Image from Wikimedia Commons.

Remember, remember the 5th of November

OK, a lot of us saw V for Vendetta, but people were commemorating Guy Fawkes’ Night  (November 5th) a long time before the movie came out, and certainly before the graphic novel (that the more sophisticated and discerning among us have read) that the movie was based on came out.  On a side tangent, if you haven’t read the book, just go out and spend some instant cash on it.  (It’s better than the film, and it makes it clear why Alan Moore HATES Hollywood.)

Time for a History Lesson.

“Remember, remember the 5th of November,

The Gunpowder Treason and Plot.

I know of no reason why the Gunpowder Treason should ever be forgot.”

The Gunpowder Treason and Plot was a (nearly successful) plot to blow up the Houses of Parliament in London, England, and thereby killing King James I.  (The Houses of Parliament thing is a dead giveaway, isn’t it?)  The next phase was to kidnap the king’s children, hold them for ransom, and start a rebellion.  Why were they so agitated? Well, the Gunpowder Plotters were all Catholics.

Incidents like these are why the Constitution has that Establishment Clause and why the Separation is necessary, BTW.

The Reader’s Digest version:  Henry the 8th (I am, I am) separated the English Crown from the Catholic Church, because the Pope was tired of his marital shenanigans.  (Beheading your ex-wife is wrong, though understandable!)  He created the Church of England, with the Monarch as the Head of the Church.  Afterward, Catholics were discriminated against (putting it mildly), until a group of wealthy Catholics decided they’d had enough, and if the King wasn’t going to listen to reason and be fair about things, they were going to do something about it, and get someone on the throne more friendly to their plight.  (This was also one more excuse for the British to abuse the Irish, although English Catholics didn’t have a problem with that.)

In 1604, a group of conspirators got together (I’m leaving the names out – this is the quick version) to come up with a plan to remove the government, and then to execute it.  They decided to burrow under Parliament, plant explosives over a long period of time (the gunpowder barrels were planted over more than 6 months) and get alibis together.  The person in charge of executing the plot was Guy Fawkes, aka Guido Fawkes, a veteran soldier.  He was about to set the whole thing off on November the 5th, 1605, when an anonymous letter tipped off the guards.  He was caught, tortured, and as they were beginning to hang, draw and quarter him, he jumped off the gallows and committed suicide.

The Aftermath

Afterward, English Catholics faced even further discrimination.  (Irish Catholics got it worse, and then came lord Cromwell. He’s getting a small “l” for a reason.) Guy Fawkes Night is celebrated in England and other territories, by lighting fireworks and/or bonfires, and burning effigies of Guy Fawkes to commemorate the Deliverance of the English King. It took 2 centuries after the events for the crown to repair credit with British and Irish Catholics, and end discrimination.  (3 more centuries to free Ireland.)  Now, don’t go setting off fireworks if it’s illegal – but take pause to remember, remember the 5th of November.

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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• how to identify mistakes,
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A key element of how you’ll “Repair Your Credit” is making mountains of debt more manageable. CLICK HERE if you missed the last installment of this article.

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Let’s face it. Managing debt can be a long, slow and tedious process. If you find yourself juggling numerous revolving credit accounts each month and relying upon online cash advance and installment loans to make ends meet, you need to find a different path through the woods. It could help you to use methods of debt consolidation. By doing so, you can put all your debt under one umbrella. At the very least, it’s likely you’ll save on interest rates each month, which makes a big difference in the long run.

When is it time to seek debt consolidation help?

Seeking help can be humbling for some and many find themselves embarrassed to seek out the appropriate help. But we’re living in a recession, we aren’t getting any younger – no Benjamin Buttons here – and we want to repair credit here. So if there’s any possibility that you could use help, take action and find it. The longer you wait, the more interest accumulates and the larger your debt pile becomes.

A good time to seek debt help is when you experience the following:

• You can only afford the minimum payments on your credit cards each month
• You’re taking on debt to pay for previous debt. An example would be using your credit card to make payments on other cards
• You write checks from one account to make a payment on another because you lack the money needed to keep up
• You are in or near “maxed out” city
• You’re working more hours or taking up part-time work in addition to your day job so that you can keep up
• You find yourself using credit for essentials like groceries and gas
• You have lost your job and don’t know how you’re going to make the minimum payments

If any of this applies to you, it’s time to take action. Begin thinking about what you can do to manage your debt before it gets out of control.

Credit card balance transfers

If your credit is at least fair (let’s say a FICO score of 660 or better), transferring the balance from a high interest card to a lower interest card might be an option. A key thing to look for here is a card that doesn’t bear an annual fee. Since there are so many banks and credit cards out there that are willing to compete for your business – recession or not – you’re bound to find a transfer option out there that has terms favorable to you. A zero percent interest rate for the life of transferred balances is ideal. Also look for a card that will allow you to transfer multiple balances, if necessary.

Home equity loans

This is the most popular form of debt consolidation, because a person’s home is generally the largest asset they possess. If you currently own a home with some equity left in it (I know, there are no guarantees of that in this economy), you can refinance the mortgage to pay off your debts and, if you’re lucky, you may even get a lower interest rate while you’re at it. Considering how low interest rates still are after the collapse of the American housing market, mortgage loan modification pays. Spread your payments out over thirty years. This gives you some immediate relief and ties all your debt into one payment with your mortgage.

CLICK HERE to see what else you can do…

Existing-home sales have increased nearly 18 percent over November 2007 in the western U.S., a region that includes Colorado. This statistic and the ones that follow include single-family homes, condominiums, townhouses and co-ops.

Counter intuitive?

It may be surprising that home sales are rising during an  economic crisis, when payday loans are more popular than ever. Furthermore, home sales usually drop in the fall and winter and pick back up in the spring and summer.

However, home prices in the West have dropped nearly 26 percent. It’s a simple matter of supply and demand. No one was buying, and prices dropped to a level where houses are selling again.

How big is this trend?

Nationally, home sales are still down. Compared to November 2007, home sales are down 10.6 percent nationally. Prices decreased more than 13 percent nationwide, but so far that’s not enough to make homes an affordable commodity.

Sales were down 8.6 percent in October. So nationally, home sales are still in decline.

Sitting pretty in the West

Even in the West, home sales for October decreased, year-after-year. They were down 4.3 percent that month, making the jump in November even more significant.

Another surprise is that the median price for a home in the West is actually higher than the national average. Nationally the average price of a home is $181,300. In the West, it’s $242,500.

What about December?

While it’s unlikely that national home sales will increase in December, one statistic provides a glimmer of hope for the housing market. During the week that ended Dec. 12, the number of mortgage applications rose 2.9 percent. This figure is a bit tricky because it includes applications to refinance, which are climbing as interest rates drop.

Should I buy a home?

Just remember if you’re applying for payday loans or looking to repair credit, make sure you don’t sign up for something you can’t easily afford.