But what if you find that you need to cut some more expenses? Here are some areas to look at.

Look to car pooling - With the sports season coming up, many parents are just tied up sending kids to various sports training and events during the week. You can potentially save money on gasoline by planning ahead and car pooling.

Use a low grade gasoline - Many people have this perception that you have to fill up your wheels with “premium” gasoline so that they “protect your car engine”, or “enhance performance”. Most of the time, these claims are false. You can actually use the lowest grade gasoline and your car will run just fine.

Don’t buy anymore new clothes - Clothes are a big expense. You can save a lot of money by skipping this year’s new season items and purchasing off season items on clearance. For example, since it’s spring right now, the new spring and fall lines of clothes are priced at a premium.

Instead of buying those clothes, purchase the winter items up to 70% off. If you do this at the end of each season you will have a nice wardrobe at a fraction of the cost.

It does mean that you will have to wait several seasons to wear your new clothes, but at the end of the year you will have a very nice wardrobe that cost far less.

Use more hand me downs - You can purchase some very nice items at thrift stores. Especially thrift stores in wealthy areas. Find out where the wealthiest areas of your city are, and call those thrift stores. Ask if they have days of the month where all items are half price. Most thrift stores do.

You can also ask your family and friends for clothing if they wear the same size. Most people enjoy clearing out their closets, especially if it’s going to help a friend.

Refinance Your Mortgage - With mortgage rates heading lower, now is the time to refinance. Many will face difficulty because appraised home values are down. However, for those who can refinance, now is a great opportunity to knock off a couple of hundred dollars of your mortgage bills.

Use one provider for cable, phone and internet - Your bills will most definitely be lower if you consolidate your phone or cable provider. In most cases, you are choosing between your cable or phone provider. Either way, you will save a lot by doing so.

Use the same insurer for auto and home insurance - You will almost certainly get a lower rate for both your auto and home insurance if you use the same company. Just make sure that if you switch, you are getting an exactly identical or better policy.

Start cutting coupons - If you are not a coupon fanatic, you’d better start now. Coupons are just like money - as long as you use them for items that you would purchase normally.

The quick way to get started using coupons is to buy some current coupons for a few dollars on EBay, and check out sites like The Grocery Game which will help you maximize sales in your area.

Revise your cell phone plans - Every one is probably paying more than we should on our cellphones. Call your provider and ask how many minutes did you use on average last year and what is the best package based on your usage. Cut down or disable things like texting that waste your time and adds to the phone bills.

Be more energy efficient - Electricity rates are lower at night because it is at a non-peak hour. So do your laundry at night and not in the morning or afternoon. Same goes for the dishwasher. Don’t leave it till the morning. Unplug plugs from the wall for appliances that are not frequently used.

Use a cash back credit card for any expense and make sure you pay your bills in full.- I’m still amazed that very few people use an actual cash rewards credit card at the supermarket. The better cards pay more than 1% rebate for supermarket and gasoline purchases.

Why Your FICO Score Might Fall If You Have Credit Card Balances

The credit card companies are trying to protect themselves from defaults, so they are cutting credit limits. Amounts owed makes up 30% of your FICO score, and the amount owed is compared to your limit. Depending on your balance and how far your limit is cut, your credit card could go from a 50% ratio to maxed out.

Even if you have a great credit history of paying your bills and paying them on time, the company can cut your limit. The good news is that the amount due vs. the credit limit is looked at as a total, not by individual card.

Your overall credit used percentage could also be raised if you have a home equity line of credit (HELOC). Banks are reducing these lines of credit since housing values have fallen. So this will also reduce your overall credit limit.

What You Can Do

Check your FICO Score by Clicking Here.

Pay more than the minimum payment. If you pay only the minimum payment for several months in a row, the bank may see that as a sign that you cannot afford to pay more. That might trigger a reduction in your credit limit. I always round my payment up to the next dollar or five dollars since the computer is probably only looking for exact matches of payment to minimum due.

It is more critical now, than ever before, that you read the fine print on any correspondence from your credit card company. If they notify you that they are decreasing your line of credit, calculate whether that will put you over 50% of your overall credit limit used. Check the correspondence or new agreement to see if you are being offered an alternative action. If they send you a notice that your interest rate is being increased, you may be offered the option of opting out of the increase by requesting to opt-out and agreeing to no longer use that credit card.

You can also call your credit card company and negotiate with them. If you have been a good customer, they are usually willing to raise your credit limit to a reasonable value, or lower your interest rate if possible.

Suze Orman says, “There is to be no curling up in a fetal position on the couch in 2009 hoping that when you emerge the crisis will have passed. No assuming that there is a government bailout or Wall Street rally right around the corner that will fix everything for you without any effort on your part. You will have to get off the couch and take control of your financial life in 2009.”

Suze has published a free downloadable book to give you an action plan for 2009. You can download it here. If you prefer a printed copy since this is a 227 page book, go to this link Suze Orman’s 2009 Action Plan.

I have to disagree with one of her action items though. She says that if your credit score is above 720 and your interest rate just shot up, that you should do a balance transfer to a lower rate card. I think this would be a good second choice. The first thing you should do is call the credit card company and negotiate a better rate with them. If they will not lower your interest rate when you have been a good customer and you have a good credit score, then it is time to find another company.

Reducing Your Debt

The book contains great advice for why you should avoid debt consolidation companies that will reduce the amount you owe by “repairing your credit.” If they are settling with your credit card companies for a lesser amount, not only will your FICO score be in the trash, and not only are you paying them a fee, but you could be liable for taxes on the amount that they reduce your credit. There is no easy way out of debt.

So how do you pay down your debt when you are already struggling? The section on how to “find” more money to pay down your credit debt is excellent. Of course, you can’t save money and pay down debt if you don’t know where you are spending your money. If you don’t have a budget, start one now with easy to use software. Starting a budget is easy with Money Tree Personal Budgeting Software. As Suze says, “2009 is about making the right and honest choices to build a secure future. And what is right is not always the same as what is easy.”

The financial experts are warning that you can’t say the economy is getting better just because the stock market rallies for a few days. A rally is expected in the stock market when Barack Obama is inaugurated. But don’t get a warm fuzzy feeling yet. It will not last, because the problems that were years in the making, will not be resolved overnight.

What About Retirement?

Suze has a whole chapter of information on how to handle your retirement accounts whether you are 25 or 65. She also recommends that you build up your savings to cover eight months of living expenses. The rule of thumb used to be three months, and for a while now it has been recommended to have at least six months of living expenses. This is the first time that I have seen eight months. That is a lot of money, but it makes good sense. When everyone is job scared and multitudes have already been laid off, it may take many months for you to find a new job if you are laid off or your company goes bankrupt. So even if it takes you a few years to get there, get started saving now.

What About Real Estate?

Whether you are looking at investing, have an adjustable rate mortgage (ARM) or facing foreclosure, Suze covers many aspects of real estate and mortgages. Many banks are cutting HELOC loans,- home equity lines of credit, because of the fall in the value of homes. So if you are using a HELOC as a safety net or were expecting to fund your children’s college, you need a new plan. Besides, you don’t want to put your house on the line, especially during a recession when you have an increased risk of losing your job.

Although Suze’s advice is very good, she says that foreclosure is not a permanent stain. I don’t agree. Although your credit will improve in seven years, every time you try to purchase a house you will have to disclose that you have been through a foreclosure in the past, even if it has been longer than 7 years. This doesn’t mean that you won’t be able to buy a house, but you will have to go through the pain of explaining the circumstances.

What To Do Now

If you don’t have a budget, start one now with easy to use software. Starting a budget is easy with Money Tree Personal Budgeting Software. Then take action and get Suze Orman’s 2009 Action Planbook and read it. She will help you recognize just how much is within your control, and show you that you can change your future for the better.

If a health crisis arises or you are laid off, call your creditors, explain the situation to them and work out a plan with them. Ask what your options are.

Here are some things that I have successfully negotiated with credit card companies.

1. Your due date can be changed. They won’t change it for the current bill, but it can be changed for future bills. This is helpful if you change jobs and will be getting paid at a different time during the month, or you have too many bills due at the same time of the month.
2. Request a lower interest rate.
   • If you have an offer to transfer your balance to a new credit card, it would be better to call up your current company and negotiate with them. Tell them about the offer you have and let them make you a counter offer, rather than have new credit cards or balance transfers on your credit report. Besides, there are usually fees if you transfer a balance.
   • If you always pay your bills on time and you are late on one, request that they set your interest rate back to the rate you were at before your payment was late. They may give you the benefit of the doubt at least once. Don’t abuse this because they will make a note of it in your record.
3. If you go over your limit, make a payment that will bring the card back below the limit, then ask the company to remove the over-the-limit fee.

Above all else, remember that attitude counts for a lot. If you want people to work with you, you must be willing to work with them.

The new rules include five key protections for consumers who use credit cards.

1. Banks would be prohibited from increasing the rate on a pre-existing credit card balance, and must allow the consumer to pay off that balance over a reasonable period of time. The consumer would be given 45 days notice before a rate increase. The increase will typically apply to future purchases rather than current balances. However, the rate can be increased if
   • it is a variable rate and the rate index changes
   • a promotional rate expires
   • the minimum payment is not received within 30 days of the due date

2. Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges. They would no longer be able to apply all payments (over the minimum payment amount) to the balance with the lower interest rate when the borrower has balances with different interest rates due to promotional offers or cash advances, etc.
3. Banks would be prohibited from imposing interest charges using the “two-cycle” method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle.
4. Banks would be required to provide consumers a reasonable amount of time to make payments. There have been class action lawsuits because of companies that send you your bill at the last minute, and then hike up your interest when your payment is late. The new rule would provide a safe harbor for banks that send periodic statements at least 21 days prior to the payment due date. In addition, a payment received by mail on the next business day after a due date, when the due date falls on a Sunday or holiday, would be considered timely. The payment must be received by 5 p.m. I have seen 2 p.m. listed on some of the current credit card rules.
5. Solicitation for new credit cards that offer multiple rates or limits, will be required to list the factors that determine whether a consumer will qualify for the lowest rate and highest credit limit.

The rules also ban the practice known as universal default. The bank will not be able to adjust your rates based on how you perform with other bills such as utilities and memberships.

There is also a new rule for bank accounts.

The new rule also provides the opportunity to opt-out of the payment of overdrafts before any overdraft fees or charges may be imposed. The bank would be required to notify you that the payment would be an overdraft.

Does this help or hurt?

I would love to see these changes now. However, there are those doing studies who say this will only make matters worse. Yes it could cut the profits of the credit card companies. I think they hurt themselves anyhow when they jack up interest rates on those who are already struggling to pay, to the point that they can no longer afford to pay. Do they actually make more, or are they forcing more people into bankruptcy?

A study by the law firm Morrison Foerster found that if the industry loses the money they make from the current rules, the reduction of credit would be at least $2,029 per account. So they are saying that there would be less availability of credit at a time when policymakers are trying to get consumers to spend money. Are they forgetting that this doesn’t take effect yet?

I believe the credit card companies extended too much credit anyhow. The real problem now is that nobody can get loans to buy major purchases. I don’t like having my credit limits cut, especially since that makes me look more in debt with my debt to limit ratio. However, I know that there is no way I could pay my bills if I maxed out all my credit cards to the limits that I previously had.

I think it is time that the consumer had more protection against the issuers of credit cards. However, I did read one comment that warrants consideration. Will those with good credit end up subsidizing those who don’t? Will the banks charge everyone higher interest rates because they can’t jack up the interest rates on people who don’t pay? As I said at the beginning, they will have time to be more selective of who they extend credit to. So wouldn’t they save money by having fewer people default? What do you think?

Databases that store your credit card number are frequently hacked. Just because you do not use your credit card to make online purchases, does not mean that your credit card number is not stored in a database that can be hacked.

I had an online purchase show up on my credit card once. However, in that case I think that the purchaser had incorrectly entered the credit card number, and just happened to have the same expiration date. So that is one reason that the three digit CW2/CID number on the back of the card helps identify the correct number was entered. To fix the problem, I just called the credit card company and explained that I had never shopped online with that retailer, and they reversed the charge.

I found another great way to protect yourself with online purchases that limits your liability to $0!

Discover Card has set up a zero dollar liability program. The way it works is they generate secure account numbers. Instead of using your real credit card number, Discover Card assigns you a secure number that is linked to your account through a secure database. When you shop online, you enter your assigned secure number.

Your secure number expires when the credit card does. So when you receive your new card, you can get a new secure number.

This is a downloadable program that is stored on your computer, but they also have a web version so that you can shop online from multiple computers. The secure number can also be used for recurring charges. You can have different secure numbers for different retailers, as long as the numbers are active. You can only maintain a limited number of unused secure account numbers.

The only time you will not be able to use your secure number is when you will have to show your actual card to verify the purchase. This usually would occur with online purchases of airline or movie tickets.

So to start having more protection for online purchases, apply for a Discover More Card by clicking here Discover Card. Or review the Discover Cards offered on our Credit Card Finder.

VS.

Spending cash can’t make you cash like credit cards can.
You don’t get rewards or discounts for paying in cash. But you do get rewards such as cash back when you use credit cards. With rewards credit cards, you can even earn points for gifts, travel, gas etc. If there is something you are going to buy, then you might as well buy it with a rewards credit card and get rewards for making the purchase. Buying in cash doesn’t give rewards, but credit cards do.

Cash is unsecure.
If your cash is stolen, then it is gone forever. But if your credit card is stolen, then your money can still be secure by simply reporting your card stolen. Carrying around tons of money just isn’t a good idea.

Cash isn’t accepted everywhere.
More and more places these days aren’t accepting cash, such as car rental agencies. It’s always good to have a credit card handy just in case.

Cash doesn’t leave a paper trail.
By leaving a paper trail it’s easier to see where all of your money is going. Unless you’re great at writing all your expenses down, your credit card bill can be used as a simple way to document your expenses. Knowing where all of your money is going can help you budget your money for the future.

Living just on cash isn’t the solution to anyone’s money problems. Credit cards are great for helping you save money by giving you cash back or rewards when you use them. Just remember to not spend more money then you have.

Do you have an opinion about cash vs. credit cards? Share it with us by leaving a comment!

2. Get a job that will pay for your tuition.
Indeed there are jobs that pay more than just a salary. Certain employers will actually pay for your education. Look for companies that have positions related to your major.

3. Buy and sell books online.
The bookstore is always overpriced. You might as well purchase your books online since thousands of students are trying to get rid of their books at low prices. To get extra cash, you can sell the books you don’t need any more online to other students in need of them. Of course, one place to find and sell college books is on eBay.

4. Budget your money.
As lame as it may seem, budgeting is the best way to save money. You have to know where your money is going before you can determine how to save it. Budgeting doesn’t have to be a long drawn out process. There are simple, easy, and fast ways to budget.

5. Use a cash back credit card.
Credit cards are great for building credit when used properly. When you use credit cards, you might as well save money by getting cash back according to the amount of money you spend.

6. Make a grocery list before going grocery shopping.
It doesn’t really take as long as you think it does. Just jot down the items you need to purchase before going shopping. That way, you don’t over spend on things you don’t need by aimlessly roaming in the aisles of the supermarket.

7. Pack a lunch instead of eating in the cafeteria.
Universities and schools often advertise that their meal plans will save you money. But honestly try doing the math. It’s cheaper to make your own lunch then eating from the cafeteria.

Do you have a tip for college students? Share them with us by leaving a comment!

1. Always pay your bill on time.
2. Always pay your bill on time. Sorry, but I can’t emphasize this enough. Even if you owe $5, pay it on time.
3. Lower your debt to credit limit ratio.
4. Close credit cards that are store specific. You should never have more than one of these, because they reduce your credit score. Each one you apply for can reduce your credit score by 20 points.
5. Don’t use credit cards for large revolving debt of more than 50% of your overall credit limit. For instance, don’t charge $1,000 every month and pay it off if your credit limit is less than $2,000. If you do this repeatedly, you will lower your credit score. If you have multiple credit cards, this will most likely be based on your overall credit limit on all your credit cards.
6. Having credit cards and installment loans, and paying them on time, will raise your credit score. Someone who has managed credit cards responsibly has proven to be more credit worthy than someone who does not have any credit cards.
7. Don’t apply for multiple credit cards at one time. Credit applications and inquiries are logged on your credit report. If you apply to three different credit card companies, the third one will see that you have applied for two other cards. They could turn you down just because they are afraid the other two will approve you. For example, if you get two or three credit cards at one time and charge them to the max, you will probably not be able to afford the payments. Most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. These are typically treated as a single inquiry.
8. Don’t close multiple unused cards at one time. Leave longer term cards open when possible. You want to show that you have available credit, but not so much that your debt to income ratio will suffer. Closed accounts still show on your credit report.
9. To rebuild credit, get a secured credit card. The deposit you make will be your line of credit, but the deposit is held by the credit card company. You still have to pay at least the minimum payment before the due date each month.

What is a Good FICO Score?

You have a FICO score for each of the three credit bureaus. Your score can vary from credit bureau to credit bureau based on when your credit record was last updated. This score affects how much and what loan terms, such as interest rate, that lenders will offer you at any given time. So to get better interest rates and loan terms, raise your FICO score.

It is called a FICO score because the score is generally produced from software developed by Fair Isaac and Company. However, many lenders use their own credit scores and ranges which often include the FICO score as well as other information about you. For instance, they may use your employment history.

Below is a chart that shows the typical FICO ranges.

Step 1: Call Your Bank

You are not liable for much (if anything) that is charged on your credit cards in the event of identity theft. Your bank account is a different story though. You can be held liable for any charges that were made before you notified the bank that your accounts had been compromised. So call your bank first, before you do anything else!

Tell them to cancel your debit cards and your checks. If necessary, have them completely close the account and open up a new one. You should also dispute any charges that were made before you called your bank. There is a good chance that you can get the charges credited back to your account. Your individual bank will walk you through this process. I had to do this myself when my identity was stolen, and it was simple, and quick. As long as you take this step first, you will be protected from the worst of the financial damage that an identity thief can inflict.

Step 2: File A Police Report

Next you will need to call your local police department. Do not call 911 int his situation. Tell them that your identity has been stolen, and file a police report. You will need to get a copy of your police report, and keep the report number close - you’ll need it to complete the next few steps.

Step 3: Call Your Credit Card Companies

Once you have filed your police report, call your credit card company. Give them the police report number, and have them cancel your current credit cards. They can either re-issue you a new credit card on the same account (with a different number) or close your credit account and open up a new one.

From a financial perspective, it is better to keep your credit card accounts open, and just have a new card issued. If you close your credit card accounts it will impact your credit score - even if they open new accounts for you. So, keep those accounts open unless there is no other way around it.

As far as liability goes you should not be liable for more than $50 of any charges that were illegally made on your credit accounts. Visa, in particular, usually offers zero liability. Be sure that you check your next credit card statement carefully and note any fraudulent charges. Call your credit card company and dispute those charges. Give them your police report number again when you call to dispute the charges.

Step 4: Freeze Your Credit Reports

It is important that you freeze your credit reports, and do not simply place a fraud alert on them. If you place a fraud alert on your credit reports, it means that lenders can still pull your credit score - which means that an identity thief could still possibly open up new accounts in your name.

Freezing your credit reports on the other hand, means that no one can access your credit reports or scores but you - at least until you choose to un-freeze them. If lender’s can’t access your credit score, then there is zero possibility of an identity thief being able to open up a new account in your name.

If you have filed a police report, you will be able to freeze and un-freeze your credit reports for free in most states. To begin the process, you can visit the three main credit bureaus online. You will need to create accounts with each of them.

• Equifax
• TransUnion
• Experian

You can also read more about freezing your credit reports in our article “What is a Security Credit Freeze and When Should I Use One?“.

Step 5: Replace Your Driver’s License and Social Security Cards if Necessary

If your driver’s license or social security number were stolen, you will need to have new ones issued. You can contact your local DMV (Department of Motor Vehicles) and Social Security office to get them replaced, or have new ones issued.

Step 6: Check Your Credit Report Each Year

Once an identity thief has your information, it is safe to assume that they always have it. For this reason alone, make sure that you check your credit reports at least once a year. You can check all three of your credit reports for free each year by visiting Annual Credit Report.com.

If you are not comfortable checking your credit reports only once a year you can purchase a credit monitoring service that will let you check your reports any time you want to. Access to all three of your credit reports typically runs about $30 a month.

All three credit bureaus offer this service. I have tried all of them, and I recommend Experian’s credit monitoring service over the other two. For $30 you get to see your reports from all three credit bureaus, all laid out on one page. Experian also offers some basic identity theft protection as part of their service. It’s far and away the best deal if you do end up needing to monitor your credit reports.

Step 7: Check Your Police Report Each Year

While your initial worry is going to be how much money you will be liable for when your identity is stolen, don’t forget to check your police reports each year. False identities are used in crimes all the time, and you don’t want yours to be one of them. For more information on how to do that you can check out this article titled, “In Case of Identity Theft, Check Your Criminal Records“.