Yes its true! According to an article written by Dan Seymour of the Associated Press on Monday, the biggest short term risk to our economy is bad credit. According to a survey of 258 members conducted by the National Association of Business Economics (NABE) credit has replaced terrorism as the gravest immediate threat to our economy.
It almost sounds surreal but I actually agree with the findings of the survey. As we continue to deal with the “credit crisis”, the issues have trickled down into our everyday lives at a record pace. The stock market being our first indicator, followed by the fact that 2 million people are expected to lose their homes this year to foreclosure. Even the big boys like Home Depot are taking the hit. Folks, real estate drives our economy far more than we would care to admit. Ask the car dealers, airlines, and other companies that depend on high discretionary income if real estate drives our economy. With less people able to tap cash/equity out of their mortgages through refinancing, Realtors not spending at a very high clip either, and the 100,000+ loan officers who have left the industry our entire economy is feeling the crunch. Builders are building less new homes being which means less work for the blue collar individuals ultimately leading to higher than normal unemployment rates. It is a serious trickle down effect.
Whoever thought that a few missed payments here and there would supplant Osama Bin Laden and his terrorist goons as one of the greatest risk to the U.S.A. I believe it goes back to my blog from last week about “Was the Mortgage a Mistake”. The consumerism mentality of our culture has left us in a very tough position for now. In a perfect world maybe we should have purchased smaller homes with stable fixed rates and chose not to drive our gas guzzling oversized SUV’s. But who know the bottom was going to fall out so quickly.
Listed below are 5 tips I encourage you to use, so we do not continue to add to the threats bad credit is placing on our society:
1) Stop using the credit cards unless you can afford to pay the balance in full for that month. This tip alone will give you a raise in income by having your money work harder for you because it won’t be spent paying high interest credit debt.
2) Pick up the book Smart Couples Finish Rich by David Bach. Married or single this book has some great tips on budgeting and other financial tools that will help you weather the storm and plan for the future
3) If you know you are going to be late contact your creditors in advance. Most creditors will be more forgiving of customers who are proactive about there obligations.