Financial Self-Defense Strategies

According to top financial analyst Meredith Whitney, U.S. banks are still in deep trouble. So how can you buy a new home at this time?

First, make sure your credit score is good. Check it out through a reputable agency such as Experian (www.experian.com). Don't give out personal information to any company you don't know, or that hasn't been recommended to you by a reputable source.

Next, do whatever you can to improve your credit score, if need be. For instance, check for mistakes in your credit file and add letters to your file to defend yourself in case there are negative reports. To do this, you may have to pay a small fee.

Now find a bank that will pre-approve you for a mortgage with terms that you can live with. The bank will set the limit on your loan.

Be prepared for high down-payments on your new home. That might mean putting off the new-home search until you have saved up cash for a down payment.

READ ALL THE FINE PRINT of every document involved. Yes, that's a lot of reading, and yes, you'll probably need a magnifying glass because some of the font sizes are beyond tiny. AND - not only must you read all this stuff, you absolutely must understand it. So break out the yellow highlighter, read, then go to the bank with your questions. Do not proceed until all your questions are answered to your satisfaction.

Most important, don't buy a house you can't afford. Meaning: is your job secure? do you have a Plan B in case of a job layoff? do you have some savings you can use as a cushion in case of emergency? is this a house you can sell for at least what you paid for it? (nice neighborhood, good schools, no major foundation, roofing, plumbing, or electrical problems?). The selling market is difficult, so again you'll need a savings cushion to keep you going if you do need to sell.

What to Do If Your Credit Card Limit Gets Lowered or Its Rates Are Raised

If you decide you need to close your credit card account because it's no longer serving your needs, and you still have a balance due, try calling the company and asking if they offer an "opt-out" provision. If they say yes, that means you can pay off your card at the current rate, but you must close your account the minute you're paid off. (Some credit card companies will close your account immediately and still let you pay off your debt at your current rate.)

If your credit is good but your card company is lowering your limit anyway, give them a call. Sometimes talking to a human and explaining your situation will actually solve the problem.

Gerri Detweiler of Credit.com  notes that many people are choosing to build up their savings before  paying off their credit card debt. (The old dynamic was to pay off c.c. debt first, and then start to save.)

Source: The Wall Street Journal, "Say Good-Bye to Credit?" by Andrea Coombes of MarketWatch, December 8, 2008.

Consumers Are Spending Less and Less: What Does This Mean to You?

If you have a small business or you are an entrepreneur, now is the time to start planning for more conservative customers. Some of your planning might include new marketing techniques, lower prices, sales, more advertising, and putting more effort into getting free publicity. Free publicity, or editorial coverage, is when you are in the news for some reason.