Tuesday, 21 February 2012 12:00

The amount of credit card debt owed to lenders in the metropolitan areas that were hardest hit by high balances in the past has been falling significantly in the last year.

[...]]]> Consumer credit card debt taking a tumble

Tuesday, 21 February 2012 12:00

The amount of credit card debt owed to lenders in the metropolitan areas that were hardest hit by high balances in the past has been falling significantly in the last year.

Of the 100 metropolitan areas nationwide that had the largest credit card debt as a percentage of annual income at the end of 2010, nearly 60 of them had seen double-digit drops in those balances at the end of 2011, according to new data from the credit monitoring bureau Equifax. Perhaps not surprisingly, the areas where those falls were most precipitous were in states that were among the most affected by the economic downturn to begin with, including California, Florida, Louisiana and Washington. Five metropolitan areas in Florida saw double-digit drops, the most of any single state.

“It is interesting that [areas] from some of the states hardest hit by the recession showed some of the biggest reductions in credit card debt,” said Trey Loughran, president of Equifax’s personal solutions business. “This suggests that consumers from these hardest hit areas have been especially cautious in their spending and diligent in paying down their credit card debt.”

The metropolitan area that saw the most significant debt relief was Port St. Lucie, Florida, which saw the percentage of income owed to lenders drop 23.59 percent between the fourth quarters of 2010 and 2011, the report said. Ocala, Florida’s reduction approached 21 percent, and those in both Bremerton-Silverdale, Washington, and Shreveport-Bossier City, Louisiana also topped 20 percent.

Equifax data shows that consumers’ overall debt – including mortgages, credit card balances, auto loans, student loans and so forth – has fallen close to 11 percent from the all-time high observed in October 2008, but that some $800 billion of that figure is composed entirely of credit card debt, the report said. However, consumers’ credit card balances have been steadily falling since the fourth quarter of 2010, when consumers still owed an average of about 17 percent of their income to lenders.

Consumers have been making concerted efforts to reduce debt since the recession, and have largely been successful because they have both reined in spending considerably and also increasing the value of their monthly contributions to their outstanding balances. However, in recent months, some statistics have shown credit card borrowing ticking back up slowly, though some experts say this is merely the result of seasonal increases seen during the holiday season every year.

Article source: http://debtmerica.com/industry-news/11-credit-cards/1141-consumer-credit-card-debt-taking-a-tumble

When it comes to managing money, there’s no lack of advice online, on everything from figuring out a budget to calculating your retirement plan.

But for 20-somethings? Not so much.

And that’s the concept behind YoBucko.com, a new personal finance website aimed squarely at those in their 20s. [...]]]>

When it comes to managing money, there’s no lack of advice online, on everything from figuring out a budget to calculating your retirement plan.

But for 20-somethings? Not so much.

And that’s the concept behind YoBucko.com, a new personal finance website aimed squarely at those in their 20s. It’s the brainchild of Eric Bell, a 28-year-old Washington, D.C., entrepreneur who sees a void in personal finance guidance for his generation.

What Bell lacks in years, he’s made up in passion for personal finances. While in college, Bell started money-management workshops at four universities in his native Arkansas. After graduating in 2006 (“one of the last group of graduates to easily get jobs”), he spent four years in the private banking division of Citigroup. Now finishing an MBA program at Georgetown University, he just finished two years as president of the Greater Washington, D.C., Jumpstart Coalition, a national nonprofit that promotes financial literacy in schools.

It all led to November, when he founded YoBucko, which offers advice to 20-somethings on budgets, debt, savings, insurance and more.

He recently talked by phone with McClatchy Newspapers about his website and his generation’s attitudes on work, taking risks and the recession’s lasting impact. Here’s an excerpt:

QUESTION: Where did (the YoBucko name) come from?

ANSWER: I wanted a name that made people laugh. There’s so much out there on personal finances but not a lot you can laugh about … . Real problems come from personal finances. But people aren’t receptive to the message if they can’t smile about it.

Q: Why focus on 20-somethings?

A: I focus on 20-year-olds and up because I am one. I understand the challenges they’re facing … . When I was in college, I wanted to take classes on money management but nothing was available. … I’m trying to get in front of problems and (help prevent) a lot of what we’ve seen with credit card debt, bad mortgages, etc.

Q: Like many college graduates, you’re saddled with $100,000 in student loans, the legacy of finishing your Georgetown University MBA. Does that make you more — or less — credible with your audience?

A: From my perspective, it adds to my credibility. I’m in the trenches with people, not speaking to them from my ivory tower. Some of the most successful people in the personal finance field are folks who faced real financial issues and got through them successfully. … So rather than hide behind the facts and pretend to be someone I’m not, I prefer to share my story openly so I can speak from experience, not theory.

Q: Student loan debt is estimated to hit $1 trillion this year and take decades to repay. What’s your advice on student loans? And how are you tackling your own debt?

A: Tuition and the rising cost of education is the downfall of our generation … . (Students) should think long and hard about why they’re going back to school. If you’re trying to switch careers or add to your current job skills, there can be a payoff. If you’re just going because you don’t know what you want to do, it may not be the best investment.

I’ve already paid off a chunk of my loans, the higher-interest rate loans first. I’m looking at my repayment options: lowering interest rates, consolidating loans, income-based repayment plans.

Q: For your generation, what are the lasting lessons of the recession?

A: There are three major takeaways:

—Bad things happen to good people. The recession demonstrated this very clearly and instilled a little fear in our generation. Prior to the recession, there was an eternal sense of optimism about our future and our potential. The recession (gave) us a wake-up call and helped us realize that we need to protect ourselves by saving for a rainy day, living below our means and hedging our bets.

—Don’t put all your eggs in one basket. People now see how being too concentrated in one asset — whether it’s real estate, stocks, cash or 401(k) plans — is a risky proposition. The concept of diversification makes more sense to our generation now than it did before.

—Be skeptical. While there are a lot of great people in the financial services industry, a few bad apples caused a ton of financial problems globally … . For our generation, it translates into being skeptical of individuals and companies that sell financial products and services.

Q: Part of the “wake-up call” is setting aside some savings. How do people do that?

A: People talk a good game about saving. But it’s like you know you’re not supposed to eat sausage, biscuits and gravy, but you do until you have a heart attack. … As a country, we’ve lived through a small heart attack and are finally listening to the fact that we should be prepared if it happens again. … Look at your 401(k). Set up direct deposit. Create a budget so you have a snapshot of your money and where it goes each month.

Q: According to a recent Pew Research Center study of 18- to 34-year-olds, the ragged economy forced many to move back in with parents (24 percent) and postpone marriage (20 percent) or kids (22 percent). Nearly half said they took a job they didn’t like just to pay the bills. How else did the recession change your generation?

Article source: http://www.ecollegetimes.com/student-life/yobucko-talks-money-for-20-somethings-1.2703920

Paul Kasriel, chief economist at Northern Trust, a Chicago-based bank, say his reading of Federal Reserve data has [...]]]> A big reason for the slow recovery has been that the nation’s battered banks haven’t been able or willing to lend. There are signs that’s changing and that bank lending is helping to support stronger growth.

Paul Kasriel, chief economist at Northern Trust, a Chicago-based bank, say his reading of Federal Reserve data has convinced him that banks have finally taken the baton from the Fed and are now making credit more available.

“We’ve seen a sharp increase in business loans on the books of banks,” he says.

And Kasriel says consumers are getting more credit, too. “In fact in January we saw the strongest car and truck sales since I believe May of 2008, and one of the explanations was that credit was now beginning to flow to households again,” he says.

Kasriel says he believes it’s because banks have a cleared many of their bad loans and strengthened their capital, their cushion against loses.

Jim Chesson, chief economist at the American Bankers Association, agrees. “Problem loans are being quickly put behind the industry. They have the deposits to be able to make loans, and the real issue is, is there creditworthy businesses that are able to borrow now and willing to borrow.”

Craig Carrel’s company Team 1 Plastics, based in Albion, Mich., is one such firm. “Business is great right now, the best it’s been since the fall of ’08,” he says.

Team 1 Plastics makes injection-molded components that show up in vehicles produced by the Big Three U.S. auto companies, and Japanese and German carsmakers, too. The recovery of the auto industry has boosted business so much that Team 1 asked Bank of America to boost the line of credit it uses to finance its operations. Carrel says the request has been tentatively approved along with a loan for some new equipment.

“I think we have a good story, and I think part of what helped us for additional credit is the bright outlook, especially in automotive,” he says.

Dan Thystrup’s company Adventureglass has not been as lucky. The firm makes paddleboats out of fiberglass for places like SeaWorld and Disney World. “Our main product is paddleboats that look like ducks and swans and pirate ships, and things like that.” Thystrup says.

The company’s revenues have fallen from about $1 million a year before the recession to about half that now. Still, Thystrup says he needs to replace an old factory building, and that requires getting a loan.

“And we worked on it a little bit with our bank and they were not very interested in doing anything for us,” he says.

Thystrup says U.S. sales are soft and foreign sales to places like Kuwait and India are what’s keeping Adventureglass afloat. As a result, he says, just renewing the credit line with his bank late last year was an ordeal.

Another strike against Thystrup may be that his main collateral is real estate, including his home and business buildings. William Dennis, of the National Federation of Independent Business says that’s hurting the creditworthiness of lots of small firms.

“Small firms own a ton of real estate, and a lot of that’s being used for collateral. And a lot of that real estate is still not doing well at all.”

Dennis says a recent NFIB survey of 850 small firms shows an increased demand for credit last year, but no increase in the number of bank loans received.

However, Fed data suggests banks are loosening their purse strings — they are identifying more credit worthy borrowers and more businesses and consumers are gaining the confidence to borrow again

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Article source: http://www.wbur.org/npr/147162534/with-business-up-owners-say-banks-lending-again