USAinDebt

The year of 2008 will be remembered and identified by the worldwide market crash that hit the economies of many countries, big and small. The global financial crisis ruined quite a few large financial firms which resulted in the collapse of thousands of smaller dependent companies and businesses. Combined with the sub prime mortgage crisis, bad debts, lack of liquidity, corruption and poor government control are pointed out as the main reasons for the market dip.
Although the crisis erupted with full power in 2008, its foundation has been started way earlier than that. To begin with, the American consumer has always lived beyond their means. Buying almost any type of commodities is very often associated with obtaining some type of a loan and paying it off within extended period of time. Credit became the foundation of nearly every purchase. Especially when it came to real estate, banks and other lending institutions were quick to provide credit to consumers, basing their decision on the muddy information, provided by mortgage brokers.

On the other side, consumers were happily taking on those mortgages, being under the false impression that prices of property will always rise and that they are making a good investment. They were also easily hooked by the Adjustable Rate Mortgage (ARM) which allowed them to take on a mortgage at a super low rate. The housing market was at its full glory: the USA home ownership rate grew to the record 69.2% (US Census Bureau Report, 2007). In the meantime, those mortgages were pooled and sold to domestic and foreign investment institutions as ‘AAA’ graded CDO’s. Since everyone was buying, demand has increased which naturally led to the increase in supply. Housing is built everywhere, 24/7. When the market reached its tipping point in the middle of 2007, supply became higher than the demand and prices began to decline. Prices quickly dropped by over 20% within less than a year (Standard & Poor’s Home Price Indices, 2008).

At one point, more people were finding themselves in a situation where they had zero or even negative equity in their homes. As a lot of those people took ARM mortgages, their payments were steadily increasing by that time. Many were unable to pay their mortgages. A wave of refinancing attempts and foreclosures made it harder and harder to obtain better financing rates and new loans. By the end of 2007, Nearly 1.3 million US housing properties were in the process of foreclosure (RealtyTrac. US Foreclosure Activity Report, 2008). This further deepened the issue – more and more consumers were unable to meet their repayment obligations, defaulting on their mortgages. People were resorting to withdrawals from their last savings accounts and even cash advances from credit cards. That led to a global bank run in which more than $550 billion dollars were withdrawn from US accounts. Banks were vastly losing their liquid assets. As a result of this, banks went low on cash, their assets disappeared and a liquidity problem developed. This pretty much is what brought down Washington Mutual – consumers feared that the bank is in trouble; they pulled their cash out and left the bank high and dry. The collapse of the Credit Default Swaps (CDS) market boosted the rapidly evolving subprime mortgage crisis even more. The weak regulation of the CDS market allowed for millions of junk swaps to be traded. The above mentioned investors, buying the ‘AAA’ graded pooled mortgages suddenly found themselves holding nearly worthless paper.

As a result of that, bankruptcies were quick to follow. This huge instability in the market had a snowball effect: AIG, the largest US insurer quickly started losing money merely because of the now worthless CDO’s they have insured. It became a vicious cycle: People were failing to pay off their mortgages, their homes were foreclosed; the owners of those failed loans were unable to recover their money so they turned to the insurers of those loans, who quickly run out of finances to pay the insurance on those junk mortgages. The result: consumers are low on cash, banks are low on cash, investors, insurers and banks are low on cash. The liquidity of the market almost doesn’t exist.

The fall of Lehman Brothers Holdings on September 14th, 2008 started a domino effect within the financial world. Many of their investments were foreign-funded, and as a result of that the US mortgage crisis quickly spilled beyond America’s borders. The German branch of Citigroup was heavily stressed by the bankruptcy of Lehman Brothers. The Indonesian stock market suspended trading after a 10% on October 8th of 2008. Thailand, Russian and Ukraine followed. Merrill Lynch was sold to Bank of America. Black Monday turned into the Black Week for the US markets: The Dow Jones fell 456.3 to 8122.2 leading to a 21pc dip, The S&P 500 fell 53.4 to 856.5, a weekly drop of more than 20pc (TMG. Financial crisis: US stock markets suffer worst week on record, 2008). This brings a whole new problem in the financial market: banks close their doors to loans, not just mortgages, credit cards and personal loans but loans to big companies, such as GM, IBM etc. These companies often rely on loans to support their productivity, but with this market seize it is hard for even them to obtain a good credit.

What started as a mortgage crisis in the middle of 2007 has quickly developed into a worldwide financial crisis. The failure of U.S. and European investment banks, insurance firms, mortgage banks and governments to contain and resolve the subprime mortgage crash has allowed for it to spread and grow into a huge, complex financial mess which is now known as the market crash of 2008.
References

Census Bureau Reports on Residential Vacancies and Homeownerships. US Census Bureau. 26 October 2007.
http://www.census.gov/hhes/www/housing/hvs/qtr307/q307press.pdf

Standard & Poor’s Home Price Indices. Standard & Poor’s S&P/Case-Shiller. New York, November 25, 2008.
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_112555.pdf

US Foreclosure Activity Report. RealtyTrac. Irvine, January 29, 2008.
http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=3988&accnt=64847

Financial crisis: US stock markets suffer worst week on record. Telegraph Media Group Limited. London, October 10, 2008.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3174151/Financial-crisis-US-stock-markets-suffer-worst-week-on-record.html

Tags: market crash 2008 | lehman brothers | foreclosure | census | financial crisis |   CDS | debt | credit

History

Ford Motor Company was found in June 16, 1903 with the simple idea of making quality, affordable vehicles so people can afford to buy and use them as they were not just a matter of luxury.  Henry Ford was in the root of this new, Detroit-based car manufacturer. On par with 87 other automobile manufacturers this young company had to quickly improvise in order to stay afloat. Many great innovations came to life in 1920’s – Ford was the first car company to introduce a conveyer-belt assembly line which allowed workers to produce complete vehicles in a matter of hours. Ford’s worker’s policies were also notable – higher wages, profit sharing and opportunities for the handicapped were a phenomenon in the industry. In 1919, Henry Ford retired, handing over the leadership to his son, Edsel. Further down the road, in 1943, Henry had to come back to the management position after the death of his son. On September 1st, 1945 Ford resigns conclusively.

Ford Motor Co has a long history and a great experience in the areas of vehicle manufacturing, alternative fuel innovations and electronics. By 1944, during World War II Ford manufactures B-24 aircraft and M-4 tanks for the US Government. Trough Philco, in 1965 Ford cooperated with NASA in their mission of putting a man on the moon.

Property, Financial & Current Lawsuits

As of the end of 2008, Ford Motor Co owned and operated 95 plants, 41 distribution centers/warehouses, 50 engineering/research & development facilities and 72 sales offices worldwide.

The total sales & revenue (the numbers are in millions, except for the stock prices) for the Ford Motor Company by the end of 2007 are $172,455. The same were equal to $160,065 for the year of 2006 and $176,835 for the year of 2005. The Net Income/Loss were reported as -$2,723 for the year of 2007, -$12,613 for the year of 2006 and $1,440 for the year of 2005. The Ford Common Stock was priced by NYSE at high/low $8.96/$7.35 (Q1 2006) and $8.06/$6.17 (Q2 2006) and $9.48/$6.06 (Q3 2006) and $9.19$/6.85 (Q4 2006). The current stock price (as of February 6th, 2009) is $3.00/$2.80.
According to the current 10K report for 2008, there are 3 state lawsuits, 2 class action lawsuits and 3 other lawsuits, currently in process for the company.

Products

In addition to vehicle manufacturing, Ford also produces vehicle parts, accessories and additives. Ford Motor Co is the manufacturer of the vehicles under the brand of ‘Ford’, ‘Lincoln’, ‘Mercury’, and ‘Volvo’. The company also produces car parts, accessories and additives (such as paint and oils) under the ‘Motorcraft’ brand. Fodor Motor Co is also a stockholder of Mazda. Ford Motor Co also supports several Governmental agencies in their development and manufacturing efforts.

Services

Ford Motor Co provides a wide array of services related to the automotive industry. Besides vehicle manufacturing, Ford also provides parts, accessories and additives (such as paint and oils) under the ‘Motorcraft’ make. Ford Credit is the financial service unit of Ford Motor Co which services loans to private and corporate parties. Ford Racing and The Ford Performance Group manufactures, sells and services vehicles & parts for NASCAR, Formula One and off-road enthusiasts.

Management

William Clay Ford, JR is Ford Motor Company’s Executive Chairman since September 1st, 2006. He started his journey within the Ford Company back in 1988 as a Director. Mr. Ford is also a member of the Environmental and Public Policy, Finance committees.

Allan Mulally is Ford Motor Company’s President and CEO since September 1st, 2006. He is also a member of the Finance committee.

Michael E. Bannister is Ford Motor Company’s Executive Vice President. He is also responsible for all operation within the Ford Credit subsidiary of Ford Motor Co.

Markets, Strategy, Research & Competition

As of today, Ford has established their business worldwide. In the 1920s, vehicles by the Detroit based company were mainly directed towards the US market. Later on, especially after the introduction of the assembly line, Ford breaks ground in Europe, Asia-Pacific, South America, Africa and the Middle East. In the beginning continental models would differ from country to country, with time that has changed and nowadays models differ mainly by continent.

The company strategy is to keep vehicles affordable and safe. Ford vehicles are appealing for a wide arrange of individuals, government as well as businesses. The company manufactures a broad spectrum of cars, trucks, vans and SUVs which are being used as daily drivers, NASCAR, rally & sports cars, test vehicles and military & government transport.
Ford Motor Co invests steadily in research and development. The Ford Company is the world’s first vehicle manufacturer to introduce a hybrid SUV. The company also developed many environmentally-friendly concepts, such as soy foam seats, 6-speed variable rate transmissions and fuel cell hybrid electric plug-ins.

The Detroit based company faces sturdy competition, especially in the recent years. Foreign manufacturers such as Toyota, Honda and Hyundai are on par and even ahead in some areas of development, sales and marketing. Domestic rivals such as GM are also a threat.

Tags: Ford | automobiles | cars | GM | Huyndai | Toyota | Honda | crisis | 10K | Detroit

With the current economic crisis spreading worldwide, many individuals are forced to seek new ways to save businesses, homes and other property. Not that long ago, the word ‘bankruptcy’ was something feared more than death and it was avoided at all costs. Nowadays, however, many resort to bankruptcy lawyers in order to be able to get out of the hole and at least partially save what they have. In a matter of fact, as per CNN ‘consumer bankruptcy filing increased almost 50% over the previous year’ and we are talking million of filings here.

Bankruptcy brings a lot of consequences that might have a very negative impact on your financial ‘grade’. Here are several facts to consider:

1) You are still obligated to pay off some of your debts: Although you will probably get rid of a lot of your simple debts, you may still be responsible for repaying, for example your mortgage or your car loan. There are certain exemptions of that rule in some states, so make sure you check that before filing. You also won’t be able to get rid of your student loans or tax debts.

2)  Bankruptcy will leave a mark: Bankruptcy filing stays on your credit report for 7 to 10 years. It will be there, on top of the negative list when you apply for credit cards, auto insurance, mortgage, rental and even a job. It will be hard for you to obtain any normal loan repayment terms.

3) Bankruptcy costs a lot: Besides the high interest rates you will most likely be getting as a result of your bankruptcy filing, you will also have to pay lawyer and filing fees.

4)  Bankruptcy process takes time: In most cases you may be required to take financial planning and credit counseling session before you are even allowed to file.

5) Bankruptcy filing is restricted: You can file once every six years. So if it does not work the first time,  you will have no other options for the next 6 years. Re-filing has a waiting period of 180 days.

6) Bankruptcy screws up your co-signers: Bankruptcy doesn’t protect the co-signers of your debt. If the filing discharges your debt,  your creditors are free to go after the co-signer.

7)  Bankruptcy won’t save your from acquiring interest:  All of your nonchargeable debts are still acquiring interest and other fees.

8 ) You still may not be able to save your property: In some cases, when you property debts are higher than the discharge exceptions, the bankrupt’s trustee may have to liquidate (sell) your property in order to pay the creditors.

9) There are different types of bankruptcy: Chapter 7 bankruptcy obligates the debtor to turn over all all nonexempt property to the bankruptcy trustee who then liquidates it and repays the loans.  Chapter 13 allows the debtor to keep their property and enter into a repayment plan with 3-5 years term.

10) You can fail in bankruptcy: If you continue missing payments, for example on your mortgage, even though you are under a bankruptcy protection your mortgage lender can go ahead and proceed with foreclosure.

Please be advised that the above facts can have exemptions and vary by state.

Tags: bankruptcy | chapter 7 | chapter 13 | filing | debt | credit | taxes

Nowadays, when consumers are measured by the quality of their credit file, bad credit can be devastating. Bad credit can easily prevent you from getting a simple loan, a credit card, a cell phone or even a job. Good credit, on the other side can give you access to many great perks such as 0% or low APR loans, cash-back and point programs and other good stuff.

When you are filling out credit card applications,  several things happen:

1) All your personal information is collected and verified
2) The credit issuing company pulls up a copy of your credit report and scores
3) All of the above is analyzed, weighted and a decision is made

At first, all your personal information is collected -  your name, address, social security number, income and real estate property data. This is all verified against your mother’s maiden name and against your credit report.

In the second step, the credit issuer pulls a current copy of your credit report and your credit score. This usually happens instantly and most of the times the creditor will only use one credit reporting agency. If the loan is more complicated (bigger sum, lower interest or additional benefits) they may check with more than one agency at a time.

In the third step, the credit issuer goes over your info in order to determine your credibility. Several factors come into play when a decision is made: the age of your credit report; the ratio of available/used credit; the occurrence of any negative items such as charge-offs, bankruptcy, collections or late payments; if you own or rent and also your yearly income.

Most of the time the process of evaluation is completed automatically, by a computerized system. It would automatically deny credit when certain negative items exist on the report. If the computer is unable to make a decision, the request sometimes gets forwarded to a person who reviews the data and makes the decision. People with poor credit are most of the time unable to receive any type of credit. Consumers with average scores are usually able to receive what’s called credit cards fair credit, which have good APRs and credit limits. Consumers with higher scores usually get special offers, lower APRs and higher credit limits.

Tags: credit | credit card | debt | fair credit | credit application

There are several websites and even programs out there that let you search a zip code for gas stations with lower gas prices. But is it really cost-effective to spend time and gas driving around just to save a questionable amount of money?

Let’s do a quick estimate. Say a gallon of gas costs $4.00 at Gas station 1, and that gas place is 1 mile away. Gas station 2 sells the same gasoline for a lower price, $3.85, and its 3 miles away. For this example, our vehicle will have a 12-gallon fuel tank and it will burn approximately 25 miles per gallon (city driving).

So, after calculating the cost of driving (which is a mix of gasoline cost and vehicle amortization cost) you basically save $1.48 per fill-up. And if you are fueling 4 times a month, 48 times per year, your savings will come to around $70 annually. Now, if you also add the cost of the time you will spend in driving (which has no price) my guess is that you will come up with the right answer to the question, ‘Is it really practical to tinker around for cents?’ all by yourself. For the rest of us, who really hate math – it’s not worth the hassle.

Tags: gas | gasoline | cheap gas | vehicle | car | auto

Buying a used car is like buying a cat in a bag – most of the time you won’t know about the problems the vehicle may have until after you sign the documents and drive off. Unfortunately, there is never a 100% guarantee, but here are some helpful tips on how to do as much as possible to ensure that the vehicle is good.

Check the history records: Carfax.com offers a vehicle history report. You will need the vehicle’s VIN number (ask the person selling it) in order to run the report. It will provide vital information concerning the auto you are about to invest your money into. A CARFAX report can disclose past vehicle accidents, recalls and registration information.

Check the vehicle body: All panels should be well-aligned, especially around the doors – check the gaps, the sections should be evenly positioned. Look at the paint color – does it match on all panels? Check the bottom of the doors for rust. Inspect the body for scratches, dents and fresh paint. Take a good view of the tires – especially the sidewall should be clean of cuts and damages. All tires should be the same (brand and type) and they should be evenly worn out. Open the driver’s door and take a look at the vehicle label – it usually will indicate the VIN number. Compare it to the registration VIN.

Inspect the interior: Good interior usually means the vehicle was taken good care of. Check for broken locks, buttons. Take a look at the dashboard, the seat belts, and the trunk. Test all doors.

Electrical stuff: Test all the lights on the dashboard – turn the key halfway until all lights light up. Make sure they all work – this indicates that the on board control unit tests the various systems of the car. Check the headlights, the taillights, the signal lights, the backing up lights. Turn on the radio.

Heater and A/C: Start the car, turn on the A/C. Make sure that the air is cold. Check the heating function as well. Turn the A/C on the highest speed possible and listen to the engine – if it struggles there may be a problem.

Engine: Pop the hood with the engine off. Inspect visually for oil leaks, torn cables / pipes. Open up the coolant fluid and take a look inside – is it clean and bright green? If it is brownish or there’s oil floating on top there is a problem. Also take a look at the engine oil – it should be brownish and there shouldn’t be any bubbles in it. Black oil means it hasn’t been changed regularly or that the engine burns oil. The transmission oil should have bright red color. Ask if the transmission has been flushed ever and if the transmission filter was changed. Let the owner start the engine and listen for noises, clicking. Check the temperature too. Ask the seller to shift the transmission from Park to Neutral (make sure to apply the brakes first) and look at the engine. It may move a bit but if it jumps a lot during shifting, avoid buying this vehicle. If you can, stick your head under the engine bay, watch out for leaks.

Transmission: Take a seat inside the car, start the engine. Apply the brake, and shift from P do D than to L / 1 / 2 / 3 / R (or whatever options you have). Fell the car – does it jump or does it make weird sounds every time when you shift?

Take a test drive: Don’t just drive on the parking lot – take a good ride, slowly, make some turns, and it would be great if you can do a short highway run. Listen, smell and look for anything out of the ordinary. Try turning the A/C, the radio, the heating while driving. Stop the car somewhere; leave it for a minute with the engine running, than ask the owner to sit inside and step on the gas. If a smoke cloud appears, this vehicle is burning oil – avoid buying it.

Trust your intuition: I the car is really good, but the price is unrealistic, avoid buying it. Ask for maintenance records; oil changes; known problems. Why is this car up for sale? How long have they owned the car? Has the car been involved in an accident? Check the title – does the VIN, the owner’s information match? If everything looks ok to you, go ahead with the purchase. If you have doubts, take the car to your mechanic / nearest shop and have it checked out. After all, it’s your hard earned money!

For more information or to file a complaint with the Federal Trade Commission, visit the FTC site.

Tags: car | vehicle | used car | dealer | credit

When it comes to applying for a mortgage to buy a home, lenders are on the lookout for specific criteria. While applying and qualifying for a mortgage is not an insurmountable task, it is important that you rate high in many of the key areas or you are not likely to be approved. Let us take a look at these essential areas.

Job Stability

Lenders like to approve individuals who have held the same job for at least two years if not longer. Jumping from job to job or having holes in your job history will require explanation and is not advantageous in the eyes of a lender.

Owning a Business

If you own a business you must provide a solid history of the success of your business for a two year period. To do this you must either obtain a letter from your accountant that clearly states that you have been in business for a period of two years or else you must be able to show proof of a business license that will identify when your business got its start.

Two Year History

If you do not have a two year job history or have not been in business for two years then you can still apply for a mortgage. If you qualify in the other categories then you are not likely to run into a problem with being approved. For those who fail to meet the two year criteria there are what is known as “No Doc” loans. If you apply for one of these types of loans, your job history does not have to be disclosed or verified. The down side however is that you will pay a higher interest rate on the mortgage.

Income

The two year rule applies with income as it does with job history. The lender will need to see two years worth of W-2 forms as well as your current pay stubs. If you own a business, the lender will take a two year average of the money you have earned based on what shows on the last line of your tax return after everything else has been written off. If you earn a commission income you must be able to account for a two year history and from that the lender will take an average. If your monthly debts equal 41% or less of your gross monthly income then you should be approved for a mortgage.

Down Payment

The traditional amount required for a mortgage is 20% which will put you in good standing with the lender and help you get the best interest rates possible. However putting 5% or 10% down is still something a lender will be pleased to see.

Reserves

Reserves are money that remains in your bank account after you have paid all of your closing costs. Having one month of reserves looks well to a lender and that includes enough money to cover one mortgage payment, your property insurance and all applicable taxes. The reserves you need are dependent upon the type of mortgage you are applying for. As a general rule, having two to six months worth of reserves is considered desirable.

Credit History

Your credit history plays a significant role in whether or not you will be approved for a mortgage and well as what terms will be set down. It is your “fico” score that will be closely scrutinized by the lender and will weigh heavily into the decision of whether to approve your application or not.

Tags: mortgage | lender | credit | home | realty

Decoding and properly understanding the fine print on credit card agreements is the foundation of your financial decisions. And if you want to make the right choice, make sure that you know what you are putting your signature under.

Fees. Annual Fee, Application Fee, Balance Transfer Fee, Late Payment Fee… Some credit cards are so overwhelmed with fees, that you credit limit can be entirely consumed by them before you even get a chance to use the plastic. Watch out for those charges! It’s a good idea to make a list of all the fees which your credit card carries in order to really understand how much exactly the credit will cost you.

APR. Most credit cards offer a low or 0% APR to their customers, but that’s just your initial APR, otherwise called Introductory APR. It is usually offered for 6 or 12 months, and after that period passes, you will be paying the regular APR. Then you also have a Default APR, which comes in effect when you miss payments, go over the limit or simply when your credit score goes down (“Universal Default”). You also may have up to three different APR’s: for cash, for balance transfer and for purchases.

Billing cycle. You can be billed bi-weekly, monthly, annually and in all kinds of other time incremental. Some banks even use double-billing cycle, where you have two due dates: one for your minimum payment and one for the entire balance.

Balance Transfer Terms. That 0% on Balance Transfers may come with its own Fine Print – for example 5% fee on the balance transferred or $2 per every $100 transferred.

Binding Arbitration. The credit card issuer is giving notice that if the cardholder has a disagreement with the creditor he or she can’t sue the card issuer in court. As a substitute, they must take the case to a private arbitrator or judge.

Identity theft has become more of a concern with the vast integration of computers and Internet into our financial matters. Years ago, when people used cash and online banking and shopping was not yet invented, identity theft level was way lower. Nowadays, when hundreds of millions transactions are performed online daily, we have to be careful more than ever. Following the simple steps below can ensure not just the safety of your personal information, but also the safety of your money.

1) Ensure that you have an Anti-virus software installed on you computer; it is supposed to run all the time, providing constant protection against viruses. A cheap and good antivirus you can buy from ESET (NOD32) or you can download a free one from AVG. Run a system scan at least once a month and make sure that the virus database is being updated.

2) You will also need a Firewall; Windows XP and Vista have their built-in Firewalls; You can also download the free Zone Alarm Firewall and install it.

3) In order to protect yourself from spyware and adware, install Ad-Aware (also free). Run a system scan at least once a month in order to keep your system clean.

4) Make sure that your Windows is fully updated with the newest patches and hotfixes: go to http://windowsupdate.microsoft.com and install the recommended updates. Check for new updates at least once per month.

5) Install CCleaner and run the clean-up wizard once a month.

6) Install Mozilla Firefox and use it instead of Internet Explorer. It provides better security!

7) Make sure that you are entering your information on the right websites. Hackers sometimes create mirror websites (’phishing’) which look exactly like banking websites and they may steal your log-in details. The address box should always display the correct address (ex. login.chase.com not 122.333.112.44 or chase.free-hosting.com) and it should always start with https:// (meaning that the connection is secure).

When shopping or banking online, look for the yellow padlock symbol in the lower right corner of your browser window. This will insure that your online session is in a secured environment and that the personal information you enter is protected

9) Protect your wireless network with a password and avoid connecting to unsecured wireless networks. Unprotected wireless networks can be tapped into and your personal information is at risk of being stolen and used inappropriately.

10) Keep your information secure: password-protect your computer and do not send any login or other sensitive information via email. Reputable companies will not ask you for your password through e-mail or over the telephone.

Tags: identity theft | antivirus | firewall | secure | banking | mozilla | credit | debt

As per the latest reports, Americans are  ’above their ears’ in debt - $48 trillion - and soaring. 9 out of 10 households in the US owe money - in mortgages, car payments, credit cards, student loans, medical bills, various payday, credit union and personal loans. And unless you are one of those lucky exceptions, you probably owe green. If so, read-on: here are your first golden steps in becoming debt - free.

When dealing with your debt, the first thing to do is to summarize your responsibilities. In another words, understand how much you owe. And in order to do this, you will need a couple of simple things: Microsoft Excel, Internet, a phone and a couple of hours of free time.

For starters, create a new Excel file and password-protect it. Go to Excel, click on “Tools” then “Options”, click on the “Security” tab and look for the box “Password to open”. This is where you are going to put your password. After you have typed the password, click on “Ok”, re-enter the password (for security) and voila, your document is protected. Save it.

Your next task to do is to type in “Creditor” into the first box (A1). Write “Owed” in B2, “Available” in B3, “APR” in B4 and “Minimum Payment” in B5. Save. Next, list the names of your creditors in the first column, one name per row. Save again. The next step is to contact each creditor that you have listed in the first column and obtain as much information as you can. Against the name of each creditor you should fill out what’s owed, what’s available, what is the APR on the credit and what is the minimum monthly payment. Save frequently to avoid loss of information!

After you have everything listed, it’s time to summarize your debt. You will be using Excel’s Auto Sum function for that. Let’s do it with the numbers in column#2, “Owed”. Click on the first number in that column, hold the “Shift” key on your keyboard, and then click on the next empty box underneath the last number in that same column. This way you should have selected all the numbers below the “Owed” column, plus one more empty box. When that’s done, click on the Auto-sum Button which looks like the Greek letter Sigma - “Σ”. This will add all the numbers that you have selected and display the result on the bottom. The great thing about Auto Sum is that if you change any of the numbers in the column, Excel will automatically re-calculate the result! Do the same for the “Available” and “Minimum Payment” columns. Save.

Let’s summarize what’s been done. You have just made the first step towards your financial freedom. You now know exactly how much you owe, what are you minimum monthly payments, how much all those credit lines cost you per month and how much credit you have available. Good job!

Tags: credit | debt | debt-free | loans | apr | autosum | excel