Most of us remember that it seemed like the financial world came crumbling down the day Lehman Brothers announced that they were going into bankruptcy. I have to admit that, even though there were overall signs that something wasn’t right, this was the defining moment when I knew this country was in trouble.

Ever since their collapse, there’s been an investigation as to why they failed, and I know why. You research things like this so you can see if someone else might be going in the same direction and should get an intervention so that they don’t collapse. That’s the one thing about the United States; it will try to find answers to bad things. Unfortunately, we don’t always learn from history either, and my thought is that this one will look and sound good, but in the end won’t stop any other banks from falling. Why? Let’s take a look at the main talking points of this investigation.

The first is that leadership lied to cover their bad performance. That’s not novel at all, and it’s the thing that’s brought down other companies in the past, such as Enron and Arthur Anderson. They even sent a young woman whom they’d made CFO only a couple of months earlier, Erin Callen, into the public to be the public face of the company, spouting all this positive stuff before she had a chance to look at anything and determine they were lying.

Something else they did was not count bartered items that were temporarily “repossessed” as loans. What they did for awhile was allow people to put up assets instead of collateral to trade for cash, but instead of calling it a loan they called it sales, which made both profits and liabilities look better, but wasn’t really legitimate. To say it wasn’t legitimate is to say that it took a foreign law office to tell them they could do it, because no American law office would. Now that’s sneaky and fraudulent.

Finally, they had some help in covering all of this up through Ernst & Young, who validated everything Lehman was doing even though they’d been informed by someone that it wasn’t legal to do. Does this remind anyone of David G. Friehling, Madoff’s accountant? Ernst & Young is a major player; they had to know this wasn’t legitimate, and they have a fiduciary responsibility not to certify this kind of thing. Oh wait, obviously they weren’t paying attention to the Arthur Anderson history either.

And that’s my main point. History repeated itself many times here, and it still resulted in another greedy banking institution and a weeping willow accounting company failing to do what was right. Why did Lehman fail? Because they didn’t pay attention in history class.

It’s safe to say that most of us live in areas where we’d love to be able to contain our energy costs in some fashion. If you live in cold climates, you have to deal with high energy bills in the winter. If you live in warm climates, you have to deal with high energy bills in the summer and sometimes in the winter in trying to stay cool.

The big move these days is towards finding more energy efficient, or “green”, ways of living. Some people will make moves such as direct water heating, where instead of having a hot water heater they have some kind of apparatus installed at points where they can get water that heats the water only when needed. Others hope to go even further, such as adding solar panels or other alternatives of capturing “free” energy to their home.

Yet, this isn’t widespread, and we all initially know the reason why. It’s expensive to upgrade your home for this kind of energy efficiency. I checked into it a few years ago, and learned that it would cost nearly $38,000 to add solar paneling, batteries, etc, to my home. That’s a third of what my house is worth, so obviously it’s pretty steep in my mind. Based on my current heating bills, even with the increase in oil prices, it would take about 9 years to recover the costs of something like that, even with a state rebate.

Here’s the other problem. It turns out that adding something like that to your home doesn’t increase the value of your home. According to CNN Money, when appraisals are done, they don’t take into consideration any green initiatives you’ve added to your home. This means a $100,000 home whose only upgrades are to green alternatives will still only be worth $100,000, or whatever the market price for the home is at that time.

Sure, environmentalists would love if all of us decided not to worry about price and just did the right thing but that’s not economically feasible across the board. Even adding used solar panels and batteries, which can cost upwards of 50% or more less than new, is still an expensive proposition, especially when compared to modernizing your kitchen, something that definitely adds value to your home.

This just proves that it’s not as easy a decision as one would hope it might be in deciding whether or not to add certain energy efficient initiatives to a home.

Everyone might not see it this way, but I think this is a pleasant surprise.

Bank of America has taken the proactive step of saying that they’re eliminating overdraft fees on debit card purchases. Well, that’s kind of a misnomer, but it works for the moment.

What they’re going to do if you use your debit card to try to make a purchase is to deny you, which is what credit cards and debit cards used to do in the past. That means you won’t get hit with fees you don’t know about by going over your banking limit.

What they’re also going to do is, if you go to an ATM to try to get money out and you don’t have it, tell you that you don’t have enough to cover what you’re trying to take out. You will have the option of accepting a $35 fee if you decide to go forward with that transaction, or do something else instead.

I think this is a brilliant move, and I’m glad to see B of A taking a step like this instead of just finding ways to get more money from unsuspecting consumers, especially when they’re not on the best financial footing. Not everyone keeps up with their money all that well, and sometimes it’s not your fault, such as when you think a check has been cashed months ago and had been checking your balance, and out of the blue it’s suddenly cashed and you hadn’t checked again. I’d rather have a store or restaurant decline me than turn around later to see I’ve been dinged with some high fees.

Good move, B of A; you’re off my list for the time being, even though you haven’t addressed those checking fees yet.

For now, it seems that the freefall that was known as Citigroup has slowed down and actually stabilized for awhile. The company whose stock price used to be around $55 a share back in 2006 is now hovering around $3.50 a share, but it’s been hovering around there for a few weeks now, even slightly improving over that period of time.

Of course we all know what brought Citigroup to this point, and we’ve seen how they’ve reacted to some of these things. Suffice it to say that Citi hasn’t inspired the most confidence in its consumers, let alone its stock holders. And yet, we just learned that Bruce Berkowitz, who manages the $11 billion Fairholme fund and was recently named Morningstar’s U.S. stock manager of the past decade, bought more than $700 million worth of Citi shares.

What’s he thinking? He says that the company is showing signs of a turnaround, even in those areas where they’d been losing a lot of money. He also said that the shares are cheap right now, and it’s a good investment in a company that seems to be on the upswing, saying that, in his opinion, right now it has the “government’s Good Housekeeping seal.”

I don’t know about this, although I did write earlier this year about how it seemed to be a good thing some days to be Citigroup because of how the government seems to be giving them all sorts of breaks as they try to recover. So maybe Berkowitz has something here.

Or maybe not. Personally, I agree that the stock price is very low, and if someone were interested in owning a piece of a bank just to see what it’s like this would be a good time to buy. But $700 million worth? Well, this guy’s done it before and survived it, so maybe he’ll do it again. If it’s me, though, I might spend my couple of hundred, then wait and see. I might, by the way, means if I were in the buying mood, which I’m not.

I have to tell you, these days I’m getting more wary about the insurance people I talk to, including the people who supposedly represent me. Sometimes I’m just not sure what they’re saying, or whether I believe them to be representing me more than they’re representing themselves.

Here’s my story. Since 1997, after I got married, we have had at least 7 different insurance people. The first guy we haven’t seen in about 7 or 8 years now; I have no idea what’s going on there. I dropped my policy with his company, but my wife still has hers. Strange that we haven’t heard from him, though, since we used to see him twice a year.

The second person was through the union my wife was a part of when she worked at a different place. They sold us on a policy where we didn’t have to do any health tests, with promises of big benefits if something happened to me. Those assertions turned out not to be true, and for what we were paying if anything had happened to either of us we’d only have gotten $15,000; sham!

The third person was a friend of my wife’s, and my wife trusted her a lot. I liked her, but was never sure what she was telling me. In the end, I’m not sure if what she set up for us was legitimate or not, mainly because, later on, it seems that we learned what we thought would happen wasn’t going to happen.

The fourth person we never got to meet. My wife’s friend got out of the business, and we got a letter stating there was someone new who was going to be taking over our account. We never heard from that person, and I met someone at a networking meeting I thought was friendly and asked her to take over for us.

She was person number five, and she was nice. She was the one who first told us that what we thought we had we probably didn’t have. That didn’t sit well with us, but she was also the person who wanted more money from us, which also didn’t sit well. At that point, you’re just not sure what you believe or not.

At least we saw her a few times, but that didn’t last. For some reason, we had an appointment scheduled with her and her husband showed up instead; he was person number six. He was the first person who actually explained how investing worked so that I understood it, even though that’s not what he was hear for. Or rather, it’s not the reason we asked him to come, though he did try to get us to invest with him. But I already had someone else, so that didn’t happen. He was supposed to come back to see us in three week’s time, but we never saw nor heard from either him or his wife again. Later we heard both had left the company.

Finally there’s guy number seven. He’s who we have now, and I’m not sure I trust him. When he came, he came with someone else, who did half the talking; that was weird. They came in wondering why none of the information they had on us matched the policies we had, until I remembered eventually that the reason the other guy was supposed to come back was to give us an updated policy. This guy said he’d be back in three weeks to finally give us our updated policy.

We finally see him this coming Thursday, six months after he was supposed to show up. Yup, we never heard from him until a couple of months ago, when we got a letter saying he’s lost our phone number and had forgotten about us, and asked if we could call him. Let’s see, his company has our policy, he had our address because he could write us, but no where in the records was our phone number, which we haven’t changed in 10 years? Not only that but my premium went up in November, even though I’m being told that my policy will expire when I turn 70 if I’m still alive and I won’t get anything from it?

I know a little bit more now about life insurance policies, yet it seems I don’t know enough as it pertains to me and my wife. If I don’t know it, then how could people who aren’t in the game understand it any better? It’s hard to find someone you can trust, and I’m not sure I trust my guy right now. However, on Thursday, I hope to ask some tough questions about things, and the answers had better be illuminating in a positive fashion, otherwise we might be moving to insurance person number eight.

How are you doing with your insurance person?

There’s something that’s been going on for at least the last 6 to 9 months that I hope no one has fallen for.

What happens is you get a call from someone telling you that there’s something wrong or getting ready to happen to your current credit card, and that you need to talk to them about lowering your interest rate.

If you get these phone calls and pick up the phone, don’t talk to these people. If you get a message asking you to call them back, don’t return the phone call. These are scams, with one of two intentions:

1. Get you to sign up for a new card

2. Get you to give them information you shouldn’t be giving out over the phone

The first is bad enough; the second is truly nothing but trouble. They have multiple ways of getting information out of you if you’re not savvy, such as having you press certain keys, or telling you that they’re from the fraud department of either Visa or Mastercard or something like that.

Here’s the thing, however. When they call, they never tell you which credit card it is that you might be having problems with. That should be your first clue. Some people will ask them which card and then start throwing out the names, in which case they’ve just handed the scammers all the information they need to continue the con. Some people are ready and willing to give out their passwords, pin numbers, and even their checking account numbers to these folks; don’t do it.

In a couple of instances people have been getting mail saying these same sort of things. Just because you’ve received something in the mail doesn’t mean it’s legitimate. Once again, most of the emails come without any information on them except a phone number or website address, which means it’s a scam because it didn’t come from your bank. You should know what the mailings from your bank or credit card look like; if you get something that doesn’t fit that, disregard it, or pull out your phone book (does anyone still use phone books? If not, look up the number on the internet) and call the bank directly, and you’ll probably find out 99% of the time that it was a scam.

If you’re contacted out of the blue by anyone who wants to talk about your credit cards or bank account, always be wary. If they can’t tell you some things without you telling them something, hang up and call your institution on your own. Better safe and rude than sorry and poor.

Last March I wrote about the efforts the Federal Trade Commission was putting through trying to get FreeCreditReport.com to change its advertising so that they had to disclose the fact that their credit report wasn’t actually free, but instead a shill trying to get everyone to buy credit monitoring services instead. They even went so far as to create their own musical ad to counter FCR’s television ads.

Now they don’t have to do that sort of thing anymore. Check out the image below:

Yup, the FTC has been able to force FCR to change their website and own up to the reality that the only free credit report available for everyone comes from AnnualCreditReport.com instead, where consumers can get a free copy of their credit report from all 3 major agencies. Experian, which owns FreeCreditReport.com, has had to acquiesce, and now faces a major loss of funds as they were averaging nearly 6 million visits a month, with most of those folks coming in after hearing those commercials on TV and thinking they would be able to get free credit reports from the site, but only being able to get the Experian credit report for free.

To be fair, I subscribe to the credit reporting service. I get a great rate, and I like the fact that I find out who’s looking at my credit and what I need to do to try to get certain things altered here and there. Of course, I’m upset that they killed their affiliate program, as they were one of the companies I helped advertise, and I made some money from them. Still, I’ll admit that I did go there thinking I would be able to get a free credit report for all 3 agencies,and was initially disappointed by that.

By the way, it’s not only Experian that has to add this disclaimer. Any credit reporting company that offers what Experian offers has to do the same thing. And, by the way, they don’t have to follow through with it until April 1st, so you won’t be seeing it immediately on other sites. Be a smart shopper, and decide what you want before giving any company your credit card number.

How well do you track your spending habits?

I ask that question because a number of people have absolutely no idea how or where they spend their money. This ends up with folks looking at their bank statements wondering where their money went, and sometimes leads them to either overdraw on their bank accounts or go over the limit on their credit cards.

I go into each week with a general spending budget and what I call the “play” spending budget. I try to stick to it in some fashion whether I have a lot of money to play with or less money to play with during the week. As an independent consultant, my income fluctuates. My play money budget covers my wife as well when we go places on the weekends, as I usually pay for things most of the time.

I don’t always write my figures down, but luckily I can mentally keep track of everything I spend. I do keep track of the bills I pay, which is what helps me keep track of my overall spending. Bills always come first for me; I know some financial experts will say to pay yourself that 10% first, but we don’t always have 10% to spend on ourselves first, do we?

Luckily, I’ve worked hard to eliminate a lot of big bills from our life, so what we mainly have to keep track of are those monthly bills you can’t get away from, and those weekly bills such as gas and food. We’re lucky not to have kids, because it allows us to do things with our food budget that wouldn’t work well with kids.

People hate the word “budget”, but I believe it’s essential to giving us peace of mind, and of course to not have to pay these banks and lenders anything extra because we’ve not kept track or just how much money we have. Do you have any secrets you’d like to share in how you keep track of your money?

Last August I wrote a post talking about this study that said 416 banks were in trouble. It seems that the news is much worse about six months later, as the prediction now is that 702 banks, which is one out of every 11 banks in the country, are in trouble. That also includes a couple of big banks, my whipping boys Citigroup and Bank of America; isn’t that a shame?

To what are they attributing all this bad news? The three main criteria are finances, operations and management. We all understand the finances part; if banks don’t have enough money to conduct business, that’s obviously not good. Operations is where we look at the specific areas that banks might be having major problems with, such as mortgage debt, credit card debt, and loan defaults. Management also speaks for itself, although I wonder how the FDIC evaluates the competency of management.

A statistic that came out said that usually only 13% of banks on the watch list end up being seized, as they usually will find ways to extricate themselves out of their difficulties, even if it’s just to merge with another bank. That’s good news if you ask me. Something they didn’t talk about, though, is if some of the banks that are on this list are those who invest heavily in commercial real estate. That’s still a major worry as well.

So far this year, 20 banks have been closed, putting it on the same pace as last year, but FDIC Chairman Sheila Bair believes the number of banks being closed will escalate as the year goes on. That’s bad news, but maybe this is what’s needed to reign in banks across the board. Seems to be a long process in fixing things, doesn’t it?

With the new credit card legislation came another new provision that effectively takes a lot of non-voluntary money away from banks.

Overdraft fees were a big thing for banks. At some point, they started charging fees to people while still paying bills if you happened to go over your limit. The same goes for credit cards, which allows people to go over their credit limit for a minimum period of time. Banks didn’t mind because they’d hit you with fees that generated more than $20 billion in revenue a year across the board.

Now that is gone. Banks have to get people to opt into the program. Some banks are being very aggressive with this, such as Chase, while others are either still working out the logistics or will probably be sending up some kind of notice in our next statements, which I’m betting the majority of people won’t even read unless it’s sent separately.

Let’s face the fact that all of us have missed this every once in awhile. A deposit didn’t clear as quickly as you thought it would and suddenly you’re hanging because the payment did clear on time. Or you bought gas after making a payment on your credit card that didn’t clear yet and suddenly you’ve gone over by a few dollars.

Do you want to accept these fees or not? The question depends on just how close to the vest you usually are with your money and whether or not you pay attention to what’s going on. If you never overdraw, or very rarely do, you shouldn’t sign up for this protection because you don’t need it. Sure, you may be shocked those couple of times if something does happen, such as being out trying to buy something and having your card decline because you don’t have enough money in the account, but that’s preferable, in my opinion, to getting hit with a big fee later on because you were never informed you didn’t have the money on your credit card to cover it.

If you overdraw all the time, or are always right next to the line, then continue paying banks for the overdraft protection. Sure, it can add up, but it’s less embarrassing than trying to pay for things and getting denied all the time.

Just make an informed decision, then live with it. but gauge how high those fees are, because banks will be raising them, as it’s just one way they can recover from all those other ways they’re cheating customers nowadays. You did know about the credit card with 79.9% interest, right?

Health care took a major beating last year in this country. Sure, I understand that the first thing the President should have concentrated on is the economy, most specifically jobs. I also understand what his position was on health care. I don’t know that either he or the Democrats in Congress explained well enough what the issues were, and the other side didn’t even try. They just wanted to beat it down because it was a Democratic proposal. Sure, I thought what was presented later on was lacking, and probably not the best plan in the world, so I’m not upset it collapsed. But at some point we need to seriously consider health care for all in this country.

Why? Two big things have come out over the past week, and both trump my recent post on Medicare Advantage Plans.

The first concerns Wellspring in California, which is also known as Anthem. It was reported that there’s going to be a rate hike of their premiums that could be as high as 39% for some of their subscribers. What they’re blaming it on, oddly enough, is that more younger people have dropped insurance coverage because it was too expensive or they just determined they didn’t want it, which leaves less money for those who are left, who are supposedly sicker, so they need to raise more money. This is a moronic thing and for them to think anyone believes it is insulting. The why it’s insulting is contained in the next paragraph.

The second thing that came out this week is that across the country, health insurers enjoyed 56% profit margins while the rest of the country’s industries suffered drastic losses. The five largest health insurers enjoyed profits of $12.2 billion. Wellspring, whom I mentioned above, recorded a profit of 91%; you saw that right, 91%!. You can bet they didn’t pass any of that money on to hospitals, otherwise it wouldn’t have been profit. And the number of people they stopped covering dropped only 3.9%; doesn’t seem like much of an offset, does it? This has prompted a call for the CEO of Wellspring to show up and talk to Congress as to how they can justify all of this.

By the way, Wellspring wasn’t even the biggest profiter in the group. Cigna’s profit increased, ready for this… 346%! Humana “only” increased a measly 61%.

I ask one more time, you sure you don’t want any kind of health care reform?

At the beginning of the week, I proclaimed that the stock market, most specifically the Dow Jones, was going to go down based on how things had closed on the previous Friday. Therefore, imagine my surprise when the Dow ended the week up close to 400 points.

It’s a funny game, this Dow, and it proves why most of us shouldn’t be in it. The news was so bad leading into the week that I figured there was no way it was going to go up. Even during the week, there was the bad news about Walmart and the negative prognosis about jobs over the next five years. Still, the Dow went up, the price of oil went up, and frankly I don’t get any of it.

Maybe it was the news that health care showed a profit of 56% for 2009 that did it. If that’s the case, then things are much worse off than I could have imagined. I still tend to think it’s a lot of speculation and faith that we’re ready to rebound, and there’s nothing in reality telling me that’s going to occur, but hey, the market went up, people made money, and I guess we’ll just have to accept that as reality.

But I’m still confused as sin.

Did you think we were done talking about health care?

A report came out this week saying that, on average, Medicare Advantage plans across the country had gone up an average of 14.2% over the past year. Although my first response is “yawn”, because I’m used to seeing those kinds of jumps o a regular basis for traditional insurance, Medicare Advantage plans don’t usually go up as fast, only increasing 5.2% last year.

For the uninitiated, Medicare Advantage plans are insurance coverage for seniors that goes above and beyond traditional Medicare coverage, or at least that’s the idea. Instead of just sticking with Medicare, which all seniors qualify for (well, that’s not exactly true, but it’s true enough for the moment), a senior can decide to pay a little bit more for an Advantage plan to hopefully gain coverage for services that Medicare might not pay for, such as foot issues. They may also reduce inpatient deductible amounts that Medicare recipients have to find the money to pay.

Medicare in general has one major rule for coverage, that being that a patient must always be getting better in some fashion. Medicare doesn’t pay for maintenance services. If a patient gets physical therapy coverage, has 10 sessions, then the therapists writes that a patient is as good as they’re going to get, but could maintain mobility with more physical therapy, Medicare won’t cover any more physical therapy, but an Advantage plan might.

Still, even with the government ponying up some of the money for the Advantage plans (oh yeah, since these patients opt into the private plan instead of Medicare, the government pays the insurance company some money to help defray the costs, which is why the plans are attractive to both patients and the insurance company), thus helping to keep the amount seniors have to pay down, seeing that there was such a dramatic increase last year points out just how much health care coverage costs are rising, and why some were hoping for an overall government health plan although, to be truthful, it might not have made much of a difference for seniors.

This is why the debate on overall health care coverage in this country still continues.

Would you trust this guy? Seems a lot of people did, to the tune of more than $1.2 billion dollars that are now gone. And this guy, Scott Rothstein, is heading to jail for probably the rest of his life, or at least 25 years of it, giving up all his assets of $300 million, putting his wife and children out on the street, and singing like a canary as to how he did it all, pulled off his own version of a Ponzi scheme.

Talk about a Bernard Madoff wannabe. This guy was big; he’s got pictures with celebrities and politicians. He was truly living the high life, and he wasn’t hiding himself like Madoff kind of did. He was giving all sorts of money away, as well as helping to raise other money. Of course, it turns out none of the money was his to give away, and many of those charities are having to give it back.

Of all things, he wasn’t even a financial guy like Madoff was; he was a lawyer. He didn’t tell people he was investing money that he was never going to invest. Instead, he told people that he had clients waiting for settlement money who were willing to accept less of it if they could get a lump sum payment now. As in, tell someone that a client was waiting for a $500,000 payment to come in, but would accept $250,000 and when the lawsuit was settled the donor would get the $500,000, making money on the deal. Those are my figures, but that’s how the scam was run. Of course, the more investors he got into it, the more he could pay certain people off.

Of course, it didn’t stop there. He then told these guys that instead of just taking the money, to let him invest their money in a hedge fund, where they could make even more money. You guessed it; no hedge fund. All money again came from new investors.

So, they’re now selling off his stuff, knowing that there’s no way they’ll ever come close to the amount of money he got from all these other people. However, unlike the investors in Madoff, this time I believe the people were stupid and greedy. I can’t imagine giving someone money for anything like this unless I got to meet the clients and saw the paperwork for the lawsuit, which they didn’t get to do. So trusting and naive; who said rich people were intelligent?

On Monday, the CARD law that was passed last May finally goes into effect, which is supposed to offer lots of protections to Americans that these greedy banks have been throwing at us. Well, at least things the law addressed before banks had time to change some things up before this law went into effect anyway, none of them good. It’s going to be a dicey road, that’s for sure.

What do we have to look forward to? One, there will probably be very few 0% interest rate offers anymore. That’s because one trick banks used to do was to get you into that interest rate, then raise it after six months to the rate that your other balances were at if you hadn’t paid it off, or jacked everything up if you were even one day past payment or if you had gone over your credit limit. Since they can no longer do that, they have no incentive to give you that introduction anymore.

Something else you can start expecting are more bank fees, and they’re probably going to be higher than they used to be. I don’t actually have a problem with that, since it’s better than floating interest rates, and at least you know what you’re paying for the right to use a card. I do have a problem with some of the ways they’re going to have fees. For all you people who have been used to paying your credit card balances off every time you got the bill, there will now be a fee for that, since they can’t make any money off you from interest.

Oh yeah, interest rates will be going up for new card requestors. I doubt you’ll see 4.9% interest rate cards anymore because banks need to make money from things since they can’t do some sneaky stuff anymore like just closing your account or raising your interest rates without really informing you that they’re doing it.

It’s definitely about to turn into a ‘buyer beware’ game when it comes to credit cards. Make sure you read everything before you apply, then obtain, a new card, and if your credit card bill shows up and is a little thicker than the previous time, check it to make sure there’s nothing new you’re being hit with as well.

This is a guest post by Raine Parker

We’ve all been there. Credit card companies or banks make an enticing offer with a low introductory interest rate and a credit limit that’s half your annual income. Before you know it, you’re in debt for thousands of dollars with no idea how to get out of the hole you’ve dug for yourself. I won’t lie: It’s going to take some hard work. But don’t panic. If your debt feels like too much to handle, here’s what to do.

First, stop adding debt. This might seem obvious, but some people continue to use their credit cards for minor purchases, despite owing a mountain of cash to creditors. It doesn’t matter how small the amount; more debt is more debt, and that’s a bad thing. Cut up the cards right away.

Next, you’ll need to set up a plan to manage and pay down the debt. Just because you’ve destroyed the card doesn’t mean you’re in the clear. One method that’s helped me out is the snowball method, which works well if you’re dealing with revolving debt like credit cards across multiple accounts. The basic plan is to pay off the smallest debt first and then roll that payment over — like a snowball rolling downhill — onto the next-smallest payment, moving on until you’re debt-free.

Here’s an example. Let’s say you have debt racked up on three credit cards, with balances of $1,000, $2,000, and $6,000. In addition to paying the minimum monthly required amount on each one, commit to putting as much extra cash as possible toward the smallest debt owed, in this case, the $1,000 amount. If your required payment on the small debt is $100 and you pay $200 a month, that’s great. When the debt is gone, you add that $200 to the monthly payment on the next-highest debt amount (in this instance, the card that began with a $2,000 balance). You’ll be paying much more than the required amount, and you’ll be using the cash you’ve already budgeted for debt reduction so you won’t feel like you’re sacrificing essentials or going broke trying to get out of debt. Don’t be discouraged if this takes time. The point isn’t to get out of debt overnight, but to do it responsibly and with a method that’s shown results.

However, that might be too much for some people. Maybe the debt is too high, income is too low, or there are just too many problems. If that’s the case, you might want to consider contacting Consumer Credit Counseling to help you get your debt under control. Always do your research on debt counseling organizations, though. Some of them are just scams designed to put you in deeper than before.

The important thing to remember is that it’s never too late to recover. Stop accruing debt and start making smart decisions to reduce it, and you’ll be able to breathe easy once again.

This guest post is contributed by Raine Parker, who writes on the topic of accounting degrees. She welcomes your comments at her email address, raine.parker6@gmail.com.

Today the Dow Jones was closed for President’s Day, but tomorrow it will open with a flourish, and the questions are which direction will it head after losing ground on Friday, although rallying back above 10,000 before the end of the day. I don’t do this often, and I hesitate to do it now, but I’m going to make a prediction as to how the markets will fare this week.

First, to get this out of the way, I think the market is going down this week. I don’t think it will fall drastically, but it will be lower by Friday than it will open tomorrow. I wouldn’t be overly surprised if it falls to 9,500 by Friday, but that would really be pushing things.

Let’s look at why I believe this. Let’s start with Toyota, which is now in freefall. I think they need to be lucky there was a holiday, otherwise I think today would have been ugly after announcing that they’re now going to have a recall on trucks. All the pretty commercials aren’t going to overcome this mess, even if there are a few people saying they’re standing by their cars. It’s also going to be interesting to see how Honda stocks shore up after they announced some problems with some of their vehicles as well. Seems American cars weren’t so deficient after all.

Next, the price of oil went down to around $74. Oddly enough, this is related to debt worries in Europe, especially thoughts about how to bail out Greece, which most of us didn’t even know was in financial trouble. It really is a world economy these days.

Valentines Day sales were down this year because of the bad weather across the country. Actually, that sounds funny coming from me, because the weather here in the Syracuse area was pretty consistent with what we normally expect, though our snow totals are down so far this year. But the rest of the country isn’t used to this and doesn’t know how to clear it out, so it impacted holiday shopping, those folks who are late to buying for holidays such as this one, so that’s going to be a bad report.

Wall Street overall is also worried about potential Congressional bills that are being worked on to heavily tax those people who are scheduled to get big bonuses once again. Last March I wrote against Congress doing things like this, saying they were ready to cross a dangerous line and I still take that position. I never blame anyone for money they’ve been promised, though I blame the companies for doling these things out in a bad economy. Passing legislation against a small group of people is still bad policy.

And finally, traders are worried because China has decided to slow down its rate of loans and hold onto some of its own money. They’re worried that this might be indicative of a slowdown of the Chinese economy, and as one of the biggest trading partners in the world and a major consumer of goods, especially energy, that news has made them shaky.

Anyway, none of that adds up to good things for the Dow this week. Of course, who knows what other kind of news might be coming, but I’ll see how my prediction holds up.

Once again, no one can be surprised by this move, after so much bad financial news and negative press. Citigroup and Bank of America got more bad news last week when their bond rating was downgraded from “stable” to “negative” by Standard & Poor. The initial outlook on both banks is that they’re still shaky, and if they needed to be bailed out again by the government they might possibly tank; my words, not theirs.

At the same time, Bank of America did get kudos saying that they seem to have the best chance to be stable as time goes on. S&P stated that Bank of America has “significantly improved its capital position during the past year and kept its liquidity strong, (though) earnings remain severely pressured.” As for Citigroup, they stated they believe Citigroup’s stand-alone position has improved, while also saying “”increased uncertainty about the U.S. government’s willingness to provide additional extraordinary support to highly systemically important financial institutions in a way that will benefit debt holders.”

What does all of this mean? It means that S&P is worried that these banks might not be healthy enough to totally go it on their own without the possibility that the government might feel compelled to help out in some fashion again, and they’re unsure, based on legislation that was passed last year, if that could occur in the first place. Supposedly the government can step in to help a company pretty much liquidate itself, but only if it’s in a bad debt position. Could the government break up both of these banks like they did AT&T many years ago, but for a much different reason?

It also means that S&P, though worried, believes that if both bank institutions will hold steady and not take unnecessary chances, while shoring up the areas in which they’re losing money (such as credit cards, where it’s predicted that both will probably continue big losses as long as unemployment doesn’t improve) that they could survive, since the biggest worry is both banks being able to continue to pay on their own debt.

Personally, if they had to be broken up I wouldn’t shed a tear; no, I still don’t trust them, even with Citigroup’s new idea on how to eases foreclosures. But that’s for another time.

This can’t be a surprise to anyone, but yesterday, the Dow Jones closed at 9,908.39, falling 104 points from last Friday. Supposedly, the market is falling because of three reasons. One, President Obama wants there to be a bit more regulation in watching what these guys do. Two, foreign markets have been erratic, especially with there being many worries about the Chinese markets and what’s going on in Dubai. And finally, supposedly many of these guys thought that our economic recovery was going to be better than it is, so there had been a lot of optimism, which inflated the market without any proof that it was on its way back, and now it’s falling back to where it probably should have been anyway.

Let’s look at this realistically, if we can. First, President Obama is absolutely correct, and all we need to do is look at how Bernie Madoff and others pulled off Ponzi schemes to realize that the market hasn’t figure out how to take care of itself. If we need more proof, look how far the market fell last year, almost going below 6,500. And finally, what’s with the price of oil, and the way these people speculate on it? Suddenly it’s falling again; why? I’m not mad because I love gas prices coming down, but there’s no real reason for it to be falling now, just as there was no reason for it to have gone up the way it did in the first place.

Second, this reliance on what’s going on in foreign markets needs to calm down. Anyone who didn’t know that Dubai was spending its way into trouble wasn’t paying attention. Anyone who is suddenly shocked with China’s finances and how they do things hasn’t been paying attention. There is literally nothing I see going on that shouldn’t have been expected by anyone who does a lot of stock market work, and that’s easily not me. These brokers take some major chances with our money, get it wrong, then get scared; that stuff has to stop.

Third, economic recovery; come on. I’ve written about this one often enough; unemployment really hasn’t come down, even if the percentage dropped, because there are no jobs. Jobs keep getting lost and there’s nothing replacing them; just where was this economic recovery everyone keeps waiting for supposed to come from? That, plus banks keep closing, foreclosures keep occurring, and there’s still this big negative prediction about the commercial real estate market. These guys are consistently grasping at straws; if we, the supposedly uninitiated, can figure this out, why can’t these high priced traders?

Wehre will the market go fro the rest of the week? I’m not sure, as I’ not a broker. I will say this, however. If it falls throughout the week, I won’t be surprised. After all, it seems like these guys are more like lemmings than true evaluators. And, truthfully, I think the market’s high was false anyway, so maybe it needs this bit of readjusting to get back to where it was supposed to be in the first place.

Man, when it’s time to pile on…

On Thursday the Attorney General of New York, Andrew Cuomo, who might be running for governor of the state later in the year, charged former CEO Ken Lewis with fraud as it regards Bank of America’s purchase of Merrill Lynch at a time when the banking industry was in trouble, and B of A was near the top of that list.

In essence, the lawsuit believes that B of A made the purchase at that time because they knew the government might be able to bail them out of any financial difficulties, in essence using the government’s money to help them fund the purchase so they could then pay out big bonuses to former Merrill Lynch employees. It also claims figures were fudged that didn’t show in full just how bad a footing Merrill Lynch had financially, and some other improprieties.

This is something different for the Attorney General, who usually goes after corporations for bad behavior committed in New York, where Bank of America’s offices are located. This is a civil lawsuit, which means that Lewis won’t have the benefit of corporate lawyers, ergo unlimited funds, to help his case.

This blog wasn’t up when all of that was going on, but I had wondered at the time what B of A could be thinking in absorbing Merrill Lynch when everyone knew they were in trouble themselves. The idea of adding someone else who’d in financial trouble just didn’t make much sense, and pretty quickly after it was all done, Lewis resigned. It all looked suspect, but legal at the time.

Of course, Bank of America doesn’t totally get off the hook here. While the present CEO has no liabilities thrown upon him, they will have to pay $150 million to their shareholders because of the previous false information, along with some other changes as it regards shareholders and their rights as voting members. Supposedly, they had initially told the shareholders that no bonuses would be paid out to Merrill employees.

The big banks just keep digging bigger and bigger holes for themselves. Is it any wonder that we’re leery of them?