Cambridge Press Releases

FEDERAL RESERVE CUTS PROBLEM SOLVED? NOT REALLY

Thu, 04 Oct 2007 10:10:26 EST

Cuts to the lending rate akin to throwing an anchor to a drowning man�

Agawam, MA - Wednesday, September 19, 2007 - On Tuesday, the Federal Reserve cut the target on a key short-term interest rate by a half of a percentage point, to 4.75%.� This was a tactical maneuver to help lessen the damage from the sub-prime lending debacle; however, it does little to help most Americans, who are already struggling with $850 billion dollars of credit card debt on their shoulders. The fact is, this cut will do little or nothing to help the majority of� �the little guys.�

�In all reality, this rate cut can be viewed as a godsend to investors, but the average American won�t feel much relief,� notes Christopher Viale, president of Cambridge Credit Counseling Corp. �In the end, consumers may only receive a $4 to $6 dollar reprieve on their monthly credit card interest payments.�

More than 86% of credit card accounts are based on variable interest rate formulas that should adjust with the current cuts.� However, if history holds true, little will change for many credit card holders.� �Between 2001 and 2003, the Federal Reserve dropped rates dramatically; in total, the prime rate fell more than 400 basis points.� continued Viale.� �Sadly, credit card issuers reduced their rates by only an average of 2% for consumers.��

Further complicating matters is the desired result of such interest rate cuts.� The lowering of interest rates is intended to bolster consumer spending on bigger ticket items such as automobiles and homes. In effect, the rate change is supposed to make consumers more comfortable so that they�ll borrow more and spend more.� But making it easier to borrow is, in part, what brought about the sub-prime lending disaster in the first place.

�These changes are designed to help us stave off a recession, basically, protecting the investments of the wealthy,� asserts Viale. �More serious moves need to be considered if we want to save our poor and middle class.�

About Cambridge Credit Counseling Corp.

Cambridge Credit Counseling Corp. is a professional credit counseling agency dedicated to educating young adults on the importance of sound financial management and providing financially distressed Americans with education and debt management services appropriate to their needs.� For more information on this article or to schedule an interview, please call 413-821-6919.�

Visit Cambridge Credit Counseling Corp. online at www.cambridgecredit.org.� To learn more about Cambridge Credit Counseling Corp. and the community, please visit www.youtube.com/CambridgeCredit.� For more helpful information, check out the Cambridge Credit Counseling Corp. Financial Literacy blog at www.cambridgecredit.blogspot.com.

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SAVINGS: THE WORST THING AN AMERICAN COULD DO?

Thu, 04 Oct 2007 10:10:57 EST

�Federal Reserve cuts negatively affect the average American�s ability to save

Agawam, MA - Friday, September 21, 2007 - Many investors were excited recently by the news that the Federal Reserve had cut interest rates; however, average Americans may not fully realize the impact these cuts may have on their wallet.� There will be some winners � some homeowners with adjustable rate mortgages, for example, but there will be losers as well - those with Certificates of Deposits and traditional savings accounts.�

�Interest rate cuts not only affect the amount a consumer is charged to borrow money, they also tempt people to go out and make additional charges, reducing any inclination they may have had to actually start saving money,� notes Christopher Viale, president of Cambridge Credit Counseling Corp. �Our national savings rate is negative 1%, meaning that we�re consuming more than we earn.� In light of this fact, these cuts do little to promote the establishment of healthy savings.�

Americans used to save nearly 10% of their income every year, but that mark fell into the negatives two years ago. Why?� A major factor is the amount the average consumer spends servicing credit card debt, roughly 11% of their disposable income.� In looking at the move the Federal Reserve has made, essentially soliciting consumers to get further into debt, one wonders - will a focus ever be put on savings?

�When a person is committed to establishing savings, they become more disciplined with their money,� observed Viale. �That commitment promotes a realistic attitude toward finances that helps individuals live within their means and not beyond them.�

At one time in America, a homebuyer couldn�t get a mortgage without a significant down payment, traditionally 20%.� In recent years, however, mortgage companies began offering 100%, or even 110% financing.� In the absence of the 20% requirement, prospective homebuyers quickly got out of the habit of saving, and now many struggle to save even a minimum down payment of 5%.� For an average home worth $250,000, for example, a 5% down payment would require a deposit of $12,500.� But even that modest figure would be beyond the reach of Americans whose savings mentality eroded during the years of easy credit.

�Placing an emphasis on savings could have prevented the turmoil facing the American markets today,� concluded Viale.� �If consumers understood that building savings is a necessary component of the American Dream, more people would take it seriously, and they�d be able to avoid the predatory practices of disingenuous lenders looking to profit at their expense.�

About Cambridge Credit Counseling Corp.

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A COLD WINTER IN STORE FOR IDENTITY THIEVES

Thu, 04 Oct 2007 09:59:12 EST

Major credit reporting bureau to offer a “freeze file” option to combat identity theft.

Agawam, MA - Monday, September 24, 2007 - One of the fastest growing crimes in America is identity theft, the act of stealing someone’s personal information to establish counterfeit credit accounts. Until now, consumers have had few allies to help defend themselves and their good credit, but help is on the way from TransUnion, one of the country’s three major credit bureaus.

The so-called “freeze file” option, scheduled to be introduced by TransUnion this October, will allow consumers to restrict lenders from accessing their credit profile. The goal of the program is to provide protection to unwitting consumers if identity thieves attempt to establish credit in their name.

“Far too many victims have been claimed by identity thieves,” according to Christopher Viale, president of Cambridge Credit Counseling Corp. “Beyond the laws that have already been enacted, we are happy to see TransUnion offer such a powerful tool to consumers.”

Several states regulate the freezing of a credit profile, but TransUnion intends to meet or exceed the requirements of those laws. In states that do not currently offer such protection to consumers, TransUnion will provide free file-freezes to all victims of identity theft, and for a nominal fee to non-victims who want the additional security.

“These steps will definitely make it harder for identity thieves, and it may cause them to target consumers who don’t have a freeze on their account,” notes Viale. “Education is the key to combating these crimes, and consumers should be aware of what to do if they fall victim.”

Cambridge Credit Counseling offers this advice to consumers who believe they may be the victim of identity theft:

1. Contact the bank, creditor or lender associated with the account that you think has been used fraudulently. Work with these institutions to lock the account and investigate the damages.

2. Contact the three major credit reporting bureaus.

Equifax: To report fraud, call 800-525-6285, or write to P.O. Box 740241, Atlanta, GA 30374-0241
Experian: To report fraud, call 888-EXPERIAN (397-3742), or write to P.O. Box 9530, Allen, TX 75013
TransUnion: To report fraud, call 800-680-7289, or write to their Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92634

3. Call the FTC’s toll-free Identity Theft Hotline at 1-877-IDTHEFT (438-4338).

4. If your case is serious, file a police report to document the identity theft. You may need a copy of the report to submit to the credit reporting agencies or financial institutions as proof of the crime.

About Cambridge Credit Counseling Corp.
Cambridge Credit Counseling Corp. is a professional credit counseling agency dedicated to educating young adults on the importance of sound financial management and providing financially distressed Americans with education and debt management services appropriate to their needs. For more information on this article or to schedule an interview, please call 413-821-6919.

Visit Cambridge Credit Counseling Corp. online at www.cambridgecredit.org. To learn more about Cambridge Credit Counseling Corp. in the community, please visit www.youtube.com/CambridgeCredit. For more helpful information, check out the Cambridge Credit Counseling Corp. Financial Literacy blog at www.cambridgecredit.blogspot.com.

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AN ACCIDENT WAITING TO HAPPEN

Thu, 04 Oct 2007 10:07:32 EST

The growing use of credit scores to determine insurance premiums threatens consumers

Agawam, MA - Thursday, September 6, 2007 - Credit scores have traditionally been used to determine the creditworthiness of applicants for financing. Lenders routinely use scores to establish the likelihood that payments will be made on time, and that loans will be repaid in their entirety. In an increasing and controversial trend in the automobile insurance industry, however, major agencies are using the credit scores of their clients to establish policy premiums.

“Agencies aren’t using these numbers to determine whether someone will pay on time, but rather, to speculate about the number of claims someone is likely to file, and the resulting costs of such claims,” observes Christopher Viale, president of Cambridge Credit Counseling Corp. “The use of insurance scoring can unfairly result in higher premiums, putting individuals in a difficult position when they’re putting together their monthly budget.”

Among the concerns of industry leaders is the fact that no independent studies have been conducted regarding the reliability of using credit scores to set auto insurance rates. In addition, there are approximately 50 million Americans with limited or no credit history at all. And for those who do have credit profiles, there’s another alarming fact to contend with: 70% of all credit reports are estimated to contain errors.

“Utilizing the old methodology, which factored in the type of car you drive, your age, driving record, how far you drive back and forth to work, marital status, and where your cars are garaged, makes complete sense,” says Viale. “However, using a score that is, at times, nonexistent or unreliable is problematic. Consumers should regularly review their credit scores anyway, but especially in states where this practice is allowed.”

Insurance agencies are required to review the credit history of each policyholder every two years, but clients can also request that their insurer review their report once during a policy term. Following such a review, the insurer can only give an individual the benefit of any improvement in their credit history. The review cannot be used to increase premiums in the event that an individual’s credit profile has deteriorated since the original application for the policy.

About Cambridge Credit Counseling Corp.

Cambridge Credit Counseling Corp. is a professional credit counseling agency dedicated to educating young adults on the importance of sound financial management and to providing financially distressed Americans with education and debt management services appropriate to their needs. For more information on this article or to schedule an interview, please call 413-821-6919.

FORECLOSURES: IF YOU THINK 2007 WAS A BAD YEAR FOR HOMEOWNERS, JUST WAIT

Wed, 29 Aug 2007 15:52:57 EST

Adjustable Rate Mortgages poised to cause further harm to consumers in 2008

Agawam, MA - Thursday, August 23, 2007 - The worst may be yet to come for homeowners who have adjustable rate mortgages. In 2008, 680 billion dollars worth of adjustable rate mortgages will reset. These are loans that originated between 2004 and 2006, when lending practices were lax, at best. When these mortgages reach their adjustment date, payments will increase by a whopping $500 to $1,500 monthly.

“The other shoe is set to drop, and the time to plan for increased mortgage payments is now,” urges Christopher Viale, president of Cambridge Credit Counseling Corp. “ I cannot stress enough – many homeowners will be faced with staggering financial challenges in the coming year; challenges that need to be addressed before the harm is done.”

In order to develop a plan to deal with an increased monthly payment, experts recommend a thorough evaluation of income and expenses. The focus should be on identifying areas where cuts in spending can be made to accommodate rising costs.

Viale’s company, Cambridge Credit Counseling, has been counseling consumers for more than a decade, helping people analyze areas of their budget that require attention. According to Viale, “The key to meeting any emerging financial concern is to evaluate where cuts are necessary. By taking a hard look at all areas of your financial life, you can eliminate the types of spending that diminish your ability to meet more immediate concerns.” His staff works closely with consumers to help them appreciate the importance of journalizing expenditures - a practice that exposes problematic spending habits. Once these habits have been recognized and addressed, individuals can reprioritize the way they allocate their hard-earned money. Cambridge’s proactive approach has helped an impressive 90.6% of the organization’s clientele reduce unnecessary spending.

Viale urges the public to take the proper precautions if they face increases in their monthly mortgage payments. “There are many tools available on the Internet that people can use to establish a budget. Our financial wellness website, GoodPayer.com, has a tremendous amount of information, financial tools and workbooks available, and they’re all free to the public.”

About Cambridge Credit Counseling Corp.
Cambridge Credit Counseling Corp. is a professional credit counseling agency dedicated to educating young adults on the importance of sound financial management and providing financially distressed Americans with education and debt management services appropriate to their needs. For more information on this article or to schedule an interview, please call 413-821-6919.

DOORS TO HOMEOWNERSHIP SLAMMING SHUT TO BAD CREDIT BUYERS

Wed, 29 Aug 2007 15:44:58 EST

In the wake of the sub-prime fallout, buyers have an uphill battle to purchase a home.

Agawam, MA - Friday, August 17, 2007 - The dream of homeownership is fading fast for those with less than perfect credit, the result of recent troubles within the sub-prime lending market that have led creditors to begin tightening their lending practices. For the foreseeable future, many prospective homebuyers should seek out professional counseling to improve their credit profile in order to qualify for affordable mortgage interest rates.

“These problems arose because of loose lending practices that allowed people to secure mortgages when they were not financially prepared for homeownership,” notes Christopher Viale, president of Cambridge Credit Counseling Corp. “The industry knew there would be problems, they only looked at their own bottom lines and not at those of their customers.”

For those considering a home purchase in today’s environment, Viale cautions that credit is just one part of the puzzle when it comes to buying a home. Home shoppers need to look at much more when deciding upon their dream house. “Any major undertaking requires a solid plan in order to be successful,” continues Viale. “If your interest rate is going to adjust in a year or two, you need to prepare by developing spending and savings plans. Many of the people in trouble now may have avoided foreclosure if they had prepared a household budget that set aside money for the periodic increases called for in their mortgage.”

Viale recommends the following crucial steps to build a solid approach to homeownership:

Review your credit
More than half of all credit reports contain errors. To ensure that your report is accurate, order a copy of each of your credit reports from TransUnion, Experian, and Equifax. When you receive your reports, review the information closely. Be on the lookout for accounts that may not be yours, and make sure that your creditors have reported your payment history correctly. If you find inaccurate or incomplete entries, there are steps you can take to correct them.

Become a stronger lending candidate
If you’re behind on any of your credit accounts, get current and stay current. Look for ways to reduce your overall debt, especially on accounts that are charging high interest. You can also open new accounts to help build your credit profile, but do so slowly, and remember, if you open a new account, you must make your payments on time. Continue to monitor your credit score, and don’t apply for a mortgage until your score is in the range that will qualify you for a reasonable interest rate.

Be realistic
Many of today’s housing problems stem from the fact that lenders believe an affordable monthly mortgage payment can be calculated by using an individual’s gross income, that is, the income before taxes and other deductions are taken out. Since that money never actually reaches your pocket, you shouldn’t consider it available to help pay your mortgage or any of your other expenses, either. Instead, you should think in terms of your net income - what you actually bring home. Your lender may qualify you for a mortgage with an $1,100 monthly payment, but if you can only afford to pay $800, stick to that figure.

And bear in mind…
Your new situation will bring about significant changes in your finances. Your mortgage payment will generally be higher than the rent you were paying, you’ll likely have higher utility costs, and you won’t be able to call the landlord anymore if something goes wrong. You’ve got to create a plan that accounts for all of the new expenses you’ll have, and you’ll need to set aside money every month to build a fund for emergencies.

SAVE SOME GREEN BY THINKING GREEN

Wed, 29 Aug 2007 15:45:23 EST

Avoiding impulse purchases can help your wallet and the environment.

Agawam, MA - Wednesday, August 15, 2007 - Global warming has been the focus of a great deal of attention recently, from full-length documentaries to world-wide concert broadcasts urging consumers to “think green.” But what if there were a way to help the environment and save money in the process? Well, there is and it’s quite simple – avoid impulse purchases. That’s the simple but effective message offered by environmentalists and personal finance experts alike, including Cambridge Credit Counseling’s president and CEO, Christopher Viale.

“Every day, advertisers urge consumers to spend their money on the newest, most advanced products, and many people have difficulty resisting such temptations. That’s because shoppers typically focus on their wants, not their needs,” Viale noted recently. Beyond such unnecessary spending, however, is the obvious fact that every MP3 player, laptop, PDA or other gadget has to come from somewhere on the planet, and additional energy must be expended to bring these products to market. Despite the best efforts of manufacturers and shippers, there are tremendous amounts of waste involved in the processes that create and deliver the goods we seem to think we can’t live without.

For example, the creation of a desktop computer requires more than 700 different materials, including metals that must be mined, oil that has to be extracted from wells, and chemicals that must be produced in factories. The manufacturing processes that combine these resources also require large amounts of energy, mostly involving the burning of fossil fuels. This often results in the release of CO₂ and other pollutants into the air, contributing to the planet’s natural greenhouse effect. In fact, for every pound of electronics in a typical computer, an astounding 8,000 pounds of solid and liquid waste are created!

According to Viale, “Analyzing your wants and needs not only helps curb your reliance on credit, it can also be good for the environment. Consumers who buy products on impulse should take a moment to think about the true impact of their spending. They may realize that they can do without certain purchases.”

Despite America’s obvious appetite for the latest in technology, cost effective upgrades to existing products can often prolong their usefulness. “By committing to maintaining your current level of technology, you’ll also limit your ancillary purchases as well,” Viale advised. “If you decide to pass on an iPhone, you also won’t need to spend $.99 for every music download or $1.99 for movies offered through the device. You can decide to simply use your current phone for its most basic use - receiving and making calls.”

About Cambridge Credit Counseling Corp.

Cambridge Credit Counseling Corp. is a professional credit counseling agency dedicated to educating young adults on the importance of sound financial management and providing financially distressed Americans with education and debt management services appropriate to their needs. For more information on this article or to schedule an interview, please call 413-821-6919.

BROTHER, CAN YOU SPARE A MILLION?

Wed, 29 Aug 2007 15:45:51 EST

Consumers are Saving at Depression-Era Levels, but Spending like Rockefellers

Agawam, MA - Friday, August 10, 2007 – Every morning, millions of Americans drive off in their SUVs and minivans, stopping off at their local coffee shop for a $4 latte before making the commute to work. Later on, they’ll return home to their McMansions, living the American Dream in the glow of their flat screen TVs. Once a month, though, they’ll have to face their bills. A quick check of the bank balances of these outwardly prosperous individuals reveals a disturbing fact: they have almost no money set aside in savings.

“In 2006, Americans saved negative 1% of their disposable income and spent roughly 11% to service their credit card debt.” reports Christopher Viale, president of Cambridge Credit Counseling Corp. “To put this in perspective, Americans today are saving money at the same rate as people saved during the Great Depression, when money was scarce. This shouldn’t be the case, because we have tremendous opportunities to build wealth in the current economy.”

Though Americans have reached a record $894 billion in credit card debt, there may be a sharp decline in spending in coming months, the result of tightening credit policies across the board in the wake of rising mortgage foreclosures Then, as credit becomes harder to obtain, people attempting to live a credit-based lifestyle will be forced to redefine their wants and needs. This won’t necessarily be a bad thing, since it’s those misplaced priorities that have put many Americans in jeopardy.

“As we’ve seen with the recent woes in the sub-prime lending market, consumers have been slowly getting into trouble,” Cambridge’s Viale noted. “They’ve been lulled into a false sense of financial security, and many have had, or will have, their lifestyles swept out from under them. We’ve become so accustomed to instant gratification that we’ve forgotten the golden rule of savings. People should save, at the very least, five percent of their disposable income. They should also establish an emergency fund equal to three months of their income if they’re single, or six months if they have a family.”

SENIORS GAMBLE THEIR RETIREMENT ON RISKY BUSINESS

Wed, 29 Aug 2007 15:46:48 EST

Cambridge Credit Counseling Corp. Warns Retirees:
Do Your Homework When Using Retirement Funds as Start-Up Capital.

Agawam, MA - Thursday, August 09, 2007 - Instead of playing shuffleboard or golfing in Florida, many recent retirees are engaging in a more dangerous activity - entrepreneurship. An increasing number of seniors are opting out of the traditional retiree lifestyle to become players in the 21^st-century economy, choosing instead to start businesses ranging from dry cleaners to sandwich shops. Experts are worried, however, that they’re often using portions of their retirement funds to get things up and running.

While these authorities recognize the importance of a healthy and fulfilling lifestyle, starting a business is notoriously risky. Statistics show that two-thirds of all new businesses fail within the first few years. When retirement funds are used as seed money, the risk may outweigh the anticipated return. “It’s recommended that individuals set aside 80% of their annual income for each year of retirement,” advises Christopher Viale, president of Cambridge Credit Counseling Corp. “With our rising life expectancy, people naturally need to increase the amount of their retirement savings. Using the money it has taken decades to save is quite chancy. It’s fantastic that seniors want to contribute to the economy, but I would advise that they seek guidance from as many business experts and community sources as they can before they invest in a new business, to see if that option is viable for them.”

How can you ensure that your investment is worth the risk? Cambridge offers this advice to retirees looking to start their own business:

Write a business plan: Writing a business plan is a good way to see if your idea is realistic, and it will force you to conduct valuable research. If you discover that the local market is over-saturated or that businesses similar to yours have failed, it can save you a tremendous amount of money.

Immerse yourself in your chosen industry: You’ll need to become an expert within the industry you’ve chosen. Join related industry or professional associations before you start your business to get the edge you need.

Get professional help: Talk to your local Small Business Association (SBA), a personal Financial Planner, your Tax-Accountant, basically anyone who can offer the support you need in your venture.

Seek alternative financing: Your idea may be attractive to other investors. Consider applying for an SBA loan or bank loan before tapping into your valuable retirement savings.

As with any aspect of personal finance, it’s best to be prepared for every outcome. Starting your own business can be rewarding, but you don’t want to jeopardize your retirement savings by investing beyond your capacity for loss.