Even with everything that is going on in the mortgage and real estate industry, access to credit sources hasn’t completely dried up. And depending on your personal financial situation it may still benefit you to look into various credit opportunities. With interest rates still being low, you may want to look into a refinance either to lower your current rate or to fix an adjustable rate. You also might want to look into a Home Equity Loan in order to consolidate other higher rate debts.

You can check out CountryWideCredit.com and find various guides and other information about these types of loans. You can also find information about other related financial topics on the site including information about what goes into your credit score. Check out the site if you’re looking for ways to reduce and eliminate your debt and improve your overall financial situation.

I think it would be a valid assumption to make that most people are carrying some form of debt. From mortgages, car loans, student and personal loans, to credit cards, their are a lot of ways that you can get yourself in debt. Unfortunately there aren’t as many different ways to get yourself out of debt. Let me be perfectly clear with this:

The only way to get out of debt is to pay back the money owed.

I’ve seen and heard many different plans or tactics that are supposed to help get people out of debt, but they at best de-emphasize the fact that you have to pay back what you’ve borrowed. You can do 0% balance transfers from credit card to credit card, and while this can lower the associated finance charges, it does nothing to reduce the actual balance owed. You can also take out some sort of home equity loan to pay off and consolidate other debt, but this again doesn’t actually reduce any outstanding balance. It’s merely another way to shift the debt and reduce finance charges.

Many people are also wanting to refinance their homes, which can be a good move depending on the reasons behind it, but it may not be the best thing for your finances. If you’ve had your mortgage for a number of years and decide to refinance, it’s very possible that you could lower your monthly payment. Just remember that you’ll also be pushing the final payoff date further into the future and in turn paying even more in interest.

Whatever fancy tactics and strategies you may hear about that are supposed to be some debt elimination magic pill, remember that the only way to eliminate your debt is to actually pay off the originally borrowed principal balance.

We dropped one of our cars off at a friend’s place today who is going to replace the brakes on it. I’ve known for a while now that the rotors would need to be replaced and not just the pads since they couldn’t be machined anymore. So why am I bringing this up?

Typically people are not excited when it comes to car repairs because just another thing they need to do and it’s going to cost money. Now, while I don’t enjoy car repairs myself, I don’t really get all that upset over them either. One of the reasons for this is because we own both of our cars outright. General maintenance is something to be expected, and it’s easier to pay for when we’re not having to make monthly car payments.

It also helps that we have built up a decent cash reserve and don’t have to worry about some maintenance problem throwing our finances out of whack. Having an emergency fund definitely helps with a financial peace of mind.

I’m also not tempted to go cheap on purchasing the new parts that need to be replaced. We plan on owning our cars for the foreseeable future, and I’d rather purchase quality parts that will increase the lifespan of the car instead of just trying to get by with something that will work for now. I understand this is a matter of opinion, but this is how I see it.

So working towards actually having your cars paid off and being comfortable driving them for a while, even though they may not be the most stylish, is certainly a goal worth pursuing. It increases your monthly free cash flow and allows you to pursue other options with your money. If paying off your cars and maintaining them isn’t a goal of yours currently, you may want to consider making it one.

I’ve heard a lot of talk recently about credit cards, specifically about the rates going up. While this isn’t anything new (credit card rates are always fluctuating) it is, and will be, cause for concern for many people carrying balances on their credit cards. The amount of interest that you will pay will increase and the time it takes to pay them off will also be extended. In order to avoid these extra charges and pay your debt off sooner, you may want to look to balance transfers. But you’ve got to be careful doing this because you could end up paying even more.

So many cards out there are offering very low balance transfer rates that it shouldn’t be too difficult to find one. Probably the most important aspect I look for (other than the length of the promotional period) is whether or not there is a fee for doing the transfer. Most of the offers that I get in the mail charge a 3% fee just for doing the transfer. Depending on how quickly you think you can pay off the debt, this may or may not be worth it. You will have to decide.

So once you’ve made a balance transfer, make sure that you don’t use the card again until you’ve paid it off in full. The reason for this is because credit card companies charge different interest rates on different balances depending on how they’re categorized. You’re balance transfer can be 0%, new purchases at 17%, and cash advances at 22%. The rub comes in how your payments are allocated. Any payment you make will be applied to the lowest interest rate first which as we know is completely opposite of how you would like it to be done.

So even if you pay off the amount of all new purchases in full every month, you’re actually paying off the 0% interest balance transfer and accruing interest on the new purchases at 17% (in this example). This is why you should never make any new purchases on a card to which you’ve made a balance transfer. It’s simple enough not to do, but the credit card companies are hoping for your ignorance on the subject. So if you’re looking to reduce and eventually eliminate your debt, balance transfers can be the way to go. Just make sure you do things carefully to avoid any other unnecessary charges along the way.

(Editors Note: As you can see (unless you’re reading the feed), there’s a new layout here at Fiscal Musings. You may be wondering why I changed the layout again since I already recently changed it. A little while ago I migrated the blog over to a Wordpress platform, and had to pick a theme in order to do so. I wasn’t completely happy with the theme, but I hadn’t found anything better at the time. I also knew that I wanted a three column layout. So now I’ve finally found what I was looking for. As usual, there are still a few changes that I need to make, but I’ll hopefully be taking care of them soon. Also, if you have any comments or suggestions about the new layout, I’d love to hear them.)

Now that 2007 is behind us and we’re a little ways into the new year, many people will be receiving year end bonuses and the like from their employers. Some of these bonuses could be considered enormous (if you look at some Wall Street firms) and others are a little more modest. Whatever the size of the bonus, there are smart things to do with it, and there are some not so smart things. I’ll explore both sides of the coin here.

Smart Bonus Moves

1. Start or enhance your emergency fund. I know, how boring. You just got a chunk of change and all you do is transfer it into an account where it’s going to just sit there. Well, sometimes boring is what’s best. And once you start to see the balance of your emergency fund continue to grow, it will get more exciting I promise.

2. Beef up your retirement accounts. This is a little more eventful since you’ll most likely be investing the balance in some sort of fund or possibly even stocks. Even if the bonus is paid out to you before being able to put it into your 401k, you can change your contribution amount that is deducted from your paycheck until the balance has been fully transferred. Keep in mind that you can contribute $15,500 to your 401k, $4k to an IRA for 2007, and $5k to an IRA in 2008. If you’re over 50 you can make catch-up contributions, but all that is for another post. Your Retirement accounts would be a great place to stash this extra windfall.

3. Pay down/off your debts. Here we go with another boring idea. It can also seem as if you never even got a bonus since it all went to pay off what you already have. So use this as the opportunity to rid yourself of the debt millstone and remember what it was like when you could keep your entire paycheck for yourself instead of handing a portion of it over to [insert favorite bank/lender here].

4. Invest in something. I’m not going to specify what sort of investment since we all have our preferences and different risk tolerances. I wouldn’t have a problem using it as a down payment or partial down payment on an investment property. Others may prefer to throw it in the stock market or try their hand at forex trading. Whatever your inclination is, give it a shot and put the money to work for you.

5. Start your own business. If you’ve ever thought about starting a business, there’s no better time than the present as they say. All you’ve got to do is check out Inc. Magazine to see how many businesses have been started with almost nothing. This isn’t the right thing for everyone, but I know there are some out there that have always wanted to and are just trigger shy. Give it a go.

Stupid Bonus Moves

1. Buying a new big screen TV. You could also substitute whatever gadget or toy you’d like, but the point is the same. Why would you go blow this extra money right out of the gate when you have the opportunity to greatly improve your financial situation? I see this one happen all the time and I always just have to shake my head.

2. Going for broke at the casino. I actually heard of someone that was going to take their bonus and head to Vegas for a weekend and just blow it all. There weren’t even any hopes of winning; he just wanted to blow it. I hope he takes a lot of pictures since the memory will be all he has after he loses the camera in a poker game. Unbelievable.

3. Splurging on some fancy restaurant. I wouldn’t mind if you wanted to treat yourself to something like the Big Deal from Jack in the Box, but going all out at some swanky place where you pay more and more for less and less food is something I don’t understand. There are much better ways to utilize your bonus money. If you just have to celebrate by going out to eat though, at least be savvy about it and use Restaurant.com to get a great discount.

4. Making a down payment on a new car. You might say that it’s good to put the money down on a car so that you don’t have to finance it 100%. But what’s wrong with your current car? If you actually need to get a new car (and I don’t actually mean new) there might be an exception here, but I would seriously evaluate the supposed inability of your current car to get you from point A to point B.

5. Doing anything that does give you actual value. This is kind of a catch all for thoughtless consumer spending. Does any of it add to your bottom line and increase your net worth? Will it help you reach your financial goals and ultimately allow you to spend more time with friends and family or doing what you love? These are just some of the questions you should ask yourself before hastily going out and spending that bonus.

So there you have it. 5 smart things and 5 stupid things to do with your bonus (or any lump sum payment for that matter). If you’ve got any other suggestions or something to add, let us hear about it in the comments.

Before I can really talk about managing your free cash flow, you’ve got to know what it is and how you can acquire some. Wikipedia defines free cash flow as:

cash flow available for distribution among all the security holders of a company.

As I’ve talked about before, if you view your personal finances as a business, you’re the sole shareholder of your “company”. Therefore all of the free cash flow belongs to you.

Essentially, it is the money that is available to you from your income after you’ve paid all necessary expenses. If you’re budget is constantly tight, you’re not going to have much cash flow to manage and you’ll need to come up with ways to increase your free cash flow. This can be accomplished in one of two ways: by increasing your income or reducing your expenses. It sounds simple enough, but coming up with specific action plans for this can sometimes be difficult.

I’d also like to mention that I’ve seen far too many people concentrate solely on reducing their expenses. While this is good to do, it leaves out the other side of the equation which would help speed you on your way to your ultimate financial goals. Don’t forget to also spend some time trying to increase your income as you also focus on reducing your expenses.

Once you have managed to free up some cash flow, you’re going to need to know what you ought to do with it. This is where so many people get in trouble because their are so many choices and everyone is vying for a piece of what you’ve got. I break down all of these choices into four basic categories to simplify things:

• Pay down debt
• Save
• Invest
• Spend

These aren’t in any particular order, but I wouldn’t put Spend near the top of the list, although that’s what most people do with it. You’ll have to decide what is best for your personal situation to do with the money that’s available to you. Establishing an emergency fund may be high on the priority list for some, while others may look to invest because they’ve already got an emergency fund. You may choose to allocate your funds equally among all of the categories so that you’re making headway on all fronts. Whatever you do though, make sure that it’s a conscious decision with your goals in mind.

If it helps you, try to think of your finances like a business (like I mentioned earlier). By doing this you’ll want to increase and manage your free cash flow so that it provides the most growth and benefit to your overall finances. So take some time to figure out what your current cash flow looks like and how you can increase it so you can allocate it how you best see fit.

I heard an ad on the radio the other day wanting to help us (the consumer that is) out this holiday season. It said that we should leave our credit cards home and not run them up this year. Instead they were advertising their mortgage company and offering their refinance options to give you the cash you “need” this time of year.

I’m not exactly sure why someone would find this logical and think it’s a viable “solution” to their holiday cash flow problems, but I have to assume that some people are actually taken in by this or else companies would stop making advertisements like this. Whether you’re borrowing money from your credit card or borrowing money through a mortgage, it’s still borrowed money that puts you further in debt than you were before.

If you want to change your future financial outlook, you’re going to have to stop making the same mistakes. Stop buying things that you can’t truly afford. You need to stop trying to hold up your house of cards and maintain an image that everything’s OK. Who cares what others will think of you? There’s no need to impress others this holiday season with the extent of your credit limits.

Maybe it’s time to get back to what the holiday season is all about. Try refocusing on the people (family and friends) that make this time of year special instead of the gifts. And who knows, maybe you’ll end up enjoying the season more without a mountain of debt hanging over your shoulders.