Microcredit is the extension of very small loans to the unemployed, to poor entrepreneurs and to others living in poverty who are not bankable. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimum qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of financial services to the very poor; apart from loans, it includes savings, microinsurance and other financial innovations.

The History Behind Microcredit
Microcredit was a financial innovation that came about in the 1970’s, with some traits of theory back to the mid-1800’s and after the end of WWII. The practice took off in developing countries, and is best promoted and practice in such countries to this day. The practice of microcredit has successfully enabled extremely impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty. There has been a great amount of success in the practices of microcredit, leading many in the traditional banking industry to realize that these microcredit borrowers should more correctly be categorized as pre-bankable. Microcredit is increasingly gaining credibility in the mainstream finance industry and many traditional large finance organizations are contemplating microcredit projects as a source of future growth.

Microcredit was originally given with bias towards women because it was thought that they would help the home and families more than men, living/working on the individual side of life. Past experiences had proven that women are a good credit risk, and that women invest their income toward the well being of their families. This is a prime reason that some microcredit organizations still only administer loans to women.  

The Benefits of Microcredit
Microcredit loans allow for people, that would otherwise be incapable, to begin their own small business or to help save up money for the future. Microfinancing organizations, in short, give small loans (some as small as $100) to people in need, allowing them to use it to ether build their own small business, pay off past debt, and/or start saving money for the future. Microcredit loans have also led the majority of borrowers to secure steady jobs thereafter, either creating jobs or stabilizing current ones. With microcredit organizations, there is an incredible repayment rate, with a world average of over 95%.       

Microcredit Facts
Microcredit loans are usually collateral free, with an average maturity of 50 weeks with repayment in weekly installments. As well, borrowers have full freedom to choose the activities that they wish to be financed. Loans do not need to be spent only on investment; spending for consumption is equally acceptable.

Higher spending and greater debt may cause for a slow-down in the upcoming months. Or maybe not. The Federal Reserve reported that consumer credit rose at a 3.2 % annual rate in January, up from December's 2.5% increase, primarily due to an increase in auto loans. Overall, the increased borrowing by US consumers pushed the total consumer debt up by $6.4 billion to a record $2.41 trillion in January.  

The gain was expected by analysts. Analysts are predicting that debt levels will grow more slowly this year as consumers try to adjust their personal finances due to record levels of debt. Auto loans took the winning prize, as they created a large growth in consumer borrowing as they rose 4.4% this January, sharply up from December’s 2.9%.  
However, credit cards have actually slowed down in borrowing rates for January. January’s rates were rising at a 1.1% rate, down from a 1.9% increase in December. Credit card debt had surged ahead at a 14.7% rate in November, primarily due to the largest consumer holiday in the month to come. 

Most credit card companies can’t wait until their customers miss a payment or pay late.  They also look forward to customer’s that exceed their credit limit.  These are some of many gateways that credit card companies look for in order to raise their interest rates and to charge additional fees – large fees – to their individual customers.  However, there are a few credit card companies that are changing their ways to better cater to customers.

Citigroup has eliminated “anytime, any reason” fees and interest rate changes. Citigroup will now only change their interest rates and fees when a customer’s card has expired (every two years) or if the card holder pays late, exceeds the credit limit, or bounces a check.

Chase has also announced a similar practice to be enforced.  Chase has put an end to using their two-cycle billing system for determining a customer's unpaid balance, which many customers never understood because they would still be charged at times even when they paid their bill in full.  The company is now using the more common approach of their customer’s average daily balance. Chase hopes that the elimination of the billing practice will benefit customers by reducing finance charges.

Capitol One has also jumped on the band wagon for changes among credit card policies. Capitol One’s new approach is to simply put their credit terms in “plain English” so their customers do not get caught with problems because of a not reading between the lines or misreading the fine print. 

This is not to say that all credit card companies have changed their ways and will better address their customers. However, it is becoming a new era among credit card users – their credit card companies should be working for them, not the other way around. Credit card owners have a right in the cards they use. Credit card users have a right to the card(s) they use, and with that, their choices should work for them. It is the scenario of the government versus the people: the government would not run if it were not for the people making the ultimate choices and decisions. The government in this case is the card companies, and the people are its customers.  The government and the credit card companies both work for the people, their customers.

If you are having problems with your credit card company, do not hesitate to talk to them about it. If your credit card has recently changed the terms of your credit agreement in a way you don't appreciate, make a complaint. Maybe the company has added an annual fee, increased your late fees, or shortened your grace period. In some cases, the credit card issuer will change the terms back, just as sometimes they won’t – but it doesn’t hurt to try.  You can also ask, without rhyme or reason, for better interest rates, especially if you are caught in debt and carrying a current balance. Shop around for the best deal(s) with credit cards and what works the best with you. Just as any major company or store, credit card companies may try to compete with other offers you may find to keep you as their customer. Make sure you use other offers and deals in your requests for changes. If you fail to change your credit card company’s individual policyfor you, you can always bring your business elsewhere.

Many people think that the main ingredient for greater salaries and overall better jobs is to have a college degree.  What people are now realizing is that to make more money, they have to pay more money for education.  Student loans have been on the rise over the last decade. College students and alumni are now dealing with an average of over $19,000 in loans (more than doubled from ten years ago).  For those that are continuing onto higher levels of education after undergrad, they will be seeing an average of over $74,000 in loans.

Not only are graduates forced to then deal with paying back these large numbers right after they graduate (some may have a six month grace period, if they’re lucky), but they also have to deal with accrued interest.
 
Many people cannot overcome their debt for a few good years (or many years, for that matter).  For some, they may only find a job that offers entry-level salaries that are not enough to cover the cost of rent, food and student loan payments. As well, student loans may be a burden under many if a student or graduate suffers from a job layoff or an illness, allowing payments to double, triple, or quadruple due to late fees, penalties and accrued interest.

Many college graduates believe that they made a huge mistake by taking out student loans, or as many or as much, as they did.  To relieve the anxiety and guilt of student loans, it is important to talk it over with your family and even a financial advisor before, or during, making the big step of borrowing lots of money from strangers. Yes, the outcome proves to be better paying jobs in the future, but can you afford the costs?  If you do need student loans, make sure you do not request more than you need. It is also crucial to looking into your college’s financial aid programs and other programs that offer financial assistance from the government.  Student loans should not be your first choice for money for college.  It should be your last resort.

401(k) Plans At-a-Glance
401(k) plans allow you the option of selecting the funds you choose to invest in, found in a list of funds provided by your company’s 401(k) plan.  You have total freedom in what to invest and how much to invest, as you have control ultimately over your own personalized 401(k) plan, offered through your employer. Your employee contribution will automatically be deducted from your pay check before taxes.
Depending on your employee, you are able to contribute up to a certain percentage of your pay into a 401k; in addition, some employers will even match a percentage of your contributions. Your contributions, along with any matched contributions, are then invested into your selected funds. These funds will grow without being taxed and can be withdrawn when you reach the age 59 ½.
By the time you reach the age 59 ½, you will be required to start paying income taxes on the money you withdraw from your 401(k).  There are ways you can withdraw your funds before reaching the age 59 ½, but these withdrawals usually require a penalty along with payment of taxes.
There are two groups of your 401(k)plan:

Defined Benefit Plan
A defined benefit plan is one in which the employer promises to pay a defined amount to retirees who meet certain eligibility criteria. A defined benefit plan usually links the benefit to the amount of service and is based on the final average salary. This is the best way to predict the monthly retirement income you may receive with this type of plan, just as you might also be given the choice of a lump-sum benefit at retirement.

Defined Contribution Plan
A defined contribution plan is one that defines the contributions that an employer can make or not make on the benefit that the employee will receive at retirement.  This is a plan that you cannot predict the final price outcome of your plans. If you choose to leave the company in which you have a 401(k) invested, you are likely to receive the proceeds in a current or deferred lump sum or annuity.

Companies are prohibited by law from tapping into the money in their 401k. However, if your company goes bankrupt and you have 401(k) money invested in their stock fund, you will most likely lose all of your money. 

To get the best results of your 401(k), make sure to monitor your money frequently. If your funds/stocks are declining, try to diversify your money and do not place it all in your company’s stock alone. It is a good idea to contribute the maximum tax-deferred amount to your 401k, if you are looking for a more risky challenge with possible greater rewards.

Allocating Your Money in Accordance to Time
According to Money magazine, the suggested allocations at three life stages are:

Aggressive--for those with 35 or more years until retirement
50% - large cap stocks
15% - mid cap stocks
15% - bonds
10% - small cap stocks
10% - international stocks

Moderate--for those with 20 years until retirement
35% - large cap stocks
35% - bonds
10% - mid cap stocks
10% - small cap stocks
10% - international stocks

Conservative--for those within 10 years of retirement
 40% - bonds
30% - large cap stocks
10% - mid cap stocks
10% - international stocks
10% - cash

When it comes down to the overall costs of monthly expenses, do not forget about one of the more pricey expenses –automobiles.  Whether you are paying for them through lease costs, gas, DMV fees, or insurance, cars are one of the largest expenses. 

When it is time to make the big decision to get a new or used car – how should you decide?  The price tag should not be the only numbers to look at.  There are three categories to a car: buy new, lease, or buy used. 

In short, buying a new car is the most expensive route to take. Insurance will be high, but the price tag is the worst in this scenario. The DMV fees and sales tax alone will be a lot of money out of your pocket right off the bat. DMV fees are very expensive for new cars in the beginning, but they will eventually level off after the first year. Gas may be the cheapest with new cars, as they are now designing them to be more fuel efficient, but the overall costs of paying for the price tag of a new car will be much greater for this route.  After a year, new car payments will settle and become more reasonable. If you plan on keeping a new car for a long time, it may be a good idea to think about investing in a new car if it best fits your lifestyle.  After the first year, the only payments will be for gas, maintenance and repairs, DMV fees, and insurance.

As for leasing a new car, the monthly lease payments don’t seem too bad, but over time they will add up with interest, coming just under or around the same as the price of buying a new car. With leased cars, insurance is generally more expensive than if you were to buy a new car, but still less than the insurance rates on used cars. However, leased cars generally have little or no down payment, as well as low monthly payments and lower sales tax compared to buying new cars. The largest concern for leasing a car is higher insurance and interest that will build over a few years. However, you are also limited to your mileage usage, and this may pose a problem for some.

Buying a used car greatly depends on your lifestyle and budget. Buying a used car will definitely save you money in the pocket (granted, you don’t buy a car that will end up in the repair shop the very next day).  Insurance prices will vary depending on the model, condition, and year of the car, and repairs may be more frequent and with higher costs each passing year on a used car. Insurance for used cars is generally more expensive than buying or leasing a new car, especially if you choose to waive theft and collision and stick just to liability coverage. Used cars are financed at higher rates, but due to a much smaller price tag, payments are made easier and in much shorter time.

To decide whether to buy a new or used car, it is important to figure out the best approach for your budget.  If you have the money to buy or lease a new car, the prices come high right off the bat, but will settle over time.  As for buying used cars, prices come much less in the beginning, but depending on the amount of time and energy you put into the car, prices will build over time.  The greatest factors are the amount of time you want to invest in the car, and the amount of monthly costs you are able to afford – insurance, repairs/maintenance, and monthly payments.

Stocks are equity investments.  In simple terms, stocks are found in the form of shares that you buy, granting you part ownership into a corporation. However, although you own stock and ownership in a company, you may still only be a small fragment among a corporation that may issue millions of shares. Ownership of a company is a very powerful thing, and very easy, too. By owning shares of stock in a company, you have the power each and every day to either hold on to your shares or to sell them.

Not only is it a fun game, but for the most part it generally works out for your own financial good. The best reason to buy stock is with the hopes that your shares will increase in value and you will be able to sell them in the future for a profit (whether it be a day, month, or even years later).  As well, stocks generate income in the form of dividends.  Some stocks may do one or the other, while some operate under both conditions.  

It is important to note that stocks can be very volatile. It is never guaranteed that your stocks will increase in value over time.  It is important to watch the market each day, particularly the stocks you have shares in or the stocks you are interested in getting involved with.  Learn the trends and patterns of your stocks, and know when and why they are increasing or decreasing in value.  It is up to you if, and when, you choose to sell your shares.  Stocks may change value rather quickly within a short frame; this is significant because stocks, in general, have historically provided stronger returns than other forms of securities.

In order to measure the return of a specific share/stock, it is important to know the exact amount of money you bought the stock with.  From there, you will calculate the total return by finding the difference from your original value, whether it has decreased or increased.  For example, suppose you bought a stock one year ago at $20 per share, which paid a $0.50 per share dividend, and now sells for $21.75. Your total return for the year would be 11.25%, calculated by adding the $1.75 per share increase in price and the $0.50 per share dividend and then dividing by the original purchase price ($21.75 – $20 = $1.75 + 0.50 = $2.25 ÷ $20 = 0.1125 or 11.25%). 

For those who live paycheck to paycheck, sometimes bills and other necessities involved with money cannot wait another week.  This creates for a rush to the local payday loan center.  Cash advance, or payday loan, centers allow us the opportunity to get money when we need it, even if it’s a week or two before our next paycheck.  The process is simple, almost too simple, creating a false security that you can borrow money and pay it when you have money again.  However, many don’t realize that payday loans are an extremely expensive way to borrow money.

 Payday loans are typically given in cash and secured by the borrower's post-dated check that includes the original loan principal and accrued interest. The maturity date usually coincides with the borrower's next payday. On the maturity date the lender processes the check traditionally or through electronic withdrawal from the borrower's checking account if the borrower does not first repay or service the loan in person. Before loaning you money through a payday loan, lenders will need proof that you have a regular income, a permanent address and an active bank account.
 
Payday loan centers are known for charging inflated "service charges" for the service of cashing a "payday advance" — effectively a short-term (no more than one or two weeks) loan for which charges may run 3-5% of the principal amount. There are many different fees and interest charges that are applied to the original amount of the loan, and this is the cause for such high expenses of borrowing from payday lenders. Payday lenders have even been called “loan sharks” for their high interest rate, typically 250% or higher when annualized. Payday lenders have also been criticized for specifically targeting the young and the poor.

Before you rush to the nearest payday loan center when you need money instantly, it is really important to consider all of the options and underlying consequences. Do you really need to take out a loan at this moment, or are you able to get by until your next paycheck?  If you need money immediately, try to make other arrangements.  Some employers allow their employees to cash in their vacation day.  Or, you could simply borrow money from your family and friends.

If you truly do not have any other options other than getting a payday loan, it is crucial that you only borrow an amount that you are completely certain you can payback (and by the date you agree to on the loan contract). Do not rush into any loans. It is important to inquire about all of the fees, charges and interest rates that apply to you, while also making sure that you understand the charges you will owe if you can't pay the loan back on time.

Last of all, do not put yourself more in debt by working with various payday/cash advance loan centers.  It is a terrible idea to borrow money from a loan center to pay back a loan from another center.  Just the same, if you are extending or "rolling over" the loan that you had with the same lender, you could find yourself in serious financial difficulty. The fees, charges and interest will add up quickly on these types of loans, which can put you into serious debt.

The key to successful money exchange is to plan in advance. It is important anticipate how much money you will need for a particular country, for it is costly to convert to a new currency because each time you convert, you pay a service charge. You can exchange money at banks, traveler's check companies, airports, railroad stations, large hotels, some tourist information centers, and travel agencies. 

With currency exchanges, if you have the ability, it is best to exchange money through a national [chain] bank (or even a local bank or credit union) in the US for they generally offer the best exchange rates.  It is important to compare prices on exchange rates by various banks and currency exchange companies.  It may also help to watch the exchange rates daily during the month or two prior to your trip.  If you notice they are rising and do not plan on slowing, then exchange more money ahead of time so you save on the increasing exchange rates. 

It is a good idea to exchange some money before you depart (the amount is up to you, but I would suggest enough for a half week for your estimated expenses for the country of your visit).  This is a good idea in case you cannot exchange money for a few days after your arrival to the country or if you need money instantly after your arrival for lodging, transportation, or food. 

Plan ahead and set aside some money (already exchanged) before you depart.  Avoid exchanging your money last minute and/or at an airport or other highly-trafficked tourist spots.  Airports and tourist spots are traps for higher exchange rates.

The best form of currency to travel with is your credit/debit card.  Credit cards can easily and quickly be canceled if lost or stolen.  As well, Visa is truly accepted everywhere you go, for the most part.  Other credit cards, such as MasterCard, may be more difficult to use as they may not be accepted everywhere.  If your credit card is of the PLUS or CIRRUS networks, then you are in the best condition to use your credit/ATM card worldwide. Also, credit /debit cards generally offer better exchange rates than traveler cheques or even currency exchange companies.

Travel cheques are a good idea for a security/backup plan, in case your money may be lost or stolen. In case the cheques are lost or stolen, they can be easily canceled if they are lost or stolen. Traveler cheques offer decent exchange rates, but it is difficult to use them – they are best only for a last resort of emergency funding.  Many banks charge a flat service fee for cashing any amount of traveler's checks; others charge a percentage of the amount you exchange. Remember to bring your passport with you as identification every time you exchange money.

In case of an emergency where not even your backup emergency money will help, have money sent abroad with caution. The quickest way to send money overseas is via American Express Moneygram. This is an immediate cash transfer, and neither sender nor receiver needs to have an AmEx card to use it.  The fee varies according to the amount sent. Avoid sending money that is cabled through Western Union, which can be much more expensive.

We’ve all heard and seen the gimmicks to buy more, save more. "The more you buy, the more you save" theory works IF you are out to buy a lot from the beginning.  Plain and simple, if you are not out to buy 10 t-shirts for $20 and only need one for $5, stick with just buying one. Yes, it may be nice to have nine other t-shirts available to you, but if you don’t need them, don’t buy them.  It’s a great deal if you specifically need to buy 10 t-shirts.  However, if not, then you are left throwing away that extra $15.
 
The same goes for food and other household necessities and commodities. Buying food and household goods in bulk always seems like you’re saving money.  Although you may eventually use up that 40-pound bag of Cheerios within the next year, do you really need to save that $3 in hopes that you use it all before it gets stale?  Will you and your spouse really need five-pound bottles of shampoo and conditioners?  It makes sense if you have a large family, but if you do not need such large quantities of an item, do not be sucked into the scheme to buy big just to save big. 

If you have the resources to buy bulk and know that in the end it will be a wise investment, then by all means do so, because it will save you an average of more than 30% over the course of a shopping trip and year.  However, if you do not need to buy bulk or know you will have to let some of it, or all of it, go to waste, not only should you avoid it for the sake of not wasting food and other items, but also for the fact that you’d be wasting money. 

Buying in bulk really can save you money, if you shop appropriately for what you need. 

With so many more bulk warehouses/stores being put up in place of everyday grocery stores, it only makes sense to check out the savings you may find there.  However, do not be fooled by all you can buy at a bulk warehouse.  Not everything at warehouse clubs is sold in bulk, such as a single gallon of milk or one ink jet printer. In those instances, the savings may not amount to much, so be sure to compare prices first, as always.

As with any type of shopping, not only compare prices, but also make sure you are not buying too much of an item that may perish before you can use it all. Do not over-buy for savings – even if it may very well be a steal. You will end up losing money if you buy and but do not make full use of your purchases within their [limited] time frames.    

Bulk shopping does save, if you know how to shop. 

The most recent [official] poverty statistics from the US Census Bureaus are from 2005.  During that year, there were 37 million Americans affected by poverty (nearing 13% of the US population).  Those numbers are outrageous for the fact that, in short, poverty consists of anyone living below US living standards.  

Poverty Among the Races and Ages
These poverty rates remained statistically unchanged for Blacks (25%) and Hispanics (22%). However, the poverty rate has decreased for non-Hispanic Whites (8.3% in 2005, down from 8.7% in 2004). Meanwhile, the poverty rate in 2005 for children under 18 (17.6%) remained higher than that of 18-to-64-year-olds (11%) and that of people 65 and older (10%), all of which were unchanged from 2004’s results. 

The Technical Poverty Calculator
With help from the Office of Management and Budget's (OMB) Statistical Policy Directive 14, the US Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is affected by poverty.  If a family’s total income is less than the family’s threshold, then that family, and every individual in it, is considered in poverty.  The official poverty thresholds do not vary geographically, but they are updated for inflation using Consumer Price Index.

The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps). The lines of poverty are found through calculations of monetary income and through the measure of need (dependent on the size of family and the ages of the members). For individual members, the same calculations apply.  However, if a family is found in poverty, each member of that family under one house is considered living in poverty at the same level.   

For example, based on the OMB calculator, if a family has five members (two children, a mother, a father, and a grandparent) living under one roof and, collectively, they make an approximate of $25,000 between two working members of the five-member household, then the family’s income is above the threshold limit (calculated for this specific family at $23,108 for need and income, inclusive of all five members).  The family comes out ahead of the poverty limit. 
 
Any family or individual that has calculated their yearly income (based on needs) to be more than their calculated threshold set by the OMB, then they are not in poverty.  If their yearly income is less than their threshold calculations, then they are living in poverty. 

The difference (in dollars) between family income and the family's poverty threshold is called the Income Deficit (for families in poverty) or Income Surplus (for families above poverty). 

Living Without Status
There are people in the US unaccounted for living in or out of poverty. These people do not have a determined poverty status due to their living conditions/arrangements. For example, foster children and children under 15 years of age, not living with a family member and without official income results, are prime examples of people unaccounted for due to lack of income results.  As well, people placed in institutional group quarters, such as prisons or nursing homes,  and college dorms or military barracks are also without an account for poverty status.