Target retirement funds are quickly becoming the funds of choice for financial advisors and others looking for an easy way to optimize their portfolio allocations automatically with no additional work. Those who are setting up Roth IRAs or other retirement accounts may want to check out these options as they can eliminate the need for a financial advisor at all and make it much easier to keep everything in order!

From CNN Money:
Target retirement funds aren’t for everyone, but they’re a good option for many people who don’t want the hassle of rebalancing their portfolio says Money Magazine’s Walter Updegrave. I think going with a target fund can protect us from our worse impulses - namely, the urge to dart in and out of different sectors of the market, move from stocks into cash or bonds, buy into the hot fund du jour, etc. By putting your portfolio strategy on autopilot, I think you’re less likely to engage in self-defeating behavior.

The residential housing market may have some more downside before things even out, according to the National Association of Realtors. The organization increased their projected declines in home valuations for the first quarter again this month and projected further declines going into 2008. This is a drastic change from their projections just a few months ago that housig prices would be flat in 2008 and begin to rebound. As foreclosures continue to increase, more and more pressure is being placed on housing prices amid rising supply and decreasing demand.

From CNN Money:
In a fresh sign that the nation's housing crisis will worsen, home prices are likely to decline in 2008 for the second straight year, the National Association of Realtors said Thursday. The Realtors, in its monthly economic and sales outlook, is forecasting a 1.2% drop in prices of existing homes sold this year. Only a month ago, the association was forecasting that prices would be flat in 2008 and that the home market would rebound in the last half of the year.

The Federal Reserve released another one of its key surveys last night that indicated that credit continues to tighten across all parts of our economy. The mortgage market and commercial real estate markets have seen the largest tightening, but there have still been some serious problems in other types of consumer and corporate loans. Notably, funding for private equity and strategic takeovers has all but completely dried up while even auto loans are difficult to find at good rates for consumers. In the end, it may be awhile before demand starts to pick up once more.

From FXStreet:
Yesterday night the Federal Reserve released the Senior Loan Officer Opinion Survey. The report conveys a survey of the lending standards for the prior three months to January. Generally, the report indicated a tightening of overall credit in all parts of the economy. In particular the mortgage credit market and commercial real estate have been facing some serious tightening. At the same time overall demand for loans has been weakening.

The Federal Reserve has decreased interest rates several times this year by as much as 2.25% since September, meaning the lenders are now paying less than ever to borrow money that they can re-loan to realize a profit. One of the largest lenders in the United States - credit card companies - have seemingly ignored the rate decreases as they have actually increased the cost to borrowers! Those who have experienced such rate increases may want to shop around for a new credit card that offers fairer terms to users that follow trends in the industry.

From The Motley Fool:
Our friends at the Fed recently lowered interest rates sharply -- and then did so again. My Foolish colleague Chuck Saletta doubts Fed Chairman Ben Bernanke's wisdom, while Matt Koppenheffer sees merits in his actions. And while you probably know that the rate cuts will affect those taking out or refinancing mortgages, you may not know that the credit cards in your wallet could be affected, too. Given a total drop of 1.25% in just the past few weeks, and 2.25% since September, you'd think that your trusty credit card-issuing bank would have lowered your credit card rates accordingly. In some cases, you'd be right -- but not in all.

Credit card companies use a number of tricks to levy fines on your account and collect as much as possible. The Consumerist showed yet another example of this practice when they allowed automatic withdrawls to continue even after accounts have been closed and the have ceased sending statements. In this case, a $38 late fee was imposed... for nothing.

From Consumerist.com:
When Capital One "closes" your credit card account, they'll continue to allow automatic withdrawals even though the account is closed. But they won't send you a statement—you know, because it's closed!—so that you'll end up with late fees. Quenten experienced this first hand when he closed his account recently, and now Capital One has sent his account to collections over a $38.00 late fee for two 38-cent charges that he never knew about.

One of the UK's largest credit card issuers was recently forced to withdraw credit from seven percent of its consumer base (161.000) people in order to increase its liquidity amidst a credit crunch that has affecting many others in the industry. So far, however, it appears that the other players are content without cutting back on their consumer accounts. For better or for worse, many are still letting consumers spend money they don't have...

From Reuters:
Egg’s move to withdraw credit from seven percent of its customer base - a total of 161,000 people - serves as a stark reminder of the severity of the credit crunch, and how it is impacting the man and woman on the street. A quick ring-around other main players in the credit card market - Barclaycard, MBNA, Halifax and Capital One included - did not uncover any other plans to mass-close accounts. But few can deny that the liquidity crisis is continuing to have an impact on consumers.

Many people have rushed to refinance their home loans after the Federal Reserve continued to lower rates. The WSJ reported a surge of 22.1% last week from the previous one while applications are up 70.7% year over year. Unfortunately, these are almost all from existing homes rather than financing for new home purchases, but it does represent people at least interacting again with the real estate financing sector. Is it time for you to refi? Well, rates are lower than they have ever been before...

From The WSJ:
Homeowners' applications to refinance loans surged again in the Mortgage Bankers Association's latest survey of filings, rising 22.1% last week from the previous one. According to the survey, refinancings accounted for 73% of the total number of mortgage applications filed during the week ended Friday, up from 66% the previous week. Applications for new mortgages to buy homes decreased by a seasonally adjusted 17.7% on a week-to-week basis. Overall, applications for mortgage loans rose a seasonally adjusted 7.5% last week, compared with the previous week. And applications rose 70.7% from the year earlier.

Bush unveiled his new $3.1 trillion budget today that may hurt many retirees and increase the national debt but promises to increase support for troops stationed abroad. The proposed budget is largely a political exercise since the Democratically controlled Congress will be responsible for approving it, but it does illustrate the many problems facing our country going forward. Many Democrats complain that the budget will trim health benefits for retirees why skyrocketing our national debt even more than it already has under the direction of President Bush. Bush responded by saying that it is a budget that achieves some important objectives.

From LATimes:
President Bush unveiled a $3.1-trillion budget today that would boost military spending and trim health benefits for retirees. The proposal was immediately tagged by Democrats as "irresponsible." The first spending plan in history to top $3 trillion would freeze or eliminate many domestic spending programs yet still rack up a $407-billion deficit for fiscal 2009, which begins Oct. 1. The Pentagon is the only department for which Bush proposes a significant increase; its budget would grow 7.5% to $515 billion. "It's a good budget," Bush said after meeting with his Cabinet. "It's a budget that achieves some important objectives. One, it understands our top priority is to defend our country, so we fund our military as well as fund the homeland security."

"When President Bush took office, the national debt stood at $5.7 trillion," said Rep. John M. Spratt Jr. (D-S.C.). chairman of the House Budget Committee. "Today it is $9.2 trillion and rising, projected to increase to $9.7 trillion by the time President Bush leaves office -- up by $4 trillion in eight years. This is the legacy our children and grandchildren will inherit from the fiscal policy of this administration."

Many people are tempted to get store cards when they shop, but it might not be worth it for many. BankRate notes that these cards often charge higher interest rates and often have stricter terms that can end up costing you a lot more in the long run. Also, having multiple credit cards can damage your credit score - especially if you carry a balance on all of them. As a result, most people may be better off sticking to one card that they can track and pay off regularly.

From CBSNews.com:
How many times have you gone to a store and have the clerk at the counter say you can get 10 percent off your purchase if you sign up for that store's private credit card? It's pretty tempting, but you'll want to think twice before signing up. According to the folks at bankrate.com, these store credit cards charge interest rates that are substantially higher than those of a regular credit card. You also want to remember that having too many credit cards can damage your credit score. All that said, if there is a store you find yourself shopping at all the time, it may be worth it to get the card, because sometimes they offer deals such as a discount on purchases when you first sign up. And remember -- closing these credit cards can also hurt your credit score, so be careful not to do that too frequently, especially right before you apply for a car loan or mortgage.

The United States has recently decided to give its citizens more money to spend in order to help spur the economy and turn the nation around, but many are skeptical as to the success of such programs. Indeed, the US has countless other problems that stand in the way - consumer spending cannot be relied on to solve problems like it has in the past. The fact is that this nation has been converted into a nation of debt - both in terms of its citizens and the government itself. Broad policy changes and tax hikes are needed in order to pull out of this mess...

From EdmondSun:
Responding quickly to save us from tumbling into a recession, President George Bush and House leaders have proudly unveiled an economic stimulus package worth some $150 billion. If approved, the plan will distribute checks to households across the country this summer. The resulting spending spree will spur the economy into a new era of prosperity. Yeah, right.

Many different countries rely on consumer spending in the United States to support their economies. Many domestic companies also rely on strength in foreign economies to support themselves, meaning that U.S. stock markets could see a further slide if other countries are significantly affected by any problems in the United States. A global slowdown isn't good for anyone...

From Reuters:
Mexican consumer lending by banks, expected to be a key motor of the economy this year, grew 19 percent in December, a slower pace than in previous months, according to a report on Thursday. Consumer credit barely existed in Mexico when its economy was dragged down by the last U.S. recession six years ago.  Mexico cut its economic growth forecast for 2008 on Wednesday to 2.8 percent from 3.7 percent as a possible recession loomed in the United States, its top trade partner.

MasterCard announced its earnings today and in it offered great insight into the economy of the United States and consumer spending. Among its notes, the company said American spending was shifting from discretionary purchases (those that aren't needed) to staples (those needed during every day life). Spending did manage to grow despite the harsh conditions by 5.1% last year, although it is slowing this year and could turn negative.

From TakingTheStreet:
Mastercard offered some useful insight into the domestic economy as well. The firm noted that consumers were spending more money on staples than discretionary items. Consumers are moving away from items like jewelry, restaurants, and home furnishings to instead purchase things like gasoline, groceries, and personal health care items. The company also noted a slowdown in spending in the U.S.; however, spending still did manage to grow at 5.1%. However, countries in Asia, Middle East, and Africa saw their spending increase an astounding 42%. Meanwhile, our neighbors in Latin America saw spending increase 28%. So, while things may be bad in the U.S., they are certainly booming abroad.

A new plan put in action by the President and Congress may help many homeowners struggling to make their payments. The plan calls for a reversal in tax policy that treats forgiven housing debt as taxable income on federal tax returns; allows homeowners who bought last year to deduct the amount of premiums they pay for PMI; and allows widowed spouses to exclude up to $500,000 in capital gains on the sale of a principal resident if the house is sold within two years of death. This is all great news for homeowners.

From AccountingWeb:
Amid daily headlines of a worsening housing crisis, debt-burdened homeowners are looking to two pieces of congressional action that could ease the pain. Monday's headlines stated that new home sales fell by 26 percent last year, which is the biggest drop since 1963, the U.S. Department of Commerce says. And last week's headlines said sales of previously owned single-family homes took a dive - the biggest annual drop in 25 years. Meanwhile, about a quarter of all subprime mortgages are in default. As more and more homeowners face the very real prospect of foreclosures, Congress last month passed the Mortgage Forgiveness Debt Relief Act. Also, Congressional Democrats say an economic stimulus package - centered on $100 billion in tax credits for about 117 million families - is headed quickly for a vote. They aim to get the package to President Bush by Feb. 15.

Many people make the mistake of only making minimum payments on their credit card debt. The problem is that you will never end up paying off your debt because you'll simply be paying back the interest only part while leaving the principal untouched. The key to getting out of debt is paying down as much of the principal as possible so that you can stop making payments sooner. Unfortunately, many people now are doing just the opposite and getting themselves into more trouble.

From LATimes:
Easy credit is great. Except when it's too easy. Millions of people are now in danger of losing their homes as a result of the meltdown in the sub-prime mortgage market. But millions more face the prospect of financial ruin because of an even more ubiquitous problem: the danger of making only minimum payments on monthly credit card bills. "You're not even denting your debt at all," said Schimeck, a Detroit resident. "All you're doing is keeping your credit card company happy so you can keep your account."

The global credit crunch that has already affected many people as lending standards tighten could be set to get worse if the economic downturn in the West continues, according to the IMF. Writedowns are continuing to affect many institutions and there is fear that the may continue to cause problems in the future. Any serious increases in the credit crunch could pour into the consumer credit and other sectors.

From Forbes:

The global credit crunch, already felt by financial institutions could continue to worsen if the economic downturn in the United States or elsewhere deepens, the IMF reported today. 'Evidence from lending surveys already shows some tightening of lending standards,' the IMF said in an update to its Global Financial Stability Report. It added that this crisis is being felt not only in the US, but also in Europe. 'While other regions' financial institutions appear to have less exposure, subprime related writedowns are still possible,' the report said.

American Express announced an increase in its loss reserves for bad consumer debt again this quarter as consumers are expected to continue defaulting on credit cards after troubles in the mortgage markets, higher energy costs, and higher food bills. Meanwhile, many are expecting the housing market to continue stalling until 2010 when the resets start to slow.

From BBC News:

American Express has posted a 10% drop in profits for the three months to December after it set aside extra capital to cover bad credit card loans. The US credit card firm said net income was $831m (£418.7m), down from $922m a year earlier. It attributed the decline to an after tax charge of $274m to boost revenue for credit card-related losses. This reflected huge defaults by American Express customers suffering from higher mortgage repayments and higher energy and food bills, analysts said.