Bank of America said that it will begin implementing new lending guidelines following its acquisition of Countrywide Financial. The biggest change will be the fact that the bank will no longer originate subprime mortgages that were the hallmark of the troubled Countrywide. It will also discontinue all nontraditional mortgages where monthly mortgage payments may not cover all interest and will curtail low-documentation loans.

The bank also plans on helping those already affected with such loans. Bank of America said that it would limit prepayment penalties as well as interest-only and hybrid adjustable rate mortgages. It will also provide $35 million in grants and low cost loans to assit loacal and national nonprofits engaged in foreclosure prevention and to purchase vacant single-family homes for neighborhood stabilization. These will be done through the Bank of America Charitable Foundation and Countrywide.

"We think it's important to clearly explain the changes in mortgage lending practices once we operate as a combined company," said Bruce Hammonds, global consumer credit executive at BofA. "We recognize this tightening, by definition, restricts the availability of credit to some borrowers. However, this will help ensure that those who get loans can afford to repay them."

Bankruptcy filings in Wisconsin jumped around 30% in the first quarter of the year as higher fuel and good costs continue to pressure consumers. Meanwhile, rising mortgage payments and lower property valuations have taken away much of the cushion that consumers often rely on in tough times. The figures aren't that different from the national average, however, which saw a 27% increase from January through March compared to the same period last year. Court records showed that there were 4,570 bankruptcy petitions in Wisconsin through March.

Many consumers are beginning to feel the heat as a perfect storm of factors combined to cause troubles that are too great to handle. Higher fuel costs were sparked by the lower dollar and supply problems abroad. Meanwhile, higher food costs come amid a world food shortage sparked by the incentives offered for corn being used in ethanol. The corn being used for the gas is being taken away for usage in food, which includes usage in corn and beef products. Meanwhile, continued housing troubles have eliminated the ability to draw on home equity lines of credit and resulted in higher monthly payments.

The credit crunch has many consumers prefering cash over credit cards when spending. The trend is most visible in the UK where the British Retail Consortium conducted a recent survey showing that cash is now used for 60% of all purchases in the UK, which is up from 54% last year. And measured by value, cash is used for 34% of retail spending compared to 32% a year ago.

The news comes after many consumers are struggling to pay credit card bills that they racked up during times when home equity loans could be drawn upon to help out. Meanwhile, many credit card companies themselves are being a bit more particular about who they offer credit cards to in the first place.

Credit cards can be a very useful tool that allow consumers to take out a "free" loan for a month as long as they pay the bills back on time. Any failure to do so can result in substantial fees that can quickly turn the free loan into interest rates that most loan sharks would settle for.

Paying in cash also has several other benefits. For one, it helps many people realize just how much they are spending on a daily basis. Paying with a credit card makes is a little too easy to notice just how much money is being spent. Meanwhile, paying with cash also avoids any chance that you'll incur late fees or charges that are associated with credit cards.

Fraud among debt relief companies is running rampant these days and it is becoming more important than ever to do your homework before seeking advice. Debt-Set Resolve Credit Counseling is the latest company to be hit with scandal after the Federal Trade Commission alleged that it violated federal law by falsely claiming that it could reduce consumers' credit card interest rates or the amount of their credit card debt.

According to the FTC complaint filed in March 2007, Debt-Set sold debt reduction services through websites, television and radio advertisements with claims such as "Reduce Debt Now" and "Eliminate Harassing Calls". When consumers called the toll-free numbers, they were encouraged to enroll in a debt consolidation program if their unsecured debt was up to a month overdue or a debt settlement program if it was overdue longer.

The FTC alleged that Debt-Set violated the FTC Act by falsely promising to obtain lump-sun settlements, such as "fifty cents on the dollar" or "50 to 60 percent" of consumers' total unsecured debts. The complaint also noted that the company misrepresented that they would not charge consumers any up-front fees before obtaining the promise of debt relief and that participation in the program would stop creditors from calling or suing them.

In the end, debt settlement and similar services can help reduce debts of 40 to 60 percent, but it is only a possibility, not a promise. Consumers that are in trouble should seek out companies that take the time to explain the process and remain upfront about any fees or other charges that come as a result of using such services.

Developing countries now produce nearly half of all American imports, and rising inflation is making these products more expensive. The currencies used in many developing Asian countries, like India and Vietnam, are quickly appreciating. Many common imports, like electronics and fabrics, may face price hikes as a result. This may be sooner than later as inflation continues to increase at a rapid rate. Unfortunately, it comes at a time when consumers are already feeling the heat from rising domestic prices.

From the New York Times:
The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries — first Japan and Korea, then China, and now increasingly places like Vietnam and India. But mounting inflation in the developing world, especially Asia, is threatening that arrangement, and not just in China, where rising energy and labor costs have already made exports to the United States more expensive, but in the lower-cost alternatives to China, too.

Many government grants are available for debt relief- the key is being able to find them. The key is to be creative. For example, using government grants to buy or start a business can enable you to put the profits from the business to work paying off your debts. The big hurdle is proving that you cannot repay the amount you owe and still maintain the same level of debt, then you may qualify for a grant to get started.

From eZineArticles.com:
When looking to pay off credit card debt, one of the most overlooked options many people have are government grants. Many people do not look into these grants because they simply do not know about them. However, the government sets aside billions each year just for this purpose, to give them away. If you are one of the millions of people who are suffering from credit card debt, you definitely want to consider applying for a grant from the government.

Food prices are rising faster than ever before and consumers around the world are starting to feel the effects. Demand for corn due to ethanol has eaten up much of the supply, sending prices much higher. It has also decreased the percentage of the fields dedicated to other plants such as soy beans and wheat. This has led to a similar rise in the price of other foods. Now, farmers are looking to raise their soy bean crops in order to alleviate issues abroad, but it could raise the price of meats and other foods domestically.

From The New York Times:
Faced with strong worldwide food demand and the accompanying higher prices, American farmers are beginning to respond to the signals of the market. In a new government report, farmers said they would make significant cuts in corn acreage this year in favor of soybeans. If they carry through with their intentions, the resulting additional soybean oil could help alleviate global shortages of cooking oil that have led to sharply higher prices, hitting poor countries hard. But a smaller corn harvest would most likely raise prices for that crop, which could also increase the prices Americans pay for meat. Most corn is used as animal feed. Higher corn prices may also compound the difficulties of companies that use corn to produce ethanol as a motor fuel. Despite government mandates for the use of ethanol, those companies are struggling. They expanded so rapidly in recent years that an oversupply of ethanol depressed prices, even as the cost of their main feedstock — corn — was rising.

J.C. Penney announced lower earnings today, which signals that the average American continues to struggle to pay the bills. A combination of lower housing prices and a tough credit market has made it increasingly difficult for consumers to go to the mall and shop. Thousands of others are facing bankruptcies and foreclosures that is further hurting their spending. It could be awhile before these consumers start heading back to the stores... and that could continue to hurt the retailers.

From The New York Times:
J. C. Penney on Friday slashed its earnings forecast for the first three months of the year by 33 percent, blaming an outright drop in consumer spending that bodes poorly for competitors. The profit warning came as the Commerce Department reported that overall consumer spending had stagnated in February, increasing 0.1 percent. If Penney is feeling the pinch of tightening wallets, investors reasoned, so is the rest of the retail industry.

“J. C. Penney,” he said, “counts half of American families as its customers, and they are feeling macro-economic pressures from many areas, including higher energy costs, deteriorating employment trends and significant issues in the housing and credit markets.”

Hundreds of thousands of Americans are self-employed in what is the economy's single largest workforce. Thousands more are making the jump every year as well, but there are many things that they should consider first. One of the largest considerations is healthcare. Rising costs among larger employers are also being faced by individuals who must insure themselves. Often times, these policies aren't as strong as those provided by employers and may cost substantially more. Luckily, they are deductible in some cases and there are many choices. Some of the favorite referrers are the Small Business Service Bureau and the AARP. Meanwhile, Blue Cross Blue Shield remains one of the largest independent providers.

From The New York Times:
If there is one thing that separates the self-employed from those employed by others, it is their preoccupation with health insurance ... Many readers shared recommendations based on where they buy their insurance. Popular sources were local chambers of commerce, the Small Business Service Bureau (sbsb.com), AARP (aarp.org) (for those over 50), industry-specific trade associations like a bar association or the Institute of Electrical and Electronics Engineers. In states that permit it, small-business owners can also start a group with as little as one member. In that case, a good insurance agent comes in handy. For the reasonably healthy who know what they are looking for, ehealthinsurance.com got fairly good reviews.

The problems associated with many financial collapses can be traced back to excessive greed. Today's mortgage crisis is no different as new reports surfaced showing that high-flying mortgage companies were hiding losses in order to ensure the bonuses kept coming for executives. These losses were hidden by illegally lowering its loan loss reserves even as it was forced to repurchase more and more from investors. As a result, the overall cash position remained neutral or positive despite a distribing trend to the contrary. To many, it sounds like another Enron scandel...

From The New York Times:
KPMG, one of the Big Four accounting firms, endorsed a move by New Century Financial, a failed mortgage company, to change its accounting practices in a way that allowed the company to report profits, rather than losses, at the height of the housing boom, an independent report commissioned by a division of the Justice Department concluded. The scathing 580-page report documents how New Century lowered its reserves for loans that investors were forcing it to buy back even as such repurchases were surging. Had it not changed its accounting, the company would have reported a loss rather a profit in the second half of 2006. The profit was important because it allowed executives at the company to earn bonuses and allay concerns that the company was healthy when in fact its business was coming apart, the report contends.

Many parents with children entering their teens are now facing a dilemma- to pay for college or to save for retirement. College expenses continue to spiral higher while fewer Government dollars are available to go around. Meanwhile, retirement costs continue to rise as unemployment soars and the stock markets decline. The ideal solution appears to be using all the loans you can get for students and covering the rest while saving enough to retire in the future. After all, retirement dollars can compound in the future while student loans simply incur a small interest charge every month.

From CNN Personal Finance:
With three teenage children, Lorri and Bruce Wilke of Danville, Calif. are caught in the perfect parental spending storm. Between laptops, cell phones and clothes, the Wilkes seem to outgrow their budget the way kids outgrow shoes. "You just feel like you're writing check after check after check," says Lorri. With Leah, 17, heading to college in the fall - and Dana, 15, and Carl, 13, soon to follow - the financial pressures are only going to grow. The Wilkes have set up custodial accounts for each of their kids, but the $16,000 in Leah's name won't cover a year of expenses at the University of California schools she hopes to attend. Most of the couple's net worth is tied up in their $1.2 million home, so they must find a way to help their children pay for school without jeopardizing retirement.

Wall Street may have seen a recover yesterday, but those on Main Street may have to wait awhile for their relief. The Fed's move to lower interest rates, the bailout packages, and other measures have all helped companies at the expense of consumers. In fact, the same companies that hurt consumers in the first place. Meanwhile, shareholders are also stuck footing the bill while executives fly out in golden parachutes. The lower dollar, credit card defaults, bankruptcies and foreclosures may last for at least the next year, all while the burden has been shifted from Wall Street to taxpayers.

From The New York Times:
In Seattle, sales at a long-established hardware store, Pacific Supply, are suddenly dipping. In Oklahoma City, couples planning their weddings are demonstrating uncustomary thrift, forgoing Dungeness crab and special linens. And in many cities, the registers at department stores like Nordstrom on the higher end and J. C. Penney in the middle are ringing less often. With Wall Street caught in a credit crisis that has captured headlines, the forces assailing the economy are now spreading beyond areas hit hardest by the boom-turned-bust in real estate like California, Florida and Nevada. Now, the downturn is seeping into new parts of the country, to communities that seemed insulated only months ago. The broadening of the slowdown, the plunge in home prices and near-paralysis in the financial system are fueling worries that what most economists now see as an inevitable recession could end up being especially painful.