I used to think losing a house to foreclosure is a financial relief. Well, I was wrong! It is a relief only if there’s NO “deficiency judgment” or difference between what you owed on your mortgage and what the bank sold it for at auction.

There was once upon a time when my credit card debt was so unbearable that I did think of giving up my house. Fortunately, I didn’t. I got help from AKPK free debt management program to help put my financial back on track again.

Are you thinking of putting your home on a short sale or have you already lost your home to a foreclosure? If so, read You Lost Your House – But You Still Have to Pay. You’ll think twice.

(CNNMoney.com) — As terrible as it is to lose your house to foreclosure, at least it’s a relief to put your biggest financial headache behind you, right?

Wrong.

Former homeowners may still be on the hook if there’s a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these “deficiency judgments” are ticking time bombs that can explode years after borrowers lose their homes.

It can even happen to people who got their bank to approve them selling their home for less than it is worth.

Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.

“My understanding was that the deficiency was negotiated away,” she said. “Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it.”

Where the foreclosure plague is spreading

Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called “liar loans” where they didn’t have to verify their income.

Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances — like unemployment or a job transfer — can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.

“After the banks foreclose, it’s very common now to have large deficiencies with houses not worth the balances owed,” said Don Lampe, a North Carolina real estate attorney.

Lenders mostly declined comment. Although Corey’s lender, BB&T did indicate it was pursuing more deficiency judgments.

“They follow the rise and fall of foreclosures,” said the spokeswoman, who would not discuss Corey’s account.

Can they come after you?

Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.

“Once they have a judgment, they can pursue you anywhere,” said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. “They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.”

In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.

Some states, such as California, are “non-recourse” and don’t allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.

Check the foreclosure rate in your state

Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.

But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.

“People shouldn’t have a false sense of security that a deficiency judgment may not be later sought,” Zaretsky said.

He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.

“The parties who bought those notes wouldn’t have paid money for them unless they had the intention of acting,” Zaretsky said.

Ticking time bomb

What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.

It doesn’t have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.

It wasn’t until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.

“I told them, ‘Hey, you guys released the title,’” he said. “As far as I know, I’m off the hook.”

He wasn’t. Releasing title does not necessarily end the debt. It’s complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.

Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.

Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.

“He had no idea what he was doing,” said Zaretsky. “All the lender had to do was go to court to convert the confession into a deficiency judgment.”

Lenders are also very inconsistent. One of Zaretsky’s short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.

Strategic defaults

Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.

“Banks are pulling credit reports to see if it’s a strategic default,” he said. “If you’re behind on all your other payments, you’re okay. But if you’re not, they’ll come after you.”

If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.

“We don’t favor any short-sale contracts that leave any deficiency that can be pursued,” he said.

Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.

I think I, the AKPK DMP blogger, am taking my financial aspect more seriously now than ever. I find myself reading tax, insurance, home mortgage, retirement fund and a few money topics which I previously hated a lot.

They still don’t interest me much, but I am doing my best to know more. Life is unpredictable, right? What if something happens to hubby? Touch wood. What should I do with his life insurance proceeds?

Speaking of life insurance, you really have to read this article – Making $300,000 Last A Lifetime. It gives you a general guideline on how to turn your retirement savings into income for life.

(Money Magazine) — Question: My mother-in-law, who’s in her early 60s, was recently widowed. She now has Social Security and approximately $300,000 from a life insurance policy to live on. She’s not comfortable taking on much, if any, risk but she does need to generate income from the life insurance proceeds. Any recommendations for how she should invest this money? –Chris, Atlanta, Georgia

Answer: Before you and your mother-in-law can even begin to think about investments, you first need to address two fundamental questions.

The first is how much income does your mother-in-law require to maintain an acceptable lifestyle for the rest of her life? If she’s in her early 60s, she could easily live another 30 years, if not longer, depending on her health and genes.

The second question is, how much of that income can she reasonably expect to withdraw from the $300,000 in life insurance proceeds?

Three hundred thousand bucks is a lot of moolah. But there’s a limit to how much lifetime income you can get from it — probably much less than most people think.

Making a retirement budget

Start with a pencil, paper pad and a calculator by going over her current outlays and then making reasonable assumptions about the future, such as how much different expenses might rise (such as health care) and which might decline or even disappear (paying off a mortgage other loan, perhaps).

Or, to make the process easier and try out different scenarios, you can do it electronically. For example, Fidelity’s Retirement Income Planner tool contains an interactive budgeting worksheet that allows you to enter figures in 49 different expense items and even allows you to plug in different inflation estimates for different expenses.

The point of this exercise isn’t to project future expenses down to the penny. No matter how hard you try, you can’t be that accurate. Rather, the idea is to get a sense of how much income your mother-in-law needs to live a secure and comfortable retirement.

Once you have a reasonable figure for the income she requires, you can deduct whatever she receives from Social Security from that amount. You will then know how much she’ll need to draw from her $300,000 nest egg.

But here’s where things can get tricky. The amount she needs from her $300,000 based on the retirement lifestyle she’d like to live could very well exceed the amount of income she can realistically expect to draw from her three hundred thousand over a period of 30 or more years.

Which brings us back to that second question: How much income can your mother-in-law reasonably draw from $300,000, without running through it too early?

There’s no hard-and-fast answer. Generally, if your mother-in-law wants a high level of assurance that her money will last, she should probably figure on withdrawing no more than 4% to 5% of her three hundred grand initially, or $12,000 to $15,000. She would then adjust that amount for inflation each year so that rising prices don’t erode her purchasing power later in life.

Balancing the risks

The way she invests can affect how much income she can draw and how long that nest egg will last.

If she invests extremely cautiously, say by keeping virtually all her stash in money-market funds and CDs, she should probably count on income at the lower end of the range above. That’s because “safe” investments tend to offer the lowest returns (like 1% to 2% annually in the case of savings and short-term CDs lately). So if your mother-in-law goes this route, she’ll indeed avoid the risk of her nest egg getting scrambled by upheavals in the stock market. But she may be paying for that security with a lower level of lifetime income.

If, on the other hand, your mother-in-law invests a portion of her three hundred large in stocks and bonds, she has a higher probability of coming in at the upper end of that income range.

But notice I said “higher probability.” Even though a diversified portfolio of stocks and bonds is more likely to generate higher returns, such a portfolio also has a much higher potential for suffering short-term losses. And if those losses are steep enough and occur early in retirement, they can be very difficult to bounce back from. So difficult, in fact, that it’s possible her money could run out quickly and your mother-in-law could end up with less income than she would get from a less volatile portfolio.

All of which is to say that while your mother-in-law says she isn’t comfortable taking “much, if any” risk, she can’t eliminate risk entirely. If she invests too cautiously, she faces the risk of not having enough income to fund the lifestyle she wants. If she invests too aggressively, she faces the risk of a devastating setback that might drain her savings too soon.

What you really want to help her do is balance those risks in a way that’s acceptable to her.

One way to do that is to go to T. Rowe Price’s Retirement Income Calculator and plug in different types of portfolios. That will give you an idea of how much income different mixes of stocks, bonds and cash might generate.

Your mother-in-law has another very valuable tool for protecting against the risk of running through her money too soon — namely, the option of scaling back the amount of income she takes from her nest egg.

So however you and she decide to invest her $300,000, it’s important that you both track its value periodically. You can do that by re-running the numbers annually on the calculator I mentioned.

If you feel that this sort of number crunching is beyond what you and your mother-in-law are up to on your own, you can always consult an adviser. Just make sure you’re dealing with someone who’s looking at the big picture and not just trying to sell her one investment or another.

Speaking of investments, one that you and your mother-in-law might consider is an immediate annuity, which is a vehicle that guarantees a certain level of lifetime income regardless of the market’s ups and downs. It wouldn’t be appropriate for her to put all, or likely even most, of her money in such an annuity. But combining an immediate annuity with other investments is a good way to generate reliable lifetime income that can keep pace with inflation while also lowering the odds that you’ll outlive your savings.

Ultimately, your mother-in-law will have to decide what to do with that $300,000. But to the extent you can help her sort through the issues I’ve outlined, she’ll have a much better shot at investing her money in a way that works best for her.

Question: My wife and I know we should have an emergency savings fund, but with one income we have nothing left to save after paying expenses.

But I’ve been thinking of a way to deal with this problem. We charge about $2,000 in monthly expenses to our credit cards, which we then pay in full each month.

My idea is this: Instead of paying off the cards every month, I’ll make only the minimum required payment and save the rest. Once I’ve accumulated a decent emergency fund, I would then begin paying down the cards. Do you think this is a good strategy? — N.G., California

Doesn’t this sound familiar to many people? It definitely sounds familiar to me.

There was once upon a time in 2007 that hubby and I were living on one income. Life was tough then because there’s so little income in hand, yet there were so many bills like car and home loan installments, term loans, and as many as 15 credit card payments waiting to be paid every month!

It’s very difficult to save for emergency fund after paying all the expenses because there was literally no money left at all!

But since hubby and I enrolled in AKPK debt management program and hubby started his full time teaching job, we have been able to save money as emergency fund.

If you are thinking of paying the minimum credit card payments and saving the rest as emergency fund until you have accumulated a decent amount of emergency fund to paying down the credit cards, well, it may/might never come true.

Financial experts say so. And I say so; I did what the reader above thought of doing and it didn’t work for me. It’s either you find extra money/income or cut down on expenses or do both if you want to save money as emergency fund.

I agree with Walter Updegrave, the author of the article of Big No-No for Building Emergency Savings that, “If you can’t save today because you have no money left after paying your expenses, how are you going to pay those expenses, plus come up with an extra $xxx a month to pay down the credit card balance you racked up to accumulate your emergency fund?”

I also concur with him that it’s more practical to spend less than you make or cut down your expenses to save money.

Well, the reality is that there is only one way to save — and that’s to spend less than you make. There are a number of ways to do that. You can go the “cut the latte” route and avoid relatively small daily expenditures that add up. You can create a budget and then go over it line by line, looking for specific areas to squeeze. You can try two techniques that I’ve advocated in the past, focusing on big-ticket items or employing strategies that can effectively fool you into being a better saver. Whatever works for you. But one way or another, you’re going to have to find a way to pare your spending.

… But I also know that borrowing to save is an oxymoronic concept that’s more likely to create problems than solve them.

I, the AKPK DMP blogger, chanced upon this interesting article, ‘Those Bloody Banks, Credit Card Companies and Bank Negara!‘ by Fahri Azzat at loyaburok.com, at The Malaysian Insider.

You may have missed this article that relates how banks and credit card companies can be so unreasonable when it comes to credit card terms. Enjoy reading!

(Source) JAN 16 — Diana Chee Vun Hsai, like many of us owned a credit card. She had two. One from Citibank Berhad, the other from HSBC Bank Berhad. On 7 September 2008, HSBC called up her to alert her about her credit card being used. When she checked her purse, she discovered both her credit cards were missing. She notified both the credit card companies of the loss of her credit cards on the same day and lodged a police report at Dang Wangi police station about it the following day. She understandably thought that was the end of the matter. She was wrong.

On 16 September 2008, Citibank told Diana Chee Vun Hsai they were billing her for the unauthorized transaction of RM 1,859.01 done on 6 September 2008. She responded through her solicitors to inform Citibank that the limit of liability for a lost credit card was RM 250.00 as provided in clauses 15.1, 15.2 and 15.3 of the Bank Negara Guidelines BNM/RH/GLO-041-01 (“the BNM Guidelines”). Citibank’s lawyers replied pointing out to her that the terms of her credit card the crux of which is as follows:

“Our client imposes a duty on the cardholder to notify the loss one (1) hour prior to the unauthorized use and to provide proof of acting in good faith and exercising reasonable care and diligence to prevent such loss or theft of unauthorized use of the card before our client can exercise its discretion whether to resolve the liability or not. Such a clause is not in contravention of the Bank Negara guidelines.” (emphasis mine)

I have emphasized that portion to demonstrate just how unreasonable banks can be; to limit your losses arising from the loss of your credit card to RM 250.00, you have to inform Citibank one hour before the unauthorized transaction takes place, which you would naturally know nothing about. Additionally, you have to prove good faith and demonstrate that you exercised reasonable care and diligence to prevent such a loss. How absurd is that! Even after you show all that that, it is still at Citibank’s discretion whether to “resolve the liability or not”. Is it any wonder the sensible man loathes banks despite yielding to them? They borrow your money, charge you a higher rate for borrowing back and offer you pittance for its use. But we shall leave this for another day.

Diana Chee rightly did not agree with the absurd reply and sued Citibank for several declarations the main ones being (i) that the BNM Guidelines issued pursuant to sections 25 and 70 the Payment Systems Act 2003 have the force of law and (ii) the term relied upon by Citibank to deduct the sum of RM 1,859.01 was illegal, void and contrary to public policy.

Justice Mohd Apandi Ali who heard the case at the outset opined that Citibank was an operator under the Payment Systems Act 2003 and therefore bound by the BNM Guidelines, which his Lordship very helpfully reproduces in its entirety for our benefit. I would strongly recommend those with credit cards to read and understand it. This would prevent credit card companies from taking advantage of your ignorance and fear of seeking legal advice. Clause 15.2 of the BNM Guidelines was referred to and is worth considering in full:

15. Liability For Lost Or Stolen Credit Card

15.2 The cardholders’ maximum liability for unauthorized transactions as a consequence of a lost or stolen credit card shall be confined to a limit specified by the issuer of the credit cards, which shall not exceed RM 250.00, provided the cardholder has not acted fraudulently or has not failed to inform the issuer of credit card as soon as reasonably practicable after having found that his credit card is lost or stolen.

His Lordship then opined quite rightly, “This ‘one hour prior to reporting of the loss card’ clause, to my mind is not only unreasonable and ridiculous but it is contrary to the provisions of cl. 15.2 of the Bank Negara Guidelines. In fact, the RM 250 is the maximum liability of the cardholder in such circumstances, and that the onus of proving fraud or unreasonable delay to report loss of the card is upon the issuer of the credit card”. So in this case, the Judge ruled that it was Citibank that had to prove any alleged fraud or unreasonable delay on the part of Diana Chee before they can deny her the limitation of liability.

This is my favourite part:

“The cardholder has complied with the said terms of reporting and confirming the loss of the credit card. The respondent cannot have the discretion, despite having it so written in the agreement, to circumvent the Bank Negara guidelines, with a view to limit its liability.”

There you have it. Citibank despite knowing the BNM Guidelines defiantly made terms of agreements for their credit cards that not only infringed the BNM Guidelines but was designed with the purpose of limiting its own liability. This you can appreciate could translate into increased profits for them.

The Judge then rightly goes on to point out that breaching the BNM Guidelines is an offence punishable under section 57 of the Payment Systems Act 2003 which prescribes a fine not exceeding RM 500,000.00. If the credit card company continues to offend it then it will be additionally liable to a fine not exceeding RM 1,000.00 for everyday that the offence continues. His Lordship states that, “the issuer of the credit card is also liable to have its approval revoked by Bank Negara if the issuer has failed to comply with any of the Guidelines issued by Bank Negara”. So clearly, the BNM Guidelines is an offence and if your credit card of bank is in breach of it, you should lodge a complaint with Bank Negara.

But it is not just the credit cards that are ripping us off. An interesting paper written by Kalavathy Maruthavanar titled “Internet Banking — A Boon or A Bane? A Study on the Legal Issues Relating to Internet Banking in Malaysia” (Developments in Malaysian Law: Selected Essays, Sharifah Suhanah Sy. Ahmad, UM 2007) suggests that our local banks are in flagrantly in breach of the BNM guidelines for internet banking as contained in the “Minimum Guidelines on the Provisions of Internet Banking Services by Licensed Banking Institutions” (referred to after this as the BNM Internet Banking Guidelines), which were issued pursuant to section 119 and section 126 of the Banking and Financial Institutions Act 1989 (“BAFIA”), and remains in force by virtue of section 77(4) of the Payment Systems Act 2003.

Kalavathy focuses her attention on four areas but I will focus only on two which I feel relevant here:

The first area is the Standard Form of Contract (“SFC”) between the bank and the user. Here she points out that the SFC generally forces the customer to agree to indemnify the bank for all and any loss arising from using internet banking regardless of whether they are at fault or responsible for the fault. She also points out that banks commonly exclude liability for negligence and for “any technical, hardware or software failure of any kind”. Basically the customer will have to bear the loss no matter what happens even when the bank is responsible.

Kalavathy points out that such clauses are in violation of Part 5, Clause 1.2(iii) of the BNM Internet Banking Guidelines which provides as follows:

“The customer know their rights and liabilities and are fully aware that they are responsible for their own actions. The contractual arrangements for liability arising from unauthorized or fraudulent transactions have been laid out to the customers. The arrangements should provide for sharing of risks between the banking institution and the customers. However, customers should not bear any loss arising from system failures.”

She also points out the relevance of the BNM Guidelines On Consumer Protection On Electronic Fund Transfers where Clause 17(1)(a) and (b) provides that:

A customer shall not be liable for loss -

(a) not attributable to or not contributed by the customer;

(b) caused by the fraudulent or negligent conduct of officers or agents appointed by, the -

(i) financial institution;

(ii) companies and other financial institutions involved in networking arrangements within this country; or

(iii) merchants who are linked to the card system.

So it appears we have local banks clearly in breach of the numerous BNM Guidelines issued.

The second area concerns the privacy aspect of internet banking. The BNM Internet Banking Guidelines approach is laudable. Clause 4.1 stresses that, “Bank Negara Malaysia considers the privacy of consumer personal information to be an important element of public trust and confidence in the Malaysian banking system”. Clause 4.4 places the responsibility of providing privacy protections in the online environment on the banks. They have to stipulate their Privacy Policy Statement on their websites and ensure that it conforms to conditions contained in clause 4.7. — BNM Internet Banking Guidelines at clauses 4.8 — 4.17 requires the banks to set up a Customer Support Service to handle queries and complaints, and oversee all internal controls.

Kalavathy then discovers that notwithstanding those guidelines, many banks Privacy Policy Statement do not comply with them because:

(i) most of those statements permit dissemination of information to the whole bank’s group and related companies;

(ii) some of those sites contain cookies that track your activities on the internet;

(iii) a customer will not be protected if they click on a third party link from the bank’s website;

(iv) information collected for promotions and contests can be used for marketing.

So even if the Privacy Policy Statement meets with the legal requirements, they do not necessarily do so with its spirit.

Both these developments indicate that though there are many good and noble BNM Guidelines out there, it suffers from the usual lack of enforcement. Bank Negara has to realize that it is no use coming up with all these noble Guidelines without backing it up with regular and consistent supervision and enforcement, more so with banks because they are so wealthy and powerful. Bank Negara has to realize that as consumers with little ability to negotiate terms with a bank, so it is all the more important that information is provided to us directly. This way we can point out and take those banks to task when they treat us as connedsumers instead of consumers, or better yet, living and breathing human beings — not just a financial statistic.

This is sensible and logical. That is probably why Bank Negara does not do it. Kalavathy reports, “The BNM Guidelines are issued by Bank Negara solely to domestic banks. These guidelines are not avaiable to the public and it has been questionable if a lay person can enforce any Bank Negara guideline in a court of law”.

As explained above, the position has moved on since then and BNM Guidelines now have the force of law.

The question now is will Bank Negara publicize all those fine and noble sounding guidelines for public education and awareness.

If they do not, that would raise the further question of, why not?

* This article is the personal opinion of the writer or publication. The Malaysian Insider does not endorse the view unless specified.

According to a recent survey done by global payment firm Visa, cost of living, salary changes and personal debt are the top 3 financial concerns for Malaysians.

In the survey conducted between Aug 21 and Sept 23 last year, 69% of Malaysians said they were extremely concerned about the cost of living expenses while 62% and 59% were worried about salary changes and personal debt respectively.

“Malaysians were less worried about the value of their retirement fund and portfolio, and fluctuating interest rates,” the company said in a statement here yesterday.

However, 25% of those surveyed also said they were more confident about their personal financial situation compared to six months earlier although 52% felt there would be no change.

Only 23% indicated they were less confident than earlier.

Sixty-six per cent of Malaysians also said they were more concerned about the impact of the global financial crisis on the local economy.

The survey involved 5,520 respondents aged between 18 and 65 years, of whom 500 were from Malaysia.

The rest were from Australia, China, Hong Kong, India, Indonesia, Japan, Korea, New Zealand, Singapore and Taiwan.

Visa country manager Stuart Tomlinson said Malaysians were being practical during the current economic climate by focusing on managing their concerns, providing themselves with a level of security and peace of mind.

“For Malaysians, potential changes in salary levels are also of concern,” he said, adding that across the region, consumers were looking to see how they could manage their expenses, savings and job security, rather than macro-economic conditions such as exchange and interest rates.

As a credit-card-debt woman who has been in AKPK debt management program since October 2008, I no longer need to worry about my credit card and loan debts. Phew, no more harassing phone calls and legal notices from banks!

Am I considered lucky to be able to escape from the new RM50 service tax a year on every principal credit card and charge card since I am now in AKPK debt management programme? So is hubby

Imagine how much annual service tax hubby and I had to pay if we still had the 15 credit cards!! 15 principal credit cards from 6 banks. Phew, it’s RM750!

According to financial analysts, it is predicted that at least 30% of the holders of 11 million cards in circulation who have more than one card will have to pay RM100 every year.

You know, the applications for new credit cards dropped by 80% following the Government’s announcement of the service tax starting 2010.

Don’t you think this new imposition is good to those who are thinking of applying credit cards? It scares them off and thus they carry no credit cards. No credit cards mean no credit card debts, right?

When there are no credit card debts, people will have no reason to turn to non-performing loans, short-term loans, personal loans, debt consolidation loans, AKPK debt management programs, or bankruptcy easily.

It’s also good to those of you who have stacks of credit cards; you are forced to reduce the number of cards you own. Having fewer credit cards means you have to cut down on spending, retail purchases and impulse buying.

Also, you get to learn to use cash and debit cards. As a credit-card-debt woman who is in AKPK’s debt management plan, I must say that I love using cash and debit card now.

I have had two debit cards, Public Bank Visa debit card and Tune Money Visa debit card. Both cards are not used for retail purchases. Noop. They are only used for collecting PayPal money from my online income.

Since PayPal has now allowed Malaysians to link their PayPal accounts to their Malaysian banks or overseas banks operating in Malaysia, I think I can totally stop using and renewing my Tune Money Visa debit card.

As for the Public Bank Visa debit card, I will keep on using as a backup for PayPal fund withdrawals.

Today is the last day of February. All eyes are on credit card defaults in March.

According to bankers, if credit card defaults don’t come down in March, there will be an increase in non-performing loans (NPLs).

It’s a norm to see credit card defaults on the rise in November, December and January because these few months are holiday shopping seasons where people tend to overspend.

However, the defaults come down in March after holiday seasons like Christmas, New Year, Chinese New Year and Valentine are over.

If credit card defaults continue to rise, banks have to be careful. An increase in credit card defaults in March could mean the start of rising NPLs in the credit card segment.

Have you been defaulting in credit card payments these few months? If so, get in touch with your banks and request for restructuring credit card debt.

Thanks to current economic conditions that banks are more proactive in restructuring your credit card debt before your debts fall under NPLs.

Restructuring your credit card debt means you get a more comfortable period to repay the debt while banks get the debt paid.

You know what? Banks are only considerate to consumers when economy is tough and their businesses drop.

I still remember a few years back when the economy was still growing, getting approvals for credit cards or home mortgages was so difficult. Tonnes of income statements, bank statements and legal documents were required. Oh, interviews were needed too.

Even with tonnes of solid statements, documents and interviews, it’s no guarantee that your applications for credit cards and home mortgages would be approved too.

After reading and hearing news about layoffs almost every day, my sister has started fearing of the possibility of being laid off by her lady boss.

I know my sister is not the most efficient staff in the company, but one thing for sure, she is the most hardworking staff. She does every job given by the boss and sometimes is willing to be taken granted of by her colleagues.

I am praying that she won’t be axed by her lady boss. If worst comes to worst, just cut her salary.

Like me, my sister is also burdened by credit card debts, personal loans, household expenses, children’s school and private tuition fees, and home and car loan installments, . Wow, 2 car loans!

It’s only the second month of year 2009, but words that I come across most are still 2009 Depression, mass layoffs, job losses, job cuts, store closings, foreclosures, job findings, redundancies, unemployment rates, home refinancing, credit crisis, recession fears, …

I read news about layoffs and hear store closings being announced daily by companies all over the world.

What’s getting more worrying is that home owners, who previously could pay their bills on time and have good credit score, are no longer able to make their payments on time or facing the possibility of foreclosures.

Is 2009 Depression really here?

My buddy and her hubby really really need a financial wake-up call, especially with dire economy, looming recession and possible layoffs.

Being $30,000 in credit card debt, having spent most of their savings account on buying their second car, a new Honda Fit, and continuing with uncontrollable spending habits, they still haven’t seen the need of cutting down on their spending.

The wife still charges her lunch to her credit card at McDonalds while the hubby charges his passion for antique watches to his credit card.

They are still paying for the family big-screen television and fitness club memberships after two years.

As for the home, they have refinanced it twice, the second time to pay off some credit card debt and pay for their home renovation.

According to them, so long as they aren’t paying their household bills and home and car loan installments using their credit cards yet, their spending habits are still considered under control.