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Your Finances in a Crisis? Part 3 and Final: An Interview with a Financial Expert from USAA

First, a big thank you this morning to USAA and JJ Montanaro and Mike Kelly! They took the time to meet with MilitaryAvenue and help provide you with some very helpful information on the current financial crisis. Today we will talk about credit cards, credit availability and car loans.

One of the issues with the financial crisis is the lack of ability to borrow money. If the larger banks have trouble borrowing, they can not loan money to consumers. Of course the biggest issue has been home mortgages, equity loans and foreclosures. This will now spread to other financial issues such as car loans. I read an article that said that consumers can expect to make larger down payments on car loans to qualify. JJ when asked, explained that the credit arena is getting tighter and could get real tight. We can expect to see it more difficult to get car loans and qualify for credit cards (hopefully that reduces the amount of junk mail I get with credit card offers inside). Increases in credit card interest rates could be around the corner. They did not expect the crisis to affect auto insurance rates as they are set by other standards.

In response to the crisis, we should focus on fundamentals! We should make smart choices on consumer purchases, reduce credit card spending if we can not pay it off monthly and avoid the debt crisis that many Americans are feeling. Remember JJ's guidance to consumers in the first blog, "Spend less than they earn and save some to boot." Plan a budget and stick to it. If possible, do not carry a credit card balance. One way we helped reduce some food costs was to plant a garden and then we canned vegetables the last couple of years. Makes us look real smart when we go the commissary or grocery store (did you notice that the price of food is going up too?). Even a couple of tomato plants in a pot could save you a few bucks at the store!

How are you planning to spend that re-enlistment or aircrew bonus this year? How about the combat exclusion tax advantage? Dislocation allowance? Our car is going to last another year so we can have some savings in the bank for a purchase versus credit. Maybe that large TDY check could go into savings for a new motorcycle next year instead of this year's credit purchase? In the meantime your credit score goes up and you can possibly get a better interest rate. Pay off that credit card balance too!

One last recommendation: If you are not a member of USAA, please consider joining the association. In August they expanded membership eligibility to an additional three million veterans and once a veteran becomes a member their adult family members are eligible as well! They have seen their membership grow by 305,000 individuals in 2008! Any questions please go to their website at USAA to learn more!

This has been a great series despite the tough times and I hope it has been helpful! Please send us comments or feedback!



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