Mixed Financial Signals: What Will 2012 Bring?

Open any newspaper or financial website and there’s a 50/50 chance you’re going to find hopeful signs of recovery, strong indications that Americans are past the difficult financial times and news that things are only getting better.

Then again, you just might find another piece exclaiming we’re headed for yet another recession, the European market crisis is affecting the recovery efforts in the U.S. and that credit card spending is out of control. It’s difficult to discern fact from fiction. The truth is, though, that there’s legitimacy in both mindsets. When it gets right down to it, the only thing that matters is how our own personal financial outlook is faring.

Now that we’re officially into the new year, let’s take a look at some of the news, what to do and what not to do.

The Holidays Linger

It’s true that Americans relied on credit cards this past holiday season for things we’ve always been warned against: frivolous purchases, small convenience purchases, rent, etc – not to mention that many of us counted on plastic to finance those Christmas and other holiday gifts. In the process, we didn’t leave ourselves much room should an emergency occur. As a result, many are now dipping into savings to cover everyday purchases. Steve Blitz, an ITG Investment Research senior economist said it best, “The consumer is far from healthy.”

What to Do: Collect all of those credit card statements that are surely rolling in by now and come to a grand total. Pay attention to APR, how close to being maxed out on each credit card you are and your minimum payments. It’s important to know those minimum payments not so you can pay only that each month, but hopefully, so that you can go into your efforts with a realistic awareness of what you’re up against.

Potential Solution: You might be served by moving those balances to a low or 0% APR intro offer. The Chase Slate Mastercard has a 0% APR for balance transfers and purchases for up to 15 months. It also has no annual fee. It’s a good way to get a real start on paying down your debt.

Not a Raise in Sight

For consumers, the problem is clear: they’ve had no raises in recent years and it doesn’t look promising for 2012, either. Job growth is modest, at best, and one little known fact is that forty percent of the new jobs in the U.S. in the past two years have been in low-paying sectors like retail and hospitality.

What to Do: Avoid charging your credit cards as much as possible, however, when you do, keep in mind there are probably many built in perks that can save big money trough the year. Purchase protection, roadside assistance and even travel assistance accompany some credit card offers.

Potential Solution: The Discover More Card also offers a 0% intro APR, but along with that, you can ease your worries knowing you have complimentary travel and auto insurance and purchase protection security. No annual fee only sweetens this deal further.

Cash Leaks

Sometimes it’s difficult to see the forest for the trees and when we’re stressed about making our credit card payments, it seems as though it’s the only thing we can think of. Have a realistic approach to your finances gives you a sense of empowerment.

What to Do: Take an extra hour a week and clip coupons, check websites that have gas comparison prices in your community and work towards paying down credit card balances.

Potential Solution: A credit card that saves money at the gas pumps might be one way to save, provided there’s an intro rate for balance transfers (so you can combine those high APR cards onto a new no-APR offer). The Chase Freedom Visa offers a $200 bonus cash back with bonus categories that allow you to save up to 20% – even on fuel charges.

With consumer spending barely crawling, a collective consumer confidence that’s doing the same, it can be difficult to work through the confusion to get to the solution – it’s most certainly worth it though. A few wise decisions, a bit of discipline and a lot of focus are definitely what you want to arm yourself with.

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