Debt can be extremely difficult to overcome and for people with serious debt issues, getting help can be just what the doctor ordered. One of the common sources of help for those with debt problems is credit counseling. Taking the step of visiting a credit counselor for the first time can be a daunting task. Often consumers experience a great deal of fear and apprehension as they have no idea what to expect in a credit counseling session. A credit counselor can be a huge asset in your fight against debt problems but can also be a waste of time, so choosing wisely is essential.

The most important thing to realize before you ever set foot in a credit counselor’s office is that getting out of debt is going to take a lot of work. No credit counselor has a magic formula that will eliminate your debt problems, but a good debt counselor can provide you with the tools and knowledge you need to get yourself on the path to debt-free living. If you’re going to share every detail and misstep of your financial life with a credit counselor, it’s important to find one that you can trust. Here are some characteristics that are a hallmark of any good credit counseling agency.

Free: Plenty of credit counselors will try to charge you for your appointment and most of them will add to your debt problems instead of helping you find a solution. There are plenty of good non-profit organizations that provide free credit counseling. You should be able to find a credit counselor that will dedicate a block of time to you without trying to get anything in return.

Educational: Good credit counseling agencies should have resources that help you organize a strategy for getting out of debt. They should have resources like brochures and a website that you can use to continue your education after a credit counseling session. Many agencies offer group classes and lectures that you can attend at no cost to gain insight in addition to your individual time spent with a counselor.

Accreditation: There are independent organizations that rate and provide accreditations to credit counseling agencies. Ask your credit counseling agency if they have a current accreditation from either the Council on Accreditation (COA) or the International Standards Organization (ISO). You can also check with your local Better Business Bureau to find out if complaints have been lodged against an organization that you’re considering working with.

Great Service: Your credit counselor is going to be giving you advice that is essential to your financial health so don’t be afraid to search for one that is a good match for your personality. You shouldn’t have to wait in a lobby all day to talk to someone and you should be able to get help on simple matters over the phone or via e-mail. You have several options for credit counseling so if you feel like you’re not getting treated in a professional manner, shop around and find a better experience.

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One of the fastest growing trends in banking is that an increasing number of bank customers are using online services to meet their banking needs. The Internet provides a medium for bank customers to easily check account balances, pay bills, transfer funds between accounts, and handle other transactions that used to require a trip to the bank. According to a recent survey, nearly 70 million Americans use the Internet for at least some banking transactions and that number is growing every year.

There are some obvious advantages that online banking offers consumers, but there are also some drawbacks that continue to keep some people from banking online. Here are some of the pros and cons of online banking.

Pros of Online Banking

- Convenience: In a world where people are constantly looking for ways to save trips and become more efficient, the Internet provides the ultimate in banking convenience. Banking transactions are no longer limited to banker’s hours and customers can now carry out complex transactions from their home, office, or even their mobile phone. Customers no longer have to worry about buying stamps to pay their bills or getting checks sent in the mail four to five days before a payment is due. Not every banking service is available online but the services are constantly evolving and improving.

- Attractive Rates: There are some online banks that are only found online. These banks don’t have the overhead costs of brick-and-mortar buildings and real estate and as a result they’re able to offer better savings rates and more attractive loan rates to their customers.

- Control: Online banking customers like the idea of controlling when transactions happen. Being able to go online and see recent expenditures, deposits, and pay bills knowing that the funds will be received in time and not be lost in the mail is an attractive feature that online banking customers enjoy.

Cons of Online Banking

- Security: Although Internet security has improved by leaps and bounds over the last few years, many customers are still concerned about the possibility of fraud or identity theft when it comes to online banking. To open a bank account, most of a person’s most confidential personal information is required and an online security breach could easily send that information into the wrong hands. Banks spend millions of dollars to fortify themselves against the attacks of hackers, but it’s impossible to guarantee the security of personal information.

- Poor Customer Service: Some people like the idea of a bank teller or loan officer being face to face with them offering service with a smile. It’s impossible to replace a personal relationship through Internet banking and issues that need to be resolved often result in toll-free calls to call centers in other countries–not exactly the highest level of customer service.

- Too Easy: With the ability to set up direct deposits and automatic bill payments, many banking transactions occur without people having to lift a finger. This is easy and convenient, but it also makes it tempting to get lazy with how closely you monitor your banking activities. Forgetting about an automatic deposit that is scheduled to occur regularly can result in costly mistakes. Sometimes it’s good to have to write a check and balance a checkbook.

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The last few months of the year are important for employees who receive benefits from the employers because, for most companies, this is open enrollment time. The benefit selections you make now are likely the ones that you will be stuck with for all of 2010 so choose wisely and take advantage of opportunities to use your benefits to improve your financial position. No one looks forward to open enrollment for corporate benefits, but the choices you make can mean extra money in your pocket if you make the right selections.

Every company offers a different benefits package so not all of these will be available to everyone, but look into each of these options and whether or not they would be an appropriate fit for you.

Health Savings Accounts: Most jobs offer health benefits for employees and their families, but a Health Savings Account is a way to put aside money for health expenses in a different manner. Employees can set aside pretax dollars that can be used to pay for qualified medical expenses and most plans allow unused funds to carry over each year. When this benefit is combined with a high-deductible health insurance plan, it is usually much cheaper than a traditional medical benefits package. It’s important to distinguish between Health Savings Accounts and Health Reimbursement Accounts, which are owned and controlled by the employer instead of the employee.

Flexible Savings Accounts: If you pay for child care during the work week, a flexible savings plan is something that is definitely worth consideration. Employees can set aside pre-tax dollars to cover expenses for childcare or care for any other dependent. Most of these plans do not allow funds to carry over each year, so it’s important to budget carefully and avoid saving too much for childcare expenses. This money can only be accessed as it is set aside. There are also flexible savings accounts for healthcare.

Health Incentive Plans: Insurance costs for most companies are substantial and many employers are interested in reducing these costs. One way to do this is to offer wellness incentives to promote healthy habits and health education to employees. Employers save many by having a healthier group of employees to insure, and many of these incentive programs offer either additional cash in your paycheck or gift cards that are earned for completing certain milestones in the wellness plans. Many companies have a wellness program but the programs often aren’t the chief concern of employees enrolling for their annual benefits.

401K: This benefit is one that does get a lot of attention from employees but many are not taking full advantage of their company’s 401K offering. The most important thing to understand is the amount of your contributions that the company is willing to match. If there is a matching program, do all you can to take full advantage of it. Many companies are now also offering a Roth 401K option that allows employees to determine whether or not contributions of pre-tax dollars or after-tax dollars would be a better fit. The power of tax deferred growth over time is impressive and setting aside money as early in your career as possible can lead to a very comfortable retirement.

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The credit card industry has been in the news a lot lately as new legislation has been signed into law protecting consumers from abusive credit card practices. Consumers have found credit card issuers taking the pain of the recession out on them as more and more cardholders fall behind on their payments. Because the law has changed to protect consumers, many assume that credit card companies no longer have the ability to change the terms on their customers, but many of the changes that have been announced don’t take effect until sometime in 2010.

In the meantime, cardholders need to continue to be watchful of their credit card companies and keep an eye out for rules that might be changing. Here are five areas to watch with each credit card bill you receive.

- Interest Rate: The news has publicized the fact that credit card companies are no longer going to be allowed to raise interest rates arbitrarily, but that change doesn’t take effect until February. Even when the new rule takes place, it will only cover existing card balances. Card issuers can still raise rates on new purchases that customers make. Over the first 12 months of a new relationship with a credit card company though, the rate can only be increased if the cardholder is at least 60 days late on their payment.

- Fees: The good news for cardholders is that laws will protect them from changes to card fees that already exist. However, there is no protection against new fees that card companies are able to come up with. Many credit cards that previously had no annual fee are informing customers that an annual fee is going to be a new feature of their credit card. Other customers are finding new fees such as inactivity fees or low usage fees to grow accustomed to.

- Rewards Programs: If you enjoyed accumulating points and miles toward trips, electronics, cash, and other awards for using a particular card, you’ll be disappointed to learn that many of these programs are being eliminated entirely. Others are scaling back award programs and making them much less attractive.

- Minimum Payments: Credit card companies can’t control how much of a balance cardholders pay, but they can at least require a minimum payment and those minimums are on the rise. Most companies have historically used 2% as the amount for the minimum payment, but now 5% is becoming a more common minimum payment amount. Part of the reason that minimum payments are increasing now is that beginning in February, the minimum payment will be capped at a 100% increase over the life of the card. Bumping up minimum payments to 5% now will allow companies to legally move the payment amount as high as 10% in the future.

- Credit Limits: Banks don’t even have to notify customers if they reduce their credit lines, and some are cutting available balances by as much as 75%. Some customers don’t notice for several months. This is important because your credit-worthiness is partially determined by your credit utilization ratio, or how much of your outstanding credit you use. Cutting card limits can significantly increase utilization ratios. Most people consider their credit line an emergency fund of sorts, so monitor any changes your card issuer makes to your account.

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Small businesses are the heart and soul of the American economy and their inability to access financing as they have struggled through the recession continues to hinder their ability to recover. Until small businesses can start hiring again, unemployment is likely to remain high and businesses will have a difficult time growing. President Obama spoke about the issue recently, saying, “There are still too many entrepreneurs who can’t get the loan they need to open their doors and start hiring. There are still too many who are struggling to make payroll and stay open. And there are still too many successful small businesses that want to expand further and hire more but just don’t have the capital to do it.”

Efforts have been made to make financing available to small business owners through the recession as the Small Business Administration has worked with banks to ease their concerns over lending to small business owners. Still, of the ten biggest sources of financing for small businesses in the US, only 2 have increased their small business lending over the past 6 months in spite of the government backing on small business loans. The top ten recipients of TARP money have reduced their small business loan portfolios by $8 billion during that time.

There are three major ways that the government is working to get more money into the hands of small business owners:

1)  Cheaper Loans: The small, regional banks are the ones who are doing the bulk of the lending to small businesses. For banks with less than a billion dollars in assets, the Treasury plans to allow loans at a special reduced rate to give them access to the cash they need in order to continue lending. In order to get the funds, banks will be asked to submit an outline of their plan for using the money to make loans to small businesses.

2) Bigger Loans: Currently, the cap on loans in lending programs that fall under the Small Business Administration’s umbrella is $2 million, and many small businesses need access to more money but they have already borrowed the maximum amount for a business of their size. Lawmakers are discussing increasing the cap on these loans to $5 million in order to create more financing options for successful small businesses that just need access to more money but want to avoid piling up credit card debt.

3) Safer Loans: The Small Business Administration attempted to ease bank concerns earlier this year by guaranteeing loans against default for up to $35,000 for small business owners. Not a lot of those loans ever made it into the hands of business owners, but those banks that did embrace the program would be likely to continue lending if the same guarantees covered larger loans. The Obama Administration is pushing for the cap on these agency-backed loans to increase to $50,000 in order to get another cash infusion into the bank accounts of struggling business owners as the economy recovers.

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When it comes to financial mistakes, there are varying degrees of severity. Some mistakes are relatively minor and easy to recover from, while others have consequences that can be a financial thorn in your side for years, decades, or even the rest of your life. These are the mistakes that are most important to understand because once you’re in some of these financial holes they can be very difficult to get out of.

- Cashing Out Retirement Plans: People sacrifice for their entire working lives to set money aside for retirement and yet an alarming number of savers decide to cash out their retirement accounts. This should be a last resort and only is really appropriate in a financial emergency. Cashing out retirement accounts before the age of 59.5 means that you not only pay taxes at the time of the withdrawal, but you pay a 10% penalty to the IRS, a penalty that is in place simply to discourage early withdrawal.

- Excessive Credit Card Debt: We all want to have nice things and enjoy dining and entertainment that we really can’t afford. Many people, unfortunately, don’t have the discipline to stop spending even when they really don’t have the money, and credit cards make it easy to build a mountain of debt. If you’re in a position where you’re carrying a credit card balance and making only the minimum payment each month, you’re in danger of creating an insurmountable debt situation. Stop swiping the card and develop a system to pay off that debt as quickly as possible. Work with your creditors, who you might find more willing to make flexible payment arrangements now than ever before.

- Inadequate Insurance: Over 1.5 million people file for bankruptcy every year, a number that would be much lower if everyone was properly insured. A major medical event, a natural disaster, or another catastrophic event in your life can literally leave you with no choice but to declare bankruptcy and start over without proper insurance. Even if all you can afford is a catastrophic care policy, at least have that in place.

- Late Payments: A late payment by itself isn’t enough to sink a person financially, but a pattern of late and missed payments can ruin your credit score and create a situation where no lender is willing to even consider you for financing. One of the easiest ways to avoid hurting your credit score is simply to make payments on time.

- Risky Decisions: You probably know someone who found an investment opportunity that “couldn’t fail” who lost a substantial amount of money when they misjudged the risk. There is no such thing as a free lunch, and just about any investment that offers a return above the return on cash at your local bank has at least some risk. Understanding that risk is essential and you should never invest money in anything that you don’t feel absolutely sure about. If it sounds too good to be true, it probably is.

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One of the most unfortunate casualties of this recession for employees of man small and medium sized companies has been the elimination of the match on the 401K. Matching 401K contributions is a substantial cost for employers, but one that most are willing to pay because it’s a nice benefit to attract and retain employees. Companies that provide a match have about a 10% higher participation rate in their 401K plan as employees take advantage of those free dollars. A company match is a 100% return on your investment, something that should never be taken lightly.

According to a recent survey, about 8% of companies have eliminated the company match as a cost cutting measure in response to the recession. Most of these companies say that they intend to restore the match as they become profitable again, but few have done so. Without a company match investing in a 401K is still certainly a worthwhile endeavor, but there may be better uses for the money you’re setting aside from every paycheck.

- Invest In An IRA: If your goal is to save toward retirement, an IRA might be an attractive option compared to a 401K. The downside is that the contribution limits each year are lower than in a 401K, but if you’re setting aside a small percentage every month, a self directed IRA has the same tax benefits as a 401K but allows the owner to invest in essentially any type of security instead of choosing one of the few mutual funds offered in the 401K plan. This investment flexibility becomes much more attractive without a company match in the 401K.

- Pay Down Debt: If you have credit card debt, you could very easily be better off taking a bite out of the amount you owe than adding to a 401K without a match. The money your investments in a 401K can earn should be in the neighborhood of 8-10% over time if history is any indication, but most credit card debt is costing you 20% or more every year in interest. Paying down the debt becomes a wise choice when you’re not missing out on a company match.

- Build Your Emergency Fund: A savings account is something that everyone should have and most financial planners will tell you that it’s a good idea to have at least 6 months worth of living expenses set aside just in case. In an uncertain economy like this where hundreds of thousands of jobs are still eliminated every month, having more than usual set aside is a great idea. You lose the tax write-off and tax deferral, but you gain liquidity.

- Pay Down Your Mortgage: Owing less on your home is never a bad thing, especially with housing prices under pressure. If you’re thinking of refinancing but your loan-to-value ratio is higher than it needs to be, you could make an effort to increase your equity in your home and increase your chances of being approved if you decide to refinance–there are always ways to tap into that equity later if you need it once the financial industry rights itself again.

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Each of us has a maximum amount of debt that we cannot exceed without getting more credit extended to us. Usually when we look at the way the government spends money–a trillion here, a trillion there–it’s hard to imagine that there is a limit to what Uncle Sam is allowed to spend. But just like an individual consumer, the federal government has a debt limit and once that limit is reached, they have to get creative to arrange for more financing.

The US Government currently has the approved ability to issue up to $12.1 trillion in debt. The government issues debt in the form of treasury bills, notes, and bonds, borrowing money from investors at a rate of return that is determined through an auction process. These bonds are issued at a discount and mature at par or face value, giving an investor the return that was agreed upon when the debt was issued. This week, the government plans to hold an auction for $123 billion worth of debt which will put them on pace to hit the debt ceiling by the end of November.

If Congress decides to increase the debt ceiling, then the government check-writing machine can continue to spend. Raising the ceiling is nothing new–it’s been done 8 times just since 2002. However, a growing number of politicians are concerned over the massive government spending we’ve seen over the first several months of the Obama administration. If the debt ceiling is not increased by lawmakers, Uncle Sam will have to get creative to gain access to more money. The likelihood of this happening is slim, but we’re close enough to the ceiling that it’s worth exploring. Here are some options they will have.

- Creative Accounting: If it’s for a short period of time, there are ways for the Treasury Department to rob Peter to pay Paul. For example, there is a sum of $113 billion currently in a retirement account for federal employees that could be accessed until a solution is found, but this amount would only last one or two weeks.

- Sell Agency Debt: The Treasury owns about $165 billion worth of debt issued by Fannie Mae and Freddie Mac that they could sell on the open market in order to access cash. However, these bonds were purchased to calm distressed financial markets, so flooding the market with them now would send a negative signal.

- Sell Dollars: The government is holding about $16 billion in order to try to stabilize the US currency. These dollars could be sold to access cash, but doing so would likely cause the value of the dollar to plummet more than it already has.

- Shut Down the Government: It’s an extreme alternative, but the government could simply shut down for a period of time until more financing can be accessed. This happened in 1995 and it was such a non-event that most people don’t remember it. The downside is that this would hurt the value of US government bonds being held around the world.

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As part of the ongoing monitoring of financial institutions who have received taxpayer dollars to survive over the past several months, President Obama’s “Pay Czar,” Kenneth Feinberg, has released his initial rulings for executive pay at bailed out firms. President Obama spoke in favor of Feinberg’s decisions, saying that it, “does offend our values when executives of big financial firms — firms that are struggling — pay themselves huge bonuses even as they continue to rely on taxpayer assistance to stay afloat.”

Seven companies submitted their pay plans to Feinberg, all of them either banks or automakers. Each of the seven companies released their estimated compensation plans for their top 100 earners and Feinberg found that most plans were, “inconsistent with the public interest.” Feinberg’s findings will have several consequences, both for executives at banks that received TARP money and for Wall Street as a whole.

- Compensation Reduced This Year: The biggest consequence of the Pay Czar’s decision is that a lot of bank executives and highly compensated employees will be seeing smaller paychecks than they expected this year. Feinberg dictated that each bailout recipient reduce its total compensation for their highest-earning 25 employees by an average of 50%. As a result, many executives will see their compensation for 2009 cut by upwards of 90%. Ken Lewis, the outgoing CEO of Bank Of America, announced that he will not receive any compensation for 2009 at the urging of Feinberg. On top of this decision, the Fed proposed a review of the compensation plans for the 28 biggest banks in the US, expanding the reach of government influence in executive compensation. Feinberg has the authority to regulate compensation for any employee making more than $500,000 at the institutions under his review.

- TARP Funds Repaid: Now that banks have seen that lawmakers and regulators are serious about the financial rewards being paid by institutions in financial trouble, many will work hard to repay the money that they’ve borrowed from taxpayers. Several executives have already commented that they wouldn’t have taken the money if they knew this level of scrutiny was coming. In the coming months, we are likely to see many TARP loans repaid as companies work to distance themselves from the intense government oversight.

- Redistribution of Talent: A game of musical chairs is being played among the biggest players in the banking industry with several of the most talented and highly-compensated individuals jumping ship and moving to firms that have already repaid TARP money. Firms like JP Morgan Chase and Goldman Sachs, who repaid the taxpayer money that they borrowed several months ago, now have a strong recruiting pitch for talented executives from other Wall Street firms that are still under the government’s watchful eye. Some of the biggest banks that have not yet repaid TARP funds claim that they have lost dozens of talented individuals to competing firms.

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A blast from the past is making a comeback this holiday season and retailers are hoping that it builds revenue numbers in what is expected to be a slow holiday season. Unemployment is expected to continue rising and is nearly at 10% already, with certain states reporting unemployment rates that are much higher than the national average. California, for instance, the nation’s most populated state, is reporting current unemployment levels over 12%. Almost no one is in a better financial position today than they were a year ago or two years ago, and as a result expectations for holiday shoppers are tempered.

To help give holiday shoppers options for financing gifts this year, many large retailers are offering layaway plans. These programs were used extensively until the early 90’s when it became easy for anyone to get a credit card with a sufficiently large credit line. These plans offer customers the ability to make a down payment on an item and then make regular payments until the item is completely paid for, at which time the item becomes the property of the buyer. This is a viable alternative for consumers with credit cards that are maxed out or for people who don’t qualify for in-store financing. These tips will help consumers use layaway plans appropriately.

- Plan Ahead: Layaway programs are great for shoppers that plan ahead for major purchases but they don’t offer much to last minute shoppers. If you’re thinking of avoiding the giant credit card bill in January this year by using layaway programs instead, you should be out shopping now. Most stores require a down payment of 20% plus a small fee to participate in the program and many stores have a set deadline in order for the last payment to be received in order to guarantee delivery of the item by Christmas.

- Buy From Established Names: A lot of stores are offering layaway programs this year that haven’t done so in past years. However, retail stores are experiencing serious financial hardship and if the one you have goes under this holiday season, there’s a possibility that it could take your layaway dollars with it. A lot of small, individually-owned companies in your local community may offer a layaway plan but some of these stores are at the greatest risk of going under. Some stores offering layaway programs this year include Sears, Toy’s R Us, and Kmart. Companies like Home Depot and Best Buy also offer an online layaway program.

- Understand The Terms: Like any financing program, there are terms, conditions, and fees to understand. You should be clear on the payment schedule as well as any penalties for late payments or cancellation of the purchase. Most programs have a defined due date by which the purchase should be completed. The fees associated with participating in the program are also important to consider. Some stores have a fee structure that makes their layaway program an excellent alternative to a credit card purchase, while others charge a higher upfront fee and interest expenses that might make them less worthwhile to consumers.

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