Fed Rules Make Credit Approval Harder to Come by for Stay-at-Home Spouses

Money can't buy you love, Storm Trooper. Sorry.

The Federal Reserve last year announced a new rule that requires credit card companies to evaluate personal income, rather than household income, in making credit card approval decisions. Not only did this move cause a stir among consumer interest groups, it also left many of the folks who aren’t primary household earners understandably unsure as to whether they would be able to obtain credit.

Credit scores are, simply put, a valuable commodity. Decision makers from banks to landlords to employers use these three-digit encapsulations of our fiscal responsibility to make decisions regarding suitability for loans (not to mention corresponding interest rates), jobs, and apartment rentals, just to name a few things. As a result, the difference between excellent credit and limited credit is an extremely expensive one that could create roadblocks for an individual who finds him or herself financially independent for the first time in years, as could be the case in the event of divorce or the passing of a loved one.

That is why the Fed’s new underwriting rules are so troubling to many stay-at-home spouses. Credit cards are generally considered the most attainable and efficient credit building tools, as they report information to the major credit bureaus on a monthly basis and do not require the same debt burden as a loan. However, in the aftermath of this new rule being put into effect, two things have become clear: 1) The Fed’s decision was logical and 2) It doesn’t completely shut out stay-at-home spouses from credit access.

Are You Frugal or Downright Cheap? - Guest Post

If there is one positive that has come out of the Great Recession and the sputtering economy, it’s that people have become much more mindful of how they spend their money. People have discovered that they have far less control over how much money comes in, than they do over how much money goes out. Budgeting and belt-tightening have become the watchwords for families of all economic stripes, unleashing everyone’s inner-frugalness. It wasn’t long ago when you would have been scorned for being cheap. Now you’re praised for being frugal. Who knew?

If you’re still struggling with the concept of frugality for fear of appearing cheap, you need to understand the difference and why one is considered to be urbanely smart while the other one is considered to be, well, cheap.

Frugality requires a sophisticated approach to finding ways to stretch your dollars. Saving money is not necessarily the primary goal; rather it’s realizing more value for your money. In doing so, your money goes further. Isn’t that the same thing as saving money, you ask? Maybe, but what we’re really talking about is a mindset. No one wants to appear cheap, but if you are able to acquire roughly the same accoutrements of life as you did before you watched your money, that’s being smart, not cheap.

Being cheap, however, is simply another form of greed that pits you and your money against everyone else in the world. It’s not about how much money you can save; rather it’s more about how much you can keep from others. Cheapskates aren’t looking for more value; they’re looking for more victims.

A prime definition of a cheapskate is the character of Alan Harper, from the show Two and a Half Men. Here are some examples of his extreme cheapness:

• He lives for free in his friend’s beach house, and never offers to pay rent.
• He always leaves the table at a restaurant just as the check arrives, so that he can avoid paying the tab.
• He sneaks deviled eggs in to the movies instead of buying snacks. Cheap and smelly!
• He only puts $5 worth of gas in his car at a time in the hopes of being able to use someone else’s car to travel.

The airwaves are overrun with shows, blogs, books, and newsletters on living the frugal life. Some people have even elevated (or denigrated depending on your viewpoint) it to a sport (i.e. extreme couponing). Whole industries have launched to cater to the frugal lifestyle (Groupon, Restaurant.com) and some that were once spurned are suddenly en vogue (thrift stores, dollar stores).

There is no shortage of ideas, tips, and resources for living a frugal life style. But be careful. Some are impractical. Some are kind of weird. And some border on just being cheap. Here’s a smattering of ideas and tips taken from a number of blogs and articles on frugal living with our take on their frugalness.

• Take your teen clothes shopping at a consignment store (Very smart – for $30 they walk out with a bunch of trendy and vintage shirts and jeans they pick out themselves)
• Use Restaurant.com certificates to dine out. (Why wouldn’t you if you could save 50% for a dinner out?)
• Re-use coffee grounds for a second or third pot. (Really?)
• For fast food places that only allow one coupon per visit, send your kid in first to order with one coupon and then follow him in with a second coupon. (Sounds pathetic, but what the heck.)
• Getting together with friends: Suggest a potluck and BYOB. Wine tasting gatherings are always popular. (Your friends will appreciate it)
• Take old or stained t-shirts and fashion them into underwear (weird)
• Designate a no-spend weekend. Plan activities at or near your home that won’t require one dime to be spent (smart)
• Go dumpster diving. One person’s junk is another person’s treasure. (weird, pathetic and probably illegal).

You get the picture. The bottom line is that anything you can do within your range of comfort to squeeze more value from your money and your time, is the smart thing to do. Frugalness is a state-of-mind that, when practiced regularly, can only improve your finances and your overall well-being.

Aubrey Clark is an editor and writer for DirectBanc.com, a website that provides low interest credit cards and credit card information.

Guest Post: Know the Habits of Frugal People and Incorporate Them

We are excited to have a guest poster today at Pinch that Penny! More information about the author is at the bottom of the post. I think some of the points are arguable, and I'd be interested in any feedback. In the meantime, enjoy!

Being frugal is about controlling your pennies so that you can allow yourself to splurge in the future. If you don’t exercise control over money, soon money will start controlling you. This may sound easy for you, but leading a frugal life is not as easy as you may think it to be. If you avoid frugality, you are sure to land in high interest debt for which you may have to run to the various debt plans that can assist you in getting out of debt. Different debt relief options have different impact on your credit score and therefore it is much better to embrace the frugal life rather than run to professional debt help companies. Have a look at some habits of the most frugal people.

1) Be proactive while controlling your finances: The first habit of all the frugal people is to take responsibility of their own finances so that no one blames them for the financial mistakes that they might make. Make your own financial decisions without taking the opinion of too many people around you. The more you ask people, the more you’ll be confused about the right steps that you must take to bring your personal finances in track.

2) Start off with the end in mind: The people who are successful in achieving their goals will always be able to envisage the end despite the various obstacles that they come across. If you don’t visualize what you want out of something in life, you can never see yourself as a financially fit person in the long run. If you create a budget today, make sure you clearly visualize what you want to achieve through it and the exact amount that you plan to save through that budget.

3) Set your priorities: Frugal people set their priorities and are always sure about the things that they need in a particular month. They can distinguish between their wants and needs and thereby control the decision of spending their bucks on the things that they need rather than on what they want. Ask yourself about the things that are most worthy to you before you take the decision of whipping your plastics for getting them.

4) Synergize and form a team: To synergize is to creatively cooperate with a team so that you can learn more skills on frugality from others. You may work in a team with your friends, family members and exchange the ideas that you’re adopting to lead a frugal life. Surround yourself with frugal people so that you can mutually benefit from each other.

Saving money, following a budget, eating less out, carrying cash instead of credit cards are some other habits that most frugal people follow to stay on the right financial track. You too can follow if you want to lead a debt free life where you don’t require running to professional debt plans for getting financial help.

Author’s Bio: EHM is a regular writer for various finance related Communities including Debt Consolidation Care. She is a PG degree holder in Marketing and Finance and right now working in a reputed bank as a relationship manager.