This is the time of the year when it’s very easier to be in debt. The government will take away 60% of your income just in taxes. House prices after the recent market jump are still out of the reach of the majority of the people. Bank and credit card companies have varieties of offers for you and they will increase the interest rates just when you are unable to afford paying them back.

Don’t be disheartened! There are ways of living a less costly life without being miserable. After the Christmas holidays that might have created difficult financial circumstances, you can still support yourself with these savvy shopping and saving tips.

Always try to concentrate on core items that you will need in your daily life. You can still afford to have things that really matter. Don’t waste your money or efforts on anything else.

When you are out for shopping, don’t buy the cheapest thing thinking that you are saving money. Quality lasts for a long time and will save money in the long run.

Before you go out for shopping grocery, make a list of the things that you need most. Plan the items that you must have and note it down. Don’t buy anything else that is not in the list. Stop impulse buying like when you have to pay for gas, you don’t have to waste your money by buying a bag of crisps, bar of chocolates, or fizzy drinks.

Try to avoid food that is pre packed. You won’t always get the best quality in the packaged food and sometimes they aren’t the freshest. Bag only what you need.

One very helpful tip! Don’t buy items that are stored in the middles shelves of the supermarkets. These are premium items and the supermarkets actually charge the suppliers for that space. Items that are displayed in the middle rack are often the costliest and most profitable items in the supermarket. Look for the items in the lower or top shelves.

Before you go out, eat your food from home only. You will feel hungry if you go out without having your food at home and this makes you spend 20% extra that could have been saved otherwise.

Ready meals are eight times expensive than raw ingredients. So the best thing for you will be to take the raw ingredients and cook it in your home. You will get a new hobby and skill.

When you are out to buy chicken, take the dressed ones and remove it yourself. Pre-skinned chicken portions are assorted and twice the price of the undressed chicken.

Buy nuts from the cake making section where they are unsalted and tend to be much cheaper.

Chop the vegetables and meat very finely. This way you will waste less.

Don’t try to make shopping as a hobby or your favorite pastime. You might get addicted to one expensive habit and it will be your road down to financial disaster.

Remember, all these tips above will drop down your bills. So you can feel proud of your personal financial growth.

Don’t fall for cheap fashion? Before buying anything, first ask yourself whether you really need it. If your heart says yes, try to move away from that place because most of the time, the heart pushes you to be tempted but the mind stays in perfect control.

Always compare prices before purchasing any item. You will not only review the different qualities of products but also get an idea about the price. Then you can make a better choice.

Be frugal but don’t be miserable. Be cost conscious but don’t fall for cheap items. That’s the best way to think when you are going out for shopping in the year 2008.

Your debt to income ratio is a simple way to figure out the percentage of your income available to pay your mortgage after paying other necessary expenses. This Debt to income ratio often abbreviated as DTI is one of the many things that a lender will consider before approving for a home loan.

When you approach a lender, you might have seen a conventional loan debt limit referred as 28/36 as the qualifying ratio. What does this mean? These two numbers refer to the two percentages that are used to examine two aspects of your debt load.

• The First Number, 28%

This number indicates the maximum percentage of your monthly gross income that is allowed by a lender for your household expenses. This will include payments on the loan principal and accrued interests, private mortgage insurance, hazard insurance, property taxes, and homeowner’s association dues

• The Second Number, 36%

This number indicates the maximum percentage of your monthly gross income that is allowed by a lender for your household expenses + recurring debt.

What are recurring debts? This will include your credit card payments, child support, car loans, and other obligations that you may not be able to pay within a short period of time.

• Debt to Income Example

Let’s say you have a yearly gross income of $45,000. Your monthly income will stand at $3,750. From this $3,750 as your monthly income, you will be allowed 28% for your household expenses. i.e. $1,050. If you have recurring debts, you will go by 36%. This means that you will be allowed household expenses for $1,350 along with recurring debt.

Not all the loans stand with the same figures. - FHA loans are different from the home loans. They stand at 29/41. This means that they allow a higher debt load for both housing expenses and recurring debt. For VA loans, the debt to income ratio should not exceed 41% of your monthly gross income.

• How to get approved by your lenders.

If you are interested in qualifying for a home loan, stay within the lender’s debt to income ratio limits. If you show a good overall picture of your finance, the lender may allow you to carry more debts. It’s always best to get pre-approved before you actually look around to purchase a house. This way, you will come to know the price range of your loan repayments that can fit to your budget.

Further reading: http://en.wikipedia.org/wiki/Debt-to-income_ratio

Chapter 7 bankruptcy means liquidation of all the assets of the debtor by a court appointed trustee. All the assets of the debtor’s estate will be sold to pay off his creditors. The debtor has the rights to retain certain exempt property and the rights of the secured creditors. In most of the chapter 7 bankruptcy cases, there is usually little or no nonexempt property. If there is, then that property of the debtor cannot be liquidated. But it rarely happens because the debtor already has no assets to show when the liquidation process is on. These cases are called “no asset” cases.

A creditor who is holding an unsecured claim will try to recover his money from the debtor through the attorney only if he is holding an asset case. The creditor will file proof of the claim with the bankruptcy court. A debtor can easily receive a discharge from the court that releases him or her from any personal liability for certain dischargeable debts. This discharge is acquired in few months after the petition is filed. A person filing for bankruptcy has to qualify in the “means test” as per the amendments to the bankruptcy code. This rule is implemented to prevent any bankruptcy abuse in the year 2005 under the Bankruptcy Abuse Prevention and Consumer Protection Act. Through the means test, it will be determined whether an individual qualifies for bankruptcy relief if his income is already below the margin. If the income is in excess of certain allowed expenses, he may not be eligible for chapter 7 relief.

• Alternatives to chapter 7

As per an individual situation, while chapter 7 will be the only available option, there are several alternatives to it. For example, those who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to continue their business and avoid the liquidation process. For this, one has to file a petition under chapter 11 of the Bankruptcy Code. According to the laws of chapter 11, the debtor might get his dues adjusted through court orders. Either the debt can be reduced or the repayment plan can be extended so that there is no need to liquidate assets.

People having regular income can also seek adjustment of debts under chapter 13 of the bankruptcy code. The advantage in Chapter 13 bankruptcy is that you get an opportunity to save your home from foreclosure if you have a repayment plan set and have every intention to “catch up” the past due payments.

If a debtor’s income is more than the state median, one has to go through the means test to determine whether he is using chapter 7 bankruptcy for abusing it or as a relief. Conditions to qualify in the means test are as follows:

1. Aggregate current monthly income of the debtor over 5 years, net of certain statutorily allowed expenses should not be more than $10,000. If it is, you are disqualified in the means test.
2. 25% of the total debts have to be non priority unsecured debts if it is over $6000. Another alternative of chapter 7 Bankruptcy is out-of-court agreements with the creditors or debt counseling services. This may also be a considerable option to avoid filing chapter 7.

Interest rates on mortgages fluctuate on daily basis. The difference in the today mortgage interest rate and the mortgage interest rate tomorrow may be of only a few points, but these few points too make a big difference in the amount to be paid as interest depending how big your principle loan amount is. Thus if there is a gap of many days between the time you have taken a mortgage rate quote from the lender and the day you close the mortgage deal, check the rate applicable on the mortgage. You can even lock the mortgage rate depending upon the policy of the lender.

In order to get an accurate today mortgage interest rate you need to take a good look at the trends in the factors that determine the mortgage interest rate. There are various macro level and micro level factors that determine whether the today mortgage interest rate will rise up or see a downfall. Let us see what these factors are.

• Macro level factors affecting today mortgage interest rate:

Macro level factors are those that are related to the economy as whole. They would include:

1) Inflation Rate: A rise in inflation rate in the economy leads to rise in mortgage interest rates too. As higher inflation indicates growth in the country’s economy inflation rate depends on various indicators like Consumer Price Index (CPI), Producer Price Index (PPI), rise in Dollar rates, etc.

2) Inter Bank lending rates: Mortgage rates widely depend on the movement in the credit market, which includes many financial intuitions like banks. Thus the fluctuation in rates at which inter bank lending takes place results in fluctuation in mortgage interest rates too. Thus change in Federal Fund Rate, LIBOR (London Interbank Offered Rates), 12-month Treasury average (12 MAT or 12 MTA), Cost of Funds Index (COFI), and Constant Maturity Treasury Index (CMT) indicates change in today mortgage interest rate.

3) Stock Market: The stock market and mortgage market have a great effect on each other. That’s because mortgage rates basically depend on the fundamentals of demand and supply and ups and downs in the stock market have a major impact on the credit supply in the financial markets.

Though most of the mortgage loan rates are based on bank interest rates, sometimes the supply and demand forces have a larger role to play. Thus it is quite possible that today mortgage interest rate may move in a different direction than bank interest rates.

• Micro level factors affecting today mortgage interest rate:

Micro level factors are those that are related to an individual, i.e. the prospective borrower. This means that mortgage interest rate also depends upon your requirements as the borrower. Thus if the amount of loan is going to be high as against your income level then the rate of interest will also go up as the risk factor to the lender increases. Similarly interest rate for shorter-term loans would be lower than the long-term ones.

Also if you make higher down payment or discount points, lower will be the interest rate quoted to you. Your credit history and your current credit rating have a key role in reckoning the today mortgage interest rate.

Happy Christmas to all of you. Enjoy this holidays…