Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Okay, I admit. There are those who will vehemently disagree with the premise of not paying down debt, I'm among them, but there are times when not paying down debt makes perfect sense when considering buying real estate and obtaining a mortgage. On the other side of that very same coin, it also makes sense to pay down debt for the very same reason: to help qualify for a home loan. What's up with that?

When debt-to-income ratios are too high for a particular loan program, then getting rid of some of that debt to help qualify is in order. But which debt? Revolving balances on credit cards do very little unless you substantially pay down a credit card balance, from say $10,000 to $5,000, but simply paying $1,000 or so will do very little to reduce the minimum monthly payment on that revolving account. That means the debt to income ratio will barely be affected.

The unchecked use of homes as ATM machines has left many home owners in the uncomfortable position of being former home owners.

Now that they're out equity and have little left to be milked for fees and interest, the big banks have turned to another group: people who have been responsible, paid off their mortgages, and preserved their equity. The New York Times reports that the big banks would "love to serve" these people.

Will isn't that just dandy. Having spent the past decade reporting huge profits (and then huge writedowns) helping financially unstable people get themselves into bigger trouble, the industry is now looking to move on to the more responsible borrowers.

To be sure: some retired people who own their homes outright do need to tap into the equity to provide for living expenses. But as I wrote back in March, retirees need to proceed with caution, especially when it comes to reverse mortgages.:

There's a reason salespeople love these products -- and therein lies the problem. One elderly lady quoted in the New York Times piece paid an up-front fee of 8% -- $17,100 -- out of the initial proceeds of the loan. And the independent counsel that people are federally-required to receive before closing on a reverse mortgage appears to be a total joke --oftentimes it's paid for by the lender making it, by definition, not independent.

Back in October, The Federal Reserve released a startling -- and widely ignored -- study showing that a large chunk of recent home buyers know almost nothing about their mortgages. Here are some findings from the Fed's survey:

• 25% could not identify the APR on their mortgages.
• 25% didn't know how much they spent on settlement charges.
  
• 50% didn't even know much the loan was for.
  
• Two-thirds were unaware of any prepayment penalties.
  
• 75% did not recognize that the loans included charges for optional credit insurance.

Major, major props to Forbes' Josh Zumbrun for digging this up. Zumbrun adds that "It's a point you don't hear much about. Yes, lenders maliciously tricked borrowers, and yes, frenzied speculators bought houses they knew they could not afford. But it's just as true that a lot of well-intentioned people simply signed mortgages they did not understand."

This post is part of a series about real-life signs we're in a recession.

Move over Pampered Chef and Mary Kay. The latest in-home sales "party" concept has reversed the usual guest-to-rep cash flow. Instead of pixie-sized portions of a demonstration omelet, or a makeover that makes your dog bark at you when you get home, the new guest takeaway is cash.

So claim the many "gold party" services cropping up (curiously, overwhelmingly headquartered in Detroit). Companies like My Gold Party and Gold Party by ADI offer to help convert your friends' gold to cash, either by supplying you (for a fee) with the equipment and training for do-it-yourself appraisals or by sending a representative to your home who will set up shop in your kitchen.

Trading your bling-bling for cash is nothing new, of course. Many folks have turned to the jewelry chest when times are hard. Traditionally, you don a scarf and dark glasses and do it quietly in a back room across town. What's new is the idea that parting with Mom's locket or Dad's pocket watch is a rollicking good way to spend a Friday night, accompanied by spinach dip and boxed wine.

As has been reported by WalletPop previously, would-be gold brokers should proceed with caution, particularly if they are required to make an investment upfront. And there are compelling arguments for keeping the lid on your jewelry box for now.

Kyran Pittman blogs at Notes to Self.

Folks, we might have a new winner in the contest for the most hated consumer industry. For years, the hands-down winner was car dealers.

But we think that credit card companies are giving them a serious run for their money!

Most credit card companies are downright ingenious when it comes to cooking up sneaky new credit card fees and dirty tricks that take more money out of your pocket. If you've had enough, keep reading because today we are going to reveal seven of the industry's dirtiest tricks. We hope this list will help you protect yourself, slash your costs and be credit card smart.

Dirty Trick #1: Say "Bye-Bye" to Your Grace Period

No grace period means that you'll start accruing interest the moment you charge something. That can cost you a bundle of "extra" interest.

If George W. Bush wants to do something to stimulate the economy and cement a positive legacy for himself, I have his magic solution right here. If he could get this done, he'd salvage his entire presidency. I'll warn you right up front though, Democrats won't like this idea. So, if you are of the progressive socialist ilk, you may want to move to the next blog post right now. Here's my plan.

If even only temporarily, we need to make the interest charged on consumer debt tax deductible. If I'm not mistaken, didn't they do away with that consumer perk sometime in the mid seventies? If I'm right, and that was part of the old tax code, we should reinstate it immediately. If it's a new and original idea of my own, please leave a dollar in the hat on your way out.

By making consumer credit interest charges tax deductible (again), we'd get an economic triple play. First, consumers would get excited knowing they could finance stuff again, Second, they'd get those interest charges back as tax credits. Third, banks could get a helping hand because consumers might step up their borrowing activity again. The government would just have to bite the bullet and tighten it's belt.

There are only two facets to this plan which would require some serious attention in order to make it work. First, we have a majority of society which needs to be schooled in responsible credit usage. That means we have to teach them how to understand budgeting and what it means to over extend yourself. Second, we need a complete overhaul of the tax code from top to bottom. In fact, the enactment of a "Fair Tax" system might render this entire blog post moot.

As I've mentioned before, I used to teach college. Although I still gripe from time to time about the downsides of teaching -- the poor pay, the administration, the poor pay, the push for political correctness, the poor pay -- I have to admit that there were a few bright aspects. I loved working with students, I enjoyed having a big office, and I really, really appreciated the health care.

Working for a state-supported university in Virginia, my health care was very cheap. In return for a premium of less than $100 a month, my wife, daughter, and I all received medical and dental benefits that, in retrospect, were pretty outstanding. To give you an idea, my daughter's birth cost my wife and I less than $300; taking into account all the prenatal visits and whatnot, I think it still came out to under $500.

Recently, I've been having some dental work done. Now that I am no longer employed by the state, I have come to realize just how great my deal was. As a further lesson, my sister has been in and out of the hospital for the past few months with a chronic liver problem that she has had since she was a baby. As an artist, she makes very little money, but, luckily, Pennsylvania's Medicaid is outstanding, as are the programs at the Geisinger Clinic, the hospital that is treating her. Otherwise, she would probably be in debt for the rest of her life.

Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

My husband and I have $7,000 in credit card debt. Should we take out a home equity loan?

Lyndajoy

Ken and Daria Dolan offer advice on all of your debt concerns at their Credit Resource Center.

Click here to ask Ken and Daria your question.

This post is part of a series about real-life signs we're in a recession.

I've had a couple close calls over the years, but happily, I've never had the experience of having anything repossessed. But if anyone reading this has had something hauled away, if it makes you feel any better, you're obviously not alone.

In this almost-but-not-quite recession, repo men have some enviable careers. Newspapers around the country have been publishing stories about local repo men raking in the bucks, taking away mostly vehicles, from cars to campers, and motorcycles to motor boats. According to KHOU, a Houston TV news station, 1.5 million vehicles were repossessed last year, a 15-percent increase from 2006. 2008 is expected to jump 10 percent from 2007.

But you can't really blame the repo men. They didn't create the current economic conditions, and they are just doing their job, and while I'm sure they're glad to be making extra money (who wouldn't want that?), I doubt these guys are getting their kicks off another person's misery. Besides, somebody's gotta do it.

Some time ago, a woman wrote a letter to The New York Times, explaining how her life had been pretty much ruined by a loan shark.

She had borrowed $50 when her daughter was sick and had to pay three consecutive monthly payments of $22. It began a cycle where she wound up broke and then foolishly went to another loan shark. She eventually lost her job (the loan shark went to her boss when she couldn't make a payment), and finally began working at a new place of employment for a very small salary and naturally couldn't pay the loan sharks she owed money to. She ended her letter by noting that "the blood-suckers are hounding me to death."

She signed her letter, "Helpless."

The year was 1908. One hundred years ago.

Today, that same letter could easily be written, only with the words "payday lending store" in place of "loan shark." That said, a payday lending company may telephone a home relentlessly, trying to get their money back and then some. They may sue a person in court. They may help make life miserable for some people, decimate their credit score, send them into bankruptcy and financially ruin them for years to come, but at least they can't legally send someone to appear in your doorway and threaten your health, or stalk your boss.

Borrowing money with interest rates you can't afford is still a poor idea -- pun intended -- but at least predatory lending offers a safer option out there than loan sharks.

Payday lending stores started to swell in the early 1980s when many banks, angling for better profits, moved out of poorer neighborhoods. That's when the industry truly started to come into its own. It also didn't help when, in 1979, laws were loosened governing interest rates on loans. Before 1979, every state loan capped how high an interest rate could go.

Arguably, the predatory loan industry can evolve even more beyond not breaking people's legs -- much, much more. On the other hand, with 13 states having banned or virtually eliminated the payday loan practice, and many others looking like it may, one has to wonder if this path is just going to take us back where we started. Sure, plenty of people abuse the system, but I half wonder if this will just encourage anxious, occasionally-cash-strapped citizens who feel helpless to someday do something they never dreamed of doing -- like meeting a loan shark in a dark alley.

Geoff Williams is a business journalist and the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).

In the last year, there has been a lot of movement afoot in state governments to either quash payday lending establishments or at least force them to bring down their interest rates. Here's a quick snapshot of how things are going -- or not going.

California: Earlier this month, just as legislators were going to vote on a bill that would have forced payday loan stores to cap their annual interest at 36%, they pulled back. That would have effectively meant that for every $100 a consumer borrowed, he would only have to pay back that $100 plus $1.60 within a two week period.

Oregon: Last July, a 36% annual cap was put on the payday lending industry, and 80% of the stores closed up and went out of business.

Illinois: In 2005, the state put forth many regulations for payday loans under 120 days. So lenders stopped issuing short-term loans and went for loans longer than 120, meaning their customers wind up paying more and going into more debt.

Ohio: They're currently trying to pass House Bill 333, which would do what California was trying to do.

Georgia: Since 2004, payday lending has been a felony. North Carolina has also banned the practice. All in all, there are 13 states in America that have banned or virtually wiped out the industry in their own states: Oregon, Arkansas, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Vermont and West Virginia. They're also illegal in the Virgin Islands and Puerto Rico.

And our neighbors to the north? Just as the payday loan stores are popping up everywhere in Canada, partially due to the influx of Americans going north to get cash, many provinces like Ontario are looking into legislation to regulate the industry.

Geoff Williams is a business journalist and the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).

This post is part of a series about real-life signs we're in a recession.

Normally, the loss of competitors in your field of business could possibly be considered a good thing, giving a boost of orders and income to your own business or employer. In today's economic climate however, the loss of competitors gives me cause for concern. Even as we struggle to accommodate growth in our facility, I'm worried by the downfall of some of our wood products compatriots. I know I've written that it doesn't pay to cry over lost manufacturing jobs, but that doesn't mean we should be without compassion either.

The National Federation of Independent Businesses (NFIB) reports for March that its Small Business Optimism Index is at its lowest point since the second quarter of 1980. Businesses are complaining that increased selling prices are not keeping up with overhead inflationary pressures. Nearly one-quarter of the NFIB survey respondents indicated that they raised employee compensation by a margin which is outstripping profitability increases. I believe that therein lies the downfall of my company's fallen competitors.

One of the biggest concerns I have with these job losses is that they tend not to be felt outside their own regions. We as a country lose a hundred good jobs here or there every day, in a hundred unnamed places. But it doesn't make the headlines because it doesn't sell advertising space. Government statistics never paint the whole picture either. The government bean counters expect that we're too dull to understand that the loss of a well-paid machinist is not mitigated by the addition of yet another undocumented food service worker. They only give you the bottom line numbers, painted with a broad and blurry stroke of the brush.

So, my employer's loss of competitors has a core which tastes quite bitter. As I work my long hours I sometimes pause to think; Was that competitor we lost as much a buyer of my goods as it was a rival? Could my employer be the next to go under, or my neighbor's, or yours? Please say a quiet prayer for the unemployed among us, then get back to work. That is, if you still have it.

This post is part of a series about real-life signs we're in a recession.

My wife and I usually take in a few concerts or comedians during the year as well as catching the occasional hockey and baseball game. This year, however, has proven different on both fronts. We missed the entire season of our favorite minor league hockey team, the Ft. Wayne Komets, and passed on seeing the hilarious Jeff Dunham in Michigan last month. We will also be passing on several concerts in the coming months.

These changes in our entertainment habits were spurred by the rising gas prices and tightening our belt due to the current economic slowdown. Spending $100 plus dinner on a concert when unemployment is rising, seems rather frivolous. Listening to a the latest album in surround sound or catching an HD concert on cable allows us to work on paying down debt and prepare for any consequences of the current economic downturn.

Even though we have cut back, we will still plan to catch some minor league baseball, while we root on the Mudhens! Thankfully the tickets are an incredibly good value, and by going with friends we can keep the gas cost down. We are saving more money by going to the alumni day our alma mater is putting on at the stadium. Group price tickets and a cheap diner nearby make for a fun and frugal night.

While the recession is keeping us from seeing our favorites up close an personal, we don't plan to sit at home and become spinsters. We will still try to take in concerts, comedians and sporting events closer to home and in the company of friends to keep costs down.

Even those with the smallest amount of money management smarts know that there is a way to be responsible with their "tax rebate" check, and a way to be irresponsible. Our government is hoping you're irresponsible with yours. The whole point of the checks is for everyone to run out and spend it on things they might not otherwise buy, giving a little boost to our economy.

But as prices are rising (and there is no shortage of people complaining about it) and people more are in debt than ever before, the most responsible thing to do with a tax rebate check for most consumers is to save it or use it to strategically pay off some debt. That's what Terri Cullen of the Wall Street Journal is hoping her family does with their checks.

But she knows they probably won't. Why not? Because she says they (and many other consumers) look at these checks as "found money." It's an unexpected windfall that's not likely to happen again, so they feel as if they have somewhat of an obligation to run out and spend this free money.

Finance experts will tell you that it's important to keep a close eye on your credit record, for a number of reasons. First of all, a good credit history is the key that opens many doors for you. Not only does it mean you'll have a better chance of buying a house and getting a good rate on a loan, it also has other implications.

Your credit history determines whether you're eligible for a credit card, what your interest rate will be, and whether you qualify for any special promotions. Some employers will do a credit check before hiring you, so that's another place a good credit record comes in handy.

Insurance companies check your credit and factor that in when determining your rates. Better credit means better insurance rates. It's also important to keep an eye on your credit record to make sure no one has stolen your identity and that no credit card company has made a mistake in reporting your activity to the credit reporting agencies.