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- Debt Management – Managing Your Emotions And You Debt Too!
Money makes the world go round they say. But it is people who make money make the world go round I say. So people make (or lose) money and people are just a bunch o emotions and attitudes mixed together.
Interestingly I have seen in life that those who do well with money, are also those who have a positive attitude and are grateful for their blessings. Meanwhile, those who are not doing so well financially, also happen to be the people who are frustrated and feel incompetent. Most people think it is the money situation which creates the emotional situation which could not be further from the truth. - Understanding The Debt Settlement Process
Debt is a tool. It allows people to buy or invest in things and assets that they otherwise could not have done. The benefits of this tool if used wisely are great, but unfortunately, so are the consequences if not used so wisely.
A lot of people and companies use debt to purchase assets and other items that they want or need. As long as the item purchased is providing more value than the additional interest which needs to be paid, it is a smart debt. If the item is not providing an equal amount of value, then it is a poor debt. - Debt Management And Low Cost Living
A dollar saved is a dollar earned. We sometimes have limited opportunities (short term) to increase our income. We therefore will have to get to saving more of what we do earn, if we want to reduce our debt.
The first thing you can do is cook more often at home and eat out less. For starters you will save a bunch of cash in entertainment expenses. Then you will also benefit from being able to buy ingredients in bulk and therefore get a good discount on them. You will be able to eat healthy meals at a cheaper price. - Start Saving With A Savings Account
Everyone wants to be rich and in order to do so we have to be wise with our money. The first thing that we need to do is make sure we save some money every month. This has to be a priority, and be treated like a bill to be paid and not something to be done with what is left over every month. If you try to save whatever is left over, you will not have anything to save.
Now the question arises how much should you save? That’s a topic for a different day however for the time being let me just tell you that general between 10-15% of earnings should consistently go into savings. If you can maintain that kind of ratio then you are well on your way to financial success. Ofcourse, if you can manage to save more than that, please be my guest because that will mean you will reach financial freedom that much faster. - Finance And The Power Of Compounding
The simplest and most powerful tool to understand when investing is the power of compounding. This is such a strong method that even Einstein called it the greatest mathematical discovery of all time. I tend to agree because unlike calculus, everybody can get, and regularly use this concept.
For compounding to work only two things are required. Firstly, it is the reinvestment of earnings and secondly it is time. The longer you give your investments the more powerful this tool becomes. This is much easier to understand with an example. - Closing 2006 On A Strong Financial Note
It’s that time of the year again when you are looking to close the year and begin a new one. Here are some tips that will help you close and get started on the right foot.
1. People First - Protection During The Holiday Season
It’s that time of the year again. Everyone is going for the last minute grabs at the stores for their holiday shopping. More people are scurrying to the malls and therefore more people are charging their plastic. That also means more people are becoming prey to identity theft as they cross off each item from their shopping list.
Don’t become a prey to such bandits and take the following precautions to make sure your holiday stays happy:- - Gifting Financial Fortune
Being the season of giving and receiving gifts it is appropriate that we take a look at what we have been giving and what we have been receiving. Are all the toys or gifts that you gave to your loved ones still appreciated? Probably not. Are all the gifts that you received last year still appreciated by you? Probably not. But a small fortune has been spent on these gifts and now that money seems to have caused only a brief amount of joy. Is there not a way to make that joy last longer.
Ok your kid won’t appreciate your investment fund for him or her today, but when it is worth thousands or hundreds of thousands of dollars, I am sure they will. The younger the age you invest for them, the more they will get. It will also help them understand the value of smart spending. Here are some ways to do this. - Why We Have Bad Financial Habits
There are so many things that we all do on a regular basis even though we know that we should not be doing them. This could be from smoking, driving and talking on the cell phone at the same time or eating too many chocolates. Whatever it is, it is not easy to break a habit. Habits are formed over a period of time and therefore will also take some time to get rid of. That includes all financial habits. Spending too much, not paying your bills regularly or not saving enough. These are all bad financial habits.
In order to get rid of your bad habits it is helpful if you understand why they are hard to break. Here is the deeper underlying element that you don’t always consider but should be doing so. - Principles Of Prosperity
There are those who are rich and then there are those who are not. What is it that makes the difference? It isn’t intellect because I know one too many fools who are wealthy. It isn’t luck for we have all heard of stories of grime and dirt where one overcomes all odds to reach their destination.
It is really a matter of following a few simple principles in life. - Things To Check If You’re Starting A Business
Many businesses need licenses to function and indeed, to be legal. If you want to buy and sell real estate you need a real estate license, likewise for insurance, stocks and bonds, etc. Many licenses are required if you want to go into the food business, either producing food to be canned or packaged for distribution or opening up a restaurant. Incorporating your business in another state can be attractive, in terms of lower or no taxes, but it involves getting a registered agent, etc. Even in states where you are not incorporated, you may have to register that you are doing business in the state. If you are not forming a corporation or Limited Liability Corporation, you may still have to register with the town, the state, etc, when you are doing business using a name other than your own. You may have to register that you are doing business as (DBA) Joe’s Pizza, for example.
Do you have an idea that needs to be protected, copyrighted or patented? If you have an invention you will need to take out a patent for it, so you have the exclusive rights to that invention for a set period of time. You may also need to copyright trade marks, written works and other materials. The U.S. Patent office is a huge operation that has been in existence for almost as long as the United States itself. There is even a provision in the U.S. Constitution protecting and encouraging the right to copyright and patent new inventions. You just have to use it. Make the necessary applications, and get competent legal advice.
Have you complied with state and federal regulations regarding the protection of employees? - Keeping Records For Your Business
Keeping records for your business, whether a small one-man self proprietorship, or a business with dozens or employees, can be both necessary and helpful to your business. By keeping adequate records, you are able to get an idea on a regular basis if your business is expanding or not. You want to check with that increase of gross volume of business, is your profit margin going up or down. Then, on a long term basis, you need to know what investments you need to make, and over how long a period of time they will take to “pay off”. Good business records are also necessary to satisfy the IRS and legally and clearly pay the correct amount of taxes to local, state and federal authorities. - Getting Insurance For Your Business Is Worth It
Getting the proper insurance is a necessary expense in running your business. Various types of insurance policies are also extremely helpful in attracting and keeping good employees. Everyone needs health insurance, and other types of insurance are helpful including life insurance, long-term care insurance, dental insurance and eye-care insurance.
Your business itself can face many calamities that require proper insurance. It’s just an additional expense you need to factor in. For example, whether your business is located in your house, an office, or another building, you need fire insurance and possibly flood and other types of disaster insurance. This is collectively known as property and casualty insurance.
Some of your jobs could be considered to cause your customers problems that cannot be solve by fixing an order or replacing an item. If you are doing medical billing and your actions are believed to cause a major foul-up for your customer you could actually be sued. The same is true for various phases of the construction business, goods production business trucking and many other types of business. Almost any type of business from goods distribution to maid service can be the subject of a killer lawsuit. If you obtain legal liability insurance, the policy will cover your expenses on lawyers up to a certain limit. They also can give you coverage of any liability settlements you have to make, up to a previously agreed upon limit. Then there are other types of insurance that include damages to third parties in a professional capacity, when you are acting as an accountant, a doctor, etc. This is general malpractice insurance, and in the medical field this is compulsorily. - Raising Capital For Your New Business Explained
Then, there are those businesses that lose money year after year, and it can be a mystery how they continue to amass investment capital and continue to grow. These are intangible values called “goodwill” that actually, in an adequate accounting statement, is put on the books. If the “Youtube” website is purchase for $1.5 billion dollars, it has to be explained to the stockholders of the purchasing company, why this money has disappeared from their assets, to buy a company that has never earned one dollar in the positive column. This value is chalked up to “goodwill” that the purchasing company has acquired. They have acquired a brand name and a distribution network that will be (hopefully) profitable enough to warrant the initial large investment that was spent.
How is it possible for businesses to lose money year after year? This is a process facilitated by raising capital. Some small businesses in the start of phase have great difficulty raising money on the capital markets or from investors. The owner is obliged to borrow money from his home equity, his credit cards, and any other personal assets he or she has.
In general, there are two ways of raising capital. You can get a loan, and go into debt, or you can sell part of your business, your equity, by selling shares. As your business becomes more established, it will be easier to get bank loans. Often companies selling goods sell part of their accounts receivable at a discounted rate of 10-20-percent or more. This is called factoring (of your accounts receivable), and has the advantage of accelerating a companies cash flow cycle. That is the time cycle it takes for money invested in producing new inventory to be sold, and for cash to be collected and deposited. Another source of loans is the U.S. Small Business Administration. It is worthwhile to check with the local Chamber of Commerce if there are other local or state government sponsored loans available to you. For example, many states and local governments have been making loans and even grants to promote energy efficiency and conservation is small businesses in the recent period. - Financial Operations Analysis Of A Company
What percentage of a company’s assets is fixed assets versus liquid assets? We need to know how much is being invested in the company over the long term. Another important factor is your fixed assets as a percentage of your total assets. One of the standard measures that you will find in the industry is the percentage of long term debt compared to equity. This ratio will immediately demonstrate the risk the company is undertaking. Of course, this can only be done taken into account the amount of fixed capital necessary in a given industry. A service type company or distribution company is not going to need as much fixed capital as a manufacturing company. Manufacturing companies take raw material or purchased parts, and provide some value added through labor and machinery. The product is then sold directly to their customers or to distributors of the product.
After we get an idea of the supply chain efficiency, we want to look at manufacturing efficiency, which we can understand by calculating the number of days it takes a company to send products through its factories. We want to work up what is the total cash cycle, which is how many days before the goods are manufactured and sold.
If a company can knock thirty days off the cash cycle, they could offer significant cash incentives to gain concessions from some key suppliers. It is this type of analysis that brings tremendous value to the total Cash cycle. One example of a company that has successfully used this type of analysis is Dell Computer. Dell has built their focus on cash conversion to capture significant market share from their competitors, and build a business model that is allowing them to move beyond personal computers and into other retail electronics, while still dominating their market. Adding in the supply chain efficiencies, Dell’s materials and parts move through their warehouse, manufacturing, and distribution to the customer in just over one week, while their competitor takes almost a full two weeks longer. - Understanding How To Look At A Business
Understanding whether a business is doing well or poorly, is not a transparent thing. A company can be making a profit on paper, but have all of its equity locked up in inventory or plant and equipment. One of most dangerous phases for a business is after it has gotten through the initial start-up phase and is now trying to expand. If they borrow a too large loan and have trouble earning enough to pay it back they could go bankrupt very quickly. To understand how a company is doing, start by looking at the operating cash flow.
This immediately tells us how regular operations can finance the everyday operations of the business. Remember your available cash is extremely important. How much of that cash is not tied up in capital expenditures? This is the free cash flow. This is operating cash flow minus the cash invested in capital expenditures. Next look at sales - the investment cash flow, we want to see how much the company is spending on investment. If a company is not raising enough cash through the operating cash flow to cover their investments, they will have to go to financing or get financing equity capital. That’s when companies raise cash flow from the capital markets. It can be safer for a company to raise capital from investors or even run an IPO (Initial Public Offer), though there is the danger of the owner of the company losing control of the company at least partially.
If you are selling parts to a computer company, or other company operating in the IT sector for example, you want to help them understand their customers. When trying to sell to such a company, you will gain a great deal of credibility if you discuss the operating strategies of similar companies in the industry.
You have to look over their industry and how they relate to and compare to other companies in their industry. This will allow you to understand the possible challenges that company is dealing with. It is important to look beyond the current operating challenges and try to broaden the scope of what a business is facing. - Do Your Profits Pay For All Your Overhead?
Business people can fool themselves often about what their profits really are. Profits are not only cash available that you can spend as salary and reinvest in a business. Profits also have to pay all taxes, fees, and service all loans outstanding. “Goodwill” earnings through the development of a brand, internet site or distribution network can warrant years of investment in companies that on the books have losses year after year. Then the owners sell the company for some huge billion dollar figure and make a big, in the pocket, profit. When looking at a company’s profit and loss statements, we first look at its top line growth. Is it making more gross sales? Is the profit margin increasing or decreasing? Is a decreasing profit margin compensated by a larger volume of sales?
Next one must look at the net profit margin. This also has to be measured against the interest expense and other charges from borrowing capital. To continue with this analysis, you need to tell the difference between your costs- that is your necessary costs of production; and your expenses- whether you need to rent extra plant space, higher more sales people, and is this a smart move. When determining your profit, after looking at your gross sales, you have to look at the cost of goods sold. This defines your net profit potential. - Relating A Company Statistics To Its Operation
There is a lot of material out on the information highway on what companies are doing. First let’s look at how fast a company that you are trying to sell to is turning over its inventory. The most accurate way to find the answer for inventory turns is to add the inventory values from the last four quarters, divide by four, and use this as your inventory number. You would then divide the inventory into the COGS, the Cost of Goods Sold. The result gives you an idea of how much inventory passed through versus the cost of the goods. Look at the asset structure, net working capital, long term debt, goodwill and intangible assets and the company’s leverage factor.
The asset structure tells us what assets the business needs – or is using – to operate. Working capital is the “grease that keeps the wheels of the organization turning.” Long-term debt will show us how the company is utilizing long-term debt to finance its objectives, and give us an idea about the risk profile of the company. An industry that requires heavy investment in fixed assets to generate sales will have a greater need for long-term debt. The amount of goodwill and intangible assets will show what growth strategies the company is following. If the goodwill account does not show much growth year over, and the company is growing sales, then we can draw some conclusions that the company is meeting its internal growth quotas, or it is acquiring companies that are valuable. The leverage factor is another way to check financial risk. This tells you how much of the company is owned by the shareholders versus the creditors. Too much long-term debt can be dangerous, while too little may indicate that little or any investment is going on in the company. In today’s acquisition happy world, some large companies are too busy accumulating trophies and companies, to invest in their production. - Looking At Business Profits And Losses
You will be focusing on what your prospect worries about every single day. Frame your discussions around your understanding of these, and you become a “trusted advisor” rather than just a sales person. You can learn to analyze the data that you get just by reading through the company’s website. There you can get a really thorough financial breakdown, more thorough than in the 10-K report filed with the SEC.
Then when you meet with an executive, you can get the conversation to revolve around his specific challenges. “It looks like your penetration strategy has yielded solid results. How are you dealing with the challenges of your top line increasing 36 percent year over, while gross margins tighten?, instead of dealing with generalities. You force your mind to study a group of five or so metrics. In this case, you have the balance sheet. Break it down into five categories: the fixed assets, the net working capital, the long term debt, changes in goodwill and intangible assets and leverage. You can define leverage as the total assets divided by the total equity. The trend in top line growth is one thing they obviously want to see this trending up. - Offshore Trusts Used To Protect Income
It seems that overseas trusts, in order to shelter your money from taxes, are expensive to run. You are forced to travel to attractive places like the Cayman Islands, or not so attractive ones like the Isle of Man. It’s not really worth it unless you’re talking about at least 1 million dollars of income to protect. Some say, you really need $20 million to make it worthwhile. An overseas trust is a good but not foolproof way of protecting your assets. Even if the corporate veil is pierced, it will definitely slow down your creditors for a while. They cannot use lawsuits to go after you from the United States; they have to file suits in the offshore entities. They really don’t want to do that because it’s expensive and time-consuming.
Tax shelters are so effective; they upset a U.S. Senate committee. The Senate wants publicly traded U.S. corporations to disclose their ownership of assets in the famous tax havens of the Cayman Islands, the Bahamas, and the Isle of Man. In terms of marketing, trusts are advertised as a way of protecting assets from creditors and lawsuits. United States citizens have to pay taxes on all income that is generated worldwide. Of course, if you don’t admit to making a certain income and no one can find the income, or if you misrepresent the source of the income when it shows up in your stateside income, probably no one can make you pay taxes on it. - Stock Options Continue, Despite Scandals
The stock-option backdating scandal has hit over 150 companies nationally as of October 2006. The financial advisory firm Glass Lewis has said that over $10 billion is involved in the various companies charged with backdating stock options. The analysis was in Glass Lewis' weekly ``Trend Alert'' advisory.
Stock-options generally are a perfectly legal option for companies to reward their employees by giving them a discounted option to buy stock. The idea is to bind the employee closer to the success or failure of the company, and reward him or her for better performance, by being able to tangibly share in the company’s shareholder value.
Some companies choose to have broad-based employee stock option plans. These plans give most employees the right to participate. An employee stock ownership plan (ESOP) is a type of employee benefit plan. The company contributes its own shares to the ESOP plan and arranges for this to provide tax benefits for the company and its employees. Many of these plans involve companies that have not “gone public” and are closely held. Probably as many as 10 million employees in the United States participate in stock option plans. Other plans allow employees to buy stock through payroll deduction plans, through a substantial, 15 percent or more, discount. ESOPs from a legal standpoint are different from straight employee stock option plans, in that they are much more broad based. The scandals involving stock options involve leading executives who are allowed to buy stock at a price that has been dated in some cases years before the present, so they can make an immediate profit selling stock of over 50 percent. - Planning Your Household Budget
Writing out a household budget can be a complicated thing. While some people just look at their immediate rent or mortgage, food, transportation and entertainment budget, there are many more factors in a family budget. A family with two or three children must plan for the future of those children. If they are healthy, it is expected they will eventually be self-supporting, but the educational process can last until age 25 and beyond in some professions. Family savings can also be quite complicated. Social Security is worth only so much, and under new budgeting plans will not go into effect at full value until a person reaches the age of 70, for young people now entering the workforce. This means that it is necessary to set up an IRA plan or a 401k or other retirement investments.
Savings can be a tricky subject as well, because there are both short-term and long-term savings. There is the $100 a month you have to put away for Christmas/Holiday presents for friends and family, and more money for that if you plan any major purchases. Every family needs some amount of immediately accessible emergency fund in addition to insurance, in case there is sickness, unemployment or accidents in the home or to the family vehicles.
Healthcare expenses as well can be tricky. Many health plans on the surface look comprehensive, but watch out for extra expenses. Even a little thing like a $30 deductible can easily add up. If infants need to go to the doctor once a month, over a year, that will be a $360 expense just for the office visit deductible. Unfortunately today, there are many health plans that in the case of operations or prolonged hospital stays require 5 percent to 20 percent out-of-pocket expenses for these extremely expensive medical procedures. Surgery, even of the run-of-the-mill type can easily approach and exceed $50,000. To pay 10 percent of that would require $5,000. - Seeking Value In Commodity Speculatio
With the decline of the value of the dollar by over 10 percent over the last year, the need for items of long-term value is increasing. Many investors have gravitated to gold and other precious metals, but base metals, energy supplies and other commodities are also favored. There has been a long-term increase in oil, coal and natural gas prices. Even uranium prices have increased dramatically. Copper, iron, steel, and other commodities have had a huge run-up in price over the last few years. The rising prices of commodities over the last few years reflect the massive inflation in financial values. Investors trying to own commodities, from oil to gold, are trying to hold on to something that is real. This is in contrast to the huge amount of speculation going on in the financial markets, the international hedge funds operations, etc. Oil prices have gone up slightly recently, but have stayed below their peak several months ago. A mild winter weather forecast in the United States means that energy prices in general should not go up too much unless there is another major war in the Persian Gulf area. Now that the real estate bubble in many parts of the world is popping, this tendency to seek values in commodities can only intensify. - Hedge Funds And M & A’s
The merger mania is continuing, with many firms in the United States and Europe being bought up by hedge funds. An enormous amount of capital has flocked to hedge funds in order to exploit the low or non-existent tax rates in offshore financial centers such as the Cayman Islands and the Bahamas. The US and other major stock markets are not going up at a level to satisfy the financial lust of the ultra-rich, so the idea is to move into hedge funds since they are what are called “market neutral”. It is a manifestation of the hyperinflation tendencies that all this money is around to run M & As. Lear Corporation announced on Dec 1st its deal to sell its interiors business to Wilbur L. Ross's International Automotive Group North America. The Bank of New York is buying the Mellon Financial for $16.5 billion, to create the world's largest security servicing firm
The value of the dollar has dropped by 11-percent so far this year, and of that 3.6-percent in November. It plunged to a 14-year low against the pound sterling pushing the dollar/British pound rate close to the $2 level, where it hasn't been since 1992. - Bankruptcy And Your Business
Bankruptcy for your business can be a traumatic event. However, it can become necessary, and at a certain point there is a need to move on in your economic life, just like it can become necessary in your personal life. Bankruptcy can happen to a business in a variety of ways. When someone is running a home business, they may have a series of orders that fall through while production or buying of inventory continues. They find themselves stuck with more inventory than they no what to do with and may simply sell off the inventory for whatever price they can and stop the business by inertia. - All That Glitters Is Gold An Silve
There is still a huge demand for gold and silver. They represent the traditional means of retaining economic value when financial systems fail or go into hyper-inflation. Gold and silver have gone down quite a bit recently, but are still far above the price level of just three years ago. - Bankruptcy After The New Law
It has become harder to go into personal bankruptcy, but the condition of not paying bills remains whether or not formal bankruptcy is filed. The changes in the bankruptcy code of 2005 have really not changed very much. The cost of going bankrupt has increased from the $1,000 range to now more like $1,500. This is not only because of additional paperwork, but also because those going into bankruptcy must receive debt counseling both before and after they file bankruptcy.
Reports from law offices around the country are that just as many, if not more people are inquiring about filing for bankruptcy, but less of these people are actually going through with it. When people find out that in many cases, now they make too much money to file a Chapter 7 bankruptcy (writing off non-secured debts) and now must go through a Chapter 13 bankruptcy, often they will not do the bankruptcy and try to just muddle through. There is no a means test, so a family of four, with an income over $65,000 in many states will be forced to sell their home, etc. in order to go through a bankruptcy.
Now, with the foreclosure today rate double of that of 2005, this situation can only get worse before it gets better. There are millions of Americans, who bought into the 2001-2005 real estate bubble. Their Adjustable Rate Mortgages (ARM) and the ARM with payment of Interest Only (IO) are now reaching the point in time that the payments are 50 to 100 percent higher. If the housing bubble was still you could refinance your home or buy a new home with an ARM mortgage, but now that option is out. They could get additional credit card loans but that is only a temporary solution that will make matters worse. The amount of bankruptcies in the period before the new law went into effect in October 2005 was huge. - Hedge Fund Frenzy
Hedge Funds are a bit funny; you have to pay 3 to 4 percent for management fees and other fees, plus about 20 percent of the profit, yet more and more people are crazy about them. For many years average hedge fund returns were 11 percent according to Business Week, but now the returns have become lower on the huge amounts invested in hedge funds. Maybe there is too much competition. Many smaller investors are involved in hedge funds through fund of fund groups, which require as little as a $25,000 investment, as opposed to a $1 million investment directly in a hedge fund. A fund of funds is a mutual fund that invests in several different hedge funds. This gives an opportunity for smaller investors, but the fees are higher, since there’s one more level of management to deal with. Altogether there is believed to be $1.5 trillion in hedge fund money in about 8,000 different hedge funds. They are under increasing pressure to be regulated after the largest collapse of a hedge fund ever, the Amaranth fund, which cost investors over $6 billion. - The Mergers And Acquisition Wave Hits
There is a wave of mergers & acquisitions hitting Europe and other places. The Leveraged Buyout (LBO) and Mergers and Acquisitions (M & A) frenzy seem to be back with a vengeance. According to Reuters in Dec 2006, equity firms held more than $300 billion, with the prospect of firms being bought out and even going private. This is a big force driving up parts of the stock market, while others continue to collapse. Stocks go up because there is a rumor of a company being the target of an M & A, also known as a Leveraged Buyout (LBO). Private equity firms (that includes I believe, hedge funds) have a lot to spend, and they are doing deals all over the place. The Japanese Yen carry-trade may be winding down, but there is plenty of hot money still out there at relatively low interest rates. The monitoring organization Dealogic is listing over $600 billion in private equity deals for M & A, and a total of $3.6 trillion in M & A. This is up almost 100 percent over last year. So, there is a tremendous amount of speculation going on, with much fear from the U.S. Treasury Department’s Paulson, and the Federal Reserve of this frenzy or bubble coming to a bad end. - What Happens After The Bubble
Real estate prices have fallen across the United States, and most rapidly in the location that were the parts of the real estate bubble going up the most rapidly in the last five years, such as Florida, Arizona, and the Boston, Mass. area. Still, some areas must be better opportunities for new buyers. After all the question remains, has the bubble gone down far enough, or does it still have a lot more to go. In any case, you have to live someplace, so you may be likely to buy a house or apartment somewhere anyway. If you live in some areas, like much of upstate New York, there may never have been much of a real estate bubble to worry about in any case.
On the other hand, on the Jersey Shore, and in suburban New Jersey’s Bergen and Passaic County, near New York City, a real estate bubble has definitely been built. For example, on the Jersey Shore (New Jersey), not far from New York City, the foreclosure rate on homes is climbing in some fairly ritzy neighborhoods. The foreclosure rate has doubled both there, and in nearby Bergen and Passaic counties.
Some sub-prime mortgage lenders sound weak and some are actually closing up shop. This is becoming a major financial development. H&R Block, the famous tax accountant firm, took a loss of about $135 million mostly from losses in their mortgage subsidiary. Option One Mortgage, and its sub-prime unit have been taking a big hit. - Junk Bonds And The M & A Craze
The merger mania is back now even at a higher level than during the days of Michael Milliken and junk bond mania. Of course, a lot of investors got severely burned when large parts of the junk bond market crashed in the late 1980s. Now junk bonds are back. There is a chase for higher and higher bond yields and may the risks be damned.
Already, the KKR deal earlier this year to buy up HCA (Hospitals,etc.) is bigger than the buyout of RJ Nabisco. In a deal like that, some 20 to 30 percent is raised in the equity market and the rest is grabbed through the sales of junk bonds. So, the question is, who are these high flying investors buying risky junk bonds at high interest rates, but no security except a plan to buy up a company, and perhaps immediately divide it up and sell it off, to make a profit? We really can’t say at this point except for the usual players: hedge funds looking to park money in a deal, make a profit and sell it off; equity funds looking to do the same; pension funds able to ride out the deal for a longer cycle, and the other usual suspects.
The default rate continues to be fairly low, but it could go up fairly rapidly. In 2001, when the tech boom and NASDAQ went bust, there was an overall default rate of 10 percent, so it has happened before, and certainly can happen again. It can be a bit scary, because companies are financing themselves at high interest rates. Tech start-ups can be financing themselves at bond rates as high as 17 percent. That is into the loan shark range. Many restaurants and construction companies are paying 10 percent or more. These high interest rates, or usury rates are an added expense in the overall economy. - Some Debt Is Actually Good
When you hear the word “debt” it can seem as if it is being uttered in the same breath as “sin” or “evil” or some other word that conjures a negative response. In some cases this is very true, but there are examples out there where taking on debt is actually a good thing especially if the long term results work to your advantage. Read on and we’ll take a look at three examples where debt can work to your benefit.
New Car Loan – Buying a new car can be a necessity especially when dependable transportation is needed. Not everyone is handy with working on a car and not every one has the time to make repairs. On the other hand, a new car can give to you years of safe and dependable travel, something that is hard to put a price on. To minimize your debt, seek out a new car offer with zero percent financing. That way you pay only the principle back on the loan and you can always bank the cash. - Smart Reasons To Have A Prepaid Debit Card
A prepaid debit card is a card that is not tied in typically tied in with a bank account. Instead of linking to your account, you obtain the card and deposit money to use later on. Kind of like a bank account on the go, you can replenish the card when it gets low and start using it again right away. The safety, security, and affordability of this type of card are obvious. Let’s take a look at some other benefits related to using a prepaid debit card.
Check Cashing Locations – you can avoid these costly and high fee businesses by having your employer deposit your funds directly into your prepaid debit card account. - Save Money On Your New Car Purchase
If you are in the market for purchasing a new car somewhere in the mix of that decision is how you will actually pay for the vehicle. If you are fortunate enough to have the cash, then more power to you. Even so, you may be looking to save some money on your purchase. With so many offers out there, why pass up on a chance to save money? If you aren’t particularly brand loyal then there are some great options for you. Consider the following when trying to save money on a new car purchase:
Season Ending Deals – As the old model year ends, new models are poised to show up in dealer showrooms. Trouble is, many dealer lots are filled with older “new” cars and dealers are anxious to push them out. Some of the best new car deals come during the late summer, early fall period. Rebates or cash credits in the thousands of dollars suddenly become available; however, don’t settle for just those rebates as manufacturers slip incentives to dealers to push out older cars. You want a piece of what they are getting! - Save Money On Your Home Heating Bill
With fuel prices surging, this winter’s heating bills are certain to rise accordingly. For many consumers higher prices to heat homes will take their toll on budgets. You can’t do anything about heating oil prices but you can reduce your heating bill by following several simple steps as outlined below.
Turn down the thermostat – If you are used to heating your home at 70 degrees, then 68 should do. Drop it down to 65, put on a sweater, and reap the savings. Even a drafty house can be comfortable enough if you dress appropriately. - Sensible Money Management Tools
If you are struggling to pay your bills every month, then you are not alone. According to many consumer experts, as much as two thirds of all consumers find it difficult to get beyond living from paycheck to paycheck. Certainly, some of these cases can be attributed to poor money management styles while others can rest squarely on life’s circumstances: you just don’t have enough money to make a go of it. Money advisors will often pitch a product to help you get your finances in order, however many of these products will cost you money and quite possibly exacerbate your problem. There has to be a better deal, right? Yes there is and I will share some sensible money management tools to get you back on track.
You may eventually need to see a debt counselor regarding your financial situation, but in the meantime let’s assume you can do some things on your own. Some sensible money management ideas include: - Watch Out For Hidden Moving Costs
Not all moving costs are apparent and they can sneak up on you when you are most vulnerable: your home has been sold and you are ready to move to another state. With that in mind, there are several things you should be on the lookout for when it comes to keeping a lid on your moving costs.
Related Supplies – Unless your moving company is providing these things for you free of charge, you’ll need to purchase more boxes and packing tape then you ever imagined. This expense alone can add hundreds of dollars to your move, but you can lessen the burden by grabbing every Xerox paper box at work that is available to you. Some companies make money off of recycling while others must pay to have their recyclables removed. Contact a local company and see if you can help relieve them of their burden somewhat. - Should You Purchase Your Health Care Coverage Online?
If you are in need of healthcare perhaps you have been charmed by sites offering you free health insurance quotes for you and/or your family. These sites often are run independently of health insurance providers; instead they offer a number of different choices from a variety of healthcare companies. Are you shopping online for healthcare coverage? If so, let’s take a look at what you need to look for when selecting a provider.
Without naming specific sites I can tell you that there are three to four really good ones chock full of useful information. Depending on the state where you reside your options can vary, therefore it would be wise to visit several sites to get a feel for what they are all about. - The Terrific Advantages Of Online Banking
The whole notion of online banking was just a dream a generation ago. Yet, even then the seeds of online banking had been germinating in the form of automatic teller machine networks that allowed consumers to withdraw funds from various locations around the country, around the world as a matter of fact. Today, online banking is in vogue and everyone seems to be jumping in. Indeed, few financial institutions do not offer online banking – to not have this service available means certain ruin for banks, credit unions, and savings and loan associations who fail to keep in step with current demands. There are many terrific advantages in online banking…do you know them all?
With online banking you not only can withdraw money from an ATM, but you can transfer money between various accounts you have at your bank. Or, if you have another bank that is almost exclusively online, such as ING Direct, you can transfer money between these two institutions seamlessly. That way if ING is paying five percent on savings and your branch bank is paying a pittance, then you simply keep the bulk of your funds with ING. When you need money for your checking account, you simply transfer funds back to your branch bank. - A Countdown To The Five Most Low Down Dirty Scams
As much as any one tries, it is becoming more and more difficult to keep pace with the clever scam artists that are operating in various markets today. No sooner do people find a method to safeguard from one scam than another emerges in the market. This article provides a countdown to the five dirtiest scams operating in the world today.
Number Five: Mortgage Elimination Scams - Tumbling Home Sales Can Work To Your Advantage
Not everyone is upset that home sales are dropping sharply in some markets. Sellers, realtors, and mortgage lenders are, but buyers certainly are not part of that group. Years of overheated housing markets have taken their toll as home prices have surged, locking thousands of buyers out of the market. If you are looking to purchase your first home, then a slow moving market can work to your advantage if you follow the tips outlined below.
Know Your Market: Now is not the time to rush in and buy a home. In years past, many buyers did just that and bidding wars broke out that pushed home prices up by the tens of thousands of dollars. Sellers won and buyers were saddled with more debt that they needed. Relax: with less people in the market to buy, you can sit back and truly explore the housing market to find a home at a price you can afford. - Ways To Avoid Identity Theft
Identity theft continues to grow as a big problem all around the world. From Frankfurt to Toronto and from Nairobi to Sydney, consumers the world over are finding that their very identity are being stolen and reused. Billions upon billions of dollars are lost every year because of thieves, even entire rings of crooks, who get a hold of your personal information and use it to their advantage. You can avoid identity theft and ensure that your information stays hidden from intruders if you follow all of the steps outlined as follows:
Secure Web Sites: Although many folks believe that the internet is a big identity theft pool, it really isn’t. Yes, if you answer one of those “phishing” emails you could be snagged. However, most shopping online is done through secure web sites, making it virtually impossible for thieves to steal your personal information. - What Are Bad Credit Bank Accounts?
If you have a bad credit rating, then you know restoring your credit to a good or excellent rating is essential in order to get the best rate on loans possible. The higher your credit score, the lower your interest rate charges will be for loans. The lower your credit score, the less likely you’ll be approved for a loan in the first place. One way to start building up your credit is to create a bank savings account; please read on to learn how a bad credit bank account can work to your advantage.
A bad credit score can really hurt. You’ll pay more for a car loan, have difficulty obtaining a mortgage, and credit card providers will really sock it to you. Moreover, you’ll have a much more difficult time borrowing money from anyone. One way to counter all of this is to establish a savings account at a local bank. By regularly adding funds to your account, let’s say $10, $15, even $25 per pay period you can show creditors that you have assets on hand. For the moment, a creditor will consider your savings account to be a bad credit bank account, but that can all change as you build up funds. - Get Help Shopping For Healthcare Plans
Health insurance is one of the basic requirements in today’s medically expensive world, but the process of taking a suitable healthcare plan could be a harrowing experience for most of us. In order to make the situation a bit easier, the following guidelines could be of valuable assistance:-
(1) With any healthcare plan, the most important thing to decide is what doctors you will get in the network. Several people are accustomed to particular doctors. If you want to continue seeing your own doctor, then you must make sure he is affiliated to that particular health plan. Remember that all doctors are not affiliated to all healthcare plans. - You Can Afford A Maine Home
As the eastern most of the lower 48 states, Maine is nearly in a category all of its own with more French speaking residents then any other state. Having more in common with neighboring Canadian provinces Quebec and New Brunswick, Maine is also one of the least densely populated states in America. Are you buying a home in the Pine Tree state? Have you finalized your financing yet? If you answered yes and then no respectively to these questions, please keep reading for some tips on how you can make Maine your home state.
From Boothbay Harbor to the Quebec border, Mainiacs as some residents like to call themselves, have an independence streak that rivals the weather. Quite frankly, to live in Maine means you must enjoy long, harsh winters as summer is brief and colder weather dominates. - The Benefits Of Debt Settlement Companies
Debt settlement companies could be blessings to people who are reeling under heavy sums of debt. When signed up for their service, these companies would negotiate with the creditors of the borrower and arrive at a reasonably low amount of repayment. Doubtless this reduction of the debts would be subject to a wide array of conditions, but still it is beneficial to the borrower who is unable to meet up with the monthly payments. Reputable debt settlement companies could effectuate a reduction of even as much as 75% of the owed amount.
However, searching for the right debt settlement company could be an uphill task. Important things to know are what the companies would do for their borrowers and what their modus operandi is. Once this is understood, the borrower will be in a better position to choose the right debt settlement company. - A Beginner’s Guide To Stockbrokers
Stockbrokers are the people who look after the buying and selling on the stock market. They are the guides of the investors in the market, and especially of the amateur investors who have little experience of the manner in which the market works. Brokers can provide a large number of options to the investors so that they may achieve whatever goals they might have. Such brokers will tell the investors when to buy or sell stock, and they also provide results of market trends they analyze and predict which way the market would be likely to move. Brokers who provide such additional facilities are known as full-service brokers.
Full-service brokers are the costliest brokers in the stock market. They charge high commission rates. However, using a full-service broker is much to the advantage of a novice investor who doesn’t know the market very well. - real estate, mortgages, loans, personal finance
Is there such a thing as a guaranteed personal loan? Well, sort of. First of all, there is no guarantee of you receiving any loan apart from the official approval of the lender. Second of all, the type of loan being offered may not meet your needs. Let’s take a look at guaranteed personal loans and how you can apply for one today.
Words matter. They really do. The term “guaranteed personal loan” is used to describe different lending vehicles, but for the sake of ease it generally covers the following names: - You Can Get Your Annual Fee Waived
One significant way that banks make money off of you, the consumer, is to charge you an annual fee for a particular service such as a credit card. Annual fees are common, but they are not universal. In fact, many credit card companies waive annual fees to compete against the large number of cards that do not charge a fee. If you are paying $25, $50, or more per year to use a credit card you can get the annual fee waived or cancelled altogether. Keep reading and we’ll take a look at one simple way you can go through life with one less fee.
If you have a credit card with a $1000 credit line and are being charged $49 annually for the card, then you already are paying 4.9% annually for the card without having made one purchase. This can be a big amount to swallow, especially if you don’t use your card all that much. So, must you continue to pay an exorbitant fee for a card that features a small credit line? No! - You Can Keep Your Finances Organized
Part of deal in managing your personal finances is to keep everything well organized. This means that paperwork is in place and copies of everything are readily accessible. If disaster strikes or some other unfortunate event happens, will you know what to do? Read on and we’ll take a look at some important documents that key to keeping your finances organized.
Financial Statements: Your 401(k), college savings, pension, IRA, and other longer term investment statements should be as readily accessible as your bank savings and checking account statements are. In an emergency, who has the presence of mind to think what should be done next? Not likely you. Have a safe, secure place where all important financial paperwork can be accessed in a moment’s notice. Make certain that account numbers are clearly listed, but don’t list your personal identification number as it could fall into the wrong hands and cause a whole different kind of disaster! - You Can Retire Rich
Claims that you can retire rich seem farfetched to some folks, especially those working what some perceive to be dead end, blue collar type jobs. Even then, these folks usually walk away with a pension that is quite good, almost good enough to help them maintain their current way of life upon retirement. Even if you do not make a lot of money, you can effectively retire rich if you start now and maintain the course. Read and we’ll explore some ways you can build and manage wealth now so that you can live as prince not a pauper upon retirement.
Fifty thousand a year doesn’t sound like a lot of money for many people, but it can be a sufficient amount of income if you live in areas where housing is much more reasonable and taxes are not all consuming. Areas of the USA that are particularly affordable include much of the Southeast and Midwest with many metropolitan areas in these areas featuring homes that still sell for about $100,000. - You Can Save On Gasoline!
Over the past year you have probably seen countless numbers of articles giving motorists advice on how they can save on their fuel purchases. The advice is usually helpful and can lead to savings of 10% or more if tires are kept inflated, jackrabbit starts are avoided, and regular gas is selected instead of premium. Beyond that, savings can only come from restricting one’s driving or finding the cheapest gas available. While you may not be able to do the former, you certainly can do the latter and accomplish that task online. Read on to uncover an important way you can save dimes at the pump!
Gas Buddy – This website tracks all of the latest prices by bringing together information gleaned from more than 170 websites to determine current prices in your area. For U.S. prices, key in your zip code for prices near your home; the results are listed by the gallon. For Canadian prices, click on the province and narrow down the list by area; the results listed will be by litre of fuel. You can find the site at GasBuddy.Com - Secured And Unsecured Debts
Debts do seem to be all alike, but it must be known that there are actually many different kinds of debts available. A borrower might ask – what does it matter if there are different kinds of debts, as long as the payments to be made with them remain the same? But the distinction becomes all too obvious if the borrower is unable to make the payments in time and needs to find out ways and means to get rid of the debt. This can be done through consolidation or refinancing. At such times, it is necessary to know the different kinds of debts and what they entail. Here we discuss the two important types of debts – secured and unsecured debts.
A secured debt is one for which the borrower needs to put some collateral. Collateral is a kind of a financial security for the lender. In case the loan is defaulted upon, the lender has the legal right to dispose of the collateral in any which way and recover some of the loaned amount through it. This is known as repossession. But it must be remembered that repossession may not let the borrower go off the hook. If the collateral is not able to compensate for the entire principal amount, then the lender would demand for the remaining amount. Then there would also be several fees to be paid for the foreclosure. Collaterals are usually needed for home and car loans. One further disadvantage with secured loans is that the borrower is not at liberty to negotiate on the interest rates later into the loan. Debt consolidation may also not be possible with such loans, since the lender has their own security. Even filing for bankruptcy may not free the borrower from the loan. - Reading The Fine Print And Between The Lines
While a mortgage loan is disbursed, the borrower generally becomes so elated that he/she ignores the fine print that may be present on the mortgage documents. This could bring the borrower to heavy peril in future. Hence ignoring the fine print just in order to lay hands on the money as soon as possible is a very foolish thing to do. It is extremely necessary to spend time in reading the fine print, and then reading it over again. If needed, the services of some financial expert must be availed of.
Let us bring to light some of the key concepts that you need to focus on in the fine print of the mortgage report. - School Finance Managing Tips For Parents
A very important part of each family’s plan is to ensure that the children get the very best of education facilities. This does not only mean providing them with the best of courses, but it also entails giving them access to the best colleges, universities and making provisions for them to get the best infrastructure required to further their education. Howsoever much the expenditure may seem initially, parents seek consolation in the fact that this investment would pay off rich dividends when their well-qualified son or daughter would begin earning in high-fly jobs.
It is quite unwise to think about spending for education only when the time comes – a responsible parent would begin saving for the child’s education from a much younger age of the child. Parents who procrastinate on saving for their children’s education usually end up feeling lacking in paying for their education when the time comes. Imagine the situation when the child gets a good mark qualifying him/her to a highly reputed college, but the parent has not saved up enough to pay the fees in the college. The child would miss out on a bright future due to the lackadaisical attitude of the parents. - Understanding Amortization
It can be said that most people all over the world have either involved themselves in an amortization process in the past or are doing so right now. As such, it could be termed as the leading financial facility available to the people of the world in current times. Though the word ‘amortization’ may not specifically be used, the act of amortization could be very well going on in your own home right now.
In fact, amortization is the financial term for the very common process of paying off a loan. People take loans for several purposes – homes, cars, education, personal reasons, whatever – and when they set out to pay these loans back to the lenders on equated monthly installments, then it is said to be amortization. So, amortization is the tool with which a borrower is gradually snuffing out the loan till it is owed no more.
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