Friday, February 27, 2009
By Michael Boshnack
In recent weeks credit card companies have been under a lot of scrutiny for raising interest rates on consumers with good credit. There is a new law that credit card companies must give their users 45 days notice about any increases in interest rates, the problem is that this does not take effect until 2010. Credit card companies are using this as their last opportunity to slip in higher interest rates on their best consumers. If I got a letter from my credit card company about them raising interest rates, I would mad and start looking to a better rate elsewhere. This has made me realize how important it is to be on top of my finances and document all relevant rates and dates.
Many personal financial advisors are recommending that their clients file for bankruptcy. This gives the family a chance to start from a clean slate, although they will not be able to borrow. The decreasing prices in the housing market have made even more incentives to file for bankruptcy as families would lose more money if they sold their houses to pay their loans versus filing for bankruptcy. My advice is if you do not know what is the best option speak to a professional who is not going to try to take you money (ie. Debt consolidation advisor), he is only in that business to make money off you. In my opinion they will never have your best interests in mind.
To read more about these topics click on the links below:
Credit Cards are Gouging me
Should my spouse file for bankrupcty with me
The changing face of consumer finance
Thursday, February 26, 2009
As a consumer, buying used can help you save money, but it can also cost you more money than you had hoped to save. Consumers must know which items are worth buying used before making a purchase. First, there are certain electronics that are never a good idea to buy used. These include projection TV’s, standard DVD players, high definition DVD players, MP3 players with hard drives, computers, and digital cameras. For projection TV’s and DVD players, they contain parts and projection bulbs which have limited life spans that burn out quickly, and are expensive to replace. MP3 players and computers contain hard drives and fans which wear out quickly and can be costly to replace. Overall, purchasing second hand items may seem like a good idea when money is tight, but sometimes the risk is too high to beat the low prices.
On the other hand, there are certain circumstances where it is ok to buy used gadgets. These gadgets include plasma TV’s, LCD TV’s, Blu-ray DVD players, computers, and flash-based MP3 players. This list is very similar to the list above, but note that these gadgets are normally a bad idea to buy used except under certain circumstances. First, used devices can be a good purchase if there is a quality warranty to back up the purchase. Plasma TV’s are a good item to buy used because it is unlikely to have any major or hidden glitches as the screen is very sensitive and displays any damage when the picture is on. Additionally, the age of the item is a very important factor in buying a used electronic item. Do not buy a TV more than two years old, a laptop more than 3 months old, or a blu-ray DVD player more than 6 months old. All in all, make sure that you consider the age of the product and its warranty when purchasing a used item.
In general, remember that buying quality used items might be a lot more satisfying than buying new low end products. However, several tips when buying used include looking into the history of the product and making sure it is not too old and has a quality warranty. Additionally, researching prices online can be a helpful tool to get the product you want cheaper. Bidding for a product online can also be successful. Lastly, when buying used products, it is important to be aware of the reason the product was returned, as well as to be knowledgeable of that product.
Wednesday, February 25, 2009
By: Sarah Horner
February 25, 2009
Many people think it is impossible to indulge while sticking to a budget, however just isn’t true. An article from Msnbc.com outlines a number of ways you can still be frugal without having to cut your Stabuck’s addiction cold turkey.
If you purchase a one pound bag of Starbuck brand coffee from the grocery store instead of paying $3 for a latte fresh from Starbucks every time you get that craving you can save hundreds of dollars every year. There are many similar tips, that will help to save you a lot of money, some other examples are buying a year long subscription to that Trashy Magazines you love so much instead of buying individual issues throughout the year, purchasing a Brita pitcher and a water bottle instead of spending money on bottle water (you’ll help the environment by doing this one to!)
There are so many tricks you can use in order to keep to your budget and continue to live the lifestyle which you are used to, Some may involve a little more effort but in the end, it will really make a big difference for your bank account.
The best way to begin your journey towards this more frugal life is to create a budget. About.com helps by listing the ten steps you need to follow in order to create the Frugal Budget to start your journey towards spending less, saving more, and continuing to indulge.
On Tuesday, Federal Reserve Chairman, Ben Bernanke testified in front of Congress, about the state of the
On Tuesday, the consumer confidence numbers also came out, and they were not good. The Consumer Confidence Index that had dropped slightly in January, dropped twelve points in February to a record low of twenty-five. Economists predicted a slight decrease in the numbers just like in January, and expected a one and a half point drop to thirty-five and a half. In the other indexes, the Present Situation Index and Expectation Index both fell. In January the Present Situation Index fell from twenty-nine to twenty-one and the Expectation Index fell from forty-two and a half to twenty-seven and a half, a massive drop in both indexes.
This comes as little surprise. With President Obama signing the stimulus package this week and the huge amount of government spending that the bill entails, on top of the Federal Reserves' near zero percent interest rate, many people are worried about inflation. On top of the lack of exports and increased employment, people have a reason to be pessimistic.
By Sidney Perez.
In a tough economy, every consumer tries to make money as he can.
Here are 3 tips to make money easily.
I/ Buy tax liens and deeds
Tax liens as mentionned in chapter 7 in our text book are property tax + interests due when you pay your tax late. Interests can vary from 8% to 25%. If people pay their tax, you get back your money plus the interests, if not you can get the house owned a way below market prices ( especially in California where liens are called deeds) so that you can use this interesting investment to rent the house or live in it at an unbeatable price. In the context of economic crisis, there are more and more liens in sales, so there is an opportunity to buy some and make money.
II/Buy foreign currency CD's
The dollar is affected by the crisis and if you want to make money, you can open a foreign currency CD in euro or yen for example. So, if the dollar decreases, you win. You can go to everybank.com for example to do that.
III/Manage your liquidity strategically
Do not keep too much money in your checking account but only what you need for your usual expenses plus an extra 1,000 dollars for interesting opportunities.
By saving your money in a CD's you get interests and in the future it can represents huge amounts of money (FV= (1+i)^n *PV)...
3)Fast Profit in Hard Times by Jordan. E. Goodman
Tuesday, February 24, 2009
Monday, February 23, 2009
Lenders are shunning consumers already in debt and cutting credit limits for existing cardholders, especially those who live in areas ravaged by the housing crisis or who work in troubled industries. In some cases, lenders are even reining in credit lines after monitoring cardholders who shop at the same stores as other risky borrowers or who have mortgages from certain companies.
While such changes protect lenders, some can come back to haunt consumers. The result can be a lower credit score, which forces a borrower to pay higher interest rates and makes it harder to obtain loans. A reduced line of credit can also make it harder for consumers to manage their budgets, because lenders have 30 days to notify their customers, and they often wait to do so after taking action."
This article by Allison Linn at msnbc.com has many helpful hints about how you can continue to consume without it leading to negative effects on the environment.
"She composts waste and is the go-to person in her community for gathering old printers, computers, batteries and other technology-related trash for recycling. When her kids have birthdays, there are no balloons, individual soda cans or goodie bags. If she gives a gift, it’ll be wrapped in newsprint, not commercial wrapping paper.
“We just basically stop before we consume and think,” she says.
With so many major environmental problems to tackle, from pollution-spewing factories in China to disappearing rainforests, it’s easy to question whether one person’s decision to abstain from plastic bags or water bottles can make a difference. But environmental advocates argue that if more people start taking personal action, corporations and governments will follow."
Click here to read more.
Copied and Pasted by: Lily Chung
Although credit card fraud is certainly on the rise -- and credit card fraud on the Internet is rising even more dramatically -- many savvy Internet shoppers know that the reality is that it's actually much safer to enter your credit card number on a secure online order form than it is to give your credit card to a waiter at a restaurant.
After all, what's to stop the waiter from writing down your credit card number and placing orders on the phone with it later?
And research shows that the rate of fraudulent purchases made by cell phones is much higher than credit card fraud on the Net.
Nevertheless, we encourage you to take precautions when giving out any confidential information (including your credit card number) over the Internet, over the phone... or anywhere else for that matter!
Always use common sense -- it is the best rule of thumb.
To read more, Click Here
Sunday, February 22, 2009
By Sidney Perez.
Deep concerns about the stock market downdraft, however, have led to a more urgent question: Will I be able to retire in this lifetime?
What should you do? Here are ideas you can use at every age:
Cut back on withdrawals. Make a pact with yourself -- and your spouse, if you have one -- to live on the same amount you withdrew in 2008.
Wednesday, February 18, 2009
According to a BusinessWeek report, total household debt -- including car loans, mortgage, and student loans -- topped 100% of disposable annual income two years ago for the first time ever. Contrast that to 20 years ago when the nation's debt stood at just two-thirds of our disposable income.
One of the consequences of this "crazy trend" is the financial crisis we are suffering now. The banks gave loans too easily to people who cannot reimburse them.
So, if you want to get out debt here are some tips to help you.
Firstly,"stop spending more than you have".
Indeed, American people tend to spend a way more than they can afford to. As we talked about it in class, do not pay your vacation on credit. With an APR of 20%, it is not worth going on vacation 2 weeks because you will pay for many years to reimburse it and then you will have to work hard and not really take benefit of this vacation.
Moreover, "Start looking for ways to cut expenses"
Maybe you think you are a busy person and you do not have time to look for good deals. However, in the same way you spend time at work to earn money, you can also use your free time to save ( and then win) a lot of money. Time is money, so, use your time to look for good deals, wait for sales to buy clothes, try to buy online, or plan your vacation one year from now to save money.
Furthermore, "Pay off" your credit cards, other unsecured debts and your cars.
Once again , time is money, so do not wait too much to reimburse your purchases on credit. If you have enough liquidity, pay them immediately and do not wait too much because the interest are going to grow fast.
Finally, "Save for retirement"
Rather than borrowing money you should save it now to be able to consume better tomorrow.
"Save money now, live better tomorrow". If you avoid "wasting" money in paying loan interests, you can save it into a retirement account which will grow very fast thanks to the interests. Don' forget that Future Value = Present value * (1+i)^N. It is an exponential growth for your money, and it is better in this sense ( when you save money) than the other when it is a even more important exponential growth of revenue for your bank ( when you borrow money).
By Sidney Perez
Choosing the right time to take out a personal loan can be a difficult decision for many people. Sometimes, there are financial reasons that make it a good idea to take out a personal loan while in other cases, a new personal loan will end up causing a financial hardship for the person.
There are many pros and cons to taking out a personal loan and choosing the right time to take out the loan could be very beneficial for your financial future.
There are many benefits to taking out a personal loan at the right time in your life. Over time, the payments that you make on your personal loan can help you build up your credit score, which makes it easier to obtain additional financial products at a good interest rate in the future. With a steady record of on time payments for the life of the loan, the person’s credit score can be increased by a significant amount.
Copied and posted by: Lisa Crowley
Does Ethanol Save Consumers Money at the Pump? [Marlo Lewis]That’s what the corn and ethanol lobbies claim. In fact, filling up with ethanol is a big fat money-loser, as you can see for yourself by visiting www.fueleconomy.gov, a website jointly administered by the Environmental Protection Agency (EPA) and the Department of Energy (DOE). Once you’re there, click on “Flex-Fuel Vehicles,” then click on “Fuel Economy Information for Flex-Fuel Vehicles,” and then click on “Go.”
EPA and DOE compare the average annual cost of using regular gasoline and E-85 (motor fuel blended with 85 percent ethanol) for 90 different flex-fuel models. In every case, regardless of make or model, fueling the vehicle with E-85 costs more than gasoline—lots more.
Click here for full article
Tuesday, February 17, 2009
Monday, February 16, 2009
By: Michael Boshnack
The Scope of the Problem
"Consumers who face financial troubles, such as heavy debt, poor credit, or the need for substantial help for educational or personal finances, usually can least absorb the economic injury caused by fraud. Fraud promoters know that these consumers are willing to pay small amounts of money to process loans, arrange financing, or help locate sources of credit that promise to cure their financial woes. Recent FTC law enforcement efforts demonstrate that fraud promoters who promise financial services or assistance for a several-hundred-dollar fee generally do not deliver. Instead, they take millions of dollars from consumers without providing any services at all."
To read more on the FTC's reports about various scams click here
By David Norton
The refinancing boom of January 2009 is already trailing off. And if you're waiting to refinance your mortgage until rates drop even lower, you may want to reconsider.
A rise in mortgage rates last week led to fewer homeowners refinancing their existing mortgages. Refinancing activity last week was down 30% from the previous week, according to the Mortgage Bankers Association. But the trend goes beyond refinancing: The overall volume of mortgage applications was down 25% from the previous week and a whopping 44% from the same week last year.
Click here to read more.
by Nick Porcell
Consumers who face financial troubles, such as heavy debt, poor credit, or the need for substantial help for educational or personal finances, usually can least absorb the economic injury caused by fraud. Fraud promoters know that these consumers are willing to pay small amounts of money to process loans, arrange financing, or help locate sources of credit that promise to cure their financial woes. Recent FTC law enforcement efforts demonstrate that fraud promoters who promise financial services or assistance for a several-hundred-dollar fee generally do not deliver. Instead, they take millions of dollars from consumers without providing any services at all.
Friday, February 13, 2009
By Andrew Cho
As consumers struggle with the present economic conditions, the issue of credit continues to haunt many Americans. As banks become more stringent on granting loans, consumers are finding it harder to finance their purchases. It is this lack of credit worthy individuals that is hindering both the housing and auto industries. Without loans, it is nearly impossible for the average buyer to purchase either a home or automobile. Needless to say, before any economic recovery can be seen, we must tackle the credit problem facing America.
So how can Americans with bad or no credit improve their rating? Unfortunately, there is no quick solution to this problem: it requires patience and persistence. One of the first things consumers can do is make sure that their bills are paid on time. This is a way to show future lenders that you have the ability to pay back what you owe, and create a certain level of trust. Another component to establishing good credit is to start off small. A lender would like to see that you are financially responsible with a relatively small amount before taking on more risk with a larger sum. Finally, review your credit report at least once a year to know where you stand. This is especially important because mistakes do happen on occasion, and not realizing the mistake made can be detrimental to your overall credit rating.
As stated above, improving your credit score can be a long and arduous journey. However, if the proper steps are taken, it is something that can be achieved. Above all else, always remember that just because you've made a few late payments or have defaulted on a loan, it does not mean the end to your credit line. There is always something you can do, as a consumer, to improve your standing.
Wednesday, February 11, 2009
The worst thing for a person to have to do is to have to file for bankruptcy or consolidate their debt. Making these choices can put a damper on your credit score for a very long time and when the time comes when you want to mortgage a house ( assuming that the economy is not as volatile as it is today), most banks will not think twice about showing you the door . To avoid this all credit card users have to do is spend wisely. Borrowers should not use credit cards to buy things they cannot pay off in a short number of payments.
Credit cards are necessary evil; they are very beneficial when used correctly. Credit Bureaus reward people with good credit by offering them lower interest rates. Being in debt is necessary, but being as far away from credit limits is also necessary to benefit from credit cards. The Fed is making changes so that credit card companies do not abuse their power over their customers but any changes are still far away so it is best to make a plan and make yourself aware healthy habits you should maintain when managing your credit.
Chances are, most of you reading this have been aggressively pursued on campus to sign up for credit card. It is a well known fact that credit card companies use college campuses to attract new customers. As college students, many of us are a bit strapped for cash, and signing up for a credit card seems an all too easy way to offset this setback. However, it is extremely important to understand the risks of signing up for a credit card on campus.
First, know that the methods many of these companies use to attract new customers are anything but ethical. An example of this would be a credit card company luring students to attend a seminar promising food, clothing, gifts, etc. and requiring the attending students to sign up for a credit card before receiving any of the “goodies”. Some students may decide to sign up for the card on the spot, and later on they may find themselves in serious debt.
The credit card companies may promise zero interest rates and zero payments for a length of time; however, they also reserve the right to change these rates at any time. In this situation, students can find themselves with huge amounts of debt reaching into the tens of thousands of dollars. If this were to happen to you, it would be extremely hard down the line to receive home loans, auto loans, or other credit cards. Some debt on a credit card can be good, but you’re spending needs to be properly managed and paid off in a timely fashion. Something that most college students have trouble doing. This is what credit card companies hope for. In essence, signing up for a credit card on campus can affect your life for years after graduation.
Many colleges and universities have now put strict regulations on how they allow credit card companies to operate on campus. However, they still manage to attract new customers with the lure of easy money, free stuff, and the promise of rates that seem to good to be true. As with everything, if it seems too good to be true, it probably is. This is certainly the case with credit card companies operating on campuses.
Posted by: Andrew Moran
Tuesday, February 10, 2009
By: Alcides Hoy Jr.
So with the recent economic crisis everyone credit is either falling or staying stagnant. Now everyone is trying to figure out how they could raise it or at least get it out of the bottom tier that most are in. Here are 5 ways that you could build credit and or fix your current credit that might not be in a good economic state:
1. Get a Checking and/or Savings Account- These accounts help credit lenders to see that you have means of stability. Also it allows them to see that you own something that they could collect in the event that you are unable to make payments. In many cases the more money you hold int these accounts, the higher credit lending you will receive.
2. Department Store Card or Gas Card- Usually department stores cards are easier to get and they do not come with as much risk as many major credit cards would. Gas Cards will allow you to be able to pay for gas at a later date but as well build your credit along the way. Try to monitor the number of cards of these types you get because sometimes you could go beyond what you could pay monthly.
3. Gaining An Understanding of Credit Scores- Nowadays many people don't even take the initiative to find out how the credit score system works. In many cases its in your best interest to find out how you can receive the highest credit score possible so that in your favor you could receive highest credit lending.
4. Take Out a Short Term Loan- In these cases lenders get EXCITED to see that you have received prior loans. This shows that your payments are more reliable and that they will almost guarantee their payments every month.
by D. Babbs
Over the last few months, I’ve noticed I have bad cash management. The money in my checking accounts keeps decreasing, while my credit card bills keep increasing. As I try to save money for spring break in a few weeks, I know I need to stick to a strict budgeting plan. In general, whether or not you are saving for a particular event, it is good to develop good cash management skills. Cash management means how you manage cash and other liquid assets to meet your personal financial goals. So as always, I have some tips and information regarding cash management:
--Cash management is an essential part of your emergency fund. Your emergency fund should be a resource that can be used to meet your unexpected needs for cash--you know those real emergencies, not buying a pair of party shoes. The rule of thumb for an emergency fund is to have sufficient liquid assets to cover three to six months of expenses.
--One of the trade-offs regarding cash management is the spending/investment risk: cash on hand is easier to spend than other financial assets. Nonliquid financial assets generally require time and effort to convert to cash, but cash is readily available to spend. Thus, keep an adequate amount of cash that will not tempt you to spend.
--It is important that you plan and spend sufficient time on your financial responsibilities each week to ensure that you are moving towards your financial goals. To achieve any goal, you must work on it. Hence, achieving financial goals requires a lot of time and effort. One should constantly budget their income and expenses, and see whether or not goals are becoming more attainable.
--There are many different alternatives for helping you manage your cash, and each alternative has its own benefits and costs. Before making any decision, you must research your options and see which one best suits your needs and ability to reach any financial goals. Some cash management alternatives include checking and savings accounts, CDs, money market deposit funds, and treasury bills. The best way to evaluate cash management alternatives is to review the characteristics of each type of account, such as liquidity, minimum balances, interest rates, safety, costs, and benefits.
It’s important to learn good cash management skills now so adults, we can just build on our foundation.