Prime Rate Credit

Ah, where have the idealists of yesterday gone? It seems that today’s wealth and celebrity obsessed culture is finally rubbing off on our youngest proteges, the future of the world, who used to be a pretty idealistic group - the college students of today. Gosh, back in the sixties and seventies, you probably didn’t hear too many college kids say that number one or number two on their list of goals and aspirations after finishing college were to “make a lot of money” or “be rich” so that they could later pursue their dreams.

Now, it seems college students are more concerned about having college student credit cards and being able to pay for them to have a lifestyle that is cushy than living out their ideals - at least right away. And who can blame them? Who doesn’t want to be financially comfortable? I guess it’s just a question of how much you are compromising your dreams to do that.

Essentially, a very large percentage of today’s college students say that making a lot of money is very high on their list, and they basically want to make the most money up front as a means to their end of carrying out their dreams. I’m trying to remember what my dreams were in college, and as sad as it is to say, I can’t remember, except I do remember that I wanted to be able to help people, and I also was very interested in some day owning my own business, being my own boss so to speak.

I also had a fervent interest in marketing and psychology, and was thinking about getting into advertising. However, I did end up listening to people who said that this field was really tough to break into and make good money in at first, so I ended up going into plain old business management, which wasn’t exactly my fancy. At the age of 33, now, I work a full time corporate job which pays the bills, but isn’t the most exciting or fulfilling work many times.

Don’t get me wrong, I love the people, the job itself leaves something to be desired at times though. I am finally starting to realize some of my dreams in the marketing and entrepreneur field, and I’m kicking myself for not having the gaul to do it sooner. I may be an example of someone who went for the money grab first, and probably wasted lots of time doing something I wasn’t crazy about only to start on my passions later in life, but oh well, I guess at least it’s happening now!

I know I wrote about this a few months back, shoot, maybe even as far back as a year ago, about the guy in West Virginia who won the largest single Poweball jackpot ever, over 300 million dollars, a couple years ago. His name is Jack Whittaker, and he says that ever since he won the lottery, his life has pretty much become a nightmare, with no friends, or at least friends that don’t ask to borrow money, and very little trust in anyone. He is actually a self made millionaire, with multiple business, even before he won the lottery, this hard working guy was very ambitious, and many say a very generous man.

He says that ever since he won the lottery, he’s had numerous break ins to his home and his cars, numerous bad things written about him, some untrue, and some greatly exaggerated, and his granddaughter, who was supposed to inherit his business is now dead, at the age of 17. He blames her death by drug addiction on a threat to kidnap her that occurred after he won the lottery, when she was 14 years old. Since the threat, she had to be home schooled and became isolated, falling in with the wrong crowd who was older and got her into drugs.

His granddaughter went in and out of rehab several times, and was found dead at the age of seventeen, right before she was supposed to move in with her grandfather, dead of an apparent drug overdose of methadone and cocaine. Jack says that all the money in the world cannot bring her back, but he would give up all the lotto money if he could just have her back.

This is a really sad story that just reminds me of what shallow and greedy people can do. Here is this man, who was already a self made millionaire, who won all this money and was forced practically into solitude because of multiple thefts and threats, not to mention lawsuits by money hungry people claiming he’d done them wrong somehow. Stories like this make you really waiver in your notion of the compassion and decency of humanity….

Hmm. Read an interesting article today, something that really hit home for me. It was about how when people have cash, they really tend to spend it without thinking, and then wonder how they spent it when they see that it is all gone. It struck a cord for me, because this is absolutely how I am when I have cash in my pocket, which is why I try to pay with almost everything with my debt card. When I have cash, it seems to just filter away somewhere, although I could never quite tell you where it was even spent, when it’s all gone.

A good example was just last week, I had gotten $120 out in cash for my spending money for the next week, on things that I couldn’t really use my debit card for or didn’t want to use my debit card for. I ended up going through it in just a few days for some reason, and all I could remember spending it on was a few items at the grocery store and one fast food meal. Other than that, it beats me where it went!

It could have been spent on a soda, a water, some candy, a group contribution to a birthday or some other festivity at work - ANYTHING. But could I remember what that “anything” was? No, not to save my life. This is just one example, and almost every time I have cash in my pocket, I end up blowing it away on things that I don’t even need or frivolous items that I really shouldn’t be buying. For some reason, when I don’t have that cash in my pocket, I tend to be a more disciplined buyer.

Also, I write down all of my debit card transactions in my checkbook register, so it’s almost like a second safety net for me, to see where I spent this money and why I spent it. It’s almost like a failsafe frivolous spending net, because I’m confronted with the frivolity of the spending in writing, and I’m less likely to do it again. When it’s cash, I don’t have that personal safety net, and things can get pretty ugly!

The FTC, or Federal Trade Comission, has announced that it is currently investigating several mortgage lenders for what they called misleading and sometimes downright deceptive advertising practices. Their findings could, in the end, lead to several civil lawsuits from people complaining that they have been detrimentally affected by extremely misleading advertising.

Some of the complaints undoubtedly stem from what is called an ARM loan. An ARM mortgage loan is an Adjustable Rate Mortgage loan, and many times it sounds like a great option to someone who wants a lower mortgage payments, since, when the mortgage rates are low, their monthly payment can be substantially lower than it would be with a fixed rate loan.

However, the problem is, many say that with these ARM and other unconventional loans that are not a fixed rate or term, it is not adequately explained how high their payments could go in the event of an extreme increase in the mortgage interest rate on the loan. This increase in the interest, and subsequent increase in mortgage payment, which many times can mount to hundreds of dollars a month additional and squeezes family’s budgets, is what is being called unjust and inadequately explained by the advertiser.

The FTC cites those ads that we all see every day online, advertising mortgage loans on a $250,000 home for just $615 a month, when in fact, when that loan is amortized, and with a low interest rate, the payment would really mount to more than double that. The FTC is looking to crack down on ads like this that make it sound like people can get a great monthly payment, without explaining the very real possibility of the downside, that is, if it increases, which it invariably will, especially with today’s volatile economy and fluctuating mortgage interest rates.

Yes, I almost wept when I read this too. For some reason, I guess I thought that since the majority of money market funds are invested in FDIC insured banks and financial institutions, that in the event of a major market meltdown, my money market fund would be protected by the federal government for deposits up to $100,000, just like it is with FDIC insured banks and financial institutions, in case they go bankrupt.

However, upon reading a little more after getting the typical jitters in an unstable market, I did find that a lot of investors think the same way I do, or at least their actions would seem to dictate this, since by the end of August 2007, money markets saw a serious surge in their funding, with investors that may have been nervous about investing in mutual funds, which are largely invested in the general markets, moved their money over to money markets. I thought, oh no, does that mean we’re in even bigger trouble if our money markets happen to go bust?

It seems that my worrying may be of no avail though, after further reading that the biggest financial institutions are still on solid ground, and doing just fine. I guess this means my money markets are supposedly safe? I guess there are no guarantees on anything these days in these financially uncertain times and people saying the ugly word “recession” over and over.

The housing market certainly isn’t helping, but I read with relief that most of the foreclosures are foreclosures on prospectors, those that were buying and flipping houses for profit. Guess that’s not such a good business to be in right now, with buyers edgy and home sales still in the dumper, but I didn’t realize that such a large percentage of these foreclosures came from home flippers, or prospecters.

I knew the idea of buying and selling homes for profit had become the next big thing in making people millionaires, and many thought it would be their financial salvation. Could this surge in home buying and selling have inadvertently really screwed up the housing market? What about all the new homes being built by popular builders now? Could that have contributed to this mess as well?

I read an interesting article the other day about how, because of the worsening housing situation and more and more people defaulting on mortgage loans (the ripple effect), credit card companies are taking their cues from this slow down, and are starting to pull back a bit on their marketing campaigns, including direct mail credit card offers.

I’m sure we’ve all gotten slews of those at one time or another, but you may soon notice a slow down in credit card offers, or at the very least, a slow down in the amount of credit companies will offer you if they do decide to take on the risk of giving you a line of credit or a revolving line of credit (credit card).

Some credit card companies are reportedly lowering people’s credit limits who are already with them, lowering new customer’s offered credit card limits, and also increasing their interest rates to make up for what they perceive as a higher risk, or clients with bad credit.

It’s interesting times now, with the economy the way it is, but an increasing amount of attention is being focused on irresponsible lending, such as has been focused on the mortgage industry as a major reason that people tend to be defaulting on their loans - because they were loaned “over their heads” to begin with and do not really have the financial backing or income monthly to keep up with the “mini mansion” as it’s been dubbed, mortgage payments.

I myself have noticed a huge slow down in the amount of “pre approved” credit card offers I’ve gotten in the mail. We were just laughing about it the other day, because we now have a mortgage, and several six months to a year with no or low interest bills for furniture and electronics because we moved into a new house, under my name, and my boyfriend is actually getting all the credit card offers while I’m getting none.

Most likely this is because right now, with my high debt ratio, and a lot of it being new debt, I am being looked at as a higher credit risk since they view that as too many monthly financial obligations to add more to the pot. I do appreciate this though - I hate getting all that mail, and it’s a tremendously irresponsible waste of paper!

I always thought it funny when I’d hear financial wizzes and others that thought they knew a lot about finances say there is a difference between debts. I always thought all debt was “bad”, but apparently there’s been a line drawn and there is such a thing as good debt and bad debt, and true enough, one kind of debt is a much better debt to be in, but I still always thought, wouldn’t “no debt” be the best for everyone involved?

Well, yes, of course, we all know that not being in any debt would seemingly be a God send to our lives and allow us to live in peace and ever lasting harmony with the world, but even being in no debt at all can have it’s pitfalls when it comes to lenders taking on your risk if you want to buy something large. If you’re a millionaire, sure, you may be able to buy things outright, but even most millionaires incur and maintain some kind of debt. Whether it’s a mortgage, or a loan to build something, or loans to buy other things, good debt and bad debt exists no matter what part of the income sector you consider yourself to be a part of.

Good debt can be things like school loans, mortgage loans, and loans to build homes and add on to your home. Good debt is basically a debt that’s typically not revolving debt, like with credit cards and other lines of credit, and is, in some way, going to pay you back. For example, school loans are low interest, and your payback is a good education, more marketability as an employee, and most likely higher pay in the jobs you will end up seeking.

For mortgages, pay back is the fact that homes usually appreciate in value, and properties usually appreciate as well, making it a “good investment”. Also, mortgage loans are usually considered fairly low interest, and also the mortgage interest is tax deductible. Sure, you pay all your interest up front, but you’re getting something in return in the end.

Credit card debt is the biggest no no in debt these days, and usually credit card debt, which is revolving, is higher interest, and is used to buy things that don’t appreciate in value, nor do they really “pay you back”, unless you’re using them to start a business, and this is really your only means of financing certain things to start that business. How much good and bad debt do you think you have, and can you label all of your debt? Hmm….

So, we’ve talked a lot of the past few months about the mortgage and housing situation currently going on here in the US, and how it is a prime opportunity for buyers to think about shopping around for a house.

What we haven’t talked about is other types of financing for home buyers, specifically, mobile home loans. Mobile home loans provide a mortgage plan, with varying interest rates depending on who is offering the loan, just like your typical mortgage loan that we’ve talked about in the past.

I happened upon a business while doing some online research which actually specializes in offering mobile home refinancing and manufactured home loans. The benefit to going with a company like this who specializes in this somewhat niche market is, they have the expertise it takes to find the right loan at the right rate for you, and can give you the guidance and experience you need when refinancing your mobile home, or when purchasing your first of second mobile home or manufactured home, unlike traditional mortgage lenders who may not have as much, if any, experience in this field.

The company, called Aaron Financial Services, offers several different services for the mobile or manufactured home buyer, including mobile home appraisals, loans and refinancing for home improvements, refinancing for debt consolidation (one of my favorite topics, and something that can help people’s financial situations immensely since they can pay off high interest “bad” debt and get it out of the way). They also offer mobile and manufactured home insurance, service contracts, and buyer-agent services.

Buyer-agent services can be of a huge benefit to those that may be more inexperienced with the buying and negotiating process. They can help you determine fair prices, and also help in the price negotiations between yourself and the sellers or the agent who is selling for them. All in all, this company offers a wide range of services and expertise if you are in the market for a mobile or manufactured home - a lot more than just mobile home loans, it seems like it’s more of a comprehensive service.

I had an appointment with a financial advisor recently and asked him, if I had planned on getting a part time job instead of what I am doing now, and pursue my outside business interests more on a full time basis, what should I start doing now, to help ensure I would have a little comfort zone in case things didn’t go immediately smoothly when I made the transition. He advised me to do a couple things differently than what I am doing now.

I told him that I am currently making a couple hundred dollars additional payments each month on my mortgage because I hate paying all that interest for the mortgage, and want to get it paid down as soon as possible. Lofty expectations, since we just moved into the house six months ago, I know, but it’s just how my mind tends to work sometimes!

He said to immediately stop doing that, since mortgage interest is tax deductible, and I should definitely be socking that same money away in an interest bearing money market account, so that the same money I’m putting toward the mortgage will grow with interest, and I’ll also still be getting the maximum mortgage interest benefit on my taxes every year. He said that I should really only be throwing extra money to the mortgage if I just had too much money and I didn’t know what to do with it (his nice way of saying only if you’re stinking rich you should be doing that).

So, since I’m not filthy rich, I decided to heed his advice and start putting that same money I was throwing toward the mortgage to a money market account, which I already have going with my Sharebuilder account now, so that’s easy enough. He also advised me to start adding up what my necessity expenses are every month, and have about six months of expenses saved in that money market account, which is very liquid by the way, before I made any job moves.

This ensures that I have a nice cushion in case we hit hard financial times, and I couldn’t agree with him more there! If you’re looking for a good money market account that you can manage online, try Sharebuilder.com, or I also know that believe it or not, PayPal actually offers a money market account that any balance in your Paypal account goes into without you even asking, so that’s another easy option if you have a Paypal account already.

OK, so I’m not sure of all the ins and outs of each card here, but I do now have both a United Airline Miles credit card and a Continental airline miles credit card, and I think I’m really preferring the United card over the Continental card, because I seem to be racking up the points much quicker.

I do know that when I signed up for the United Business Credit card, through Chase bank, they gave me quite a nice amount of bonus airline miles to sign up when I made my first qualifying purchase, so that definitely helped to add to the points I’ve accumulated so far, but it also seems like many more of my business purchases are “qualifying” than they are for Continental, because almost all of my purchases now are adding to my points every month, whereas it seemed like with the Continental card, many of my purchases did not contribute, point for point, to my monthly points stats.

Also, I will say that United seems to outline their rewards program much better by actually sending you emails when there are special new partners, like when you can get two points for every dollar purchased instead of one, and I don’t get any of that from the Continental card. Thoughts, comments on this? I’m wondering if other people have made the same observations who have either card, or both, like me. Personally, out of the two I’d say United has the best airline credit card so far, at least of the ones I’ve tried.

I got the United card to pay for business expenses, and I keep the Continental MasterCard to make personal purchases.