Fed is Not Cutting Rates Any More?

Well, I was wondering when they would put a stop to cutting the prime interest rates for the US, in the wake of a further weakening economy and businesses being squeezed which is a trickle down effect. In what seemed to be a never ending stream of news about the Fed cutting the interest rates yet again, we now seem to have a stalemate, and it seems that the federal government arm of controlling interest rates and the money supply here in the US has decided they’ve done all they can to help stimulate our economy.

And many wonder, does it really help all that much? Some say that the government and it’s arms of extension that control agencies which control things like the money supply and the interest rates need to butt out more, and I tend to agree with that a bit. Especially since the US dollar is at it’s weakest we’ve seen in years. Heck, I can’t tell you how startling the exchange rate is between the Euro and the US dollar.

I have a monthly agreement with an agency over in Europe and everytime I see my statement at the end of the month, I am startled at how the US dollar amount charged for the product or service is more than double the face value, telling me that our dollar is in some real trouble. And some say that it’s going to only get worse.

Now, as you know, I’m no fan of fear tactics as I think they further paralyze an already scared nation into not spending money, and only send us further into a recession. However, some of the news as of late has seemed like somewhat of a domino effect, of the likes which we haven’t seen in many many years because of all the safeguards put into place.

I’m not so radical as some of these groups though that are living off their own land and have stashed guns, ammo and are now farming animals to slaughter and hording food for the imminent “crash” that will takes years to recover from. However I do have to say I think it’s going to take a while for us to recover from this economic slowdown – excuse me, full blown recession we are in now, and it’s going to take a lot of cooperation from the media to not scare everyone further into making the economy worse.

We really need an alternative energy source as well, asap. Oil is a finite resource, folks, and it can only get worse as time goes on. We can’t live off oil for the rest of our lives, and it seems that government is not all that eager to give the greenlight to alternative energy sources.

Talkin’ Bout My Generation….Borrowing More

Wow, talk about a tough economy. Apparently, recent surveys have shown that roughly one in ten baby boomers and middle to getting-up-there agers, are having an especially rough time, turning to borrowing via lending from friends and family, charities or other relief outlets just to pay their bills. Many are relying on parents who are older to help them pay their bills, hopefully only while this economic glut is happening, because we all know that our seniors usually don’t make nearly enough to survive on with social security being a joke and many not putting away adequately for retirement.

But, this one also goes both ways. The majority of reitirees said they’d helped their children or child out with bills, while only a smaller portion of people not in the retirement age category said they had helped their parents out with their finances and bill paying. So, you see, families are having to rely on one another to just make it by in this tough market and raising food costs and skyrocketing gas prices.

Oh, by the way, as we speak, Bush has just asked Saudi Arabia to increase it’s oil production to meet higher US demand, and been met with a resounding no, so that’s squashes that idea. I wonder if now we can start drilling here, or if it really is too big of an environmental risk to start doing so over here. And where are all these alternative fuel sourcse and vehicles? We have the hybrids now, true, but are they really an effective alternative? Anyways, I digress.

Many baby boomers, as much as one third, have also made the startling admission that they have cut back on what they are putting in their retirement accounts, or have cut that out all together so they could have more money to pay their bills. The said part about this is that they are missing out of a great tax benefit if they are cutting out an account like a 401k that is tax deferred, so this makes me really sad that this is happening to our fellow Americans, it just seems like a double shot of unfairness to be honest.

Many also reported that they have cut back on doctor’s visits and medications, because of high copays and the fact that they may not absolutely need them, makes them a non-necessity in hard economic times. About one third is also admitting that they are having a tough time making their rent or mortgage payments, and that this has contributed to their cutting back on spending, although to no avail since they are still having harder times paying their rents and mortgages.

Sorry to report all this bad news, but this is what we’re getting from the media. Hopefully they will report on the good news as readily when the market recovers – they’d better!

Fannie Mae Helping Out in Hard Hit Housing Markets

Fannie Mae, the government mortgage financing arm, has decided to help out the hardest hit housing markets in the US, where home prices are seeing record lows, in hopes of helping encourage home buyers or potential home buyers to ignore all the negative housing and mortgage hype and news and take the plunge to buy their first home or even just to buy homes who are already existing home owners.

The mortgage financing organization said that it would drop its minimum down payments to between 3 to 5 percent in the zip codes that have been identified as those that are the most desperate for home sales and have the worst (lowest) housing prices in the designated areas of determination. This is in conjunction with the federal government’s attempt to ease American’s housing and economic woes by cutting federal interest rates several times over the past several months, as well as issuing the economic stimulas tax rebates that are designed to help stimulate people into buying again.

This may seem that it is in direct conflict with a call to tighten lending standards which was called for not only by the federal government but also by consumer rights activists who felt that many people would not be in such a bind as they are now had they not been knowingly given loans they couldn’t financially handle in the end.

And it actually is, however, many of those behind the scenes additional steps have not been scrapped to determine a person’s true abilities to financially pay back loans and extension loans, but the fact that people are not required to put such a huge chunk of change down on a home may stimulate the house buying market since they don’t have to use their entire savings potentially just to become homeowners. For information on how to properly calculate a mortgage payment, see our complimentary mortgage calculator.

This is the key – the banks still need to closely look at salary information and income to debt ratios, but if they can somehow still entice the consumer to buy a home without a large downpayment, I think this is still a safe way to get more people to buy homes without putting themselves in a tremendously burdensome financial quandry where they have to choose between paying several bills or none at all.

Housing Markets Hit Worst In……

Well, it’s no secret by now that housing really stinks pretty much anywhere you go. Sure, there are those few places that have magically escaped the wonders of the falling value of the average home, and the buyer’s market, so to speak, but the majority of even formerly hot markets that everyone wanted a piece of are on their way down, and many are saying that over the next twelve months they still have farther to fall. And what’s that saying, try not to catch a falling knife?

This is precisely why so many home sellers are opting to rent out their properties instead of trying to sell them, because they know that if they sell it they may not get the full asking price, and also may be forced to list it below what it is truly valued at to begin with, in order to compete in a stagnant real estate market.

Boy, if I only could have been buying my home now instead of a year ago, and I thought that then I was getting some great prices on listings! Now those same homes are probably going for less than they were a year ago when it seems like only the first hints of what was to come in the housing market were starting to make themselves painfully apparent.

Some of the states where home prices have been hard hit where you wouldn’t expect it, since they seem to be the land of opportunity when it comes to selling a home for a ton of money, are California, Miami and Phoenix, all of which were booming real estate markets and areas of high desire to live in for many people, including affluent people with lots of cash to spare when it came to buying a pad for themselves.

California, Miami and Phoenix are former hotbeds of real estate, and although homes sell for astronomical amounts and just a piece of property goes for so much that it would make anyone in my home state of Ohio’s head spin, since it would be the cost of a large piece of land and a nice home to boot here in Ohio in most areas save a few of the more affluent places.

California is definitely a shocking place to me, because I’ve been out there to visit my sister and even in her area which seemed out of the way and not close to any major cities or jobs, the property values were totally insane. An investment of just ten thousand dollars and a good mortgage rate or so would bring almost quadrupled ten years later in many cases, so a lot of people who bought wisely are sitting on gold mines out there.

However, the most affluent and high priced properties even now are looking at a real bust in pricing, and a very competitive market where they either have to be the best looking home on the block to get their price, or be priced very competitively to get what they want. Times they are a changing, to quote Bob Dylan.

Credit Card Use Jumps Regardless of Tighter Lending

Counter to what you might think in this weakened economy and the wave of tighter lending standards for almost any type of lending, including home mortgage loans, equity loans, lines of credit, credit cards, auto loans and general loans including business loans, consumers are spending more money on credit cards than you’d think. So, is this a good thing, or no?

Well, in my opnion, probably no, because this excess spending on credit cards is probably a reason why we are in the position we are in today, and if people are putting their normal expenses on credit cards, such as gas, food and necessities, then this means they are putting things on credit cards and then only making the minimum payments on them, which means they could end up paying over ten times more than what the items they originally purchased are worth when it’s all said and done unless they can consolidate and pay it all off or accelerate their payoff quicker when they have more money to work with.

The results of surveys and various other counting measures are showing that consumer credit card spending is up, with other numbers on their way down, so this is a slightly disturbing happening since many of them report also that they can only afford to make the minimum payments on the revolving debt, and this means that they are being charged anywhere from 15 to 25 percent or more on their purchases, and this is putting them further behind the eight ball, so to speak.

Some households are reporting that their monthly or biweekly income is not covering their heightened expenses, what with energy costs skyrocketing and gas prices going up higher than ever, as well as the cost of food and general cost of living going up since gasoline is used in almost every line of business for transport, and this is having a domino effect on the price of all consumer goods.

Is this finally the energy crisis that so many analysts have been saying we will eventually have? Will this force us all to purchase hybrid vehicles in the near future? Well, who knows, I wish I could see into a crystal ball.

One thing I can tell you is that using a credit card for normal every day expenses is what got me knee deep in debt in college, and took me years to finally pay off, negotiating lower rates with the credit card companies and using good, old fashioned discipline to get myself out of the strangling debt. It never felt so good! Credit cards are definitely good for many reasons, it’s just in cases where we use them to actually live on and pay expenses where we normally wouldn’t when we start to get ourselves in over our heads.

Dividends Anyone?

Dividends, in my humble opinion, are a great thing. After all, I’ve followed a bit of how world famous investory Warren Buffett, the head of famed conglomerate Berkshire Hathaway, invests, and much of the companies he invests in (mind you, long haul), do pay some sort of dividend.

Dividend investing probably isn’t for those who want a fast growing, quick money type of stock, like the next Google or IBM, or Marvel or heck, Berkshire Hathaway, but they are for people who want a solid, respectable and usually fairly reliable source of steady income over the years they invest for their golden retirement, rather than the risk of losing it all. This doesn’t mean that all dividend stocks are safe, or even steady for that matter, but a lot of the bigger companies like GE and PG (Procter and Gamble) are good solid dividend payers that grow steadily over the years and usually render a nice little return after years of investment.

I for one have have burned on investing in what I thought was going to be the next best thing, and without dividends as an incentive to stay in the stock, I quickly bailed when I realized that the majority of my capital, if not all of it, would be compromised if I kept it in that particular stock.

Dividend paying stocks generally steer clear of a lot of this type of volatility and can often be purchased at bargain prices during recessions and other economic downturns, or heck, even when it’s going really well in the stock market, because this tends to be when people go for high tech stocks, banks and the next biggest thing in hopes of getting more bang for their buck.

It’s important to note that dividends are not always “guaranteed” though, and that dividends can disappear with little or no notice, so it may be important for you to gauge this by looking at the company’s dividend paying history to determine whether their history dictates that you are taking a good risk by buying it for the dividend’s sake.

Credit Card and Auto Loan Spending Drove March

The results are “in” for April’s spending reports on the American public spending habits, and borrowing habits, and it’s actually what appears to be a bright spot in the otherwise dark doppler forecast for the economy as of late. Apparently, consumer spending and borrowing, mostly in the form of credit card spending and auto loans, went up modestly in March. Yes, it takes almost a full month to calculate these types of numbers, and believe me, even then I feel many times they are unreliable – after all, how can they account for ALL of it? That’s just my inner skepticism though, so ignore me for the moment.

This, paired with news that the GDP, the beacon by which recessions are gauged, has increased modestly as well, and that is counter to what we’ve been hearing about an already-here or pending recession, which is marked by a series of slowing GDP all the way around, which basically means that the whole economy has slowed for so many months in succession. Of course, this can never be accounted for until it’s actually over and all the numbers are reported, so recessions can rarely be absolutely earmarked until they are actually over, since no one can really say for certain one has happened until it’s after the fact.

Borrowing on various types of credit cards, including gas credit cards and low apr credit cards with fixed rates, went up almost a full three percent more annually than they do normally, so that’s good news, depending on how you look at credit card borrowing I guess (wink wink). Does this mean that consumers are still over extending themselves?

Well, that’s a matter of judgment so it really depends on who you ask, but for me, I’ve seen the struggling of my friends and coworkers, and the signs are there that people are having to tap credit sources they normally wouldn’t which many times comes in the form of a credit card, or revolving debt as we’re all aware. Those government issues rebate checks?

Hmm, well most people think that these are going to be spent on paying bills and putting the money away for savings, but that remains to be seen in about another month when we see if the first distribution of the stimulus checks helped with our GDP at all. Let’s be optimistic though, it does seem like there is some positive activity going on her, which is a good sign.

Higher Percentage of Banks Report Stringent Lending Practices

Although banks have historically had a set of criteria to go by when lending money to an individual or couple for the purpose of purchasing a home with it (in other words, a mortgage loan), many admittedly let some of the criteria either slip by or be minimally qualifying in years past, which analysts say is part of why we are facing one of the largest mortgage and subprime meltdowns ever which is just now coming to light now.

However, if it’s been a lesson to anyone, it’s been a lesson to major lenders that they need to tighten the noose on their lending practices, meaning they had to better screen candidates for mortgage loans so that they could keep both themselves out of hot water by avoiding bad loans, and the consumer, by not letting them get in “over their heads” so to speak, by taking on too big a mortgage for their salary and other forms of compensation to cover over the duration of the loan, typically 30 years.

A survey taken in April of major lending banks found that over 2/3 of the banks reported they had adopted tighter lending restrictions and new criteria and guidelines, including proof required of income, before they let a consumer sign on the dotted line and purchase a home with money borrowed from their institution.

Not only that, but banks are also severely tightening (compared to years ago), their restrictions on lending for credit cards and other common loans as well, extending their caution into other fields of concern, since consumers have generally overextended themselves in these areas, which many analysts say has also led to the current economic conditions and “credit crunch”, as it has been termed.

Banks have grown more concerned as well because with the erosion of current credit including mortgages, loans and credit card delinquencies, they are forecasting that even more loans are going to go bad in the near future, only further pulling back on their profits and putting them in the red, so to speak. There are of course some banks that have avoided this crisis as greatly as they can, but most are in some form of trouble because of one thing or another, and many think it will be years before they and consumers recover from this debacle.

When is It Worth it To Consolidate?

My boyfriend and I live together. We do not share bank accounts as I personally do not believe that to be with someone, even married, that you have to share checking accounts, or even credit accounts. We do have our home we bought last year in both of our names, but even that is slightly split in that he is on one of the loans (we got two mortgage loans, it was the best way for us to go at the time), and not on the other because we had varying credit.

Which is funny because now he actually has better credit than I do, perhaps because my name is on the larger mortgage and that symbolizes a higher debt to income ratio for me, especially since I am partially self employed, which is typically a harder income to prove than a regular “salary” job. However, I digress. We both receive plenty of credit offers in the mail, ranging from special loans to balance transfer credit cards, to mortgage lines of credit that can be transferred into fixed rate low interest loans, but he still receives the bulk of the credit card offers.

Like I said, I think that even though I have a higher income and pay my bills on time every month, it is looked at as higher risk to extend more credit to me because of my debt ratio, so he does still get the bulk of the credit card offers. However, when do you know if it’s worth it to transfer a lot of outstanding revolving debt to a card that may be just the same thing pretty much after your introductory period is over? Well, it’s important to read the fine print on these.

Always go for something that says “fixed rate”, otherwise they “reserve the right” to change your APR terms on you any time, which can end up being the opposite of getting you out of debt, but instead steeping your further into it by increasing the interest you owe on your existing debt. Always have your calculator ready.

We’ve sat down and actually calculated, when the term is over, and how much you are paying for monthly payments, you are actually saving in the end on interest when taking on these deals, and sometimes you are better off just sticking with several balances on lower APR fixed rate cards rather than transferring it all to one card. Sure, it’s easier to make one payment a month as opposed to 2-5 payments to separate cards, but who cares when in the end you are paying more money for the luxury to do so?

My boyfriend and I live together. We do not share bank accounts as I personally do not believe that to be with someone, even married, that you have to share checking accounts, or even credit accounts. We do have our home we bought last year in both of our names, but even that is slightly split in that he is on one of the loans (we got two mortgage loans, it was the best way for us to go at the time), and not on the other because we had varying credit.

Which is funny because now he actually has better credit than I do, perhaps because my name is on the larger mortgage and that symbolizes a higher debt to income ratio for me, especially since I am partially self employed, which is typically a harder income to prove than a regular “salary” job. However, I digress. We both receive plenty of credit offers in the mail, ranging from special loans to balance transfer credit cards, to mortgage lines of credit that can be transferred into fixed rate low interest loans, but he still receives the bulk of the credit card offers.

Like I said, I think that even though I have a higher income and pay my bills on time every month, it is looked at as higher risk to extend more credit to me because of my debt ratio, so he does still get the bulk of the credit card offers. However, when do you know if it’s worth it to transfer a lot of outstanding revolving debt to a card that may be just the same thing pretty much after your introductory period is over? Well, it’s important to read the fine print on these.

Always go for something that says “fixed rate”, otherwise they “reserve the right” to change your APR terms on you any time, which can end up being the opposite of getting you out of debt, but instead steeping your further into it by increasing the interest you owe on your existing debt. Always have your calculator ready.

We’ve sat down and actually calculated, when the term is over, and how much you are paying for monthly payments, you are actually saving in the end on interest when taking on these deals, and sometimes you are better off just sticking with several balances on lower APR fixed rate cards rather than transferring it all to one card. Sure, it’s easier to make one payment a month as opposed to 2-5 payments to separate cards, but who cares when in the end you are paying more money for the luxury to do so?

Stimulus Checks On Their Way

A lot of people I work with were supposed to be getting their stimulus checks that the Federal government is issuing in the next few weeks, in this current week we are in now. Many of them said that the check could not come soon enough for them, many of whom are struggling to pay off old gas bills from the winter and are also struggling to pay to fill their gas tanks large and small just to make the commute to work and back and to make other small necessary commutes as well.

It’s really crazy times we’re living in these days when our citizens in the US can’t even make ends meet and have to pinch pennies just to live, and not even to live on any extravagant means, just to make it by, to buy groceries and other necessities and yeah, maybe to splurge on a little something here and there because after all isn’t that what living is all about?

The government stimulus checks were issued earlier than originally planned, thanks to urges by the president and congress to get them out quicker to help the struggling economy and get it back on its feet faster. Next question is, when is someone going to step in and force these oil companies to stop gouging the gas prices for no good given reason?

The stimulus checks supposedly go by the last few digits of your social security number, and there were numerous places online for the schedule of mailing to be found according to this individual information. I think last I looked married couples could get up to $1200 and people who filed as single or are married filing as single can get back up to $600, all depending on how much money the individual or the married couple makes.

The next question on these stimulus tax return checks is, where are we really getting this money from? Is it hidden somewhere or are we in effect really borrowing social security money from our future generations? These are hard economic times, but the good news is that hard economic times and times of recession, which we are in right now according to most financial analysts, are usually followed by economic booms. So it’ll be a good time to position yourself and your investments for when things pick back up hopefully!