Archive for February, 2009:
Written on February 28th, 2009 by CleanedUpCreditno shouts
More and more people are seeking financial advice these days, whether that advice comes from self study or from other people, professionals, online guides, or books, it’s an increasing area of interest for our population, and it’s no wonder with all the uncertainty and fear that’s culminating right now . Shoot, I can’t even listen to NPR without hearing about stories of financial devastation, businesses shutting down, and other horror stories.
It’s no wonder any of us can sleep at night when we are bombarded with such stories of seeming hopelessness every day. I’ve even begun to try to minimize my exposure to this news lately, shutting off my beloved morning news programs on the radio on my way into work in the morning because I’m afraid it’s going to penetrate my psyche and make self fulfilling prophecies begin to happen, because I do believe that you are what you read, listen to, and practice.
I’ve begun to seek out a lot more financial advice on my outlet of interest, which happens to be the internet (go figure), by signing up for newsletters and other programs that help alert me to new laws and other news that might have some sort of impact on how I live my financial life.
I also read a lot more articles that are written by financial experts or others that are in the know on the subjects of today that seem to have so much bearing on our financial lives and future success. People of faith are even starting to turn to their church and spiritual advisers for financial and money advice, and say that this advice has even greatly helped out their relationships with their spouse or partner because it opens the passages of communication for this often misunderstood and much feared topic.
Have you begun to seek out more money advice? If so, in which ways are you looking for information, to save more money, spend it more wisely, or perhaps just to get the latest information on how to accumulate money without sacrificing your way of life or current standard of living? Perhaps many are also looking for alternate ways to make money, which is becoming an increasing interest as jobs are lost or cut back.
Written on February 25th, 2009 by CleanedUpCreditno shouts
Obama has unveiled part of the stimulus bill that will set aside about seventy five billion dollars in a fund that is designed to help homeowners lower their payments on mortgage loans that he says were ones where people were snookered into buying loans at lower interest rates, then unscrupulously made to make higher payments and balloon payments when the interest rates zoomed up. These are characteristic of ARM mortgage loans, which make up a significant portion of the subprime mortgages that many say were gotten by banks under predatory lending.
Predatory lending is, in many economist’s opinion, the basis for this whole fiasco that we have gotten ourselves into. It started by hurting the banking industry and the housing industry and now it’s got the whole economy and job market by the cajones, cascading down into other major economies like Japan and China, even Germany, and making this not just a US recession, but a global recession that seems to be spinning out of control at the moment. But not to fear, you still have your health, and if you still have your home, you should count yourself among the blessed few who are flourishing, safe, and relatively secure these days.
The seventy five billion, Obama has said, is really to help those who have been responsible and have just fallen victim to predatory lending, or are victims of circumstance of bad luck, such as losing their jobs or having a business fail because of the economy, he says, but it is not designed to help those that have been blatantly irresponsible or where it is clear that they’ve really gotten in over their heads or greedy. I’m not really sure what kind of verification matrix they can use to determine this, but I can assure you, it can’t be foolproof and those guidelines do worry me a bit, although I have to hand it to the guy for trying.
The problem with the stimulus passing is that it has not gained the confidence of the consumers, and most people still feel like this will not help us pull out of the mire we are in any sooner than with no help at all. Stock markets responded in like on Friday, with the Dow dipping even lower and bellweather stocks like GE dipping to levels not seen in years and years. It’s sad really, because these stocks don’t just represent the loss of a piece of the American dream, but they also represent significant drops in people’s investment portfolios and dividend income, especially those relying on interest and dividends for retirement.
Written on February 22nd, 2009 by CleanedUpCreditno shouts
Well, the huge, every growing, now almost trillion dollar stimulas package that Barack Obama and his team have come up with was finally signed into action last week. And with that, you’d have thought the economy (ie stock market) would have turned up in response to that, however, it didn’t, it actually went down again, along with most retiring American’s investment portfolios, and many other small businesses hopes of a quicker turnaround than anticipated.
Many think that we are just too far into this recession for any type of government intervention to make a difference, and the sad part is that they may at least be partially right, we may need to just wait out good old fashioned American capitalism and consumerism to take hold again to get the economy flowing. I know this end myself, being a small business owner who sells goods and services online, that my sales have suffered immensely since the start of the downturn, and one of the things I’m waiting most on is for the turnaround to start in regards to consumer spending.
Even though that’s the part I can’t wait to start to see happen, I know that the part that most economists predict will actually be the real sign that things are picking up is going to be the new jobs that start to emerge as part of the package promises. Obama wanted to created thousands, if not millions of new jobs through the package, presumably people who would be working as part of the huge infrastructure rebuilding effort, but that is yet to be seen of course because it’s still too early.
With all of the people losing jobs, this is what’s starting to really spin the fear out of control, further contracting the formerly loose credit markets, and making people start to save their money consistently instead of spending, which is what keeps the economy going. Unfortunately, this new found discipline, which was obviously much over due for many Americans, is also a huge part of the problem of the ailing economy. Time will tell whether this stimulus will help to boost the economy, but one thing’s for sure. It won’t work alone and needs a lot of our help to get us back to where we were before.
Written on February 19th, 2009 by CleanedUpCreditno shouts
There is a bright spot in today’s faltering economy. If you are in the market for buying a home, or are comparing renting to owning a home, the timing is excellent for purchasing real estate. The lowered value of real estate coupled with some of the lowest mortgage rates in 37 years can mean a monthly payment that can be equal to or even lower than the amount you’d pay for rent each month.
If you’re lucky enough to have job security and a good credit record, you should look into shopping for a home now. From an investment standpoint, many homes are presently undervalued and when we come out of this economic slump, the odds would be favorable that you could realize a profit when selling years down the road. Also, if you are a first time buyer, when comparing a mortgage payment to the high cost of rent, at least you’re investing in something for your future.
Some of the historic lows on interest rates on loans are, according to Quicken loans website as follows; 4.875% for a 30 yr. fixed loan, 5.5% for a 30 yr. FHA express loan and 4.375% for a 15 year loan. If you’re buying for the first time, the moment is now. Also, if you’re interested in refinancing, you can benefit if you are in an adjustable rate mortgage and you want to lock in at a low rate for 30 years.
You may also benefit if you have other outstanding high interest debt, you may combine it to a lower monthly payment with your home and save money on interest and qualify for a tax deduction. Consumers who are looking to lock into a 30 year fixed rate that is lower must have an excellent record to qualify. If this is the case, the timing is right to rearrange your present mortgage loans now. If you are looking to so home improvements and repairs, you can refinance with a great rate and access cash out for repairs.
Written on February 16th, 2009 by CleanedUpCreditno shouts
Well, for those of you who may want to refinance in the next year or even couple of years, or for those of you who are first time home buyers, or just home buyers in general in the next few years, there may be some very good legislation headed your way. And, for the first news, and this is definitely happening to my knowledge, and may even be enacted at this writing, but the government is going to give all first time homebuyers a $15,000 credit for buying their new home.
This would be more like an interest free loan from how I understand it though. It would be given the year of purchase, and would then slowly be paid back, interest free, over the next several years in the taxes. I’m not a tax professional though, so don’t quote me on that! At any rate, congress is looking at this as a way to help boost new home sales, not as a fix-all for the horrid housing market right now, just as an added incentive for people to buy homes for the first time.
Now, onto some very interesting developments that could potentially save millions of homeowners hundreds of dollars off of their monthly mortgage payments, and also potentially thousands off the life of the their home mortgage loans. This one really got my attention, because we are currently looking to refinance our home as well, for purposes of saving mostly on the life interest of the loan, not really so much on the monthly payment, although that would certainly be an added bonus.
Congress is also thinking of passing a bill that would give homeowners, both those looking to initiate a mortgage for a new home purchase, and those looking to refinance existing mortgages, a very low interest rate – as low as 4% as long as they have decent credit. The idea behind this is that these mortgages would supposedly be government backed because the government can finance loans very cheaply.
The goal here is to free monthly mortgage payment money up for homeowners so that they (hopefully) will go out and spend that money, thereby increasing the economy’s strength and adding the suffering consumer spending outlook that we are dealing with right now.
However, critics of this idea are saying that they don’t necessarily believe that people will spend this money, instead they believe they will save it, which is the trend right now. Who’s to say whether it would be good or not in the end, but it sure is enticing as a homeowner to think about!
Written on February 13th, 2009 by CleanedUpCreditno shouts
Wells Fargo, which is supposed to be one of the more stable banks these days, has gotten promised somewhere around 25 billion dollars in the national bailout plan thus far, so it’s no wonder that all eyes are on what this company is doing with their money from the taxpayers these days. That’s why when it came to Capitol Hill’s attention that the mortgage and lending giant was taking it’s top mortgage writers on a luxurious vacation in Vegas, they received sharp and swift criticism for poor judgment in a time when they are using federal money essentially to pay for lux vacations when they should be directing every penny to juicing up profits and loosening credit, which is supposed to be the idea behind this whole bailout plan.
Wells Fargo, which I do believe is a fairly respectable and well run bank, especially considering the circumstances of so many other mortgage giants going under due to greedy loan making, has responded by saying that it has taken this into consideration and will consider altering the plans or maybe even scrapping them all together.
While I do believe this is their best move public relations-wise, I’m not so sure it’ll cultivate very much employee loyalty which we all know too well is an important aspect of a booming and successful business, but I think at this point they need to worry more about the now, and the need to stay afloat and gain back the public’s trust than they do about pleasing employees and going above and beyond what many other employers do, even for their top performers.
Apparently their past jaunts they would treat top performers to consisted of things like horse back riding in Puerto Rico, helicopter rides and also private concerts even, but their culture is such that they reward their top performing employees for great business dealings, which is understandable. However, it is the right of the American people to draw the line and ask if they are spending the TARP funds that they have been granted by the federal bailout money, or if they are spending their own money on luxuries.
Written on February 10th, 2009 by CleanedUpCreditno shouts
These are unprecedented times, and unprecedented low interest rates set forth by the Federal Reserve, and that means that there are lots of people looking to capitalize on that fact because they think they may be able to refinance their home mortgage at a much lower rate. One catch though is that lots of these people will be turned down, because either the banks are lowering their loan approvals, or many people may not have good enough credit to be able to justify getting a lower interest rate. That doesnt’ mean people aren’t trying though.
I know this for a fact. I tried to refinance our home mortgage loan for this very reason, and I was on hold for twenty minutes with my bank, and they then told me that I had to call one of two sister companies because they were so inundated with requests to approve refinance loans because of the current economic climate and times and the thought that many people think they may qualify for lower interest rates on their home. The kicker and the sign of the times when I was on the phone with the rep was that he instantly asked me if I was behind on my payments or in need of assistance.
I don’t know if you answer “yes” that makes you any more likely to get a refinance, but apparently they had to ask that question. I read the other day that you have to be at least 60 days delinquent on your mortgage loan in order for banks to put you on any sort of a federal assistance wait list, whether that is still true I don’t know, but I know that the government is helping record numbers of people out of jams who have fallen on hard luck or the times and need help.
If you are in the boat where you think you are ready to refinance and might qualify for a better rate out of all this hoopla, call your current bank, or take up one of the numerous offers you get in the mail and see if they can run your credit and your application to see if you might qualify for this. Sometimes what you need is a decent amount of equity built in the home, and the room for improvement on the interest rate, and of course the better your credit and payment histories, the better your chances of getting that coveted awesome interest rate. My problem and the reason I was turned down was that we didn’t yet have enough equity built in the home to be able to qualify.
Written on February 7th, 2009 by CleanedUpCreditno shouts
The Federal Reserve, who is responsible for regulating base interest rates and somewhat for also regulating the prime interest rate, which is what we talk about sometims, is getting ready to launch a new program whereby (I’ll skip how they intend to get this done as I don’t understand it and I think you’d need a degree in economics and finance to understand anyways) they are going to enable banks to extend loans and credit card lines to consumers, both of which are suffering and dramatically tighter these days, and hence the reason for much of the spending freeze we see by modern day consumers today.
This new program, combined with the recently released statement by the Fed that it does not intend to increase the interest rate of nearly 0% it instituted citing the weakening economy as a reason, any time soon, and they are hoping that this combined with the new program to help loosen up the consumer credit market will enable people to start spending more money. This will help business be profitable again, which should in turn help to turn around the dismal job market and all the layoffs we keep on hearing about. It will still take a lot of time, this is just the beginning of a bad spell, as we’ve been warned so very many times now.
The Fed has only stated that this program is slated to begin some time in February, so that’s a good thing, we’re already most likely in the midst of it’s final planning and implementation stages. Hopefully they really know what they’re doing and this move will be a big injection into the economy of what we need most right now, which is easier credit. People will begin to spend more freely, although many have gotten so in a routine of fear and saving every last penny that may be a difficult cycle to break.
Speaking from an economic growth standpoint, this is never a good thing, however, the lesson that many Americans have learned is that money doesn’t grow on trees, as your parents used to tell you, and that the days of easy credit and getting in over your head may well be over, inciting a furthering toward an environment where Americans are more spend thrifty, save more, and hopefully don’t bite off more than they can chew so to speak.
Written on February 4th, 2009 by CleanedUpCreditno shouts
The economic downturn has made the need to save for a rainy day more important then ever. One thing that remains constant in turbulent economic times is uncertainty of what tomorrow may bring financially.
Although it is difficult to set money aside for savings, it can be a life saver in the event of a job loss or layoff in the future. According to financial experts, you should have 3 to 6 months worth of living expenses to fall back on in savings so if you are faced with a job loss in the future, you’ll be able to survive.
Your emergency funds should be tapped into for only true emergencies, not for day to day wants. Where you keep your funds should be safe, readily available and with a decent interest rate. Traditional savings accounts are the most commonly used for this purpose. C.D.s can be used for emergency funds if they are set up in a “ladder” with staggering maturity rates at different times.
This way funds are available to you as the varying maturity rates come due. If you draw out of these funds before they mature, you’ll be charged a penalty. C.D.s are considered safe as the FDIC insures them up to $250,000 per person per institution. Money market funds are another way to store your emergency funds. They remain a safe place to store cash for the future. Interest rates pay, on average, 2 to 2.21 percent.
Establishing a home equity line of credit can help in the event of future personal calamity. The idea behind this method is to leave other investments that have a good yield untapped. However, with falling values of real estate, many home equity lines of credit have been cut.
Given a choice, if disaster strikes, first tap into your home equity line of credit rather than cashing in C.D.s prematurely and paying penalties. Try to keep something in reserve in your savings accounts and money markets for further future emergencies. When looking for ways to save for the future, look for safe growth even if it is slower. The possibly higher yields hold with them higher risk for potential loss. The purpose of an emergency fund is a guaranteed backup plan.
Written on February 1st, 2009 by CleanedUpCreditno shouts
I hate to compare our current economic fiasco to Darwinism, but it really is somewhat of a perfect situation for business owners to really ratchet up their performance, goals and their strategies for being more profitable, more competitive and more goal oriented, while some of their competitors are taking it on the chin or even going out of business.
Not that all of us business owners aren’t taking it on the chin with the tight grip consumers have on their money right now, and the even tighter credit markets, but there are certainly the stronger amongst us who can weather the storm without freaking out and closing shop, for fear that we will lose everything if we don’t. It’s interesting times right now. It’s a time when a lot of people who have the guts to do things that most others are fearful to do will make lots of money when this whole fiasco is over with.
Take value stock buying for example. You are seeing common stock drift to levels not seen in years, and the opportunity is prime picking for buying excellent stocks are dirt cheap prices. Heck, some of them are practically being given away right now, and are still producing great returns and dividends while others have their money in money market funds and low yield savings accounts. Not that I’m downplaying how much so many of us lost in the stock market, I’m not, but if you can, you may want to research and buy some stocks now that are truly high value.
Business owners, this is your time to really fine tune your business. Try to keep your cool, even in the face of falling sales and plummeting profits. Use this time to tweak what doesn’t work, realign your advertising and marketing strategies to the new era (albeit it may be short, we don’t know) of thrifty spending, and work like hell on your business model to ensure that when times do get better, you will be primed to take over your niche when a lot of the other guys and girls that couldn’t stomach it took what they had left and ran.
In times like this, there comes incredible hardship and trying times, but there also comes incredible opportunity. You decide – are you going to make it into your biggest opportunity of your lifetime?