Continuing Market Rally Shows Return of Investor Faith

Investors appear to have regained faith in the U.S. economy if the steady improvement in stock prices is any indicator of market sentiment. The S&P 500 has shown a good 6% improvement this year and, across many sectors, investors have been steadily buying into stocks of various kinds. The inertia in the markets and the risk averseness seem to have worn off as many of the high return- high risk stocks show good following alongside the ‘sure winner’ ones like Coke.

In fact, economists point out that high risk stocks are being favored increasingly by investors who would have earlier stuck to ‘safe’ ones in the utilities and telecom basket. This ‘safe’ basket, has, quite surprisingly, kept a low profile when compared with the market performance of the relatively risky stocks. The investment trend is clearly not conservative at this point with investors vying with each other for stocks like Netflix that keep inching upwards almost every day.

Technology, energy and materials are some other sectors that are popular with investors. The earlier focus on housing and finance seems to have given way to this new trend. Considering where housing prices are still stagnating post recession, the market has good reason to leave this sector well alone. However, shift or no shift, experts say that the trend clearly shows a return of faith by investors in the economy.
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CPI Shows an Increase – Is Inflation Set to Go Up?

CPI Shows an Increase – Is Inflation Set to Go Up?

Even as the government advertises the low inflation rate as a positive development in the slowly recovering U.S. economy, the consumer price index has recorded the largest increase from the end of 2009. The Labor department recently released the CPI statistics that show a 0.2% increase that comes close on the heels of the 0.1% increase recorded in December 2009.

The Federal Reserve is still continuing with its many programs designed to instill consumer confidence and boost economic stability, in spite of the fact that increased inflation is usually associated with a recovering economy. While economists have stated that the inflation levels are not likely to drop any further, they are also being cautious about taking any stance indicating an economic turnaround. It appears that they believe the price rise is too swift to be considered the beginning of a full fledged trend. Until more time has passed, it may not become clear exactly how prices will look in the coming months. However, many economists are terming the increase as the desired outcome of the many fiscal measures that the government put in place during the recession. From this perspective, the improvement in inflation may be perceived as a measure of the success of the policies.

The increase has exceeded the expectations of economists who had predicted a 0.1 % gain. The major contribution to the current increase comes from the fact that air fare and apparel have both become costlier now. Cost of shelter has continued its upward movement for the fourth month in a row.

However, Fed President (Chicago) Charles Evans believes that with the unemployment rate still hovering at high levels, the increase in inflation does not really mean much in terms of representing economic improvement. The labor market has definitely a long way to go as is clear from the rise in unemployment wage benefit applications in recent weeks.

Taking a completely opposing view, the Fed Chief in Dallas, Richard Fisher, believes that it is time for the government to ease off with stimulus programs to ensure that no further pressure is added to prices, pushing them up. He categorically stated that he could not see any reason for further government initiatives on the same lines.

Investors do not appear to be unduly worried about the possibility of increasing prices that the rising CPI indicates. Prices for Treasury instruments showed an improvement while stocks continued to be popular modes of investment for various investors.

Charges Announced In The Largest Healthcare Fraud In U.S

An estimated $60 billion a year is siphoned off from the Medicare program through fraudulent means. The investigation into healthcare fraud has uncovered this and many other shocking facts even as the country gears up to find out more about the various cases filed by the Obama administration in different cities.

Healthcare reforms are an important component of Obama’s political strategy. The Democrat President has been pushing for a complete overhaul of the various programs and schemes sponsored by the government under this heading.

Although the Republicans have been strongly opposed to the focus on healthcare, it is undeniable that this area is one where much of the government expenditure happens. Given the current situation where it is becoming evident that government spending cuts need to be brought in right away, there is clearly a need to stem leaks from heavily sponsored programs such as Medicare.

Nearly 45 million Americans are beneficiaries of the Medicare program. The treatment and health schemes offered under this program are sponsored by various companies that are, in turn, paid by the government from tax payer funds. Critics have been vociferous in their complaint that the entire system is susceptible to fraudulent practices and that the companies are overpaid substantially to implement the programs.
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Debt Ceiling Debate Is it Time for Obama to Take Fiscal Responsibility More Seriously

As the debate over raising the debt ceiling continues to rage, it is clear that the U.S. Government is now facing a stand off of sorts. Pushing up the debt ceiling would, no doubt, make a good ‘placebo’ for the immediate problem of unmanageable borrowings.

But, many critics fear that it will also serve to eliminate the sense of urgency that should hopefully push Obama’s boys into undertaking some effective spending cuts. Given these fears, there is no doubt that any move by the government to increase the debt ceiling will spark off heated discussions at every level within the country.

The debt ceiling represents the limit up to which the U.S. Treasury can borrow funds. If the borrowings grow beyond manageable levels, then Government may be forced to default on its repayments. If this does happen, the world financial markets will lose faith in the creditworthiness of the U.S. and this will have some far reaching consequences for the nation’s economy, none of them positive.

The U.S. government has carefully preserved its position as the ‘world’s safest borrower’ for over two centuries with timely repayments on all its debts. The current debt ceiling stands at $14.3 trillion, a massive figure indeed.
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The Euronext Deutsche Boerse Merger Will it Happen?

Earlier this month, the announcement by the London Stock Exchange of its proposed acquisition of the TMX group Canada caused a flurry of excitement. The new entity that arises from this deal would boast about $4.1 trillion of trading volume annually. But it now appears that there is much more in store in terms of dramatic changes where the world’s top stock exchanges are concerned.

Merger talks are underway between New York’s own Euronext and the German Deutsche Boerse AG. If the deal pans out, this new mammoth will overshadow the LSE –TMX trading volume with an astounding above $20 trillion worth of trades in a year. The Germans will hold the lion’s share of the proposed merged entity and its headquarters will be based in both NY and Frankfurt.

However, the road ahead may have its bumps and blocks for the Germans and Euronext as the deal faces an unprecedented degree of scrutiny by U.S. regulators. No comments have been released on the issue from any official sources, leaving one to wonder what exactly the government feels about letting the Big Board go out of American hands.

One issue that may be a major concern is that the merger will give an uncomfortably large degree of influence over the derivatives market in Europe to the new entity. This market is indisputably one of the most lucrative world markets. The sagacity of knowingly giving one single entity a large enough clout to call the shots here is definitely one that is, hopefully, being questioned.
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Obama’s Budget to Focus on Reducing Deficit

The focus of the 2012 budget will be on cutting down the deficit, according to budget director Jacob Lew. The statement was made by the director in a talk aired on CNN. If the budget achieves its targets, U.S.’s deficit will be reduced to the tune of $1.1 trillion over the next 10 years.

Lew also hinted at the strategy that will be followed by President Obama to achieve this ambitious target. He said that strategic spending that will make the U.S. more competitive in the global markets combined with expenditure cut backs in some hand picked areas will provide the solutions.

The statement does not give any specifics about how exactly the $1.1 trillion deficit will be wiped out from the books. Neither does it clarify how the to-be-announced budget will deal with or impact long term deficit.

However, one aspect that is quite clear is that the President is proposing to put a clamp on discretionary spending on non-security related issues. The clamp will last for five years if Obama’s call is indeed heeded. This alone will save $400 billion, a massive chunk of money by all standards. However, this expense head still accounts for only about 10% of the total spending by the Fed.

Critics have been quick to point out that rather than focusing on this relatively small expense area, the government would do better to address items like entitlement programs, where enormous expense is borne year after year.
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New Hampshire Wealthiest State Census Bureau Report

The U.S. Census Bureau has released its latest report showing the median income of various states across the country. With a $65,028 median income, New Hampshire heads the list followed closely by New Jersey. Washington trails in at 10th place with a median income of $58,404, ranking last among the 10 wealthiest states in the U.S. The report takes the income over the past two years into consideration.

The Census Bureau report has revealed one interesting fact. Four of the states that make it to the top 10 most wealthy states list are located in the Northeastern part of the country. The money seems to be all concentrated here if one is to look at the statistics.

In striking contrast, the South has most of the 10 lowest income states. North Dakota residents have cause for celebration because this is the state with the best percentage improvement in median income. On the downside, Hawaii posted one of the biggest income declines.

When compared with the previous report, it is clear that not many states show much headway in terms of increasing their median income levels. Only a dozen have shown some improvement in the income, when the current report is compared with the earlier one showing the median income for the two year period ranging over 2006 and 2007.
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Will the Dollar Step Aside for SDRs?

The dollar may soon be ousted from its position as the reserve currency of the world if and when a new IMF proposal comes into force. A recent report from the International Monetary Fund discusses the use of Special Drawing Rights as substitutes for the ubiquitous dollar. The reasons for this proposal to replace the USD are many.

Even as the economies across the world begin to gear up once more post recession, the dollar continues to lose ground. This disappointing trend appears to be a huge factor in the IMF’s proposal to replace this currency with a more stable offering.

Although the beginning weeks of this year promised a good start for the dollar, the currency appears to have lost momentum in early February. When compared with the USD, other international currencies have been steadily moving up in value.

There is still considerable volatility in currency values and this has made it difficult to say with certainty what the final fate of the dollar will be. In this week’s statement, Fed Chairman Ben Bernanke stated that the upturn in the economy has not yet eliminated the poor employment rate in the U.S.

On a more positive note, inflation is still under control. The Federal Reserve is clearly going to be hard pressed to maintain low inflation levels while taking all necessary steps to boost employment. Given this, the future path that the dollar may take is still quite unpredictable, and this fact has lead some economists into stating that replacing this currency with SDRs is the best course of action.
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Bank Of Americas Campaign To Rid Bad Mortgages

Bank of America Gets Serious About Bad Mortgage Clean Up

The announcement of a veteran mortgage expert to head the Legacy Asset Servicing unit to take care of bad mortgages and foreclosures has lent strength to Bank of America’s ongoing battle in this area. Terry Laughlin, who amply demonstrated his expertise in his earlier stint with OneWest Bank, will head this new division and hopefully find more success in keeping the bank’s subprime mortgages within control.

Ever since it acquired Countrywide Financial Corp. in 2008, Bank of America has been hard pressed to contain the damages the new company brought into the fold in the form of bad mortgages. Already, BofA has invested billions in settling claims in this respect. Recent months witnessed a 50 million dollar spending towards the legal costs for Angelo R Mozilo, erstwhile Chairman and CEO of Countrywide.

Needless to say, investors have been apprehensive about how these costs will impact the bottom line of BofA. Many fear that as more bills continue to pile up in the coming months the bank may start to show some cracks.

Statistics show that there is good reason for such fears. In September 2010, Wells Fargo reports showed that upwards of 13% of the mortgages attributable to Countrywide payments were either late or foreclosure proceedings had already been initiated on them. BofA has also failed to make the best use of loan modifications under the Making Homes Affordable program introduced by Obama to shore up housing.
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Investors Take A Closer Look At The Undervalued Yuan

Yuan ‘Substantially Undervalued’- Latest U.S Treasury Report

The latest report from the U.S Treasury states that the Yuan is ‘substantially undervalued’. The artificially suppressed valuation of the Chinese currency has been a bone of contention for a while now for manufacturers in the U.S. Their grievance is more than justified as they continue to steadily lose potential customers to the Chinese manufacturers who make cheap substitutes for U.S. produced wares available in the market.

The line taken by the Treasury with this report is a markedly stronger one than the ‘undervalued’ prognosis it gave to the Yuan in the earlier July 2010 report. Back then, this ‘mild’ reprimand was considered as a political placebo offered by the government to keep U.S manufacturers happy without ruffling any Chinese feathers. Even this time, the report was kept ‘on ice’ so to speak until after the Washington visit by the Chinese President.

During his visit, President Hu Jintao made all the right noises about being keen on currency reform. The Yuan has, in fact, been appreciating ever since the Chinese verbally committed to kick start a currency revaluation program back in June. However, the stronger tack taken in the latest report still falls far short of expectations that the major power houses in manufacturing had from the U.S government.
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Wall Street Tycoons Could See More Bonus Cuts

Wall Street Bonus Cuts Will Reduce Risk U.S. Regulators

U.S regulators are all set to address the growing concerns about top financial institutions paying huge bonuses without considering long term financial stability of the organization. A new proposal is being mooted, that will require that top ranking executives put off receiving half their bonus for a minimum period of 3 years.

This news comes from sources who are in the know about the proposal that is being unveiled at the FDIC board meeting. Among those institutions that will be affected by this new proposal are Bank of America Corp, Morgan Stanley and Goldman Sachs.

The proposal is based on the Dodd-Frank law that aims at reducing the risk that investors and stakeholders face if the company pays out a significant proportion of its short term profits to top level employees. The reform law came into being to ensure that no adverse long term implications arise out of such short sighted bonus policies. By deferring bonuses of some high ranking employees, the profits of the company can be deployed towards cementing its financial stability.

According to the proposal mooted by the U.S. regulators, the deferred bonus that the employee could draw at a later date, post the three year period, depends on his contribution to the company’s overall profitability. The eligible bonus may be paid in installments not exceeding one-third of the total amount in each year post deferral period.
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The Unemployment Rate Continues To Fall

Unemployment Rate Falls in January

As the unemployment rate takes a marked dip for the second month in running as per January’s figures, there is cause for rejoicing across the U.S. However, the news could be better, according to economists, who fear that the dip may just be the precursor to a slow increase in the number of unemployed in the coming months.

The latest report from the Government shows that from the 9.8% unemployment rate in November 2010, the figure dropped to 9.4% in December and further dipped to 9% in January. The declining rate has encouraged optimism about employment prospects across the country. But there is another side to the story that is not quite as heartening.

Yet another survey has revealed that only about 35,000 new jobs were added last month. Given that the falling unemployment rate represents nearly 600,000 newly employed people, the two findings are not consistent. Economists are still trying to correlate these two contrasting pieces of information to understand what it all means for the job market.

While a cautious approach from independent analysts is not surprising, it is definitely food for thought that even White House officials are toeing a ‘wait and watch’ approach instead of advertising the declining unemployment rate. In fact, economists at the White House have categorically stated that the figures need to be studied with care before any conclusions are made.
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Are Bonds Smart Investments

Why Bonds are Best Investments for Baby Boomers

With several hundred baby boomers nearing retirement in the coming years, there is much fear about how much strain the social security system can bear. Many analysts predict that when all of these retirees come to depend on social security to meet their post retirement living expenses, the entire system may collapse.

It cannot be said with certainty that social security is doomed but it is clear that in near future, Americans may get a much smaller percentage as social security than at present. What is certain is that retirees can no longer depend entirely on Uncle Sam for their post retirement living expenses.

While it is critical for every citizen to start saving for retirement it is now more important than ever for near retirees to ensure that they invest in safe avenues. In this way they can be assured of having a financially secure post retirement life.

Bonds as investment option

Bonds are the best investment options for people on the verge of retirement. These instruments are safe because they offer assured returns at the end of a fixed period. A bond, as opposed to equity, is a loan that you make to the issuer.
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Tips For Renting An Apartment

Tips on Renting an Apartment

Exercising caution and care is crucial when renting an apartment. It is very important to do enough research before signing the lease agreement of your new apartment. After all, a lease is a long term commitment, and also involves significant financial commitment from your side. Here are a few tips on ’things to do’ when you are looking for an apartment to rent.

Research the neighborhood

Visit the neighborhood that you want to live in both during daytime and at night to get an idea of how safe, how noisy or how busy it is at different times of the day. If you have a few apartments lined up on your ‘check them out’ list then take a stroll around them to see how the surroundings are, especially at night.

Talk to ‘neighbors’

Get a feel for the area as well as the apartments by talking to a few ‘potential neighbors’. People who live in the building where you are looking for an apartment will be able to give you a very accurate picture of the pros and cons of the apartment and landlord. Chatting with neighbors also gives you a preview of the kind of people who live in the building.
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Creating A Budget and Staying Out of Debt

How to Live Within Your Means to Stay Debt Free

Debt reduction is a long drawn and effort intensive process. With several thousand Americans struggling with massive debt, the realization that it is best not to fall into the debt trap, has perhaps come a bit late. Often, huge debts are incurred because you do not have enough savings to meet unexpected expenses such as medical emergencies.

At other times, overspending using credit cards or on loans is the cause of excessive debt. When you control and structure your spending so that every dollar is spent on worthwhile expenses, it is easier to avoid incurring such debts. Here are some ideas that you can use to live life within your means and still enjoy it.

Keep track of your spending

One of the biggest mistakes that debt ridden people made is that they never realize their spending far exceeded what they were earning by way of salary, income from investments etc. Make a simple income expense sheet to tell you exactly how much money is coming in each month and how much you are spending.

This monthly statement helps you take stock of your finances and spending habits. If your spending is way beyond your income then chances are you are already well on your way to accumulating unmanageable debts.
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Are Your Making Smart Investment Decisions

Are you a Wise Investor?

Investing for the future is a task that is best started as early in your career as possible. Although a novice investor cannot aim at duplicating the success of a market savvy investment guru, it is not an impossible task for such investors to make money in the markets. What it requires is some basic knowledge about how investing works, options you can invest in and safeguards you should establish to keep your investments safe. Here a few points to keep in mind if you are a new investor.

Avoid ‘get rich quick’ tips

No one can predict the market with perfect accuracy. Never base your investments on ‘sure winners’ recommended by brokers, friends or acquaintances. The savvy investors who have made a killing in the markets have based their investments on research and personal judgment. Invest only as much cash as you are willing to write off in such ‘sure fire’ high risk channels.
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Is Refinancing Your Home With Equity Smart

Should You Refinance with Home Equity

Many Americans who accumulated unmanageably large debts during the economic downturn are now considering using the equity they have built up in their homes to reduce their debt burden. A home is your most expensive asset and using it to take a refinance loan can give you access to a substantial sum that can cover a large number of small debts.

Getting a refinance loan using your home is a good way to consolidate all your loans into one for easy management. Taking such a loan in this low interest climate can also reduce your monthly outgoings by quite a significant amount. This, in turn, makes it easier for you to get out of debt sooner.

Before you use your home to get a refinance loan, it is very important to gain an idea of what experts predict about future interest rates. This will help you choose between a fixed rate and an adjustable rate for your new loan. A fixed rate is a good option when rates are expected to rise in future. Your fixed rate loan is protected against any such future increases. Even when rates do rise, your loan repayment remains the same.
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How To Travel On A Budget

How to Travel on a Budget

Many people who dream of traveling around the world are content to simply live vicariously through the journeys of others because they believe a world tour would be prohibitively expensive. Traveling does come with its own share of expenses- lodging, food, transport etc, but there is no reason why you cannot do all of these within your means and still visit your dream locations.

By planning and researching options through discussions with other travelers who have recently visited the place, you can get an accurate idea of how to find good deals there. Here are some more tips on budget travel you can use before you start on your journey.

Use the Internet to Make your Budget

The internet is a great resource when you need to gain an idea of costs and prices in any place on the globe. Use the many online travel guides and travel blogs to see what recent visitors to your dream locale have paid for accommodation, food and transport. Make a budget based on recent figures before you start finalizing your hotel, air or guided tour bookings.

Look for Package Deals
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How To Score Good Deals On Foreclosed Homes

Buying Foreclosed Homes Getting a Good Deal

In the U.S, the housing segment was the worst hit by the economic recession. Despite numerous shoring up efforts by President Obama through various schemes, housing values are yet to recover lost ground. Signs of recovery are being seen in some prime areas but still these prices are nowhere near the peak prices of 2007- 2008.

However, this is not all bad news especially for those who are looking to buy their dream home. With many homes going underwater, there are a number of foreclosures happening these days. Buying a ‘foreclosed’ home lets you get your dream home at price that can be really attractive.

Checking with real estate agents and brokers in the area you want to buy into often yields good results. Owners of homes that are being foreclosed typically use agents so that they can maximize the chances of finding buyers who are willing to pay a good price.

Check with some reputed real estate agents in the locality for a list of foreclosed properties in the area. Chances are the agent can even tell you which properties have recently come into the market so that you get a home that has not been standing empty for months, thus falling into disrepair.
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How To Prepare Your Home For A Quick Sale

How to ‘Dress Up’ Your Home before a sale

The collapse of the housing market has resulted in so many homes being put up for sale that it is difficult to get a good price for your property in this crowd. Even if you have prime property and hire the best real estate agent in your locality, you still have enough competition to make getting the best price a tough task. One good way to make your home stand apart from the many others on sale is to ensure that it presents a pleasing picture to prospective buyers. Here are some ideas on how you can ‘dress up’ your home so that buyers like it at first sight.

What does the buyer want?

Thinking from the buyer’s perspective is the first step you need to take when you are staging your home for sale. If you were looking at your home with an idea of buying it, what would you like to see? A sound structure, which has evidently been well maintained, crack free walls and floors, clean interiors, bathrooms, sinks and other damp areas in good condition- these are all important factors considered by buyers. Both the exterior appearance and the interiors of your home play an important role in attracting prospective buyers.

The exterior of your home

The buyer’s first impression of your home is formed by what he can see of it from the street. This is why the exteriors and the setting of your home make a huge difference to its salability. Trim the lawn, clean up the frontage and spruce up the garden before you put up the “For Sale” sign. A coat of paint to the outside walls of your home makes it stand out among the many houses on the street. All of these serve to give the impression that your home is well maintained.
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Don’t Start Stuffing Your Mattress With Cash Just Yet

Why Banks Accounts are Still Good Places to Keep Cash

Post recession a majority of Americans not just lost faith in the economy but also in the banking industry. Some huge, ‘indestructible’ banking and financial groups like Citi Group started tanking during the economic crisis. This led to fear among those who had accounts with many major banks. In fact, there were many who pulled out their savings from their local banks, preferring to keep at home even if it meant loss of interest.

Although the economy is not exactly booming even now, it is certainly more stable and the banking sector has managed to find its feet once again. If you are one of those people who keeps all your money at home, then here are a few good reasons why you should reconsider your decision to avoid banks.

Extended protection to bank account holders

As part of its economic improvement program, the U.S government is allowing an extended protection to bank account holders to cover losses in case of bank failure. The standard $100,000 FDIC (Federal Deposit Insurance Corporation) insurance on accounts now stands increased to $250,000. This limit will be in force until the year 2014 when the $100,000 insurance limit will come back into force.
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What Exactly Is Your Credit Score

Your Credit Score What is it and Why is it Important

Your credit score is perhaps one of the most important numbers in your life and chances are you don’t even know it. Many Americans are waking up to the fact that every late payment, every unpaid loan and every repossessed asset they have is causing long term damage to their financial health.

All of your major financial dalliances are recorded in your credit report and reflect on your credit score so that anyone wanting to engage in financial transactions with you can have a measure of the risk that you pose. Most often, it is the lenders who make use of your credit score to get an accurate picture of your financial capacity and repayment ability before they approve a loan you have applied for.
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Is A Short Sale The Right Option For You

Short Sale A Win Win Solution for Unmanageable Home Loans

Millions of Americans who have huge home loans to pay off are now finding themselves in a no-win situation. This is because their repayment capacity has been eroded by reducing salaries and interest rates. On the other side, home values have dipped to all time lows. For those who find themselves struggling to repay home loans that are far bigger than the actual resale value of the asset, a short sale is a good solution.

What is a short sale?

Simply put, a short sale happens when you sell the home for an amount that is lower than what you actually owe to your home loan lender. Clearly, your lender needs to approve the deal before you can go ahead with this kind of sale. Once the sale is completed, the proceeds are transferred directly to the lender instead of you, the seller. The difference between the actual loan amount you owe and the sale proceeds may be written off by the lender or he may require that you pay it off within a specific time period.
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Improve Your Credit Score For A Better Job

How Bad Credit Score Affects Your Job Prospects

Many Americans may not be aware of this, but quite a large number of employers check credit scores when they are screening applicants for an employment opportunity. Surveys have suggested that more than 40% of employers conduct this ‘credit check’ on job applicants.

This is definitely an unpleasant revelation to many who have lost jobs during the recession and as a result fallen behind on repayments. The problem is that unless you can find a job that gives you a regular paycheck there is no way to set your finances in order and improve your credit score.

But if more and more jobs begin to hinge on your credit score, you may need to improve the score first to even get a job. While the debate goes on in Congress about whether credit checking by employers should be prohibited, let’s see why employers consider your credit score so important.
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How To Avoid Big Credit Card Bills

Tips on Avoiding Huge Credit Card Bills

Credit card debt is one of the biggest problems that cash strapped Americans have are facing today. With salaries taking a beating and uncertainty about jobs preying on their minds, many Americans use their plastic to buy things because they do not have to pay for them right away.

Although users conveniently forget that credit card balances have to be paid off sooner or later, the issuers don’t forget to send the bills at month end. Instead of running up huge bills on your plastic that will wipe out your entire savings to repay, it is far better to keep a check on how you are using your card.

Monitor Your Card Spending

A great way to ensure you always have the cash to pay back credit card dues is to keep a list of purchases that you make using it. Update the list diligently whenever you use the card so that at month end you know exactly what you owe to your credit card company. This list will also help you detect any errors in your billing.
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Practicing Good Money Management

The Importance of Training your Kids in Money Management

Although giving kids an allowance is ok, we rarely realize that it is also very important to teach them to spend it wisely. Merely giving purchasing power in the hands of children does not ensure that they gain the maturity to use it responsibly. It is necessary to train your kids in money management right from an early age.

This helps them understand when and why to save and when and where to spend. By understanding the value of money and the way to use it judiciously, the children grow up to be financially responsible adults.

Teaching the Importance of Spending Within Means

By getting kids to keep track of their spending you help them understand the importance of budgeting for different expenses. With budgeting comes the awareness that spending substantially on one item will mean less or no money for another. The limits on spending that are established in this way inculcate a habit of spending only within the means.
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Advantages and Disadvantages of Cash Back Credit Cards

Cash Back Credit Cards – Advantages and Disadvantages

If you are addicted to spending with your credit card, a cash back card may be a good option for you. While a cash back card helps you earn as you spend, it is important to understand how it works before you sign up for one. Here are some advantages and disadvantages of this type of card – read on to learn how to use it wisely.

How Does it Work?

When you use your credit card to buy something, the merchant pays a commission to your bank or service provider. On a cash back card, your card issuer shares some of this commission with you when you make certain kinds of purchases.

The total cash you can receive in this way is either mailed to you as a check or added to your total credit at year end. You can get back as much as up to 2% of your total credit card spending in this way. Currently, credit card issuers are competing with each other to get more customers and you may even find some 5% cash back cards in the market.
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Different Between Chapter 7 and Chapter 13

Bankruptcy Basics- Chapter 7 vs Chapter 13

According to the American Bankruptcy Institute, in the year 2010, more than 1.3 million people filed for bankruptcy. The reasons for the bankruptcies varied from loss of employment to salary cuts. With not much hope of a boom in the economy in the near future it is too much to hope for any dramatic changes in these figures in the current year.

For Americans drowning in huge debts, declaring bankruptcy may appear to be the only recourse. But before you do so, you should know some basics about the different kinds of bankruptcy that can be declared.

Chapter 7 Bankruptcy

Also called straight bankruptcy, the Chapter 7 bankruptcy is an option for debtors who have no significant assets to lose. With exception of exempt assets, all others are handed over to a bankruptcy trustee. The trustee liquidates these assets and distributes the proceeds among the various creditors in line with order of precedence. A period of 4 months usually elapses before the bankrupt debtor can claim to be discharged from all his debts.
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Is Debt Consolidation Really A Good Option For You?

Is Debt Consolidation a Solution to Debt Reduction?

Many financial experts suggest consolidation of debts as the solution to reduce your debt and become more financially secure. But is this true? Debt consolidation can lower your monthly payments and help you better organize them. But consolidating debt may not be the best solution for everyone. Some things you should keep in mind before going for debt consolidation as a solution are discussed here.

Taking out another loan can be risky

If you are taking a second loan against your home to consolidate your debt, you put your property at risk and may even lose it in the event of a default. There is the possibility that you might consolidate your entire loan amount only to realize that you are unable to pay back the loan, making your financial condition murkier.
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Stock Investing Tips For Beginners

What You Should Know Before Investing in Stocks

Stocks have always been right at the top when it comes to choosing good performers among different investment avenues. Historic statistics show that those who have steadily invested in stocks have been better off than those investing in bonds, mutual funds and other investment options.

But stock market investing is also fraught with risk, especially when it is difficult to predict how the market will move. To invest successfully in stocks, it is important for you keep some basic rules in mind.

Never Invest for The Short Term

To an outsider it may appear that it is possible to make incredible gains by investing in stocks for very short periods. In fact, day traders do make a killing in the market when they know exactly how to time purchases and where to invest.
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How To Save Money On A Home Purchase

How to Buy a Home Cheap

The housing market is the one most affected by the economic downturn that caused savings of many Americans to dwindle down to nothing. The recession wiped out the asset values of existing home owners and also made finances extremely tight for prospective buyers through lay offs and drastic salary cuts.

The net result was that although home values were dropping like stones, there were not many hopeful buyers who could afford to make an investment. There was no way to predict where the housing market would bottom out so there was also no way for hopeful buyers to identify the right time to invest.

Much shoring from the government in the form of tax credits and easing of loan preconditions and returning confidence in the economy have now served to put the brakes on the falling housing segment prices. If owning a home is a dream of yours then this is the time to fulfill your dream with minimum outlay.

Improve Your Credit Score

Your credit score tells your lender how much of a credit risk you are. The interest rate on your loan rises when your credit score is low. Make sure you pay bills on time, keep unpaid balances on cards low and pay off long standing outstandings well before you apply for the home loan. These acts will boost your credit score so that the lender can see you are credit worthy.

Foreclosed Homes are a Bargain

During the recession, several home owners were unable to repay their mortgages and were forced to foreclose on their homes. Such homes will typically sell for prices that are much lower than prevailing market prices because both the lender and the home owner want to recover as much money as possible from the asset as quickly as possible.

You can simply take a walk through the neighborhood where you want to buy a home and look for homes with “Foreclosed” signs on the lawn. A local real estate agent should also have a list of foreclosed properties for you choose from.

Hire an Agent

Experienced real estate agents have a good number of links with agents and lenders in many locations. These links ensure that your agent will be aware of both sellers as well as home owners who cannot afford to fully pay off their home loans. Also, an agent will have a good idea of existing prices in different localities and he can negotiate the best rates for you.

Most home owners find that the money they save in their agent-enabled home purchase far exceeds what they pay to hire him/ her. Of course, making sure that you find an honest, experienced agent is a basic criterion for this.

Understanding How Home Equity Loans Work

Understanding Home Equity Loans

Loans involve intricate terms and conditions that you have to follow very carefully if you want to get a good deal. Of the secured loans available to homeowners, home equity loan is a good option. To help you better understand home equity loans, here are some basics.

What does equity mean?

Equity can simply be defined as the amount of your share in your home. If you have taken a loan against your home, then equity is calculated as the difference between the total value of the house and your outstanding debt.
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AIG Sells Asian Life Insurance Moving Closer to Paying Off Debt

AIG is steadily getting closer to repaying the $132 billion debt that it took in 2008 from the government to avoid collapse. The latest step in the direction is AIG’s agreement to sell its international life insurance unit, American Life Insurance Co. (Alico) to MetLife Inc. [Read more…]

Saving For Your Child’s College Education

A Guide to Saving for Children’s College Education

When you think of saving for future expenses, the cost of educating your children is one of the most important financial needs that you should consider. College education does not come cheap and educating your son or daughter in a little known institution rarely has much value.
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Are Bonds Safe Investments

Why Bonds are Ideal for Cautious Investors 

When it comes to investing, stocks are favorite avenues for spectacular returns, but the high risk associated with them also puts off many a cautious investor. For those who want their money to be safe, yet grow at a decent pace, bonds are good options for investment. Bonds are steady winners and their low returns are a good exchange for the protection they offer when the market is volatile. If you have a low risk appetite and still want your money to work for you reasonably well, then investing in bonds is the strategy you should follow.
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