Currently Viewing Posts in Finance

Tips to Stabilize Your Finances

As families struggle through the current recession it is important to remember that this is not the first nor the last time that the economy will take a turn for the worse. In knowing this you should also know there are a few simple ways to prepare you finances to ensure you weather the current cycle and remain in a position to benefit when the economy takes it’s next turn; hopefully for the better.

  1. Have multiple streams of income- A few decades ago it was standard procedure to graduate from either high school or college and establish yourself with a company for the long haul. Those times have changes and if you wish to be financially secure it is important to understand the benefit of having multiple streams of income. Even if you have a great job with a great salary in times when the economy falters layoffs and downsizing become a reality many people are simply not prepared for. If you depend on just one source of income and you lose that income your finances can quickly take a turn for the worse. If you are fortunate enough to have a severance package you may be able to live off of that for a period of time, but you will eventually have to find another job and in the interim you may have to dip into your savings to survive.
  2. Diversity is the key- Similar to the first tip, having a diverse portfolio is the best way to protect yourself from losing everything in one fell swoop. The economy is simply not predictable enough at any time to have all of your eggs in one basket. Your age and the age at which you want to retire play a big factor in how risky you want to be in the market, but you should always spread your investments in a way that some money is safely tucked away slowly making more money.
  3. Manage your debt- An import lesson was brought to attention in the last year. Millions of people have learned that their spending and saving habits leave a lot to be desired. If you have debt now is the time to tackle it once and for all. If you can do it on your own by cutting costs and focusing serious energy and efforts toward debt reduction- then by all means go for it. Keep in mind that you will likely have to take a serious look at your lifestyle and make appropriate changes to ensure you do not dig yourself out of debt only to find yourself back in debt from using credit cards or overspending. If you are overwhelmed and your debt is making it impossible to move forward financially it is time to look into the various debt relief options available to you.

Bad Economy – Extreme Tactics

You may be thinking to yourself, I don’t need to hear anything about being tough in a tough economy, I’m doing just fine, and that’s what I thought too. My whole life I never got laid off and I never went without a Job unless I wanted to. Times are different now; you almost can’t be overly prepared.

So here are some of the things I wish I would have done a long time ago to prevent at least a little of the difficulty getting through this bad economy.

  • Tip one- Never say it couldn’t happen to you. When you think you are invincible you aren’t going to make any preparations for the worst case scenario. You might be thinking, it doesn’t matter, even if I lose my job I can get another one very quickly, and hopefully you are right. My question to you is what if you are wrong, are you prepared?
  • Tip two- Get prepared. Going through a really bad economy can be like going through a natural disaster, if you are like I was then you might say, I will always have someone to count on even if the worst happens. What if they are all going through the same thing? Developing a plan of action to rely solely on you is the only way to go. It’s nice if you can rely on family and friends but you may not be able to.
  • Tip three- Don’t live in denial. I can’t believe how many people, even when times are tough, still spend money they don’t have. You can’t bury your head in the sand. Be prepared to make extreme sacrifices. I had to sell almost everything I owned and at first I was devastated. Some of the things I missed, but I soon realized that most of the stuff I got rid of I didn’t even notice. I actually am glad I don’t have so much junk now, later when the good times are upon you again you can re-buy the things you really miss.
  • Tip four- Have the right mindset. Having a long term perspective about it all will make a difference. I’m sure it feels like the end of the world now but I learned from my own experience that very little of what I thought mattered actually did. Keeping a positive frame of mind will ensure that you get back on your feet as quickly as possible.
  • Tip five- Learn from the experience. I have had some of the greatest personal growth in my life during the tough times of the bad economy. I learned so much about myself, and my ability to persevere. I also learned what mistakes I will not make in the future. Every experience in life has a lesson to teach if you are willing to learn, even the bad ones.

Economies shift, markets vary, and the only thing that is constant is change. If you prepare during the prosperous times you will be more ready for the lean ones. When all is said and done, no matter how the bad economy affects things in your life, you will overcome it all in the end.

Economic Bandage Won’t Help Economy

The sub prime mortgage crisis began and just hit its peak, according to some economic analysts. In my opinion, it has been long in coming. The basic issue was that lenders issued mortgages at low rates that were adjustable. At the low rate, home buyers were able to squeak out payments. But, when the interest rates rose and monthly payments rose, the consumer was unable to pay. Many loans were given to people at the economic margin and anyone with an elementary education should have seen that those consumers could not afford a doubling of their payments. Anyone looking for details can easily Google “mortgage crisis” and get more financial information than you could probably use.

One may also recall the savings and loan crisis of the late 70s and early 80s which, according to some, led to the recession in 1991-92. Again, the approach was a bandage in the form of a bailout. And today, we see another bailout, but not a cure. Economic news has seen the current financial woes spread across the world thanks to globalization. The economic markets have become so entangled that if one suffers, they all are affected. This is kind of reminiscent of the web of tangled alliances that led to WWI or the “domino theory” of the Vietnam War era. We all know that markets have been consolidating and control of the economies in the world is spiraling into the hands of the few. Perhaps we should take a lesson from nature.

Diversity is a key for ecological health. As species diversity decreases, an ecological system may collapse. While this is actually happening in the environment today, it should serve as a mirror of our economic systems. As conglomerates grow, diversity is lost and economic systems face collapse. They talk of a tipping point with respect to climate change, the same hold true for economic systems. We are fast approaching the time when the bandage will not work because the system cannot heal itself.

Perhaps the primary reason that the system is in deep financial is “greed.” The powers that be continue to insist that we purchase things that we do not really need and that we do so whether we have the money or not. In one of my articles, “You Are Pre-Approved to Go Deeper into Debt,” I tried to show that we are deluged with offers to take out low interest loans or get starter low interest credit cards in order to purchase that new car, fix the house or take a vacation. Daily offers received in the mail or by email to buy now and pay later are very attractive to those who might be faced with financial difficulties. The offers of thousands of dollars now are even attractive to those with steady incomes who feel that that will be able to keep up in the hopes of growing incomes. Even with the current financial crisis looming over everyone’s head, these cheap credit offers still pour in.

The world cannot sustain wanton consumerism. It is one thing to produce and to purchase products that will enhance the quality of our lives or to decrease our dependence on vanishing fuel systems. It is quite another thing to buy for the sake of buying and to keep up with the latest trends in fashion, the newest junk toys and other products that will soon hit already overburdened landfills. It has been clear that large corporations are not treating consumers and the environment in a responsible manner. We are now in that “pay later” of the buy now syndrome and the question is, “Can we afford the price?”

Mr. Harris was born in Massachusetts. He attended The American University in Washington, D.C. and received his degree in Political Science. His graduate work was done at the University of Northern Colorado and Howard University. While in D.C., he spent several years working for local and regional government agencies. Upon moving to Maine he worked with three governors and served as the Assistant Director of the Maine State Planning Office. He worked on a White House Task Force for the development of a National Rural Policy and later served as Rural Policy Coordinator at the Federal Regional Council of New England. He has worked on gubernatorial and senatorial political campaigns and currently works in Special Education.

Creative Financing Techniques in a Down Economy

 

Creative financing can help most sellers to not only sell their property but may also aid in getting the higher asking price or very close to the full asking price.

Many buyers whether first time or moving into something bigger are looking for financing in an economy that is experiencing a big reform and stricter rules of extending credit. Banks at this time are very leery of government backlash if they do anything remotely close to sub-prime lending. The answer is creative financing.

Many sellers do not understand creative financing, but in this upside down slowly getting better economy a seller will have to understand creative financing if they wish to sell their property sooner rather than later.

Creative strategies such as lease option, seller assisted down payments, seller held second or even first mortgage. All can be better options than not selling the property. Use of these types of strategies can also help in selling a property close to if not the full asking price.

So instead of trying to wait for the economy to improve before selling your property, consider conventional and creative options with an open mind. Many sellers and buyers are going to have to start thinking in a different manner to be able to achieve results, understanding creative financing techniques is a step closer to closing.

Saving in the Current Economy

That is sometimes a really good thing because it is then that we actually realise what we waste money on. Not to mention that once you begin to cut back you can see that you are still OK and that if you had saved some of that money over the years you might have $30k in saving’s right!:) I know that a lot of us are now forced into being more conscious of what we are doing to the point where people are actually growing their own vegetables and using their mind’s to think outside the box a little more. We have had to do this for Millennia really so it is no different now. See what I mean there? You see that a perceived negative situation can bring about forced change that actually starts us thinking a bit more about being industrious instead of just living or existing each day like a cycle of negative perceived reality of the downturn, which I think is wrong anyway.

What can you do now to cut back? What can you do that might have a profound affect on your next ten years of life? What changes can you make that might seem quite small but could have quite large positive changes to your financial/mental/physical future? It might be something as simple as eating more fresh grown vegetables or fruit which helps your health right!:) Try and figure out in all areas of your life where you start to gradually implement positive changes that will assist you in a brighter and more abundant future. I bet you will have at least a few things you can do this week, I know that I have!

we are currently in a financial crisis or economic downturn. Now this can actually be a good thing. How? Well it is because it will get people to think outside the box when it comes to spending. Actually when there is mass panic about money is when most clever people make money because everyone else is hanging on for dear life to what they have and taking no risks. So how can you save more money now and create a secure future? You can start by looking at your shopping list. How much rubbish do you buy? How much is spent on Cereals for example? I know me and my girlfriend will buy just one cereal that is healthy so not only are we spending less but we might even live more. Cool huh! It doesn’t take much to begin breaking down your monthly expenses and cutting back.

What you might even do is go for a smaller car? Or wipeout an expense that is not actually needed. Let’s say you go to the Gym ok, well how much do you pay per month? $30, $70? Well ever heard of running,swimming,walking,badminton,cycling,press ups, situps? You can save your monthly Gym costs right there. What about getting your hair cut, do you go expensive or cheap? You are getting the idea by now huh!:)

So first of all look at all of your outgoings, then eliminate any that are not needed at all, then adjust the outgoings to cheaper versions of what you buy, like value groceries. After that you can look at your fixes, what do I mean? Well Alcohol, smoking, junk food, commercial coffee shops, general luxuries that you really could do without especially for your health.

Let’s say that you save $50 per month well that’s $600 per year or $6000 over ten years, or $18,000 over 30 years. Cool huh! It won’t take much to get to that level of saving and then when you retire you will have maybe $20k in savings that you didn’t miss. This all depends on your ability to save more and then either live much more comfortably in the now or have a hefty lump sum when you retire. Hey it might even allow you retire a few years earlier.

Commercial Finance

What are these events today? 1) The Mortgage Melt-down. Major financial institutions in the United States are incurring billions of dollars in losses due to the loss in valuation of their investments in mortgage securities. The consequence for borrowers is that these institutions are less inclined to take risks when loaning money for fear of additional losses. And their regulators are demanding that regulated lenders raise their credit standards for borrowers to qualify for a loan. 2) The devaluation of the American dollar versus other world currencies. The U.S. government is spending ginormous amounts of money in excess of what it collect in revenue due to the political compulsion to spend taxpayers’ money, the war in Iraq, Hurricane Katrina (and other natural disasters) and the war on terrorism. This makes our currency less valuable. It makes importing to the U.S. more expensive. The American people have less money to spend on goods and services, and their money buys less than it did a year ago because prices of necessities such as gasoline are higher. 3) The current tendency of Federal and State governments to reduce funding for social services, health services and education because of inadequate revenues; this hurts individuals and businesses who have less money to spend on products and services which creates additional drags on our economy. 4) The diminishing value of residential real estate all across the United States. This is related to the mortgage meltdown and the fact that many people incurred debts that they cannot repay. The real causes of these events are complicated and beyond the scope of this article. Suffice it to say that these are hard times and hard times create needs for hard money loans.

What exactly is hard money? Here are seven examples:

  1. A commercial real estate loan where the borrower receives funds based on the value of the property, usually 50% or less, at an interest rate higher than a bank would charge. This is the most commonly understood type of hard money. In this financing, neither the income from the property or the borrower demonstrably supports the repayment of the loan.
  2. A real estate loan to buy a residential property where the borrower cannot prove their income. This may be accomplished with financing from a seller, the only party willing to take the risk of non-payment.
  3. A small junior lien on income producing commercial real estate where the first lien is very large. For example, a million dollar second lien behind a ten million dollar first lien. Most lenders simply do not want to consider a loan of this type because of the potential liability for repayment of the first lien. It is ten times the risk of the secondary loan.
  4. Most loans to people with less than excellent credit. Many loans are based on credit scoring. If you do not have a credit score that is high enough for the lender’s requirement, you simply do not get their loan and you may or may not be able to find a hard money loan to accomplish your objective.
  5. Accounts receivable financing to construction contractors, medical providers and sellers of agricultural products. Most factors do not offer to these sectors of the economy because of the risks and complexities that are involved.
  6. Purchase order financing for items with gross margins less than twenty percent. The twenty percent margin is a benchmark for sufficient profitability in a transaction to pay all financing costs and create profits for the business after all costs are paid. During hard economic times margins are squeezed. It is a vicious cycle.
  7. Loans to businesses that are particularly negatively affected by the current economy. For instance, a loan to build a new lumberyard is impacted by the downturn in new real estate construction and a lower need for lumber. Most banks would simply decline to consider such a loan. The same is true for developers seeking to build new housing tracts or office building developments. This is not a good time to try to start a new mortgage brokerage company; although it may be a good time to be a hard money lender provided that you are very, very careful in assessing your transactional risks.

What do all of these situations have in common? In times of easy money these situations would be less costly to finance and more likely to receive funding. Today, the lender’s answer to your request for funding is more likely to be a polite but strong “no way”. Many lenders have effectively (if not actually) shut their doors. Many lenders will simply decline to lend on hotels/motels, gas stations, owner/user properties, properties with any environmental issues. Borrowers who do not have FICO credit scores above 680, with substantial net worth and income will find it is very difficult to obtain many types of loans. Fortunately, the door for accounts receivable financing is still wide open.

Importance of Keeping Up With Finance News

Finance news keep you abreast with developments in various critical sectors of the either the national or international economy. For instance if you may want to keep abreast with opportunities that exist for you in domains like forex trader then you need to know what is happening in line with developments of the volatile stock market and money markets. On another front you may want to know where there are affordable foreclosure properties that you can makes the most of to get yourself that dream real estate property as your residence or for investment.

Many people are getting hands on with financial matters because it does not really take an expert to get into financial trade circle and the make the most of what the industry can offer. What happens in the finance world affects your life directly it does not matter if it happens on a national scale or international locale. The fact is that the global economy in intertwined such that financial matters in the Australia economy for instance may affect the whole of the global financial landscape, which has an impact on the state of the economies, inflation, interest rate, etc. These are kinds of issues that get to affect you directly.

Keeping abreast with financial developments has been quiet a critically important aspect in the recent global economic meltdown. The global financial sector has been riddled with negative developments which cost some people huge profits from various business ventures. Keeping up with finance news helped people to stay on the look out and alert on the next move to do for instance in terms of example selling property, buying a property, getting a bank loan etc. the principle of keeping pace with financial developments is very important especially for entrepreneur who want to keep a close eye on the financial developments every second in order to position themselves for expediency and survival.

Financing to Purchase Property Quickly

While a downturn in the economy can be an ideal time for finding great deals, there can be one issue with doing business under these conditions. The biggest issue is that when the economy isn’t doing well, securing financing in a timely manner can be much more difficult. Because banks and other financial institutions are dealing with problems, they aren’t as willing to quickly give out traditional means of financing. Instead, they act in a conservative manner that causes the process to take much longer. The reason this can be a significant problem is because in order to take advantage of the best deals that come up, you need to be able to quickly get financing. Good deals don’t last forever, so you need financing to help you purchase property quickly.

Fortunately, while many financing options may not be viable for these types of fast deals, there is an option that can work for you. Bridging finance can be used to purchase property quickly. The reason this option can work in situations when other financing options won’t is because bridging finance is directly based on the value of properties that you own. As a result, the bank or financial institution you work with doesn’t have to go through a lengthy process to provide you with the financing you need. Instead, they are able to quickly provide you with financing that you can then use to purchase property.

In addition to being available in a short period of time, another reason this is a great option for purchasing property is because the rates offered are generally competitive. While bridging finance doesn’t offer the absolute lowest rates of any financing options, they are still a very reasonable option. Additionally, because you can shop around among lenders, you can use an offer from one lender to negotiate a better rate with another lender.

Flexible terms are another factor that make bridging finance a good option for anyone who wants to purchase property quickly. With many forms of financing, the fact that you have to stick to a specific payment schedule can end up costing you money. However, with bridging finance, this doesn’t have to be an issue. Instead, you will have the ability to choose what works best for you. As a result of all the benefits that this type of financing has to offer, if you need to quickly purchase property, you should strongly consider using bridging finance to get your deal finished as soon as possible.

Personal Economy

Experience tells us that the personal impact of major issues and changes is largely unknown until long after the fact, and it’s never the way it was reported or predicted. So then why so many headlines and articles and commentary? There is a very simple answer to this, but not an answer that’s easily swallowed. Sadly, headlines, hype, and drama sell (and prompt people to react and buy and sell assets, and all kinds of things).

We know that when you get down to it, sales are a core consideration for the media. We just choose not to consider it and overlook this. We’re hopeful that the information is reliable and sound. After all, if the information flowing from books, magazines, TV shows, and newspapers is provided in a way to drive sales numbers, then where can the raw facts be found? And since advertisers believe that I won’t buy or watch unless I see an impact to me or my family, then that’s the way things are spun.

After studying finance from an armchair (especially personal finance) for many years, and reading book after book from many authors on the subject, I then ventured into the financial newspaper and magazine world. (By the way, as far as books go there are only about 5 authors that I believe are worth reading and most of them have passed… but isn’t that really the test of solid information? It stands the test of time?). We’ll discuss books and newspapers in another article.

I won’t name the magazines, but would like to relate an experience. I picked up a fairly popular financial magazine at my Dentist’s office and liked the articles. They were candid, focused, and seemed factual with no speculation. That’s what I want. I don’t want opinions (unless they’re unbiased which is rare), speculation, or rhetoric which typically constitutes 75% of the articles I see. I want the facts. I saw a discounted subscription offer for this magazine, and I bought it. Before I received the first issue, a copy of a sister magazine (also pertaining to personal finance) arrived and I assumed that I had made a mistake when ordering. I leafed quickly through the magazine and none of the articles went on my “read this” list so I laid it aside. Two weeks later, the magazine I ordered arrived, and it was pretty good. Similar in quality to the first copy I had read, and interesting articles. So then why was there another magazine? What was the real difference? Every month about two weeks before receiving the magazine that I ordered, the other one would arrive. I never saw much in it of interest, but I decided to carve out some time and go through it page by page. As I went through it, I ripped out the ads as I went along. I stopped at a few articles and read partway through only to find they had sales pitches buried in them. Out they went, one by one, and not one page remained when I was through. Not one. Every page was an ad in some sense or tilted toward a sale… and this is a popular magazine. I determined that the reason I get it for free when I didn’t order it and don’t want it, is because it’s one big ad masquerading as a magazine. An entire magazine with no objectivity or substance, made up of ads and steering articles… and it’s popular. What are people getting out of this? I really can’t say.

After a few months of reading the magazine that I ordered, I found that it too was drifting toward speculation and more ads. Oh well… I gave it a try. Time will tell which way it goes. Even the association that I joined a few years ago which claims to be unbiased, is showing rather obvious signs of bias with sales as a goal. Since we really want to manage our finances, take control, work toward goals, eliminate debt, and establish and maintain a reasonable savings, these are not the articles and recommendations we need. I wonder if we’re not better off without any of them.

The good news: These experiences are my glaring reminders to stick to the basics, and to do the work myself. To manage our finances, we need to be diligent, vigilant, and responsible, and this means allocating time. It means not letting someone else do the homework and just following their lead. It means planning and reviewing, and nose to the grindstone debt reduction and prudent saving… acknowledging the fallacy in the quick-solution mentality. I form a plan toward my goals based on sound knowledge and principles, diligently follow the plan, and review and adjust the plan as things change. It’s pretty straight-forward and not terribly difficult… and this is the good news. Few articles will divulge the tried and true… after all, it doesn’t sell anything.

Wisdom is the proper allocation of knowledge, and prudence is the ability to govern and discipline ourselves using reason. These attributes should form the foundation of how we manage our personal economy. We build on these with diligence and perseverance toward our goals, and that is how we achieve them.

Basics of Stock Finance

It is an official and organized market in which the exchanges of foreign transferable securities take place under the guidance of a centralized authority. The operation of the financial market rests on the activities of the share market. It is where investors from within the country and the foreign investors invest their money and participate in buying and selling of the stocks. This trade leads to huge amount of profit generation which is then utilized by the government and the private sector for various development activities. The government earns revenue from stock finance and so it is necessary for the swift functioning of a country and its economy.

The economic growth of a country can be ascertained from the amount of Foreign Direct Investment (FDI) that is received by its stock market. When investors have faith in a country’s financial possibilities, they invest in that country for long term returns. The individual citizens of a country can also benefit from it by investing smartly on the shares of companies that are profitable and have shown rapid improvement in their annual balance sheets.

Stock finance is ideal for aspiring entrepreneurs who intend to make good money in a short period of time without having to start any venture of their own; they can instead be share holders in established companies and reap the benefits. However, it is a very volatile and risky market and investors can also end up losing a considerate amount of their money when the economy is not doing very well. For example, during the recession period, stock value of various Fortune 500 companies decreased by more than 25 % which resulted in huge losses for the investors. Thus, it is necessary to have a good understanding of stock finance before taking the risk of investing in any shares.