November 18th, 2008 — Banking, Financial Security, Income Streams, Long Term, Money, Personal Finance, Real Estate
While many are reacting to the news of bank failures and bailouts badly, there are a few people that are taking the time to assess the situation and figure out what they can do to stay on top, and keep their money safe. Panic is an ugly thing, especially when it involves money. Britain has already seen a run on their banks once this year, and many other countries are finding that their banks are on tenuous footing at best.
This creates an environment that is very unstable and as a result, the very real prospect of earning everything you worked so hard is now possible. The biggest mistake that people make when the economy goes through corrections is overreacting. Granted, no one wants to lose all their money in the stock market, and you would find few people indeed that aren’t at least somewhat concerned over the direction the economy is going.
While some are bleating “Great Depression” and others are scoffing, this is a good time to start developing some strategies that will keep your money safe. While there are no guarantees that you can protect every dime, there are ways that you can keep your money safe, and even increasing, in times of economic hardship.
One of the best ways to secure more income in these times is to find ways to make the situation work for you. As an example, the car market is struggling right now, people can’t pay their interest payments and housing is in the tank. However, a smart investor will look at this issue and see ways that they can profit from it.
Thanks to the falling value of homes, there is a rush to pick them up cheaply to flip at a later date. Whether you decide to use the property as a rental to keep regular income coming in, or you want to flip it quickly, real estate has a lot to offer at this time, even though everything seems gloomy. All hope is not lost, and while outright speculation is not a good thing, taking stock of the market and seeing how you can turn your finances around is a good thing.
While you should not invest if you have no experience, at least not without the help of a broker, it helps to broaden your view of the situation and see where you can profit. Reading the financial news on a daily basis is something proactive you can do and it can help you spot trends right as they are occurring. By becoming an informed consumer and taking the time to learn the ropes, you’ll be in a much better position than those who have not paid attention and frittered away their money.
If you are truly worried about your money, consider speaking with a financial analyst, or an investment broker that can help you develop long term strategies that will keep your money safe, and increase your income, no matter what happens in the world.
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November 11th, 2008 — Banking, Debt, Personal Finance, economy, loans, stock market
With the fall of the stock market, the collapse of the economy became clear. The real driving force behind it, however, was the failure and dropping confidence in the largest bond market of the world. Known as structured finance, it has led to a crisis which rivals the Great Depression, as well as brought about the demise of twenty plus banks and almost $3 trillion in government spending and guarantees.
Securitization is the biggest export for the US in the 2000s. What they are is the bundling of consumer loans sub prime mortgages. The US has the largest debt, having borrowed $27 trillion since 2001. That amount is nearly twice the gross national domestic product, which is $13.8 trillion. This sort of growth owes itself to overseas banks, which wanted a piece of the action it saw in US banks. With this demand, Wall Street gladly supplied the securities, leading to nearly a trillion dollars worth of bank losses, almost half of which was outside of the US. It was in Europe where a great deal of banks got hit. The amount of securitizations grew from 78 to 453 billion euros, which is over half a trillion in US dollars. Many of these banks lost a lot of money, from one bank in Germany losing $4.1 billion to Iceland, where the Prime Minister advised his citizens to switch from finance to fishing. Even in Japan, its third largest bank saw a $6 billion dollar loss.
Securitization is considered a system which operates in the shadows, powering many consumer debt vehicles, such as credit cards, car purchases and sub prime mortgages. This system leads to cheaper loans thanks to dividing the risk of default by pooling loans. As a result, bank profits went up and a debt culture became realized across the globe. In 2005, banks decided to put more into the system in order to boost profits. Through lending more through sub prime mortgages and by relying more and more on the US money market funds, investment banks brought about fatal consequences.
Traditional lending involved the bank loaning money it had on hand, receiving regular payments on the loan and turning a profit from the amount over the principle that the borrower pays. It was loosely around 1985 that a method was devised for lending without capital. Its general mechanics involved taking anything on a payment schedule and using that money to pay off the interest for bond holders. The biggest technique used in securitization was the utilization of a sort of shadow accounting. The bank could take bonds it did not sell and shift them to an off shore account in a trust, which removed the entry from the books and allowed the bank to lend more while still recording profits. As a result, the bank could sell some of its loans to investors and put the rest in a trust, and not have to hold any capital.
It was this system that led to the banks eventually trying to use sub prime mortgages to cover money that it owed, which led to the economic crash. The failure of the economy owes itself to a pen and paper trick devised to maximize bank profits.
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November 10th, 2008 — Debt, News, Personal Finance, carnivals, credit, credit cards, credit score, economy
Welcome to the November 10, 2008 edition of credit report stories!
Rich Credit Debt Loan is happy to host the latest edition of the Credit Report Stories carnival. We hope you enjoy the posts and find many worthwhile articles. Below are our editorial picks:
Credit Karma presents Balance Needed As Credit Card Rules Experience Change posted at Credit Karma.
MoneyNing presents Credit Card Spending Limit, Credit Scores and Conventional Mortgages posted at Money Ning, saying, “A credit card representative told me that my credit card limit alone will affect my credit score. Do you believe her?”
hank presents How Is What We Are Going Through Now Different From The Great Depression in the 1930’s? posted at My Investing Blog.
News
KCLau presents Financial Consideration for New Parents in Malaysia posted at KCLau’s Money Tips, saying, “Recently, there is an interesting post written by Xin Lu at Wisebread about the financial consideration of having a newborn baby. The article is more catered to the situation in the USA. Although it might differ in terms of currency, the other facts might similar and worth our study. This sparks the idea of writing this post to share with you the financial side of being a new parent in Malaysia.”
KCLau presents Case Study: Financial Goals of a Malaysian working in Singapore posted at KCLau’s Money Tips, saying, “Subscribe to my Newsletter to receive the Top Money Tips for Malaysians ebook. What you will get: * Top Money Tips e-book * Budgeting e-book (a week after signing up) * Insider’s tips not published here”
Andrea Smith presents How Can I Recover from Bankruptcy? | Consolidate4Free: Free Debt Consolidation Articles posted at Free Debt Consolidation: Qualified Financial Management.
Credit Cards
Mr Credit Card presents Rebuilding Your Credit? Don’t Use First Premier! posted at Ask Mr Credit Card.
Credit Shout presents How Does Your FICO Score Affect A Credit Card Approval? posted at CreditShout.
Credit Shout presents Chase Freedom Credit Card Review posted at CreditShout.
Raymond presents The Best Christmas Credit Cards For Holiday Shopping posted at Money Blue Book.
Raymond presents How To Generate Valid Credit Card Numbers posted at Money Blue Book.
Credit Score
Rich Leverage presents Resisting Panic: A Quick Guide to Surviving The Credit Crunch posted at Rich Credit Debt Loan.
Save Money presents Crazy Things that Kill Your Credit Score…Part 2 of 2 posted at How I Save Money.net.
Transunion
sherin presents Economic Recession and Preparing for a Recession posted at Investment Internals, saying, “A study on the preparation for recession time. Focused on Savings, Portfolio and Job security. An educational article for ordinary person to help self to build a self defense against problems from economic slowdown i.e. recession”
That concludes this edition of the Credit Report Stories carnival. Be sure to submit your relevant blog articles to the next edition of credit report stories using the carnival submission form. Past posts and future hosts can be found at the blog carnival index page. CRS is looking for blogs to host so if you’re interested be sure to include that in your submission.
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June 13th, 2008 — Leverage, Money, Personal Finance, Wealth
This is probably one of the most commonly used books by those who are looking to create wealth. It first came onto the scene in 1926, and shot to fame during the Great Depression as the desperate populace looked for a way out of poverty. While this book does raise many good points and offers a lot of good advice for standard money management, it is important to consider the time in which it was written.
It’s set up as a bunch of fables that all teach a lesson. While this is helpful for some readers, it can be pretty frustrating if you’re just looking for some hard hitting facts. Unfortunately, the morals in the stories are pretty much already well known. Don’t spend what you don’t have, put money aside for your future, and make smart investments. Most of us learned this before we even hit high school.
The central problem, at least as how I see it, centers around the fact that the fables all involve people who already have at least some money in their purse. After all, you’ve got to have money to make money. What it doesn’t cover is what to do if that purse is already stretched to the limit with normal living expenses. No matter how hard some people try, there just isn’t enough at the end of the month to sock away. Are these people then doomed to a life of living paycheck to paycheck?
The process of leveraging debt to secure your financial future is really nothing new. People have been doing it for thousands of years. Whether it’s as simple as getting an investment to start a new company or getting a loan from a friend to invest in a hot stock, leveraging debt is still one of the best ways to start making more money right now. And for those of us with moths living in our purses, it is the only chance at creating alternative streams of income.
That said, this is still a good book and there are some important lessons that can be gleaned from it. However, it is best suited as a primer for those who need guidance for personal management of their funds or for teenagers that are just getting started in the financial world. If you’re looking for a book that’s going to tell you how to fill up that empty purse, your answers will not be found inside its covers.
There is nothing wrong with this book per se, but it did fail to cover techniques that are already proven to help people make money. While you can easily follow the advice and have a safe and steady income over time, for those looking to dramatically increase their wealth in a short period of time, the book is a bit of a disappointment. Buy it, read it, and put it aside to give to your children when it comes time to learn about managing their checkbook and saving for their futures.
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