Associate Money

We Survived Black Monday...

2009-10-20T21:48:10.321-07:00

22 years ago, on this day, this was what happened to the stock market... a plunge which rocked the financial world.

We survived the scare for now as the Dow Jones Industrial Average is still above 10,000 and with no sign of slowing down.

But for how long will this bullish momentum stay intact?

Disconnect Between Wall Street And Main Street

2009-10-20T22:04:12.057-07:00

Wall Street have no qualms about enriching themselves and getting fat bonuses. Who cares about the struggling masses on Main Street?

Don't bother telling them your troubles... it is just too bad you have no money to organize lobby groups.

Cash For Clunkers Withdrawal

2009-10-20T22:03:50.329-07:00

Is this what happens to consumers when Cash For Clunkers program is withdrawn?

But don't worry, there could be another round if the economy goes into a double dip recession.

Save $1000 in 30 days, Is It Sustainable?

2009-10-20T21:39:43.013-07:00

I don't know about you guys but this is a tough challenge even if I consider myself a frugal guy.

We may be able to save $1000 for one month but to do it consistently is nearly impossible. Also, you need to have lots of disposable income and hence, expenses to whittle down in the first place. If your total expenditure is less than $1000, you cannot achieve the target

I believe the biggest expense item for most people is mortgage payments or rental but if you skip it consistently, you may soon end up in the streets or depend on free lodging from friends and relatives.

Overall, the idea is good, even if you cannot save the entire $1000, saving $500 is better than nothing. But realistically speaking, we should think of saving money in terms of percentage of our income rather than the absolute amount.

Charity In A Recession Is More Meaningful

2009-10-08T06:52:19.595-07:00

Is the end of recession here? From the recent slew of "bleak" economic data, I remain pessimistic. In fact, I don't want the recession to end too soon, lest we forget important lessons from the financial crisis and go back to our spending binges.I believe many Americans are still staying true to their newfound frugality. They are cutting back on expenses and setting aside money to weather turbulence in the coming months.However, it is one thing to save money but quite another when our frugal living gives rise rise to an uncaring society where there is little room for charitable giving.I can understand during a recession, charity work is among the first expense to be sacrificed. That is hardly a tough decision; after all, you have to make ends meet first before helping others.But charity is even more important during a recession. People who are living at the lowest rungs of poverty are affected more by rising costs or the loss of income. Every dollar counts for them.Forget about the idea that only the wealthy can afford to be charitable. So long as you have a roof over your head, food on the table and enjoy basic amenities, you are already more fortunate and can make a difference in the life of those struggling with poverty.At the moment, many charities are struggling to stay afloat. Recession deals a double blow to charities as sharp drops in donations and investment income have been coupled by soaring demand for their services.Being charitable in a recession means we have to do more with less. It takes creativity but more importantly, the heart to share and give. Here are some tips to get you started on charitable giving:1. Be A Volunteer If you can't write a check, then be a volunteer. It also looks good on your resume as job interviewers look favorably on time spent volunteering than watching TV or wallowing in self pity.2. Put Your Skills To UseIf you have a practical skill or hobby, why not use it to help someone? Charities will always require people to do maintenance, landscaping, property improvement, hair-cutting, administrative work, cooking, etc.Thus, if you are a handyman, carpenter, landscaper, hair stylist or a cook, then your services will be greatly appreciated. It is also beneficial to you as your skills will not be rusty and you may even acquire new skills which come in handy for a career switch or to impress your current employer.3. Donate Household Items To CharityHave a wardrobe full of "new" clothing that no longer fits or isn’t quitefashionable enough? Those items can be especially helpful to a charity. So do your toys and unopened gifts.4. Send Extra Food To The Food Bank If you bought extra food at the grocery store because of special discounts or buying in bulk, you can always send some items to the food bank. It is good to give nutritious items but even biscuits, crackers, canned food are better than nothing.5. Utilize your networkDon’t be shy. Tell your friends, neighbors and relatives that you are doing charity and ask if they want to help out. You will be surprised by the positive response.If you still need a final kick to begin your charity work, think about setting a good example for your children. It is a good chance to impart right life values to them.Rather than engaging in extravagant lifestyles and forever complaining that money is not enough, it is better to let our kids learn to make do with they have and yet, give to the less fortunate at the same time.[...]

Save Money On Your Beauty Routines

2009-10-20T18:36:35.164-07:00

This video teaches you to save money on your beauty routines.

I am not familiar with this topic but I figure some of the tips may be helpful to my female readers.

Better To Sugar Coat Corporate News In A Recession

2009-10-06T05:47:50.513-07:00

We keep blaming politicians and economists for not telling the truth and churning out fictitious statistics.

But when you are in danger of losing your job, you may actually appreciate your boss sugar-coating the bad corporate news...

Mayor Issues No Chase Policy To Save On Insurance

2009-10-06T05:35:00.759-07:00

The mayor of 14 years said she issued the order after a city officer suffered a foot injury while chasing a "guy who had some crack on him" and had to be out of work for several days on workers' compensation pay.

Noting the suspect wasn't stealing or breaking into a home at the time, she said she didn't consider the drug possession a crime, and said the town of 2,100 couldn't afford the increased insurance costs. Though the ban applied only to foot chases, she said officers also totaled two town-issued cars in a month.

Well, what can I say when such an order is issued? The police's job is to go after criminals and bring them to justice.

Just because of a foot injury and insurance claims, the entire police force is being hampered in their work by this bizarre order.

Binge Years Over, Make Do With Modest Living

2009-10-08T06:49:40.159-07:00

Frugality is entrenched in Americans' mentality right now; for how long... I do not know but I hope it last, as living well within our means is essential in a sound financial plan.Ben Bernanke believes the recession is most likely over. To the many Americans who remain unemployed, that is scant consolation. The Fed can pull the wool over our eyes that economic outlook has improved but I am not convinced that the binge years will return.The financial crisis has ravaged the US Dollar and tarnished the credit worthiness of the US Government. Hence, I have little confidence in government pensions and social safety net. It is best if we devise our own retirement savings plans.Nevertheless, retirement planning is going to be more challenging. Frivolous, uncontrolled spending must be curtailed. Even if you have a steady job now and earn a reasonable income, it is prudent to adjust your financial goals and start living modestly. By that, I mean shunning materialism and taking pleasure from simple things in life.Instead of living in a mansion, what is wrong with staying in a 1000 sq ft apartment? When I was little, I remembered cooping up at a relative's house with my parents and the kids sleep two or more to a room. There were no fancy baby clothes or shoes but only drappy hand-me-downs.That didn't make my childhood any less happy. I am not tempted by material goods because my past makes me appreciative of the fact that earning money is not easy. Sometimes, I wonder why people feel the need to buy many pairs of shoes, ties, or clothes - only to wear it once or twice (sometimes not even opening up the box at all).That is not the way to spend money, especially when you don't have a million dollars in the bank. All the money is actually coming from credit cards, home equity, etc.If you are guilty of reckless spending and are now crushed under the massive weight of debts, it is no use beating yourself silly.Review your expenses, savings, income and the amount of money you need in the future. Figure out what it takes to live modestly for a month. You’ll need to cover your regular bills, such as, mortgage/rent, utilities, transportation, food, clothes, etc.Once you have a figure for your expenses, say $500, try making do with $300 or $400 instead. Take that as a challenge for modest living. Even if you don't succeed on the first try, at least you know where you have failed and can improve on it next month.Living modestly usually involve battling impulse buying and various motivations to spend: advertising, friends, etc. It often means taking a little more time to find what you really need, and not what you desire. And you have to be content that what you already have is good enough.If you do away with Starbucks coffee, downsizing your home and holding off new purchases (clothes, gadgets, shoes, etc.) until your stuff are worn out, that is a lot of money you can save every year. The savings from living modestly can be placed in a Roth IRA, bonds or equities.Keep your sense of balance and sleep tight at night by living modestly today.[...]

Recession Likely To Be Over?

2009-09-24T06:28:08.385-07:00

Ben Bernanke said the economy likely is growing now, but he warned that won’t be sufficient to prevent the unemployment rate, now at a 26-year high of 9.7 percent, from rising.

“From a technical perspective, the recession is very likely over at this point,” Bernanke said in responding to questions at the Brookings Institution. “It’s still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was.”

Source: MSNBC

Has Ben Bernanke jumped the gun in declaring the recession is likely over? I think it is callous for Bernanke to make such a statement when 9 million people are still underemployed.

Will the underemployed be able to secure new job soon that will utilize their expensive education and core skill sets? Will the cash registers of retailers start ringing tomorrow now that the outlook is "brighter?"

Don't bet on it...

Is The Economy Out Of The Woods?

2009-09-17T19:38:00.555-07:00

From the multitude of economic reports, it seems the economy is stabilizing and we are finally out of the woods. Well, let's hope we don't go from here and drop into the abysss later on.

4 Tips To Save Money On Gift Giving

2009-09-23T05:46:10.872-07:00

The festive period is a few months away which is a time when our household budgets are strained by all the gift buying and celebration. Since the recession started, my wife and I have started to plan our gift giving early in the year.

The process is similar to planning for a household budget. We indicate the amount to spend on gifts, for whom, as well as where this money is going to come from. There are no hard and fast rules - we adjust our gift giving in the event of upcoming weddings and anniversaries.

Buying gifts can cost a bomb. You need to plan properly in order to save money and not ruin our finances on excessive credit card expenses.

Here are some money saving tips to support your gift giving.

1. Redeem Rewards - If you have been swiping your credit cards throughout the year, it is a good idea to redeem your credit card rewards as a complement to your gift giving during the festive period. We have two credit cards that earn us cash back or rewards that can be used to redeem gifts.

There are also product rewards to redeem gift cards or other products. We have used the My Coke Rewards program to redeem points for special gifts. Look for these types of promotions on items that you frequently purchase.

2. Clearance Sales and Special Promotions - Flip open the newspapers and there are always advertisements of clearance sales. We do not stake out all the clearance sales but when there are attractive marked down prices, we head for the retail stores.

Some of the products we purchase include toys, board games, clothes, books, all of which come in handy during birthday parties for our kids.

3. Accumulate Extra Change - We keep our loose change in a jar and place them into our savings fund every month. It is somewhat like "extra money" which can be used to purchase gifts late in the year too.

4. Re-Gift - This means passing on a gift which you receive but you have little need for. Passing on gift cards is fine but some people don’t believe in re-gifting physical items, because it is disrespectful and unappreciative to the original giver.

There is a possibility that you may get fewer gifts if your friends and relatives know that such presents, which they spend money and time shopping for, are passed on to strangers. But if the gifts are lying around the house, they could end up in the dumps or being sent to the Salvation Army, come spring cleaning time.

I think it is too wasteful. Hence, to preserve the gift-giving spirit, I prefer re-gifting, than throwing stuff away.

Debtors Revolt Watch

2009-09-12T19:41:41.645-07:00

This lady is leading an army of revolters into the line of fire against the banking system.

It is high time consumers take a stand and let the lenders sit up and take notice.

For how long should we endure predatory terms of financial institutions and allow them to take taxpayers' money on one hand while awarding fat bonuses amongst their cronies?

Enough of riding roughshod over consumers. What do you guys think?

Beware Of Debts And Excess Leverage

2009-09-10T06:50:24.178-07:00

Six months of stock market rally... holly shit! The bears (including me) have highlighted an impending drastic stock market correction for weeks but the stock market continues to defy gravity. I know people are more confident when they see their investments doing well, regardless of the well-being of the real economy. However, such over-confidence can lead one to take on more debts than is prudent to finance purchases or investment. To be sure, consumers and investors are not soley at fault. Banks, credit card companies and brokerages are eager to feed this frenzy by expanding our overdrafts, credit limit and margin accounts. But excessive leverage is dangerous and will destroy our financial future. To get our finances to grow in a healthy manner, you must eliminate the weeds (debts and its associated interests cum fees) in our financial garden. I believe many people realize the dire effects of debts, yet they willing become enslaved to financial institutions which offer credit cards and credit lines with low teaser rates and entice us to pursue extravagant lifestyles, way beyond our means. Sometimes, I get really upset that our entitlement mentality, thanks to the media, politicians and unscrupulous lenders, has become so deeply entrenched that we believe we can always get what we desire right away, without paying for it. Now isn't that naive? The banks and credit card companies are in business to make money, not to do charity work. Thus, all their easy money come with a heavy price to pay... eventually. There is no free lunch, period. If we don't pay up, the only way is to kick the can down the road and burden the next generation with our reckless spending. The financial institutions are more than happy to let our debts snowball and to see us slog like hell to contribute to their profits in perpetuity. To avoid the vicious debt ruthole, you must be disciplined in paying off debts as soon as possible. But you should not do it too aggressively such that your emergency fund is neglected. An emergency fund is crucial even as you keep track of current liabilities, so that your ability to make good on payments is not impaired even if you lose your job. You should also get free credit reports and see whether there are any inaccuracies reported. If so, dispute the problem in writing and get it resolved. A drop in your credit score of just 50 points will cause your monthly payments to spike and even restrict your credit limit. Next, examine your credit card and loan statements to see what interest rates you're paying. Do some comparison shopping for more attractive interest rates and then make a few phone calls to negotiate your existing rates. If the phone calls are not fruitful, you can move your outstanding balances from higher interest cards to a lower interest card. Or pay off high interest credit cards with a lower interest loan. These actions can save you hundreds or thousands of dollars per year, and only take a few minutes of your time to initiate. But you still get nowhere near eliminating your debts if you don't change your mindset and lifestyle.Stop piling on more debts if you are serious about eliminating debts. You only dig a bigger hole whenever you charge new expenses to a card and accumulate your outstanding balances which cost you the most money in fees and interest. I believe the the economy will still be in deflation for the short term, even though the Federal Reserve has been printing money furiously. And there is still a strong possibility that the economy will suffer a double dip and the credit crunch worsen in 2010. But whatever happens, we can always cope with interest rate hikes or withdrawal of credit lines if we pare down our debts and get our emergen[...]

Money Saving Scams In College

2009-09-09T06:34:04.240-07:00

I am not sure how helpful these tips will be for you in terms of saving money.

In fact, some of the tips are pretty "slimy", for example, sneaking into events, avoiding parking tickets, hiding stuff in dorms, getting free snacks, fake IDs, getting out of speeding tickets (you shouldnt' speed in the first place) and more.

But still, there is plenty of educational, if not, entertainment value in this video. Check it out.

Make It Fun To Save Money On A Tight Budget

2009-09-05T03:21:12.786-07:00

To save money requires that we made sacrifices and adopt lifestyle changes. As they say, no pain, no gain. But that is not to say saving money means there is no more fun for you.

There’s plenty to do out there that won’t cost you anything at all. You just need some creativity and rediscovering activities which you enjoy when you were little.

Here are some tips to have fun saving money while on a tight budget, say $50 in your wallet.

1. Rent movies.

I love going to cinemas for the occasional blockbuster movies but if $50 is all I have, then I will rather sign up with Netflix. They allow a free 2 weeks trial period and after that, you can choose your own plan.

You can have up to 3 movies out at once with no late fees, and each plan is under $20a month.

In terms of entertainment value, it may lose out to a cinema, but you get to cosy up with your partner in the privacy of your home. There are no jabbering from inconsiderate people who interrupt your enjoyment of the movie.

Or you can even plan a whole party with your friends and have a movie night. Host a potluck dinner for your friends - ask them to bring their favorite dish and you’ll end up with a nice variety (bonus if everyone brings dessert!)

2. Check out libraries and museums.

Museums offer discounted or free admission on certain days, so it is great for a family outing. You get to increase your knowledge and appreciate rare artifacts and exhibits without spending a cent. As for libraries, it is one of my favorite pasttime as I can borrow books and videos for free.

3. Go bargain hunting!

If you are really bored, why not go outdoors on a bargain hunting trip? You’ll be sure to come across some good deals and rare finds. Auctions can offer some good deals, too. Just be prepared to go a little higher on price to compete with other bidders.

Importance of Saving Money

2009-08-29T18:06:00.574-07:00

Saving Money: Review Expenses First

2009-08-29T02:58:16.037-07:00

Ever wonder why your savings target cannot be met every month? I know you are trying hard but maybe you aren't aware of your spending leaks.

You have to record down your expenses conscientiously for a few months, even if it is just a few pennies.

I found out that I have been buying snacks, magazines, newspapers, iced coffee and mineral water at convenience stores and petrol kiosks which amounted to about $200 in my first month of tracking expenses.

Add to that about $200 a month on clothes, $300 on fuel expenses, and then hundreds of dollars on food, electronic gadgets, digital downloads, as well as other miscellaneous items, you can see that my income is spent mindlessly and I don't have much left to pay my bills, not to mention saving money.

You don't feel the pinch until you actually record the expenses down and review it with an objective mind. It was a horrible feeling and I wanted to change my frivolous lifestyle.

Take Action

Once I set my mind on changing, I found that a lot of expenses can be whittled out and channeled into my savings account.

First, I try not to shop online frequently which reduce my spending by about 40-50%. Online shopping and a credit card is a potent combination because everything is so convenient. When you see attractive gadgets, it is difficult to resist impulse buying. Before you know it, you have checked out the products with a few clicks of the mouse.

I also decided to avoid buying unnecessary stuff whenever I stepped into stores. If I do shop, I have a list of what I need and the amounts which I am willing to spend.

There are times when I exceed this self-imposed budget but it is just to give myself or my family occasional treats which brings me to the next point.

Reward Yourself Occasionally

Every household which practices budgeting must allow themselves some incentives to go the distance. You pick up some desirable but unnecessary items like Starbucks coffee, chocolate, toys or a new outfit.

The main thing is to reward your efforts for sticking to the budget every month. Such rewards keep us motivated and happy, so be sure to include them in your budget.

If you want to be serious about saving money, get started on tracking your expenses. It may sound like hard work but the payoff will come in the long run.

A Tale Of Two Cows In Different Corporations

2009-08-23T05:27:41.133-07:00

DEMOCRATYou have two cows.Your neighbor has none.You feel guilty for being successful.Barbara Streisand sings for you.REPUBLICANYou have two cows.Your neighbor has none.So?SOCIALISTYou have two cows.The government takes one and gives it to your neighbor.You form a cooperative to tell him how to manage his cow.COMMUNISTYou have two cows.The government seizes both and provides you with milk.You wait in line for hours to get it.It is expensive and sour.CAPITALISM, AMERICAN STYLEYou have two cows.You sell one, buy a bull, and build a herd of cows.BUREAUCRACY, AMERICAN STYLEYou have two cows.Under the new farm program the government pays you to shoot one, milk the other, and then pours the milk down the drain.AMERICAN CORPORATIONYou have two cows.You sell one, lease it back to yourself and do an IPO on the 2nd one.You force the two cows to produce the milk of four cows. You are surprised when one cow drops dead. You spin an announcement to the analysts stating you have downsized and are reducing expenses.Your stock goes up.FRENCH CORPORATIONYou have two cows.You go on strike because you want three cows.You go to lunch and drink wine.Life is good.JAPANESE CORPORATIONYou have two cows.You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.They learn to travel on unbelievably crowded trains.Most are at the top of their class at cow school.GERMAN CORPORATIONYou have two cows.You engineer them so they are all blond, drink lots of beer, give excellent quality milk, and run a hundred miles an hour.Unfortunately they also demand 13 weeks of vacation per year.ITALIAN CORPORATIONYou have two cows but you don't know where they are.While ambling around, you see a beautiful woman.You break for lunch.Life is good.RUSSIAN CORPORATIONYou have two cows.You have some vodka.You count them and learn you have five cows.You have some more vodka.You count them again and learn you have 42 cows.The Mafia shows up and takes over however many cows you really have.TALIBAN CORPORATIONYou have all the cows in Afghanistan, which are two.You don't milk them because you cannot touch any creature's private parts.You get a $40 million grant from the US government to find alternatives to milk production but use the money to buy weapons.IRAQI CORPORATIONYou have two cows.They go into hiding.They send radio tapes of their mooing.POLISH CORPORATIONYou have two bulls.Employees are regularly maimed and killed attempting to milk them.BELGIAN CORPORATIONYou have one cow.The cow is schizophrenic.Sometimes the cow thinks he's French, other times he's Flemish.The Flemish cow won't share with the French cow.The French cow wants control of the Flemish cow's milk.The cow asks permission to be cut in half.The cow dies happy.FLORIDA CORPORATIONYou have a black cow and a brown cow.Everyone votes for the best looking one.Some of the people who actually like the brown one best accidentally vote for the black one.Some people vote for both.Some people vote for neither.Some people can't figure out how to vote at all.Finally, a bunch of guys from out-of-state tell you which one you think is the best-looking cow.CALIFORNIA CORPORATIONYou have millions of cows.They make real California cheese.Only five speak English.Most are undocumented.Arnold likes the ones with the big udders. Hat tip: James[...]

Retirement Planning: Can You Make Do With Less?

2009-08-30T05:21:34.689-07:00

Since the 80's, we have benefited from strong GDP growth, low inflation, lower taxes, and bull markets in both equities and bonds. It was easy to build up our wealth but gone are those days.For the last year or so, a lot of people suffered immense losses in the financial crisis. Even if the worst of the recession is behind us, we have to prepare for a different economy.Due to tighter regulations and lesser debt-fueled consumer spending, forecasts for economic growth and investment returns are expected to be lower. For a lot of baby boomers who are likely to retire in the next decade, that is bad news.Yet, financial planners still impress upon us the need for an 80% replacement rate of pre-retirement income to enjoy a reasonable standard of living after retirement. This is a lofty target and if your wealth has been decimated in the financial crisis, achieving the goal looks even more distant.For most of us, circumstances will ensure that we make do with less or continue working past retirement age. According to the Federal Reserve’s 2007 Survey of Consumer Finances, the median income for households headed by retirees is just $25,000 a year.That is about half of the median income for all families, which is $47,000. Clearly, a lot of retirees are doing well on a modest 50% of pre-retirement income.I do not like to set any benchmark to measure our retirement success but I won't say that the 80% target specified by financial planners is entirely unrealistic. It is true that the future contains many challenges which require that we save as much in our retirement fund as possible. And don't mention early retirement to me.For a start, runaway inflation, or stagflation, thanks to the relentless money printing by the Federal Reserve to back-stop losses in the financial system and stimulate the economy, will whittle our purchasing power considerably.Next up is Social Security which has been billed as one giant Ponzi scheme. As it is, the problems with funding Social Security are serious. Given the trillions of dollars in debt racked up by the U.S. government, from its years of practicing a reckless policy of "deficits don't matter," it has finally reached a stage where higher tax rates are inevitable.And then there’s the problem of soaring healthcare costs. The Employee Benefit Research Institute reveals that a typical 65-year-old male retiree may need about $173,000 to cover health insurance premiums and out-of-pocket expenses in order to have a 50-50.Of course, the longer you live, the more money you need to set aside. President Obama is advocating healthcare reforms to bring it in line with the core rate of inflation, but I am not sure how effective that policy will be.In the end, 50% or 80% of pre-retirement income targets depend on individuals. To ensure self-sufficiency, we should get serious about a retirement plan as soon as possible and not wait till 5-6 years before retirement.In a globalized economy where jobs are outsourced, manufacturing plants relocated and our skills rendered redundant quickly, we have to prepare for long periods of job losses, thus, our retirement goals should also be realistic.I also prefer to pay off mortgage loans before retirement. This will greatly improve our cash flow and let us sleep better at night, knowing that whatever happens, we have a roof over our heads.If possible, we should accumulate 1-2 years of cash to prepare for emergencies. This will prevent us from making panic decisions on our other investments.There is no harm in saving too much money but if we retire with litt[...]

5 Easy Ways to Save Money in a Recession

2009-08-13T03:44:14.272-07:00

Here is some good advice from Shelley Roche for people looking to save money in a recession.

1. Bartering.
2. Growing your own food.
3. Bakery outlet stores.
4. Cable TV savings.
5. Cowpooler savings.

Is Cash For Clunkers Worth The Trouble?

2009-08-13T17:39:46.072-07:00

Cash for Clunkers program got off to a bang last week but interest has cooled off considerably, according to Edmunds.com, a car-shopping website.In case you are unaware of the Cash for Clunkers program, here is a quick summary. The clunker rules state that if you trade a vehicle with a fuel economy of 18 mpg or less for a vehicle which is at least 4 mpg higher, you’ll get a government rebate to use toward the purchase.More specifically, if the new car gets at least 10 mpg more than your old one, the rebate is $4,500. If it is between 4-10mpg, you qualify only for $3500.You can check your clunker's mpg at the official Cash for Clunkers Web site which will link you to the Fueleconomy.gov site. Before we explore the inadequacies of Cash for Clunkers, some credit must be given to the Obama administration for boosting the sluggish automotive industry. After all, two major scalps (General Motors and Chrylser) have already been claimed in this recession.Notwithstanding the much-touted green shoots, the automotive industry continues to suffer from excess inventory due to overproduction and lacklustre demand.Speaking of demand, I doubt it is not going to recover soon when consumers are still caught in the triple whammy of job insecurity, stagnant wages and restrictive bank credit. The specter of high fuel costs has also deterred most people from upgrading their vehicles.External stimulus like Cash for Clunkers will entice people to buy cars by trading in their old, fuel inefficient clunkers. That will also free up inventories and spur production again.To be sure, a new car is more comfortable and creates less emissions and maintenance problems than an old one. It is also much safer with advanced lifesaving electronic stability control and side-curtain airbags.However, Uncle Sam’s rebate program is crafted in such a manner that not all clunker owners qualify or find the terms attractive enough to trade in. Older cars that are not worth much and get poor gas mileage stand to benefit most from the government rebates. Here are more catches in the Cash for Clunkers program:1. Your clunker must be less than 25 years old. 2. The vehicle must be be road-ready with at least 1 year insurance history in your name.3. You must buy a new car, not used. 4. The manufacturer’s suggested retail price (MSRP) of the vehicle you buy can’t exceed $45,000.5. If you want to lease instead of buying a new car, the contract must be at least five years. Frankly speaking, I prefer taking cash to getting rebates. However, Uncle Sam does not want to mail us the cheque. Instead, when you trade in your clunker, the car dealer will just apply the credit toward your purchase price, send your clunker to the scrap yard, and get reimbursed by the government.If we aren’t careful, at least part of the rebate could be lost during the negotiations for the new vehicle. A sleek salesman is likely to jack up his price or forgo the in-house discounts when they realize that you are trading in your clunker.There is also a good chance you can extract a better deal by selling your clunker in the open market. Many old cars have higher trade-in values than the $4,500 or $3,500 rebates. You lose out when you don't comparison shop around for the best market prices. With the atuomotive industry in doldrums, it’s a buyer’s market out there. Customers command a lot of leverage in the auto showroom, even without the government rebates. Since we call the shots, do not rush to trade in the vintage clunkers witho[...]

Twisted Irony of Bailouts

2009-08-07T19:34:57.471-07:00

Isn't this sentence interesting? From each according to his ability to each according to his lack thereof.

Frugal and responsible Americans save religiously and could end up $80,000 poorer if all schemes to rescue the financial system are implemented.

Recently, the inspector general for the $700 billion TARP scheme concluded that “the US government’s maximum exposure to financial institutions since 2007 could total nearly $24 trillion, or about $80,000 for every American.”

Tsk, tsk, how many $80,000 are we able to save in a lifetime? And yet, in one fell stroke to save greedy Wall Street who took home fat bonuses in a five year housing orgy, our money is gone.

Does It Make Sense To Use Home Equity To Invest?

2009-08-29T03:00:06.022-07:00

As a measure of how Main Street is reacting to the stock market rally, we just need to check out some of the popular forums. I recently saw in a forum that discussions about withdrawing home equity for investments is becoming a hot topic again.I can understand the speculative fervor, after all the stock market is going gang-busters (the rally started in March and shows no sign of dying down after 16 weeks ). At this moment, money seems to be growing on trees, just plonk your money into equities and it is hard not to make money.Clearly, investors will seek all kinds of leverage to maximise their profits during this "window" of opportunity where fundamentals don't matter. But have we already forgotten the misery from the financial crisis when some of us flirted with financial ruin while those who are more prudent also saw their hard-earned wealth decimated?More specifically, is it wise to use a home equity loan to speculate or invest in securities? First let's understand the types of home equity loans available.Types of Home Equity LoansThere are two types of home equity loans: term loans and lines of credit. The former is a one-time lump sum paid off over a predetermined time period, at a predetermined rate of interest.A home equity line of credit (HELOC) sets a maximum amount for the line and lets the borrower withdraw money up to that point. The interest rate on a HELOC is usually variable and there are minimum requirements (in terms of time and amount) for paying back the principal.Home Equity Loan Is A GambleAs far as I am concerned, taking out home equity is a gamble, even if you sugar-coat it as a form of investment. There are risks associated with any investment, nobody can guarantee you make money or preserve your principal. And the basic rule is the higher the returns, then the risker the investment.If your investment goes sour and you lose a substantial portion of the home equity loan, the collateral supporting the loan (house) is also compromised. That is a terrible fate if you have spent your adult lifetime amassing the equity in your house. In the worst case scenario, you could end up on the streets when you cannot make good on the loan payments as they fall due.Before you undertake any investments, first evaluate the interest rate on your home equity loan. For example, if your rate is at 5%, then your investment must yield more than 5% or they are not worth the trouble.One of the advantage being bandied out is that the interest you pay on your home equity loan is tax deductible, thus giving you a "theoretically" higher rate. But you have to remember that the home equity loan must be used for home improvements in order to qualify for the IRS home mortgage interest tax deduction. Using it for other purposes and then claiming that interest may get you penalized.The next consideration is that payment for the home equity loan is most likely to be monthly. Hence, if your investments do not payout monthly, you will have to fork out home equity loan payment from somewhere else like your savings or the lump sum.You should also make sure interest on your home equity loan is not a variable amount; if it is, you will need to watch it so that it doesn't go up high enough to wipe out your profits. With the possibility of the Federal Reserve raising the rates once the economy is on a firmer footing, this would be a concern of mine.There are other options available if you need money to invest in stocks, and[...]

Beat The Heat And Save Money

2009-08-03T08:07:53.467-07:00

Texas is blazing hot and with low rainfall, the state is suffering its worst drought in 50 years.

If you are struggling in the heat and turning your aircon full blast, there could be a whopping utility bills at the end of the month.

Here is a cool video by Umbra Fisk who advises how to beat the heat while being kind to your wallet and the planet. She also weighs in on the fan vs. aircon dilemma.

Check it out.

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