Posts tagged Aren
How To Manage Your Credit In The New Year
Jan 13th
One of the keys to managing your finances effectively is keeping your debt to a minimum, or at least reducing the debt you already have. Most consumers find it challenging to live a completely debt free existence (ever tried to buy a house without a mortgage?), but carrying high interest credit card debt makes reaching financial goals impossible.
With every new year comes the chance for a new start and to regain control of your financial situation. The economy, while showing signs of recovery, is still struggling. And upcoming government changes to credit card rules may change the way you manage your credit. Many tried-and-true debt-avoidance strategies, like utilizing 0% balance transfer offers to postpone the inevitable, may not be available for long. Here’s what you can do to manage your credit in the new year with the new credit card rules.
Always Pay Your Credit Card In Full On Time
As you may have already noticed, credit card companies are increasing their fees before the new rules take place in February. This means you’re paying more for late payments or going over your credit limit and higher interest rates on existing balances. To avoid these outrageously-high fees, focus on paying at least the minimum payment before the due date. It goes without saying you should pay your balance in full every month if you can possibly afford it, but even paying the minimum should prevent your debt from growing any larger.
Stop Using Credit Cards
Credit cards are convenient and, if used responsibly, using certain cash-rewards cards can pay off handsomely. However, if you can’t control yourself your goal should be to reduce your credit card use or stop using them entirely. We’re a society that has gotten used to just swiping a credit card to pay for things when we don’t have the cash available – that has to stop. Sweeping your financial problems under the rug is a recipe for disaster.
Credit Card Rewards Programs Aren’t So Rewarding
When the new credit card rules take effect, cardholders will find their rewards programs probably won’t be quite as rewarding as they once were. With credit card rewards becoming less and less generous, a major incentive to use credit will have disappeared. There’s still the convenience factor, of course, but if more people used cash, the price of many everyday items might actually decrease (see The True Cost Of Credit).
Balance Transfer Offers A Thing Of The Past?
When a high interest credit card balance started getting out of control in the past and credit was easy to come by, you could almost always transfer the balance to a zero interest, or at least low interest, credit card. With credit tightening, these offers will likely be few and far in between and probably only available to people with immaculate credit histories and high credit scores.
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Links: 2010-01-12
Jan 12th
More links are available in the news feed (also available as an RSS feed).
Feature Link: A New Tax on Banks and Bankers? – NYTimes.com
Simon Johnson, Bert Ely and I each gave our view on a proposed banker tax for the Editors at the New York Times’ Room for Debate. Bert and I are against and Simon is for.
- Economics of Contempt: The Unofficial List of Pundits/Experts Who Were Wrong on the Housing Bubble
- When men shouldn’t be in want of a wife – New Scientist
- Paul Kedrosky: U.S. House Prices to Income: 1989-2009
- Economist’s View: Will We Get ”Sensible, Comprehensive Financial Reform"?
- Too big to fail fail? – Paul Krugman Blog – NYTimes.com
- How single mothers enter the labour market | vox
- Federal Reserve earned $45 billion in 2009 – washingtonpost.com
- Why Are They at War With Us? Patrick J. Buchanan
- Flattery Will Get You Far: Scientific American
- Eugene Robinson – Harry Reid’s comments were crudely put, yet true – washingtonpost.com
- Econbrowser: Bernanke on the Taylor Rule
- The Big Picture – Lessons from Merrill Lynch
- The Big Picture – Wages of Failure: Exec Comp at Bear, Lehman 2000-08
- The Pragmatic Capitalist – One Overvalued Market?
- Your Passwords Aren’t As Secure As You Think – Lifehacker
- Taylor: Federal Reserve Monetary and the Financial Crisis: A Reply to Chairman Ben Bernanke – WSJ.com
- Holding off inflation, blowing bubbles | The Economist
- FT.com – Edward Chancellor – Ben Bernanke has learnt so little
- Fitch: U.S. CMBS Delinquencies up 42bps
- Federal Reserve Seeks to Block Release of U.S. Bailout Secrets – Bloomberg.com
Today’s Bread & Circus feature: Rod Blagojevich: ‘I’m blacker than Obama’
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Related posts:
- Links: 2010-01-04
- Links: 2010-01-06
- Hitler flips out over hacked climate change e-mails
- Links: 2010-01-08
- Links: 2010-01-07
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Five Reason to Apply for a Settlement Loan
Jan 12th
This guide is designed to explain the top 5 reasons why someone in a pending lawsuit would want to apply for a settlement loan. A settlement loan is basically a cash advance on a possible settlement amount during a pending lawsuit. A settlement loan provider reviews the probability and merit of winning your current lawsuit and determines if you’re eligible. Below are the top 5 reasons why a settlement loan would be right for you.
#1. Credit checks or Income Amounts Aren’t Required with Settlement Loans.
A settlement loan is a provider or investor buying interest into your pending lawsuit. They provide a specific monetary portion of your estimated awardable amount in return for a specific amount of it and the original amount loaned to you. Since settlement loans are solely based on your case your credit report and current income play no role in the application process.
#2. Your Are Required to Only Pay Back if You Win.
This is the main reason settlement loans aren’t consider traditional loans. If you lose your lawsuit you’re not responsible or obligated to pay back the amount of the settlement loan. You only pay back the amount if you win your lawsuit case; this fact alone makes a settlement loan far better than a traditional loan.
#3. Prevent Early Settlement of Your Pending Lawsuit
You’ll probably not be able to work during your pending lawsuit; income will be unattainable and you’ll be stuck with your current assets. Ethical rules prevent attorneys from loaning their client money, as it might create situations where you’ll feel you’ll need to settle sooner when you really didn’t want to. A settlement loan can provide you with financial support during your pending lawsuit. You won’t feel the stressed to settle your case early; you’ll be able to make all medical payments, auto payments, home mortgage, etc on time and protect your credit history.
#4. Your Not Required to Take Out The Full Amount
You never need to take out the maximum amount allowed in you’re approved settlement loan. Settlement loan providers go as low as $150 and up to $5,000,000+ when it comes to loan able amounts in your pending case. This allows you to only take out what you need during the case and keep more of your awarded money after a verdict is reached in your case. Settlement loan providers allow you to take out multiple settlement loans if you still need more money and the case has not ended yet.
#5. Settlement Loans Do Not Affect Your Case.
For some reason people think settlement loans will effect their case, this is farther from the truth. The defendant in your case is never notified if you apply for andor get accepted for a settlement loan. In fact, the court itself isn’t even notified about the settlement loan and the provider is not required by law to notify anybody beyond your attorney.
The Negative Effects of Bankruptcy
Jan 12th
When someone is considering filing for bankruptcy, chances are that they aren’t thinking of all the repercussions that they are going to have after it’s over. Here are negative affects of filing for bankruptcy.
Will Recent 85K Jobs Lost Lead to More Foreclosures?
Jan 12th
While tentative headlines keep promising that the recession is just about ready to be over, the numbers have come out about another batch of job cuts; it seems that employers around the country aren’t buying the line about a recovering economy just yet. How this recent loss of jobs will affect the looming swell of foreclosures on the horizon is really only a matter of degrees in an already increasing bloat.
Eye On Junk
Jan 7th
The junk bond market has had its busiest start to a year since 2005, but investors aren’t surprised that it’s gotten off to a flier. Brendan White, managing director and senior portfolio manager at Touchstone High Yield Bond Fund, says there was a big calendar of bonds at year end still unsold and technicals continue to be very muscular. “As long as the market is open companies will continue to finance and refinance. There is a lot of cash out there,” he says. “If you’re not going to buy high-yield, I can’t see what other asset class would offer the same kind of risk adjusted return.”
Life Insurance Benefits Aren’t Taxed (Usually)
Jan 7th
I was poking around on the internet the other day when I saw one of those morbid life insurance policy ads. You’ve probably seen them before too. They usually have someone kneeling at a grave or a kid wearing all black at a funeral. They ask you the pointed question of – “If you died today, who would take care of your family?” I suspect they’re trying to tap into your fear of the unknown, how your kids won’t be able to fend for themselves or how your husband or wife is going to be lost without your financial support.
First of all, my lovely wife is quite capable and she can take care of herself. I bet she’d miss my sparkling personality but after a while she’d probably be OK with it. 
Second, our dog Tobey is the fiercest beagle in all the land. He’d do fine finding his own rawhide cow ears and kibble. Just the other day we left some food on the table and he managed to to jury-rig a Rube Goldberg-contraption just to get at it.
Life Insurance Death Benefit
OK, all kidding aside, life insurance is important but we haven’t looked at it yet. As I was about to tweet a joke about the ad’s morbidity, I wondered about whether life insurance benefits were taxed. As it turns out, life insurance death benefits are not taxed. Implicitly this made sense because auto insurance claims payouts aren’t taxed either. If you crash your car and the insurance company reimburses you, you don’t claim that payment as income on your tax return.
The same holds true for life insurance. It’s not obvious because your life doesn’t have a set dollar value like a car does. A particular repair will cost you a specific amount because you can go to a repair shop and get a quote. If it’s totaled, the pre-accident car could’ve been sold for a certain amount on the open market. You can’t really do that with your life, so we don’t really think about it in those terms.
If you receive more than the life insurance death benefit, then the excess is taxable and should be included on your return. If the benefit was $50,000 and you get $60,000, then $10,000 is taxable. If you get it paid out in regular installments, you can divide the total benefit by the number of installment payments to find out how much of each payment is not taxed. For example, if your benefit is $500,000 over 10 years, then $50,000 of annual life insurance death benefits is tax free.
Life Insurance Dividends
Here’s where things get a little tricky – life insurance dividends are only taxable if:
- The amount you receive in cash is more than the amount of premiums you have paid,
- You take the dividends as cash, as opposed to buy additional coverage,
- Your policy is a modified endowment contract, which is a special kind of policy, and you take cash.
Life insurance can be a tricky subject, especially since there are so many plans and policies out there, so I recommend you talk to an expert before rely on anything this novice as written. As for tax treatment, a financial advisor or a tax expert will be able to give you the ins and outs of everything much better than me!
Life Insurance Benefits Aren’t Taxed (Usually) from personal finance blog Bargaineering.com.
Baum Makes Mincemeat of Bernanke’s Twisted Logic
Jan 7th
In Ivory Tower Doesn’t Have a Mortgage, Bloomberg columnist Caroline Baum makes mincemeat out of Bernanke’s twisted defense of Fed policy.
Bernanke takes great pains to rebut criticism that the funds rate was well below where the Taylor Rule, developed by Stanford economist John Taylor, suggested it should be following the 2001 recession.Substitute forecast inflation for actual inflation, and the personal consumption expenditures price index for the consumer price index, and — voila! — monetary policy looks far less accommodating, Bernanke said.
It’s always easier to start with a desired conclusion and retrofit a model or equation to prove it.
What if easy money is a necessary but not sufficient condition to explain the magnitude of housing bubbles across countries?
The real fed funds rate was negative from 2002 to 2005, the longest stretch since the 1970s, a decade notable for high inflation and unemployment. The teaser rates lenders offered on ARMs were pretty close to zero when adjusted for inflation.
When you can borrow for free and invest in an asset whose price can only go up (at least that was the perception about home prices), guess what happens? Credit is misallocated. Lending standards decline. Everyone wants in.
Yes, monetary policy is a blunt instrument, as Bernanke pointed out. Keep rates too low — create too much money — and sometimes that money chases goods and services prices, which we designate as inflation. Other times it piles into certain assets, which we call a bubble.
“The best response to the housing bubble would have been regulatory, not monetary,” Bernanke said, avoiding any reference to prevention.
The two aren’t substitutes. Relying on regulation to counteract the impetus of easy money is like using a split-rail fence to stop an auto with the accelerator pressed to the floor. They are different species, operating in different spheres.
All the regulation in the world can’t counteract the power of near-zero interest rates. At the same time, high interest rates won’t prevent financial institutions from engaging in shady practices. To think regulation can prevent the next asset bubble is naive.
Why is the Fed so fixated on inflation expectations and so blase about asset-price expectations? Aren’t they of a piece?
Taylor Rule Nonsense
The highly respected Taylor Rule is fatally flawed because it only looks at the CPI, while ignoring asset bubbles in virtually anything else, including housing.
I have pointed this out many times, most recently in Ben Bernanke Looks In Mirror, Sees Barney Frank.
Bernanke blames inadequate subprime regulation for the housing bubble.Bernanke also takes refuge in the Taylor Rule although there is considerable disagreement over what it says. My take is the Taylor Rule is fatally flawed because it fails to take into consideration housing prices (asset prices in general).
Watch what happens when the Case-Shiller Housing Index is substituted for Owners’ Equivalent Rent (OER) in the CPI.
Case Shiller CPI vs. CPI-U
click on chart for sharper image
The above is from What’s the Real CPI?
The Fed could have and should have acted to rein in property bubbles, but Bernanke is so dense he could not even see there was a property bubble.
Substituting home prices for OER the CPI was running a hot 6%+ in mid 2004 with the Fed Funds Rate near .25%.
Who’s The Bigger Fool?
1) Taylor in all his hubris for believing his fatally flawed rule is the only policy tool the Fed needs
2) Bernanke for relying on it to the point of insanity
Academic Wonks vs. Practicality
Bernanke is an academic wonk, totally incapable of looking at policy in terms of anything other than formulas and his twisted ideas about the great depression.
Baum on the other hand shows impeccable logic with…
Relying on regulation to counteract the impetus of easy money is like using a split-rail fence to stop an auto with the accelerator pressed to the floor. All the regulation in the world can’t counteract the power of near-zero interest rates.
Indeed.
When the price of money is too low, it is virtually guaranteed to cause speculation in something. In 2000 it was Nasdaq and technology speculation. This go around it was housing, followed by commercial real estate, followed by immense commodity speculation driving the price of oil to $140.
The moral of this story is loose money always finds a home.
It is beyond absurd we have a Fed chairman that does not understand that simple construct or for that matter basic economics in general.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
How-to Save Money on Gym Memberships & Are They Worth it?
Jan 6th
I don’t know how to start off today’s article so I will just throw this out there for you guys- I’m a personal finance blogger that pays $70 a month for a gym membership.
I’m so foolish aren’t I?
Aren’t you supposed to eliminate your monthly subscriptions?
Well yes and no. My gym membership adds a lot of value to my life. I not only have access to weights and cardio equipment but I’m able to attend all sorts of different combat sports classes. After working out for many years at a wide variety of gyms, it seems to be the perfect one for me for now.
Aside from my perspective, this article is also perfect around this time of the year because all of you New Year Resolutioners that plan on getting in better shape in 2010 will be making an important decision in regards to a gym membership (or lack thereof).
Keep on reading if you want to learn how-to save money on gym memberships:
Gym membership fees can be avoided altogether
First and foremost I need to throw this out there- Why spend money on a gym membership if you don’t have to? I worked out at home for as long as I could until I wanted to start swimming, ran out of weights, found motivated gym addicts to work out with, and pissed off my family.
Train at home for a few weeks of serious training. Don’t think that you will become serious about your physical fitness just because you start paying $70 a month for a gym membership. First you need to prove to yourself that you are taking your personal fitness seriously. Once you have a decent workout regimen in place and fitness has become apart of your lifestyle, then you can start looking around for a gym membership to consider.
Pursue a free gym membership
If you take an honest look around you, I’m sure that you can find access to a gym for free. This is not the same thing as avoiding gym fees. I’m also not suggesting you to be the prick that goes to the same gym every week asking for a “free week pass” with a different alias. This will work only for so long before you get banned from every gym within driving distance. Then you’re really going to have to find a way to workout for free.
How can I obtain a gym membership for cheap/even free?
Look no further- check if your current work/school offer a gym to use.
A work gym:
In order to promote health and all of that other good stuff, most workplaces are either setting up an in-house gym or offering free/discounted gym memberships. I personally have access to a $12 a month gym from my work. My friend just became a Fire Fighter and he’s able to train while on shift. Go to the Human Resources department or whoever deals with that stuff in your company and inquire about gym membership options/plans. I guarantee you that your workplace will offer you a better deal than you could find on your own.
The school gym:
Every college has some sort of semblance of a gym. At my old school the gym was nothing fancy at all but it had the basics. If you’re just getting into working out, that is all you will need. Fortunately, many colleges these days have state of the art gyms that you can either join for free or they will charge you a small fee per semester.
Why pay high gym membership fees if you don’t have to?
Before you sign up for a gym membership:
Will you actually go?
It’s nice that you have bought a fancy new pair of running shoes and all of the other gym attire, but will you actually go to the gym? No really, how many excuses do you have lined up? Do you realistically have the time in your schedule to fit in a work? Are you willing to work out before work in the morning? Are you willing to work out late at night? A realistic assessment needs to be done before you hand over your hard earned money to a gym.
Consider pay per use.
Ramit Sethi calls this the a-la-carte method. Instead of signing up for a subscription why not try paying per use? Instead of paying the $40-50 per month for a gym membership, pay the daily fee every time that you go to the gym.
If I go the gym regularly this is a stupid idea, isn’t it? Yes it is. Unfortunately, most people will only go 3 times a week for the first few weeks. If you find yourself hitting the gym on a consistent basis after a month then please by all means sign up.
Do you even need a gym membership?
Many of us are conscious about the fact that we need to improve our personal fitness but we don’t know where to start, besides joining a gym. Working out at a gym is not for everyone. If you love blasting music (or podcasts) on your music player then the gym will be fun for you. If you appreciate team work and group effort then you definitely need to look into sports.
I have friends that absolutely loathe working out at a gym but can’t get enough of soccer or hockey or swimming or golf. If you want to get serious about your personal fitness in 201o, look beyond a gym. Pick up skiing, play football in the park, join the school basketball team, walk to work, or go old school and clean up your diet.
Hopefully this article will help you decide on whether a gym membership and the gym membership fees that come along with it are worth it for you in 2010. I wish everyone all the best! I hope you all wish me the same because my dumbass is going to need to get through a difficult semester.
