Helping You Avoid Life's Financial Mistakes

How The Recession Of 2009 Will Affect You

March 30, 2009 By Leave a Comment

A few friends of mine forwarded this video to me.  It talks about how much money are government is really spending.  Anyways watch the video and leave a comment.  I’m interested to hear what you think.

How Government Spending Will Effect You

Obviously with government spending out of control their will be some definite reactions to this.  The thing to remember is this will eventually effect you.

In order for the government to come up with this money they need print more money.  This in turn will lower the value of the dollar.  Why is that you might ask?  Because with no physical asset like gold, silver, or platinum to back the value of are money, so the value drops.

This then creates the next problem, inflation.  As a result of value dropping this will drive the cost of goods and services up.  In fact it is starting to happen right now as I write this post.  Just a few weeks ago gas was around $1.80 in my area and is now over $2 a gallon now. 

But it gets worse, not only is the United States printing more money but so are a lot of other countries.  This will eventually drive us into global inflation. 

So over the next couple of years you can expect the prices of goods and services to increase again.

Spending More Money To Fix A Growing Problem

Along with the government spending more money to fix the problems are country is currently facing a trillion dollar debt with no end in site.  This will also have a huge effect on are country.

With a debt growing bigger and bigger by the moment the best solution are government has come up with is throwing more money at it.  While this may solve problems in the short term in the long term we are delaying the inevitable. 

So how will this effect you?  Eventually, it will mean higher taxes to payback what we are borrowing. 

Spread The Word

If you have read this article and feel spending more money will not solve this problem take some time to send this article to a few friends.  If your not quite sure, think about this for a second.

If you want to get out of debt how would you do it?  Simple, put a plan together, spend smart, and most importantly save up more money.  It doesn’t take a rocket scientist to figure this out.  It looks to me we are doing the exact opposite. 

So take some time and send this to a friend or bookmark it and share it with other to get the message out.

Chris

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Is Another Stimulus Bill The Right Answer

February 4, 2009 By Leave a Comment

I recently seen a video talking about all of the different things they are planning on including in the next stimulus bill.  From things like stop smoking to birth control prevention the new stimulus bill is crammed full of things like this. 

If you would like to check the video out you can do that here.

When you look at a country that is trillions in debt and sinking further into debt everyday how do you stop it.  Well lets think about this a bit.  First off unlike the last stimulus bill not all of that money was borrowed money.  In this particular stimulus plan all of this money is being borrowed.

Second, normally to get out of debt as an individual it’s fairly simple, cut down debt and save more money.  With the new stimulus plan we aren’t paying off any debt, we aren’t saving any money, and we aren’t going to get ahead by doing this new stimulus plan.

It seems as if the plan is to spend more money to get are country out of debt.  Personally I can’t see how that will work. 

So what are your thoughts?  Should they have another stimulus package or will it work if they cut some of the odd stuff out they discuss in the video?  Leave a comment and let me know.  Also any good ideas for what you would do to solve the economies issues would be great.  Any good ideas will be posted in a later post.

Till then,

Chris

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Could This Be The Next Depression?

January 20, 2009 By 1 Comment

Hey everyone just got done reading a personal newsletter from Paul Dietrich.  If your not familiar with him he is the one of the top financial professionals in the U.S.  He is one of the top owners of Foxhall Capital and has written many articles for the Washington Post.

I’ve also had a chance to meet Paul and few of his close associates and hear what they have to say about the economy and so far he is on target.  Everything he has told me over the last year has been true thus far.  So when I get one of his personal newsletters I treat it like gold.

I must also mention that Paul is a professional investment adviser as well as at forex trading.

What we have faced so far.

  • Currently the average fund has lost 48% according to the Washington Post.
  • Trillions have been lost in 401k and IRA accounts.  This doesn’t count the trillions lost in non-pension assets.
  • The trillions lost in the real estate market, and the above average foreclosures all across the U.S.
  • The Dow having it’s worse losing streak since 1931.
  • The S&P 500 being down nearly 40% in 2008.

With all those things and a national deficit in the trillions what can we expect for 2009?

What’s up for 2009?

As far as Dietrich is concerned they expect more of the same for 2009, and that is what I am projecting as well.  We can’t expect this mess to go away overnight.  Though with some tough times still ahead we will make it through.

However don’t expect it to be another depression.  Even with things as bad as they are I am guessing 2010 will be the comeback year however this is only a guess at this point with unemployment at almost 8% it will take some time for this to work itself out.

How is this going to effect you?

If you haven’t started looking for a way to cut down your debt now is better than later.  My best suggestion is to cut down as much as you can and sock away as much as you can.  Just cause 2008 is over and we have a new president in the White House doesn’t mean things are about to get better.

Also once things do start to turn around don’t loosen your grip and get lazy with your finances again.  I learned this from the last recession we had.  This is a typical thing that happens when we get through the tough times.  We tend to let loose and forget about what just happened.

Stick with your plans even when the worst is over and get prepared for the next ression.  Even though it may be a few years or even a decade or two till the next one the point is by staying prepared you’ll be ready for the next one whenever that may be.

To getting debt free,

Chris

This post was recently featured on The Carnival of Money Hacks by Little Miss Know It All.

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Is Spreading Your Wealth Around A Terrible Idea?

November 3, 2008 By 13 Comments

Some Things Work Great In Theory But Not In Reality

Recently, I was reading an email that someone had sent to me about a customer at a restaurant who had just finished eating and the waiter had left the bill and was expecting a tip from his customer for about $10 because he had worked very hard for his customer bringing drinks back and forth and waiting on him hand a foot.

When the waiter came back for the bill the customer explained to the waiter that he was not going to leave a tip for him but instead leave it to the homeless man outside the restaurant.  The waiter went into a rage and explained that he worked very hard for that tip and deserved it.  As the customer got up to leave he said to the waiter, not to be upset it’s just redistribution of wealth.

My goal in this post is to show that in theory spreading wealth seems like a good option but reality will never work.

The Theory Part Of It.

With all of this talk lately about spreading the wealth around in today’s economy I realize how we could say this would be fair in theory.  With CEOs making millions with government bailouts and buyouts form other financial organizations who wouldn’t be upset.  Millions of Americans have worked hard for there money to only have it dwindle away in the stock market to others who already have enough money.

In theory this sounds like a great plan.  Just like Robin Hood use to say:

Take from the rich and give to the poor.

Though is this the right way to go about things.  When you talk about CEOs making millions I can see where there coming from but lets look at it from a different angle.

Recently, I heard of a man down in Florida who was in talks with his Real Estate agent to buy some land to open up a second grocery store.  Before he decided to buy the land he decide to talk to his accountant first and see what kind of tax he would be paying on this new store if the tax code would change. 

As a result his accountant urged him not to build a new store because he will end up having to pay so much in new taxes because he will have to help with spreading the wealth.  The business owner who employees 27 people at his current store decide to hold off on building a new store because his taxes on his store would increase to drastically. 

The Reality Part Of It.

The reality is if you work hard and others don’t you still get the same as everyone else.  Just like the waiter in the beginning of the post he worked very hard for what he wanted but yet didn’t get it due to others who decided his money should go to the homeless man.

The true question you really have to ask yourself here is do you want a freedom of choice in life for what you earn and keep or would you rather have someone decide that for you?

What do you prefer?  Leave me a comment and let me know.

How This Will Effect Are Economy?

People in this country work hard for what they want but with wealth redistribution people won’t have to.  Working hard and reaping the benefit of it will fade away.  For those that don’t work so hard will get more. 

Does this sound like a problem to you?

Yes this will eliminate those that make millions from bailouts and buyout but what about the average Joe who owns the grocery store or the small restaurant or any other small business.  They will have to pay too.

Because small business owners will have to pay also they won’t be so eager to expand, increase profits, and create new jobs. The same will be for the working class.  They won’t strive to make more in fear of getting taxed more.  The economy will slow to a crawl because of a severe reaction that will echo through the economy not make to much money.

How This Will Effect You?

This will effect you in a few different ways. 

  • You either make less money so you don’t get taxed more.
  • Or you make more money and let someone else decide where your money will go.

Working hard and achieving success won’t have the same feel to it anymore.  The success you achieve will go to others who are less fortunate but not by your choice but by someone else’s.  In a sense you will be punished for working to hard and rewarded for hardly working at all.

What are Your Thoughts? 

Would spreading the wealth and redistributing it to others who are less fortunate solve the problem or will it create new ones.  When you reply on this post don’t just think about yourself think about what other will have to give up as well.

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A Payday Lenders Good For Consumers – Readers Comments

October 20, 2008 By 9 Comments

Novemeber 4th will be here before you know it.

We are only a few weeks away from the elections and things are really starting to heat up.  Ohio has many issues on the ballot this year but I have been talking about Issue 5 lately which is in concern to the Ohio Payday Lenders. 

I ran my first post on this in early September “Are Payday Lenders Good For Consumers?” and a month later I revisited the issue to see if any positions had changed.  I wrote “Are Payday Lenders Good For Consumers-Revisited?” 

I also have a poll going on the home page to the left if you would like to throw your vote in on what you feel you would do.

In this post I have decided to post some of the prominent comments I have received in the last post I did on this and I got some great comment on this.  If you are still deciding on which way to go with this issue then you may want to read this.  If you would like to find out how this issue ends up and what the other readers comments are you can subscribe to my RSS here.

Readers Comments

Marc was the first to respond and he had a lot to say.

The issue is that by limiting the interest rate legislators essentially banned payday lending. It’s not as if many or any lenders can stay open at a 28% APR. That would mean that they would only be able to charge $1.17 per every $100 borrowed. Given that the average payday lender only makes between a 3% and 7% profit on the “high” interest rates currently charged, it’s difficult to see how they could remain in business with the lower rate. What will happen is that people who need a payday loan will not have that option and will turn to a less desirable alternative. It’s not as if getting rid of these loans will get rid of the need for these loans.

You remark “if I were a consumer going to a payday lender to get a loan would I want to pay 300% interest or would I rather pay 28% interest.” Borrowers don’t really seem to think this way. According to surveys of borrowers, they choose payday loans mainly out of reasons of convenience. They don’t shop around on price. That’s pretty clear when you consider that before the payday lending ban anyone could have opened a store to loan money at 28% APR. Why didn’t someone do so? It seems that if a businessman could have made a profit at that rate (a dubious proposition) and if consumers were really concerned about paying “excessive” interest, then the businessman who opened that store would have cleaned up in the market. The fact that this didn’t happen should indicate that it’s just not a realistic scenario, either from the business side or the consumer side.

Then Donnie who has replied at everyone of my post on the payday lenders has stood to his decision that payday lenders should be regulated more.  I personally still agree with this decision but decide for yourself and let me know in the comments.

Donnie said:

I agree with many of your points. Most consumers, if they knew what they were being charged (no payday lending ad mentions 391% APR or the fact that they are talking about payday lending), wouldn’t “choose” 391% APR over 28% APR. The industry has mounted a major effort to deceive and confuse voters. The jobs argument is one of the biggest cons out there. Of Ohio’s 1,600 plus payday lenders, 1,130 of them have applied for licenses from the Ohio Department of Commerce to operate under the new law. So, it appears most of them are still going to offer services of some kind. The payday lenders have also put up an ad suggesting that “Big Brother” is going to be watching you because the bill passed in June requires a database that ensures payday lenders’ compliance with the new law! What they don’t mention is that they payday lenders have their own UNSECURED database that has all kinds of information about you from your landlord/tenant records to your bankruptcy case proceedings.

Don’t fall for all their misleading ads and deceptive mailers! Reign in reckless predatory payday lending by voting yes on issue 5!

Finally PT from Prime Time Money piped in and said:

It’s sad that people have to resort to this type of financial product to keep them a float. I can’t stand to see the payday loan businesses. Still, I don’t know what I think about running them out of business. I mean, they are filling a need…but so would marijuana stores if they were allowed.

The free market man inside tells me to let them do what they do and that the uneducated will always make poor choices.

I guess at the end of the day, I’m just for more education. Something like the “truth in lending” act expanded for these loans would be beneficial.

In all the comments I would have to agree with PT the most.  It’s all about the education and what you don’t know can really hurt you.

I will be doing one more post on this subject on November 5th to share my thoughts on the results and to get your comments and reactions on the results.  Also don’t forget to vote on my issue 5 poll on the home page.

Filed Under: Market Updates Tagged With: ,

Are Payday Lenders Good For Consumers – Revisited

October 6, 2008 By 7 Comments

 Why I Am Revisiting?

A month ago I did an article called Are payday lenders good for consumers.  It was meant just to be a smaller article talking about some the issues that Ohioans will be facing this November. 

Or so I thought.

The article ended you becoming very popular and controversial.  With 17 comment left by readers who all had different opinions about the situation.  So I decide to revisit the issue read over all the comments again and meditate on which may be the right decision.

I have received many comments from Donnie who explained that 391% interest is to much for anyone to pay on a loan and repeated that this is a trap to Ohioans.  He explains that this is more or less predatory lending tactics that they are using to bring in customers and lock them in with high interest rates.

However Casey and Tara believed that the fee was only $15 for a two week loan which was better that paying an over draft fee.  They also believe that there would be 6000 jobs lost as a result.  They believe in the freedom of choice should be preserved to the consumers.

So in this article I have decide to go through all the facts and see how this might relate to you as the consumer and let you decide from there.  If you feel these fact differ from what you know let a comment at the bottom of this article.

The Facts ( or at least what I have read)

  • If the issue passes the maximum loan amount will go from $800 to $500.
  • If the issue passes the borrowers would have 30 days to repay the loan otherwise if it doesn’t there will be no time period.  (Not sure on this one let me know what you think?)
  • If the issue passes the maximum interest rate would be 28% and if it didn’t it would be much greater than that.
  • If the issue passes the government will be able to look at your financial records and decide if you will be able to have a loan or not. ( not sure if this true either.)

What’s true and what’s not

  • Here are some video I came across.  I couldn’t find any on you tube saying vote No on issue 5 so here is a link to those videos.
  • The next video here is from those that are getting the raw end of the deal from payday lenders watch it and see what you think.  You can also check out the vote Yes on website.

 

  • This next video is from the CBS Evening News talking about the payday lending as a whole across the country.  This is a disturbing video.  Check it out and let me know what you think.  Leave me a comment on how you feel about this.

 

My thoughts on the subject

I have been thinking about this issue a lot recently and have tried to put myself in the shoes of the consumer.  My thought is if I were a consumer going to a payday lender to get a loan would I want to pay 300% interest or would I rather pay 28% interest.  Sounds like a pretty simple decision to me.

The other things that I don’t understand is that they say that 6000 jobs will be lost.  All they are doing is limiting the interest rate, loan amount, and time frame for the repayment.  How will this lose jobs for us in Ohio? 

Finally, if you would care to share your thoughts on the subject please leave me a comment.  I also plan on doing a follow up article again in a few more weeks to display and discuss the comments that were made.

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The Death Of Wall Street

September 19, 2008 By Leave a Comment

Wall street isn’t dead but it sure seems like it.

With recent government bailouts of Freddie Mac, Fannie Mae, and now recently AIG.  It seems as if the economy has gone into a huge tail spin that it can’t get out of.   Not to mention Merrill Lynch being bought out by Bank of America and Lehman Brothers filing bankruptcy.  With all the bailouts and government take overs one can only ask what’s next?

Why is this happening?

It’s really quit simple.  The foreclosure crisis is now finally starting to spill over into the other financial organizations who were backing the housing market.  This is just the cause and effect of the industry.  Look at the savings and loan crisis of the 1980′s.

With the latest bail out of AIG for $85 billion loaned from the U.S. Government for the bargain price of 11.5%the government is doing anything they can to save us from financial catastrophe.  Though some of this has happened so quickly companies like Lehman Brothers who are over a 150 years old went out like a light.  It can happen that fast.  In fact this is considered  the worst banking crisis since 1929.

And it must be said, there will be more bank failures.

Although the U.S. Government has stepped in to help aid in this financial emergency it has helped avoid what could have been something much worse.  What are your thoughts and concerns about the current situation leave a comment and let me know.

Will this affect you?

  • First and foremost it will affect the employees of these financial institutions.  People will be losing there jobs over this, and there will be more to come before it’s all said and done.
  • Anyone that is a shareholder will lose out.  Hopefully you have already talked to your financial professional about this.
  • Although if you have bad credit and are looking for some type of unconventional loan ( loans for people who have less than perfect credit) you will find that there will be tougher guidelines, possible higher down payments, and less of a chance for you to get a loan.

How will this effect the banks?

In fact the lending power of some financial institutions has been cut down severely.  If a major bank loses $1 billion they will lose around $10 billion in lending power that they would have had.  With less money to lend out it will mean less expansion, mortgages will be tougher to get, the home buyers will have to put more down to get a home, which means there will be less homes sold, which means home values will go down as a result.  In short…

This will affect everyone!

What can you do?

At this point there are a few things I would recommend you do.

  • Talk to your financial professional.  He will be able to best direct you in this situation.
  • Keep an ear out for the market this is not a time to ignore the situation.
  • Educate yourself.  Learn how you can stay out of these situations.  Sign up for are RSS here at Stumble Forward and get ahead of the crowd and educate yourself.

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Are Payday Loans Good For Consumers?

September 4, 2008 By 20 Comments

With all the payday lenders going up it seems as they just all sprung up at once.  However are they a defective product in itself putting more people into debt than getting out?

In Ohio ( my home state)  there is currently a big discussion going on about restricting some of the things these lenders can do.  For example the payday lenders in Ohio can charge over 300% interest to these small personal loans.  This could obviously create a problem to the point where people will become dependent on them. 

When I first heard this story it sounded like the payday lenders where getting away with predatory lending in a sense being able to charge unheard of interest rates.

 Check this out.

 

Currently Ohio has opt to cap the amount of interest these payday lenders can charge.  However the payday lenders feel this could force a lot of the payday lenders to go out of business.  Putting as many as 6,000 people out of a job.

How do you feel about this?  Should there be payday lenders, or is it ok as long as there is a cap on the interest rates?

Let me know how you feel.

Filed Under: Market Updates