Folks,
Here are a couple of websites I’ve been messing around with recently. One of them has listings for super cheap real estate, the other for rock bottom prices on jewelery.
I’m posting these because I think people should be in the business of acquiring assets. This includes buying real estate and valuables like diamonds and gold.
For cheap real estate, click here.
For inexpensive jewelery, click here.
Enjoy!
James
When it comes to buying a new car, many consumers will opt for car finance from the dealer as they are usually quick and readily available. However, for some consumers, it might actually be beneficial to get a personal loan to finance your vehicle instead.
A personal loan is a loan from a lending institution (such as a bank) that you can then use for pretty much anything, unlike a car loan that can only go towards the purchase of the car. A personal loan can be secured against something of value, such as another vehicle or home or you can obtain an unsecured personal loan, which usually incurs higher interest rates because the bank has no “security” if you default on your payments. Meanwhile, a car loan is a secured loan against the car you are looking to purchase, so if you default on your car payments, the lender takes ownership of your car.
Ultimately the choice you make between a car loan and a personal loan will depend on a number of factors, but there are a few situations where personal loans might be most beneficial.
If you’re looking for an older model…
Generally, car financing doesn’t exist for older vehicles as they are worth less so banks are unwilling to secure loans against them. Vehicles that are older than seven years are much harder to finance with a car loan.
If you can offer other security…
If you have an asset to secure your loan against, you’ll benefit from the lower interest rate of a secured personal loan. The interest rates difference between secured and unsecured loans is usually about 2%, which can make a sizable difference to your repayments.
If you want to own your car outright…
For various reasons, you may not want to encumber your vehicle with debt and would prefer to own it outright. Individuals who rely on their car for their livelihood may not want to risk having a vehicle repossessed so a personal loan can offer some peace of mind.
Better negotiation power?
Some argue that getting a personal loan so you get the “cash” in hand will give you better bargaining power at dealerships. In actuality, car dealers make money through dealer financing arrangements from the lenders, so paying cash means you’ll be taking away that potential income so there’s no incentive for them to haggle. If you do get a personal loan or are looking to pay cash, tell a dealer that you’re undecided about how you’ll be paying until you settle on a price.
As far as where to get your funding – we pretty much recommend that you go with a credit union or a reputable outfit like USAA. Credit unions generally charge about 2% less and USAA has a great reputation for customer service, so consider starting there first.
What do Bank of America, JPMorgan Chase and Barclays all have in common? Each of those companies have Wilmington, DE as their credit card headquarters. Wilmington, Delaware probably wouldn’t jump to most people’s minds when discussing national credit card headquarters. I, for one, assumed they would be located in New York City. After all, NYC is the financial capital of the U.S., so at first glance NYC would seem to be the most logical choice. But as it turns out, Delaware is the most logical choice, for the banks at least.
In 1978, the Supreme Court ruled in Marquette National Bank vs. First of Omaha Service Corp that the state of Minnesota could not enforce its usury laws against a credit card company that was not based in Minnesota. That means interest rates are set according to the laws established in the state that the credit card company is chartered. Since every state has its own set of usury regulations, a credit card company could exploit this by headquartering itself in a state with favorable laws. And Delaware’s current usury laws are very favorable to credit card companies.
The Obama administration attempted to curtail the variance of interest rate limits in the Credit Card Consumer’s Bill of Rights by submitting two proposals that would impose interest rate caps. The bill, signed into law in May and which will start to be enforced this coming February, however, did not contain those amendments. The credit card companies lobbied hard to get those proposals removed, but were unable to kill the bill as a whole. Despite the inability to get interest rate caps enacted into law, the CCC Bill of Rights does however contain many changes that will affect how credit card companies are able to change the terms of account agreement with the consumer.
The new law will stipulate that credit card companies must give 45 days notice before changing the interest rate, as well as a written explanation for why the change is taking place. Additionally, consumers would have to be 60 days late on payments before they would see an interest rate hike on their existing balance. If the customer is able to make on-time minimum payments for six consecutive months after the rate increase, then the credit card company would be compelled to reduce the interest rate back to the pre-increase rate.
Credit card companies were given 9 months to enact the necessary internal changes to make this happen – hence the February start date. Earlier versions of the bill had much shorter timelines, but lenders were able to successfully lobby for the 9 month time frame.
As their willingness to establish their credit divisions in Wilmington, DE suggest, lenders are willing to undertake great effort to find and exploit loopholes in the laws to increase their profits. The Credit Card Consumer’s Bill of Rights attempts to close many of the most commonly used loopholes. It’ll be interesting to see how the credit card companies respond, and how consumers are ultimately affected.
-Michael
When I first started working, the task of determining my 401(k) allocation was quite overwhelming. I was barely out of college and had hardly picked up a financial book and was thus in no position whatsoever to pick the set of funds that were right for me and my retirement goals. A colleague must have noticed my wide eyes and bewildered look and suggested that I put all of my 401(k) money in the Target Fund that best approximated the year at which I will presumably retire. That seemed like a good idea at the time and so I did just that. Within 6 months I had altered my 401(k) allocations to exclude all Target Funds.
Target Funds are predicated on the idea that a diverse portfolio is optimal and that an individual’s investment mix should grow more conservative as they move closer to retirement, and are subsequently built with those two principles in mind.
Diversification – Diversification is one of the primary tenets of investing in general (“don’t put all your eggs in one basket”) and is especially important when attempting to grow your retirement nest egg. It is the primary risk management technique that you will use to ensure that the decline in value of one security will have a minimal effect on the value of the portfolio as a whole.
The critical importance of having a decent chunk of money available when you retire dictates that a diverse portfolio – and thus a safe and stable portfolio – is absolutely essential. There are many ways that you can diversify. You can spread your investments over a variety of different asset types (stocks, bonds, cash, for example), or perhaps you can allocate your assets over a series of funds with varying risk (index funds vs. small-cap funds vs. international funds) or across funds that are representative of different industries.
A solid portfolio strategy would employ all three types of diversification. Target Funds attempt just that. For example, according to Vanguard, my general preferred asset allocation breakdown is as follows: Domestic Stocks (72%), International Stocks (18%) and Nominal Bonds (10%). That asset allocation has some diversity, but it isn’t as diverse as it could be, which introduces risk. But that is done for a reason, and is explained by the next point.
Conservatively Growing Asset Mix – A general rule of thumb is that the longer your investment window, the more risk you should be able to stomach, given that you have enough time to earn back those losses. Conversely, as you grow older and that window shrinks, you should have a more conservative mix of investments, to protect the money that you have spent years earning. So when you (hopefully) start investing young, it’s suggested that you take on more risk in your fund selection (by selecting International Funds, Aggressive Growth Funds and Small-Cap Funds) and then gradually over time move to a more conservative mix (such as Money-Market Accounts, Bond Funds and Balanced Large-Cap Stock Funds).
For example, someone electing to invest in Vanguard’s 2010 Target Fund would see an asset allocation of 40% Domestic Stocks, 40% Nominal Bonds, 10% International Stocks and 10% Inflation-Protected Bonds. That is obviously a much more conservative fund allocation than the one recommended for someone my age.
Supposedly a lot of people are mad about this article.
Basically, this guy Brent White is saying that politicians, banks and the media are encouraging people to stay in mortgaged homes, even when the homeowner is so far underwater it would be in their best interest to walk away. He also mentions – and here is the kicker – in some cases it may be actually be legally permissable to default.
Heh.
_________________________________________________________________________
Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis
Brent T. White
University of Arizona – James E. Rogers College of Law
December 7, 2009
Arizona Legal Studies Discussion Paper No 09-35
Abstract:
Despite reports that homeowners are increasingly “walking away” from their mortgages, most homeowners continue to make their payments even when they are significantly underwater. This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences. Moreover, these emotional constraints are actively cultivated by the government and other social control agents in order to encourage homeowners to follow social and moral norms related to the honoring of financial obligations – and to ignore market and legal norms under which strategic default might be both viable and the wisest financial decision. Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse.
Hi Folks,
Some days you’ve got to love Robert Kiyosaku, some days you’ve got to hate him. Today I’m loving Kiyosaki. He’s got a great quote on the impact friends have on wealth that makes a lot of sense:
CHOOSE FRIENDS CAREFULLY: The power of association. First of all, I do not choose my friends by their financial statements. I have friends who have actually take the vow of poverty as well as friends who earn millions every year. The point is I learn from all of them, and I consciously make the effort to learn from them.
Now I will admit that there are people I have actually sought out because they had money. I was not after their money; I was seeking their knowledge. In some cases, these people who had money have become dear friends, but not all.
But there is one distinction that I would like to point out. I’ve noticed that my friends with money talk about money. And I do not mean brag. They’re interested in the subject. So I learn from them, and they learn from me. My friends, whom I know are in dire straights financially, do not like talking about money, business or investing. They often think it rude or unintellectual. So, I also learn from my friends who struggle financially. I find out what not to do.
…
A WARNING: Do not listen to poor or frightened people. I have such friends, I love them dearly, but they are the “Chicken Littles” of life. When it comes to money, especially investments, “The sky is always falling.” They can tell you why something won’t work. The problem is, people listen to them, but people who blindly accept doom-and-gloom information are also “Chicken Littles”. As the old saying goes, “Chickens of a feather flock together”.
Rich Dad Poor Dad, p. 153-154. Bolding and italics are my embellishment.
There is a lot of truth in this quote. If you want to gain wealth, financial security, make extra money, learn about interest rates, etc. etc. A great way to do it is by associating yourself with people who know what they are doing and conversely, by ignoring the views of people who don’t.
Thanks All,
James
Kiplinger had an interesting graphic the other day that showed how much foreclosures have increased in 2007 and 2008 on a per state level (“The Rise of Foreclosure Filings“). The graph shows the effect of geography on housing, and there can be a pretty stark difference in the rate of foreclosure filings from states right next to each other. Some interesting observations:
I’ve seen a lot of graphs during the recession that describe data similar, but this one really drove the point home, and I thought it was really interesting.
Hi Readers,
Just a quick note to let you know that we were noted by Talk with Tim as one of the Twenty Top Personal Finance Blogs. Check it out!
Thanks for your readership and feel free to leave us comments with subjects that you would like to read more about.
Cheers,
Miel&James
If you haven’t yet heard of Smarty Pig, listen up. This a great tool to both teach the kids in your life about saving, or use it to save for yourself as well.
It’s like no other piggy bank, and allows you to keep track of your saving, have friends and family help you to save for your goals, and earn a competitive interest along the way!
Simply sign up for a free account, save and track your progress, and when you’ve reached your goal you’ve got several options. You can either send the funds back to your normal bank account, put the funds on a debit account to use towards your goal, or cash it out in gift cards with up to 12% off from a variety of retailers. This makes it particularly easy if you are saving up for a new gadget or the like.
You can also add your Smarty Pig logo to your social networking sites, like Facebook and Twitter, to have friends and family contribute that way!
We like Smarty Pig so much that you may have noticed our new advertisement banner. If you click through and sign up for an account through our site, we will also get an incentive as well. So we both win!
I’ve set up my account with the long awaited goal of making it back to my Peace Corps village in Ghana. It has now been 10 years since I first moved there as a volunteer, so I’ve got two years left to make it there before it has been ten years since leaving. I figure it’s about time that I make it happen.
I actually landed briefly in Accra on my way from Liberia to Ethiopia, so I was able to see how big the city has become. I’m excited to make it back to my village and see if there is electricity, check on the mango plantation that I did, and see how the school children have grown!
If you’d like to contribute to my goal you can do so here.
If you do sign up for an account, we’d be happy to hear what you are saving for, and how your experience goes.
This also a great gift for the holidays for children, grandchildren, nieces and nephews!
Cheers,
Miel
I have a hard time believing that Mint.com put this out. It’s definitely critical of the Bureau of Labor Statistics and a bit on the subversive side, but it’s amusing so we’re posting it here.
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