Even Though Real Estate is Gloomy, Opportunities Will Present Themselves

The negative news in the real estate market continues. Every week it seems like a new report is out highlighting record drops in home sales, lower home prices, and more difficulties in obtaining a loan. For those who already own a home, or are trying to sell their home, this is obviously a difficult time. I don’t want to dismiss the hardship that this crisis has created, but I am glass is half full kind of guy, so I wanted to highlight some of the positive aspects of what is going on.

Looking Ahead a Few Years

When will the real estate market settle down? That is the million dollar question right now, and there are a lot of different thoughts. And to make things more difficult, some areas of the country will begin to rebound faster than others, so without a crystal ball, the best we can do is guess. That being said, I think it’s fair to say that it will be a while before we see any significant improvement. Whether it’s a year or two, or five years from now, it doesn’t really matter. Trying to pick the absolute bottom is like trying to pick the day the stock market bottoms out. If you’re a little early or little late to the party, you’ll still be fine.

So, if you’re thinking about buying a house in the coming few years, you have a tremendous opportunity in front of you. In many cases, you could buy a home right now at a 25% or more discount from just a year or two ago. As prices continue to fall in coming months and years, you should find even steeper discounts. The good news is that there is no rush in buying. Even if home prices do begin to stabilize earlier than expected, they won’t immediately spike back up, especially with the excess inventory out there. This means that you’ll have a pretty long window of time where you should be able to buy your home without being concerned about skyrocketing prices or strong demand.

Start Getting Your Credit in Order Today

Even if you don’t plan on buying a home for another few years, it is never too early to begin thinking about your credit score and the effect it will have on your ability to secure lending. Banks have learned their lessons (at least I hope so), and that means we’re returning to times where credit is harder to get, and those with poor credit will find it extremely difficult to obtain financing, or may pay a significantly higher interest rate. This makes having a clean credit history more important than ever.

When it comes to improving your credit score, it’s important to have time. This is why it’s a good idea to start planning as early as possible. For one, if you have negative marks on your credit report, the only thing that will remove them is time. In most cases, seven years, or ten if a bankruptcy. So, check your credit report and look for negative marks. How long ago were they? If you have a late payment showing up five years ago and think you’ll be buying a house in about three years, it looks like that would be removed, and improve your score once it’s time to apply for a loan.

Even if you do have more recent dings on your score, the good news is that their importance diminishes over time, so that is still in your favor. Just make sure you don’t make any more late payments! In addition, if you have a few years yet and you currently have very little credit, you have time to open or close lines of credit as needed in order to maximize your score. Remember, length of credit history is also very important, as well as what types of credit you have, and the credit utilization. This gives you time to maximize those aspects of your report as well. Use this time wisely, and don’t wait until just before applying for a loan to begin thinking about your credit score. And don’t forget to check out these tips on how to improve your credit score.

Think About the Down Payment

In the past, it was common to put 20% down on a home. In the 90s, with rapidly increasing home prices and easy access to credit, this became less common, and many people were able to get attractive financing with little or even no money down. Of course, when your home is expected to increase in value by 20% each year, it made sense. As we’ve seen lately, having equity in your home from day one has many advantages, especially when it becomes clear that home values don’t always increase each year. Not only that, but putting 20% down can get you out of paying private mortgage insurance, or PMI. This keeps your monthly payments low, and helps you put more money in your pocket.

That being said, more banks are now requiring money down. There are still plenty of offers out there for zero or low down payment loans, but you’ll need even higher credit scores, and might pay a premium for those loans. Bringing money to the table will help you if you have less than perfect credit, and will help ensure you’re getting the best rate.

This doesn’t mean you have to spend years and years trying to scrape together $50,000 or more, but you have enough time to begin thinking about a down payment and to start saving up now. If you’re looking at a home purchase in the next few years, just saving a couple hundred a month can make a good dent in your down payment over time. Again, time is on your side here, and the sooner you can begin taking advantage, the better off you’ll be.

Don’t Screw This Up

If you don’t own a home and want to buy, or are thinking about upgrading in the coming years, this is a tremendous opportunity. You have just enough time to get your financial house in order so that you will be able to take advantage of the decline in home prices. Use this time wisely, and don’t screw it up. If you wait until the last minute, you’ll miss out on plenty of areas where you could maximize your purchase.

And above all, don’t make the same mistakes people have made in the past. Once the economy begins to recover, the stock market takes off, and home prices begin to rise again, it’s easy to forget about what got us into this mess. Remember, you buy a home for a place to live first and foremost. Find a home that is suitable for your needs, and understand exactly how much home you can truly afford. Don’t borrow too much, and don’t put yourself at further risk by taking on an exotic mortgage. And most of all, don’t go into your home purchase expecting the value to double in five years.

If you plan ahead, stick to the basics, and don’t get greedy, you’ll find yourself in a fantastic position. You’ll have a nice roof over your head, you’ll be able to weather future economic troubles, and since you were able to buy at a significant discount, you might even stand to make some money when you sell in the future. Opportunities to learn from past mistakes and to take advantage of relatively low prices don’t come along that often, so make the most of it.

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Prospective Home Buyers, This is an Opportunity of a Lifetime - Don’t Screw it Up

Fannie Mae and Freddie Mac, combined, own or back up some $5 trillion dollars of debt. That is about half of ALL the mortgages in the U.S. They have already lost some $11 BILLION since the current mortgage/credit crisis began, so it is easy to see why there is profound concern about their fiscal health–or lack there of.

Concern turned to horror today after the New York Times reported that the U.S. government is thinking about a takeover of the mortgage giants–placing them in a conservatorship.

Should that happen, the shares of both could be worth almost nothing and taxpayers, you and me, would have to pick up the tab, says the Times, for “any losses on mortgages they own or guarantee–which could be staggering…”

This news brought about what the AFP news agency referred to in a headline as a “meltdown” of the share prices of both Fannie and Freddie.

According to Reuters, “Fannie shares closed at $10.25, down some 22 percent but well above the session low of $6.68. Freddie closed at $7.75, down 3 percent, after touching a low of $3.89 earlier in the session.”

And, here is the most amazing part of the story. Freddie and Fannie have lost almost 90 percent of their enture value just since August, says Reuters.

Doubts about bailout

As the day drew to a hectic close, Treasury Secretary Henry Paulson sent out signals that it is not likely there will be any federal bailout–However, Sen. Christopher Dodd of Connecticut, who is chairman of the Senate Banking Committee, said he spoke with both Paulson and Fed Chairman Ben Bernanke and that they are looking at options that would include “opening access to the discount window,” Reuters reports. The discount window allows the Fed to act as an emergency lender for the banking system.

Meantime, both Fannie Mae and Freddie Mac insisted they have enough capital to keep going and Sen. Dodd said both are “fundamentally sound and strong.”

Although both were originally formed by the federal government, they now function as private corporations, though there has always been an assumption that the government would never let either go under for fear of what might happen to the entire financial system in this country and, indeed, around the world.

How they got into trouble
To understand how they got into trouble, you must first understand what it is they do. Both buy up literally hundreds of billions of dollars in mortgages–then repackage them as securities.

In some cases, they hold on to these new securities, but they also sell them to investors.

That is why when the subprime mortgage crisis hit,Fannie and Freddie were hit hard. And, says the New York Times, “analysts expect the companies to announce a new round of write-downs and possibly be forced to raise capital by issuing additional shares.”

Stocks tumble then regain

At first, the fears of a Fannie/Freddie implosion plunged the Dow Jones Industrial Average down more than 200 points…but, by the end of the trading day, it closed down “just” 128.48 points.

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This Post is from the BiggerPockets Real Estate Blog. Copyright © 2008 BiggerPockets, Inc. All Rights Reserved.

Fannie Mae & Freddie Mac: What Will The Feds Do?

Times are tough out there and a lot of Americans are getting caught in the squeeze. As real estate investors we feel this in a number of ways: bargain foreclosures to buy (good!), a glut of rental properties depressing rental rates (bad!), fewer competing bids for quality properties (good!), longer waits to sell properties (bad!)...and the list goes on.

One thing I’m noticing is the challenge to get quality tenants. I have some properties that rent like hotcakes w/ zero vacancy time. But others, for some reason, have been more challenging. Like most property owners, I have a number of rules-of-thumb that I follow when it comes to screening tenants. But rules of thumb aren’t written in stone; they’re just guidelines. Every now and then I come across an applicant who I think will make a great tenant, but there is something or other that makes me second guess myself.

The fact of the matter is that good people get caught in bad situations sometimes, and a quality applicant can sometimes appear brandishing a blemished credit report. Don’t get me wrong – my mantra #1 is that renting to a bad tenant is twice as expensive as sitting on a vacancy for an extra month – but what is a landlord to do when her gut tells her that she should take a chance on an applicant? Well here are three steps I sometime take::

• Ask for first and last months' rent upfront, plus one month’s deposit. This does three things for you. First, the applicant will have to cough up three months’ rent upfront before he moves in. If the applicant can do this it is an indicator that he’s not living paycheck to paycheck, a good sign that he will be responsible. Secondly, it mitigates your risk by ensuring the final month is paid. Lastly, that final month’s rent sits in your bank account collecting interest (or, better, is out in the market working for you) for the entire time the tenant resides in the property. I write the lease to state that the last month’s rent paid upfront will be credited to the final month that the tenant resides in the property.  PROs:  will scare off bad/risky applicants.  CONs:  may eliminate some good applicants as well. 
• Shorten the term. Write a lease with a short term; four months or six months. Agree to renew if the tenant pays each month on time; you can put this in writing in the contract if you wish. If there is a problem you’re still going to suffer, but you wont’ have a deadbeat sitting in your property with a contractual right to stick around for an entire year.  PROs:  limits the period you're at risk.  CONs: no financial benefit to the landlord, who is still stuck with evicting the tenant if he doesn't work out. 
• Charge a higher rent. This doesn’t do much for you in the risk mitigation category, but if you’ve trust yourself as a judge of character and you’re willing to rent to an applicant that other landlords have turned away, you should get compensated for the extra risk you’re assuming.  PROs:  higher return on the property, a good thing.  CONs: doesn't lower your risk.

Smart landlords use these strategies in combination. Increase the rent and offer a shorter term. Offer a shorter term w/ first and last month paid upfront (great risk mitigation).

Some people like change, other people don’t.  You could argue that change is distracting and slows you down but you can also argue that without change we’d all still be living in caves.

Personally change makes me nervous but I know that it’s necessary for growth.  I’ve been working on a few things related to this site for a while now that I’m getting ready to roll out.  I’ll let you know more once change is imminent.  Until then, what are a few things you’d like to see changed about this site? Please leave your thoughts in the comments.

One more thing to cover.  I’ve been meaning to highlight some more money articles over the last few days but hadn’t gotten around to it since I’ve been working on “the changes”.  Here are some articles you might want to check out.

– The Sun talks about a new rule for online real estate brokers

– The Lazy Man reviews the Amazon Kindle: Buy or Not?

– GenX Finance looks at the cost of a family cookout

-Free Money Finance takes a look at an  Investment Portfolio Using Only Three Index Funds

-No Credit Needed gives us 10 Steps For Getting Back On Track

– Five Cent Nickel covers SmartMoney’s Best and Worst Brokers,as did Blueprint for Financial Prosperity, SmartMoney’s 2008 Best Discount Brokers

You may or may not have heard the term ?ethical will?. But, for those who care about making their values and ethics part of their legacy, it is a tool to consider when planning your estate.

Unlike a ?last will and testament?, which provides for the distribution of a person?s material assets, or a ?living will?, which contains instructions for how you want to be treated medically at the end of your days, an ?ethical will? is designed to let someone preserve and share their values, principles and beliefs for heirs and future generations, though it?s not legally binding.

According to Personal Legacy Advisors? Web site, an ethical will is a letter that transmits the non-material assets that are also of great importance: your values, your story, the lessons life has taught you and the other information that is too valuable to risk being lost. Your ethical will is the tool that enables you to address the question, ?What do I want my loved ones to know??

As a concept, ethical wills are not new. The first written reference to ethical wills occurs in both the Hebrew and Christian Bibles. Examples are Genesis, chapter 49, and The Book of John, chapters 15-18. Over time, they evolved into written documents. While ethical wills were traditionally shared after death, along with the reading of an individual?s last will and testament, today they are often shared during the author?s life.

While exact figures aren?t available for how many people are writing ethical wills, they are on the rise, based on increased Web activity and sales of ethical will resources. They have gained impetus particularly in the wake of tragedies like the September 11 terrorist attacks.

Why create one? People are inclined to write an ethical will when facing a challenging event, or at a turning point in life. Some examples are facing the loss of a loved one, birth of a grandchild, expectant parents, becoming an empty-nester or approaching the end of life. Other reasons to create an ethical will include:

• Your reflections will confirm what?s important and renew appreciation of your life to date
• You will create a personal message to those you love, of priceless value in the event of your absence
• If you do not tell your personal (and family) stories, they may be lost forever
• Your material assets can be given within a personal context
• You will mitigate confusion and hurt feelings with a personal explanation of potentially controversial elements of your legal will
• Your spirit will be expressed on paper, living beyond you in a timeless way
• Your words will link the past, present and future generations of your family
• You will enjoy peace of mind knowing the most important things will have been said.

Pros and cons. The pros of an ethical include having an opportunity to influence future generations. Through the process of writing an ethical will, the writer can gain self-knowledge and come to an understanding of what?s most important to him or her. This is valuable information not only for their families but their professional advisers as well. Another pro is that ethical wills are private documents. Unlike a will, which if admitted to probate will become a matter of public record, an ethical will is a private communication and will not be made public unless the author (or recipient) so desires. The con is that an ethical will is not enforceable in a court of law. Those who want to provide specific instructions, such as who is to receive which asset or how assets are to be distributed and under what conditions, would need to put the instruction in a will or trust.

Setting up an ethical will. Ethical wills come in a variety of forms, from a short letter to a lengthy autobiographical statement, from an audio-recorded message to a bound album. There are three basic ways to create an ethical will.

1. Begin with an outline and list of suggestions. Once you?ve created a rough draft, you can review and personalize it as much as you wish.
2. Begin with guided writing exercises. For example, start with phrases such as ?From my grandparents, I learned?? or ?I am most grateful for??
3. Begin with a blank sheet of paper and write down whatever is relevant about your thoughts, experiences and feelings. This is an open-ended approach. Eventually you should be able to create a comfortable structure for your ethical will. For one-on-one help, an organization like the Association of Personal Historians may be of assistance.

Other tips from Personal Legacy Advisors include the following:

• Start today: If you were not here tomorrow, what is the most important thing you would not want left unsaid? Write it down - now you’ve begun
• Relax: You are not trying to write for the Pulitzer Prize. The letter is a gift of yourself, written for those you love
• Ask yourself: What do I want to make sure my loved ones know and have in writing
• Take it topic by topic: Don’t try to write it all at once
• Be yourself: You cannot bequeath what you never owned to begin with
• Be careful, be loving. The reach of this letter is unknowable.

Sharing your will. It?s a good idea to share your ethical will not only with family and friends, but also with your financial adviser and attorney. Knowing what you value and what?s important to you will help them to develop a personalized plan that can help you to leverage your values in the future.

An ethical will speaks to one?s posterity or descendants long after the legal will has been probated and forgotten. Of note, an ethical will is a dynamic document. Just as a will or living trust document needs to be revisited so does an ethical will, because events occur in ones’ life that have an impact on ones’ value systems.

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Buy a car anytime you want, but I would tell anybody today that applying for a car offline is one of the worst and tiresome things I have done in my whole entire life. There was a man trying to explain the rates to me in a rushing manner. He even tried to force a particular car on me that I didnt even want, and the finance company that they deal with tried to push my rates close as 13 percent which is outrageous. I felt like I was being suckered into a deal so I turned towards the internet to get some information which is the best way to be successful in buying a car in todays world in my opinion.

I searched for days online looking for some great resources. There were many websites that showed you how to buy a car, but I needed to know the important points when I buy a car. Finally, I came upon some great websites that shows you everything that you need to know in order for you to apply yourself to buy a car successfully. I learned a ton of things, such as, the great loan company that I talk about on my website that you can easily apply for to buy a car anytime you want. What I liked about that loan is the rates and the time it takes for you to get a loan. It takes up to 24 hours for you to get a loan from them and the rates is the best on the net. The rates are very low. You would pay 7 percent at the most. Take out a loan because if you financed through a car dealership you probably would have to pay 9 or 10 percent interest rates to buy a car through a dealer.

When I was searching for a car, I also tried the car quote websites that, and they are great. I simply filled out the form and got quotes back to back in no time. There is four different websites for you to choose from or compare together. First I used edmunds, which is a pretty coo carl quote website, but personally, I like the other free car quote websites because it's easier to operate and quickerto obtain. You will get back some car quotes back in the same day. I used this for myself because you can make an educated decision of what price you can afford, and make or model of the cars. You can have local dealerships calling you to buy a car that fits your budget.

You can buy a car cash if you want. After I bought my car, I discovered some great auction services that allows me to buy a car from my own state and area. This is my main source when I buy a car now. The great news about buying auctioned cars is that you can get some really nice updated, running cars really cheap in your own local are. The bad news is that you have to react on these deals quickly in the process. I have posted some great car auction websites for people who want to buy a car cash instead of paying monthly rent. These are my jewels that I use here on out. I no longer have car bills to pay. I use most of my time buying 3 cars a month and selling them for a little more. Alot of the cars that are offered on the sites are in tip top shape. Many of the cars are under $1000. It's really easy to navigate your area. All you do is type in your area code and it shows you all the auctions going on in your area, contact info, etc.

***Remember before you buy a car to check and make sure mileages and price matches correctly. Check out my website and see how I calculated this for myself and do it for yourself too.***

About the Author

My name is Jay Pleas. I'm an auto mechanic and interior designer that spends most of my time buying autos and detailing them for many customers. At this time I make $100,000 a year maintaining my own car interior buisness. I live in Florida. I'm 28 years of age

www.squidoo.com/buy_a_car

I made 12 phone calls today. 2.5 hours of talk time. Here’s what I learned:

1. All mortgage companies cost the same-ish.  If their rates were lower, their closing costs were higher.  If their rates were higher, the closing costs were lower.
2. Some mortgage companies sell your loans.  3 of the mortgage companies I called today gave me an unsolicited aside:  “We buy loans.  We don’t sell them.”  Does that mean that you should always go with a direct lender?  Nope.  It just means that the mortgage company might not be able to view or change things if the mortgage is owned by someone else.
3. You don’t need to give out all your information (address, social security) to get rates and closing costs.  You can get ballpark numbers as long as you provide the purchase price, the down payment amount, and the type of mortgage.
4. If you call a company and they won’t give you any estimated numbers without giving all your information, hang up.  Call again.  A different mortgage specialist will be glad to help you without giving all your information.
5. Closing cost fees are where you can differentiate a mortgage company from another.  Ask the mortgage people to break down their closing fees.  Fees can include:
   • Property appraisal
   • Credit report
   • Lender’s inpsection
   • Mortgage insurance application
   • Assumption
   • Mortgage broker fee
   • Tax related service fee
   • Application
   • Commitment
   • Rate lock
   • Processing
   • Underwriting
   • Wire transfer
   • Abstract or title search
   • Title examination
   • Document preparation
   • Notary
   • Attorney
   • Title insurance
   • Recording
   • City/county tax stamps
   • Transfer tax
   • Survey
   • Pest inspection
   • Condominium application
   • Prepaids for interest
   • Prepaids for hazard insurance
   • Prepaids for property taxes
   • Prepaids for mortgage insurance
   • Prepaids for flood insurance
6. The rates and payments assume you have great credit and good stability.  They want to quote you the best rate and closing costs possible so they pretty much assume you’re a model citizen.
7. Lenders don’t like it too much if you’re quitting your job and you don’t have a job secured yet.  Hopefully you have a wife or wife-to-be who looks more stable to lenders.
8. They ask you if the down payment is gift money or if you saved it on your own.  No one gave me a clear answer on why they ask that question.
9. Do your research even if your wife-to-be’s sister’s soon-to-be husband is a mortgage specialist.  You never know…
10. Every mortgage person you talk to will give you a piece of advice.  The advice that resurfaces the most is probably important.

Did I apply for a mortgage yet?  Nope.  This whole day just narrowed down my choice to 2 or 3 mortgage lenders.  Time to talk to Miss Soon-To-Be-Wife…

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The sooner you and your spouse can agree on where the family money goes, the better. The best time to figure out finances is before you’re married when both of your money is separate.

I’m getting married in November. The shared finances discussion has begun. It will continue for the next few months until we’ve covered all of the ground rules. These premarital financial discussions should minimize the fights while we’re married.

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There are two components to each transaction: compensation and risk. While many investment bankers and business owners tend to focus almost solely on compensation, PLG Advisory Group gives equal consideration to the risk associated with each transaction.

There are three primary areas of risk:

(1) Known risks, for example the liabilities set forth on the company's balance sheet, or known regulatory risk;
(2) Unknown risks, for example, unanticipated employee or customer lawsuits; and
(3) Transactional risk, which is the risk that the transaction will be litigated, either prior to or after a closing.

How do small business owners view risk in a business transaction: is price or the reduction of risk the most important component of a M&A transaction?

(This is a guest post written by ABCs of Investing, a brand new site for novice investors which offers two short and simple investing posts per week.  Feel free to subscribe to the feed.)

The majority of investors use a financial advisor or broker to help with their investing planning.  There is nothing wrong with getting some help with investing since it is a fairly intimidating subject.  Most people just don’t have the time or the interest to read investment books and become knowledgeable enough to be able to handle all of their own investments.  Do-it-yourself investors forget how much time they have put into learning about finances and think that investing is easier than it really is.

The great thing about investing is you don’t have to choose between being an expert DIYer or a clueless investor who needs an advisor.  You can hire professional help AND know what you are doing at the same time!

A few years ago I bought a basic electrical book.  It showed how to do electrical repair jobs and even how to plan various circuits in a house.  One of the things that I found most interesting about the book was in the introduction; it said that learning the basics of your electrical system is useful whether you do the work yourself or hire someone else.  The point was that even if you end up hiring a contractor to complete your electrical work, any knowledge you have about the electrical system in your house and how it works will assist you greatly.  The same logic applies to investing: the more investment knowledge you have when dealing with an advisor, the better off you will be.  It is worthwhile to spend a bit of time learning about investing.

There are number of areas where some investing knowledge will help if you have an advisor:

• It won’t be as easy for the advisor to take advantage of you.  Let’s face it: some financial advisors, like real estate agents, make money on commission, and unscrupulous ones can rob you blind if you let them.  Knowledge about proper investments and for that matter knowledge about how advisors make their money will help you a lot.
• You’ll have more productive advisor/client meetings.  Usually when a client visits or talks with their advisor, the advisor is telling them what to buy.  If you can spend some time before meetings looking over your portfolio then you can drive the meeting agenda and make sure that your questions get answered.
• You’ll know better what you want from your advisor.  A lot of investors just hand over the financial reins to their advisor and just do whatever they are told.  If you have some investment knowledge then you will be in a lot better shape to determine what you want from the advisor, communicate your desires to them and make sure that they are the right advisor for you.

The single best way to learn about investing is to read.  Read, read and then read some more.  Books, blogs, websites, newspapers are all sources of information.  Talking with friends, relatives, co-workers can also be helpful.  But beware, all the “good” ways to learn about investing can unfortunately also be “bad” ways to learn about investing.  The best way to protect yourself is to read as much as you can and eventually you will be able to figure out where the good information sources are.

Knowledge is power!  Make sure you have as much as possible when dealing with your advisor.  Even a little bit of knowledge is a lot better than none at all.

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If you have ever read an article on eBay, you'll have discovered the type of income people earn - it isn't strange to find out about people earning thousands of dollars per month on eBay. Next time you are surfing the eBay site, check out how many PowerSellers there are: you'll find quite a few. Now think about the fact every single one of one of them must be making at least $1,000 per month, as that's eBay's requirement for becoming a PowerSeller. Silver PowerSellers make at least $3,000 monthly, while Gold PowerSellers make more than $10,000, and the Platinum level is $25,000. The top level is Titanium PowerSeller, and to measure up you must make at least $150,000 in sales each month!

It's hard to believe that Ebay has been around for ten years. eBay started in September 1995, by a man named Pierre Omidyar, who was residing in San Jose, California. He envisioned his site - formerly known as 'AuctionWeb' - to be an internet mart, and composed the first code for it in one weekend. It was one of the first sites of its type on the planet. The name 'eBay' follows from the domain Omidyar applied to his internet site His company's name was Echo Bay, and the 'eBay AuctionWeb' was formerly just one part of Echo Bay's website at ebay.com. The first product ever traded on the site was Omidyar's defective laser pointer, which sold for $14 .

The web site rapidly became hugely popular, as vendors arrived to auction off all sorts of strange things and buyers actually purchased them. Relying on faith appeared to work out outstandingly well, and implied that the web site could just about be left alone to run itself. The internet site had been configured from the beginning to take in a small fee on every sale, and it was this revenue that Omidyar applied to finance AuctionWeb's expansion. The fees speedily totaled up to more than his salary at the time, so he resolved to quit his job and devote attention to the site full-time. It was at this point in time, in 1996, that he added the feedback capability, to let buyers and sellers rate one another and make purchasing and trading safer.

In 1997, Omidyar modified AuctionWeb's - and his company's - name to 'eBay', which is what people had been using to refer to the site for awhile. He started to spend a great deal of money on promotion, and had the eBay logo created. A milestone was reached in this year - the one-millionth item was sold (it was a miniature version of Big Bird from Sesame Street). Then, in 1998 - the peak of the dot com company boom - eBay became big business, and the investment in Internet businesses at the time allowed it to bring in senior managers and business strategists, who took in public on the stock market. It began to encourage people to trade more than only collectibles, and rapidly morphed into a huge site on which you could trade anything, big or little. Different from the other websites, though, eBay endured the final stage of the bonanza, and is still going strong nowadays.

1999 saw eBay go worldwide, unveiling sites in the UK, Australia and Germany. eBay purchased half.com, an Amazon-like internet retailer, in the year 2000 - the same year it inaugurated Buy it Now - and bought PayPal, an internet payment service, in 2002.

Pierre Omidyar has now cleared an estimated $3 billion from eBay, and still serves as Chairman of the Board.There are now literally millions of items bought and sold every day on eBay, all over the world. For every $100 spent online worldwide, it is estimated that $14 is spent on eBay - that's a lot of laser pointers.

The fact that these PowerSellers are around gives you some idea of the money possibilities on Ebay. Most of the power sellers never intended to even launch a commercial enterprise on eBay - they merely began trading a couple of items, and then continued. There are quite a lot of people whose full-time job is merchandising items on eBay, and some of them have been working at it for years now. Can you believe that? Once they've purchased the merchandise, everything else is basically pure profit for these people - they don't need to spend money on any business premises, employees, or anything else. There are multi-million dollar commercial enterprises earning less in genuine net income than eBay PowerSellers do.

Even if you do not want to resign from your line of work and really try for it, you can use all the same eBay to make a substantial supplemental income. You can package customer purchases during the week and bring them to the local post office for shipping each Saturday. There are few other things you could be doing with your free time that have anywhere close to that kind of money-making potential.

What's more, eBay could care less about who you are, where you reside, or if you are good-looking. Some PowerSellers are very old, or very young. Some live out in very rural areas where selling on eBay is one of the few options to agriculture or being very impoverished. eBay levels the playing field and removes the roadblocks to earning that the real world constantly erects. There's no job interview and no traveling back and forth involved - if you can post items on the site, you can make it happen!

Put it this way: if you know where to acquire something fairly inexpensively that you could sell, then you can sell it on eBay - and because you can always get discount rates for mass purchases at wholesale, that's not hard. Purchase a job lot of something in-demand inexpensively, sell it on eBay, and you are earning cash already, with no set-up expenses.

If you wish to try it out before you commit to really purchasing anything, then you can just sell unwanted objects that you've got sitting around in the home. Explore that closet full of items that you never use, and you'll in all likelihood find you've got a couple of hundred bucks' worth of stuff lying around in there! This is the beauty of eBay: there is always someone who wants what you're selling, whatever it might be, and because they have come searching you out, you don't even need to do anything to get them to buy it.

Please visit http://homebizhelper.com and http://www.computingninternet.com/

About the Author

Dottye is an Educational Consultant. Please visit http://homebizhelper.com and http://www.computingninternet.com/

This Thursday is Thanksgiving in the United States.  If you’re traveling, please do so safely.  And especially with all of the market turmoil and uncertainty, please do what you can to focus on what you have and be thankful for it.

Here are this week’s posts selected for the Carnival of Debt Reduction, starting with the earliest submission:

• Tough Money Love has some choice words for credit card issuers and some debtors who would benefit from a bailout.
• Money Help and Tips comes through with a quickie on how not to abuse your credit cards.
• Destroy Debt lists over six dozen ways to save money while saving the environment.
• Financial Wellness Project wrote a guest post over at Clever Dude reviewing You’re Broke Because You Want To Be by Larry Winget and highlighting twelve rules of debt elimination.
• Deposit Accounts Blog gives a few ways to save money by trimming household expenses.
• Master Your Card shares six things she’s learned from being in debt.
• Economic Crunch played a high-stakes salary-negotiation game that paid off handsomely toward her debt reduction.
• Fix My Personal Finance has some thoughts on how to boost savings.
• Studenomics explains an interesting debt-ranking system.
• Bible Money Matters illustrates a way to control spending using the envelope system.
• Debt Reduction Formula has some reflections on money and debt.
• Budgets Are Sexy asks if you really have to use your credit card for things.
• Debt Free Destiny asks how freely your cash is flowing.
• Credit Card Assist lists the top three ways to build better credit.
• Finance Tips 101 asks if you’ve considered debt consolidation.
• Discover Debt Freedom gives a few suggestions for rescuing your finances.
• Digerati Life asks how the economy has affected how you save money.
• Broke Grad Student lists eight resources for finding college scholarships.
• The Smarter Wallet gives a number of frugal tips for clothes-shopping online.
• Saving Advice rattles off a number of ways to feel better without spending a lot of money.
• Credit Addict explains how to evaluate balance transfer credit card offers.
• The Happy Rock reviews Dave Ramsey’s Baby Steps.

Next week we have Green Panda Treehouse hosting.  Have a great week!

With the whole mortgage meltdown and ensuing credit crisis, there is plenty of blame to go around. Even with shady lenders, complex loans, and loose lending requirements, most of this could have been avoided if people took the time to read, and more importantly, understand what they were signing. Most people simply don’t want to spend the time to sit there and read all of the fine print and those who do actually read it may not fully understand everything.

Don’t Be Embarrassed if You Don’t Understand

When someone explains something technical or difficult to grasp and then asks, “Do you understand?”, the response is typically “yes.” Either it is because you want to get through the process quickly, you don’t think it is very important, or you don’t want to feel embarrassed that you don’t understand a concept. This could end up being a costly mistake. If you don’t understand something or if you see conflicting information, it is in your best interest to stop and ask questions. It’s much easier to take a moment before signing to get clarification than to learn the hard way at some point in the future.

Information Included in the Fine Print

Most people are concerned with a few key areas of a loan such interest rate and length of the loan, but it is within the fine print of the promissory note or security agreement that contains the information that can really cost you money. The most common information included throughout the text will include:

• The promise you make to pay the lender a certain amount of money plus the agreed to interest rate.
• Whether the interest rate is fixed or variable — if variable, when does the rate change and by how much.
• The payment schedule.
• Charges for late payments.
• Any applicable grace period.
• If the loan can be paid off early and if any penalties are incurred for doing so.
• Whether or not security or collateral is required.
• Whether or not the loan can be extended.
• What happens if you default.
• What happens if you pay with a bad check.
• Can the lender take money from other accounts you may have with them to repay the loan.
• Who pays legal fees and collection costs.

Don’t Sign Anything Until You Completely Understand

While it pays to make sure you get a good interest rate with good terms, it is equally important to make sure you understand everything about the loan even if you don’t think it will ever apply to you. You have nobody to blame but yourself if you make a late payment and find out there is a $40 late fee. It would come as no surprise if you took the time to understand what you agreed to. In the event of a problem with your account, ignorance is not a defense. It may seem like a waste of time to spend an extra ten or fifteen minutes to read multiple pages of small text, but it could end up saving you money or problems somewhere down the line.

And finally, don’t feel pressured by the person sitting across the table who’s urging you to sign. Not everyone is out there trying to trick you into a shady loan, but you shouldn’t feel rushed if they are just trying to quickly get you through the process. They can wait, and you should take as much time as you need. If they brush off certain sections saying it isn’t important, just explain that you want to take a moment to look it over. A couple extra minutes will ensure that you aren’t missing some key terms on the loan and help you completely understand what to expect, and what the consequences will be if something goes wrong.

Read the Fine Print Before Signing Any Loan - You Might be Surprised at What’s in There

Funny stuff by the folks over at Salon.com:

Well, funny if it weren't so true!

Frugality is quickly becoming a buzzword in America with people’s retirement dreams taking a bit of a detour into a ravine — and right before the holidays, too.  How very inconsiderate.

Here are a few tips and tricks for descroogifying what might be more modest holidays:

• Check out the library and paw through some December family-oriented magazines. Ones like Redbook, Family Circle, and Ladies Home Journal regularly have articles with lists of frugal tips, especially around the holidays.  These magazines also have the advantage that the tips don’t get terribly outdated the way some other magazines might.
• Hit thrift stores for little kids’ toys. (And for big people’s toys, too.)  When giving a gift, consider whether “new” can be extended to include “new to them.”  Antibacterial soap and water for plastics, or a gentle wash for cloth, can do wonders.
• Resist the temptation to buy inflatable holiday lawn ornaments. I’ve long thought that big huge inflatable snow globes and the like are tacky, and if you don’t have them, consider yourself all the richer.  (As will I.)
• Put up a website with pictures instead of sending out Christmas cards. If you already have your own web space, most hosting providers will allow you to password-protect a directory.  Then you can e-mail the link, and the username/password, to your friends and family.  Well, you can e-mail it to most of your friends and family, but your 97-year-old great uncle might still appreciate the snail mail.  If you don’t have a website or if this is too much trouble, then DropShots.com lets you upload up to 500 pictures and 20 two-minute videos for free, without ads, and lets you decide who you want to see them.
• Try your hand at cinnamon-applesauce ornaments. My wife tried some of the recipes over at HandMadeCountry.com and found the second recipe to work pretty well.  You might be the only one in your circle of friends who does this, and they’re inexpensive (especially if you get the cinnamon at Costco).
• Speaking of cinnamon, it’s really good for you, and it adds flavor to a number of ordinary drinks.  Sprinkle a little bit of cinnamon on top of the coffee before brewing.  Or, warm some apple cider on the stove with a cinnamon stick.
• Attend a school holiday chorus/band concert. The music is better than you might think.  If the rehearsals are anything like when I was in high school, there’s probably at least 30 hours of solid preparation that goes into these concerts from the beginning of the year to December.  There’s at least a little bit of magic that happens during that time.  And you can’t beat the price.
• If you’re going to give money as a gift, you might be able to get by with giving a little less for the same “wow” factor if you give shiny Presidential dollar coins instead of regular bills. (One for each President issued so far only sets you back eight bucks right now!)  Or, if you’re a really big spender, a full assortment of state quarters is only $12.50!
• If you’re after one of those “hot, must-have” toys that you’ll fight tooth and nail for, stop. Take a deep breath, and step away from the shopping cart.  You might even consider not going on eBay, because there will be opportunities for you to pay way more than retail for it.  (I did this with Wii Fit but I felt I had a better excuse.)  Instead offer it to your kids after Christmas when there will probably be plenty of them around.  Maybe wrap a picture of it with a note.
• Through all of this, remember that the greatest gift of all is freely given for anyone who asks for it.

(Photo credit: shutter.chick)

I guess by now nobody cares if I am around … so this would be just to motivate myself to write a little more.

Looks like the site was down for a couple of months after some screwup with Wordpress/Hostmonster/Upgrade/That-Kind-of-Crap; so it took quite some efforts to get it back on track. Now, it looks all messed up so it will be a while before it looks pretty again.

Hoping to see some old friends again.

Although many small businesses begin with only one or two members of staff - the founders - most growing businesses quickly recognise the need to create a larger team. Not only can this spread the workload but a well-selected team can bring in more energy, creativity, drive and knowledge than the founder alone might possess. A small, closely-knit, highly motivated team can be an unstoppable driving force.

The authors of The Beermat Entrepreneur call the members of this core team 'cornerstones'. They suggest that the ideal mix is one entrepreneur providing strong leadership, surrounded by four 'cornerstones' - one for sale, one for finance, one for product development and one for project delivery and customer service. In real terms, most small businesses cannot afford such a big team, and don't really need it to begin with. However, even bringing one other person in to the business can make a huge difference to its success during the first year or so.

In many cases, the original team will be composed of the founder, or founders, and one or two relatives or friends who have been roped in along the way. This works well if everyone is committed to the success of the business and prepared to work hard. As we've seen the early days of a business are defined by long hours and a painfully demanding workload - there is no room for the half-hearted or unenthusiastic. Not only will they not pull their weight, but they will sap everyone else's enthusiasm too.

I've heard it said 'never work with friends or relatives' and it's true that in some cases this leads to disaster. However, a team who like each other - and have a friendship beyond the business - can also be extremely efficient and powerful.

Jude, Business adviser

Remember that just because you enjoy spending time with someone socially it doesn't mean you will like working with them. Ask yourself what they would be like to work with. Are they hardworking? Enthusiastic? What do they have to offer your business? Try to find people whose skills compliment yours, who can bring something to the business that fills 'gaps'. For instance, if you are fantastic on the finances but weak on marketing, you need to find someone who can bring something extra to the marketing side of the business.

A recent London Business School survey of CEOs found that they considered the major factor that had contributed to the success of their businesses was 'selecting the right people with good attitudes who are loyal to the company and who want to excel in their careers'.

Defining Roles

Whether you decide to go into business with others as equals or you employ them as part of your original team, it is very important to define roles carefully. Everyone needs to know what is expected of them and where the boundaries of their 'area' lie. In businesses with two or more equal partners a lack of clarity about roles can be a major source of conflict, taking up valuable time that might be better spent focused on other aspects of the business. If you have a management team, you need to give them space to fulfil their roles and feel that their contribution is valued. This doesn't mean handing over control, final decisions will still rest with you (or if they don't you need to be clear about exactly who is the boss - only one person should take this position or squabbling and infighting can result).

Consider the following key roles and divide them between your core team. You should all be clear on who is going to take each role.

Business leader - who takes the final decisions? In other words, the boss.

Sales person - who sells to your customers? Identifies customers and carries out your customer research?

Finance person - who manages the money and the associated administrative work?

Supply management - who locates suppliers, negotiates with them and maintains adequate supply levels.

Core business - who does the core tasks of your business, by which we mean the things that your business is actually about? This might mean making a product, providing a service or something else.

Marketing and PR person - who promotes your business to potential customers and raises the profile of your business?

Some of these roles overlap, so good communication is also of key importance to your business.

Importance of Role Clarification

People do either one of two things in a business - they either add value or they add cost. There are no grey areas.

One of the most important ways to ensure that your core team members are all adding value is to help them clarify their roles.

There are a number of different aspects to role clarification:

Prescribed role - This is what the business uses to set down the individual's overall goals and objectives. It is usually called a 'job description' or something similar and it sets out the person's responsibilities, authority, and key tasks, as well as their position in the business hierarchy.

While this is a useful starting point, it does not take account of personal differences and changes in circumstances such as growth of the business or the need to cover weak performances by others.

Personalised role - the prescribed role is only part of the picture. These are factors internal to the individual which will affect the way he or she performs in the role.

This includes their abilities, skills and strengths, as well as their expectations of the role, their assumptions (about the role, the business, the sector. etc.), their values and ambitions.

Perceived role - the perceptions and expectations of others in the business will have an impact on the individual. For example, they will have their own views on what the priorities of the role should be as well as the boundaries: 'I don't think Sales Managers should...'; 'I expect you to...' These can limit or restrict the way a person performs, but if expectations are high and positive they can raise the person's game, enabling them to perform to their full potential within their current role.

From the Business Team at Learning Curve; offering a range of unique development programmes for small businesses.

About the Author

Director of Studies at Learning Curve Home Study, one of the UK's leading distance learning providers. Learning Curve offers home study courses in a range of subjects, including Business development courses.