(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.

(Photo credit: net efekt)

Welcome to the Carnival of Personal Finance!  It’s officially Cyber Monday 2008, the online doppelgaenger to Black Friday.  This term was coined by the American Retail Federation three years ago after a majority of online retailers saw their sales go up the Monday after Thanksgiving.  Snopes found that the busiest online shopping day is not Cyber Monday but a couple of weeks after.  Regardless of whether online shoppers are only lukewarm about today, one thing’s for sure: there’s way less danger of getting injured by an online shopping cart.

So enjoy the Carnival, and head over to Amazon or eBay with full assurance that the Internet will completely protect you from e-bruising by other online shoppers!

Posts on Budgeting

• Mighty Bargain Hunter gives ways to save on food, clothing, and shelter.
• Canadian Dream: Free at 45 reveals his spending weakness.
• Studenomics asks if you’re cash-strapped this holiday season.
• M is for Money talks about zero-based budgeting.
• Green Panda Treehouse asks a hard question: “Do you pay your mortgage or your medical bills?”
• Penny Jobs asks a good question for tough times: “What can I cut back on?“

Posts on Career

• Economic Crunch runs through a checklist for taking advantage of benefits on a new job.  (These things can be a nice supplement to your salary.)
• Monagomoney offers parallel advice with five things to do if you get laid off.  (Hopefully you’re not needing both this advice and the previous advice in the same day.)
• Dog Ate My Finances (ha!) will take Common Sense for $200, Alex.  (Note:  Careful punctuation is crucial in this blog’s tagline.  Imagine, if you will, a misplaced colon: “Mid twenties.  Big salary.  Paying for some mistakes:  a wedding, and life.”  The name would then have to be changed to Alimony Ate My Finances.)
• Beating Broke asks: “What is freedom worth?“

Posts on Credit and Debt

• Free From Broke chats about medical treatment and how it can affect your credit.  (Especially if the costs are big.)
• Credit Toolbox discusses some aspects of refinancing consumer debt.
• Blueprint for Financial Prosperity has a list of 0% balance transfer offers.  (Fifty different offers.  You should be able to do a 0% transfer of the national debt with this volume of plastic.)
• Ask Mr. Credit Card: “Should teenagers have credit cards?”
• Discover Debt Freedom has some advice for someone trying to get out of debt for the first time.
• Single Guy Money has a credit score checkup.
• My Family’s Money talks about two states’ propositions on payday loans.
• Destroy Debt discusses debt settlement and some factors to consider before doing it.
• Think Your Way To Wealth gives a closer look at the Baby Steps plan.
• Debt Goal tells how to say “no” to your children this holiday season correctly.

Posts on The Economy

• Wide Open Wallet has some ideas as to what the government should be doing during the recession.  (I have my own thoughts but I like to keep this blog clean.)
• Everyday Finance – the Blog of a Thousand Tabs — has some choice words to say about repricing employee stock options.  (Ahh, stock options.  What a cool dream.)
• Amateur Asset Allocator postulates on what a privatized social security system would look like.
• Funny about Money observes that the Dow is up, in spite of it all.  (Yeah, I don’t buy it either.  The market’s always right, but remember, it’s still down over 5,000 points from its high.)
• Frugal in the Fruitlands reviews The Two-Income Trap.
• The Sun’s Financial Diary reports on the extent of the malaise in the banking industry.
• Earn What You Spend discusses some of the relevant financial news as the incoming administration gears up.
• No Credit Needed questions whether spending patterns are in line with the direction the economy is heading.
• Brip Blap gives a superb answer to the question: “Do you need a bailout?“

Posts on Finance

• The Strump wonders why we don’t like to talk about money.  (It’s dangerous, especially if you were wise enough to sell your stocks a while back.)
• InsureBlog discusses discounts and medical plans.
• Accumulating Money talks about Social Security insurance.
• Harvesting Dollars suggests making this year’s bonus season different.  (Assuming you get a bonus, of course.)

Posts on Frugality

• Just Thrive explains three rules for giving the perfect gift without necessarily spending a lot of money.  (Money is tight, so make the most out of your gift-giving.)
• Debt Free Saver has a very simple suggestion for holiday gift-giving.  (It gets back to the basic of gift-giving!)
• Money Ning asks whether we always think that saving money is worth it.
• Monroe on a Budget rattles off some practical Christmas gift ideas.
• The Smarter Wallet has some tips for the early-bird traveler.
• Online Saving Blog tells how to avoid the Black Friday hype.
• Uncommon Cents discusses personal opportunity cost.

Posts on Investing

• Investing School explains the important aspects of bond funds.  (I love how he reminds us that even US Treasuries can default. I happen to agree, but rates will go way up before they do that.)
• Crash Market Stocks goes through the basics of buying and selling options contracts.
• The Financial Blogger wonders if the Dogs of the Dow have had their day.
• Intelligent Speculator questions whether corporate bonds are really safer investments.  (Than, say, Forever Stamps.)
• Dividends4Life discusses how to manage your dividend portfolio in a downturn.
• Four Pillars discusses whether we’ve reached the death of index investing.
• ABCs of Investing gives a quick tutorial on index funds.
• Dividend Growth Investor discusses why companies should pay dividends.
• Greener Pastures talks about the Standard & Poor’s Aristocrat Indexes.
• Monevator shows how to get rich by playing a video game.  (Nice spin on things.)
• Cash Money Life recommends making some year-end retirement account moves.
• The Dividend Guy sold some dividend cut stocks.
• The Dough Roller asks if you follow the 50-50 rule of mutual fund investing.  (Click to see what the fifties are.)
• No Debt Plan continues the “No Debt Plan” series with a post on investing for retirement.  (Very nice post.)

Posts on Money Management

• Crackerjack Greenback questions whether you can really trust your financial adviser.  (It makes good sense to follow the money.)
• Smart Money Daily takes a look at whether winning the lottery is all it’s cracked up to be.  (After reading the post, I’ll probably never buy a lottery ticket.)
• About.com Financial Software lists eight good iGoogle financial gadgets.
• Wisdom Journal lays out ten economic truths we cannot ignore.
• Christian Personal Finance advocates letting your finances see the light of day.
• Sound Money Matters asks: “To gift card, or not to gift card.“  (That is the question.)
• American Consumer News doesn’t buy the two months’ salary thing.  (I don’t either.  But if I were a high-powered CEO with a yearly salary of $1, well … “Here’s your Secret Decoder Ring.  Will you marry me?”)
• My Wealth Builder lists a few personal finance strategies that have helped during times of economic crisis.

Posts on Real Estate

• Living After Foreclosure has some suggestions if you’re facing foreclosure.
• Insurance Toolbox comes through with seven practical tips for reducing your homeowner’s insurance expense.  (Some of these tips have other good side-effects in addition to lowering your insurance bill.)
• Growing Money Blog posts a rental property update.

Posts on Saving and Taxes

• Stumble Forward gives five tips to creating a stellar emergency fund.  (Covers the basics well.)
• Blogging Banks posts the best CD rates around.
• Dollar Frugal is sounding the charge and telling people to continue hypermiling.  (Great advice.  Gas prices are low because of the recession.  They’re still going to go way up as supply crunches hit.)
• The Happy Rock pits Black Friday against Buy Nothing Day.
• Deposit Accounts talks about flexible spending accounts.
• Money Smart Life compares a couple of online bank accounts.
• Saving To Invest has some end-of-year tax tips, among other things.  (Gee, I can’t imagine anyone would have capital losses this year to deduct, as kind as the market’s been to people, but just in case you do …)
• Online Banking Blog shows how to choose the best bank account.

Other Posts

• Happiness is Better lists three keys to banana-free living.  (Sounds a-peeling.)
• Curious Cat discusses a financial Thanksgiving.
• Free Money Finance asks if you’re using your dollar coins.  (All the time, man!)
• Chief Family Officer has an emergency preparedness checklist for personal finance matters.
• Digerati Life wonders if there’s any good time to start a business.
• Budgets Are Sexy is uber-tempted by sales e-mails.
• Living Almost Large asks if one should feel guilty for success.  (Absolutely not!)
• Prime Time Money gives six ways to argue less about money.

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.

Image credit: TheTruthAbout

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

Who’s to blame for the worst economic crisis since the Great Depression?

Warning… long rant ahead.

Have you heard the latest bad joke around? Okay not this bailout crisis joke I wrote about a week or so ago but the one on how we’re socializing our financial markets by making the taxpayers bail out all our financial institutions. As someone put it, “this is a form of wealth distribution alright, the government robbing from the poor to give to the rich….”.

So when will this nightmare of a crisis end? Sure we’re shoring up our failing banks and institutions right now, and even possibly certain vital industries that are the heart and pulse of our nation. But, I also see the flip-side, which is the fact that we (and our kids, and maybe even our grandkids) will be paying off for this till kingdom come, with the whole thing financed by our debt to foreign interests (e.g. Chinese).

This soap opera can’t be without its sorry cast of characters.

Golden Sach’s Bailout Man: Henry Paulson and George W. Bush, by Buckfush

Big 3 take private jets to grovel for cash, by Daily News

Capitalism Gone Awry

I wonder: how naive have I been? I am big on capitalism and believe wholeheartedly in rewarding anyone for the work they’ve done and value they’ve produced. I’ve always been of the mind that, if a CEO does well by his company and makes me happy as a stockholder, I have no qualms in approving a commensurate pay package for the geezer.

I’ve always been a proponent of self-regulation and a laissez faire economy, but this very thing has led to the disasters we’re seeing today. Now with the government sweeping in to save “the big guys” from themselves and their gross mistakes, I see that apparently, self-accountability is optional in this free market. Very interesting what this blog has to say:

Now consider: finance is a necessary function, but is represents a tax, a drain on the productive economy, just as defense and lawyers do. It is ironic that free market fundamentalists have so vociferously argued for unfettered markets, without understanding (or perhaps understanding all too well) that the house always wins.

The whole crisis has caused a very large swing from one extreme to another, the moving pendulum leaving behind much collateral damage: credit’s gone from very loose to extremely tight overnight.

Some people who had access to a lot of credit will correctly have a lot less, and that on dearer terms. But there are also perfectly worthwhile businesses and individuals who are also caught in the meat grinder of indiscriminate reduction of loan balances. Times are bad, and any efforts to extract more revenues from customers, even if it is blood from a turnip, or worse, even if it puts a viable business under, is warranted.

Silly me to have been so gullible, as I now stand confused about what should be done and how the economy should be run. It doesn’t help that I keep reading stuff like this to feed my migraines and sour stomach bouts.

How This Economic Crisis Is Breaking Financial Rules

What stance do I take now, as a die-hard pro-business supporter? I had placed my faith in the “powers that be” and didn’t think I’d ever see these levels of corruption, unchecked greed and blatant mismanagement in a first world country on this grand a scale (yes, I say this as someone who’s no stranger to the machinations of the third world, where corrupt ineptitude is rampant). This stuff happens, sure enough, but it happens in another world, and under the covers.

But there’s no hiding the ugly anymore. All I can see now is just how the ruling class has done a number on the working masses. And for the millions of people who followed the financial rule book throughout their lives to meet a horrible end to their futures because of the incompetent, morally degenerate few — well, I can say I’m beyond disappointed, and have crossed the line to feeling outrage and disgust.

Yes, this crisis is breaking all sorts of rules, including those I’d consider as long-standing successful personal financial tenets. Responsible approaches to personal finance don’t have a chance against a crisis of tsunamic proportions:

So let’s see — doing the right thing by scrimping, saving, investing, diversifying, doing proper asset allocation, avoiding market timing, indexing, and hedging against inflation through equities, even doing your job well will no longer guarantee you a splendid, worry-free financial future. Not when a “once in a century financial event” can just come by and rob you off the stuff you worked so hard for; not when someone “up there” can change the rules for you, just like that.

I didn’t necessarily see it coming, but some of my readers here have: I see just how observant readers have been, as they’ve shared their insights on the causes and consequences of the subprime mortgage financial crisis, the pros and cons of financial bailouts, and the relevance of market timing during a stock market bear and the current investment climate.

The Economic Crisis Calls For Faith: Do You Have Any To Spare?

Perhaps I’ve placed far too much faith in the integrity of our political and business leaders and trends in modern history to believe that our financial system was strong enough (and people were smart and honest enough) to absorb any shakeups, shocks and imbalances that happen. I still have hope, but recent events continually call to question my position in this matter.

Not long ago, I had asked: who’s to blame for the subprime mortgage mess? I said then that everyone here had a hand in this (from the mortgage lenders to the developers to the Fed to ignorant homeowners), but in reality, I’m now seeing where the bulk of that blame should go. It should be clear by now who should bear the brunt of your harsh judgment: follow the money.

Sure we (as the little people) can’t really do much about this (except whine, rant and call the villains out), but with more discussion, we can spread awareness of these ridiculous affairs. What I got out of this is that there’s little out there we can count on and few people we can trust when it comes to our finances. A sobering thought. Do you think there are really any lessons and takeaways here for the future? Do we even have much of a future the way it’s been mortgaged?

I welcome your thoughts on this matter. Fire away!

This is a post from The Digerati Life.

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Additional casualties and signs of economic recession: laid off bloggers and your favorite web sites for sale!

Do you see what’s in store for you next year? Well, I’ve peeked at my crystal ball and can see the same thing you’re all seeing, an ugly 2009 as the economy continues to contract. Still no relief in sight (or maybe just a little, with Obama stepping in with a pep talk and an action plan).

Still, the tremors reverberate in the blogosphere.

More and more bloggers are reporting that they’ve been laid off, or are afraid that they will be. Some of the ones I know:

• Trent Lapinski’s Blog: Dear Barak Obama, I?m 22 I Just Got Laid Off, and I Can?t Afford College - Please Help (ugh! This was hard to read.)
• Amateur Asset Allocator: I Was Laid Off Yesterday
• Finance Your Life: Job Security: I Am Safe….Right?
• Shaun’s Real Estate Adventures: This is Why I Want Passive Income
• The Smart Passive Income Blog: Nevermind. I Just Got Laid Off

Judging by the dates on these posts, changes have been coming fast and quick! I’ve also mentioned that TechCrunch has this layoff tracker while Gawker (the online media name that bloggers look up to ) is selling off The Consumerist, and Valleywag (what!? one less Silicon Valley blog?) and trimming its staff. You can see how the online world has been taking its hits.

The trends have been reflecting reality for a while now, so when are they announcing that we’re officially in the dog house?

I’ve also talked about how we’re coping with the recession in Silicon Valley, but whatever else I’ve got to say about this can fill a book. Anyway, it’s been the subject of deep conversation between me and my close friends and family these past few weeks.

More Signs of Economic Recession Where I Live

Just to see how widespread the financial pain is, I’ve polled the people I know for their stories and concerns — here are just a few:

• A couple of people I know have been laid off in the last two weeks. These are people who work at smaller companies that are now embarking on cost cutting measures. With the VC spigot closing off, startups that aren’t solvent will be forced to cut back heavily or close down completely. Startups are living on borrowed time. These events are reminiscent of massive layoffs in Silicon Valley in 2000 during the tech bust, so it’s not new to me. I should get used to this happening every 5 to 8 years, I guess.
• Friends of mine who are consultants are experiencing delays in payments. Uh oh. They’ve done the work, but there’s some worry they’ll end up on a long list of creditors waiting to get paid.
• Too close to home! I never thought it would happen, but someone I know pretty well actually is in the process of losing their house. The story is complicated — he was a victim of a drawn out scam that got exposed by the housing downturn. And I’ve heard rumors of acquaintances going on short sales on expensive homes they purchased only a few years ago (and which I had the pleasure of visiting during house-warming parties galore way back when).
• I heard about how there are scores of luxury cars just sitting on Long Beach right now, with no takers. I got this story from a guy who’s well insulated from the crisis because he’s sitting on a huge pile of cash (he’s very conservative with his savings). Yet, he’s concerned about the effect of currency exchange on his international business.
• Some of us self-employed folks are seriously thinking of joining the many out there who’re already chasing what few jobs are around. I read that Cisco’s job listings have dropped by 93% in one week, from many thousands of openings to a trickle of a few hundred.
• I miss “happy” news. Could this be capitulation? Or close?

Break Open Your Emergency Funds

For many whose lives have been viciously upturned by the forces of the economy, it sure feels that this recession isn’t “normal”. But the reality is that this is probably what a “true” recession feels like. The waves of an economic downturn are much like dealing with the effects of an impending tornado. The tornado spares some while it devastates others. You just pray it doesn’t hit your household when it comes, although you can expect it to do a number on your landscape.

This has become a time of emergency for many. Our situation clearly emphasizes the importance of having enough insurance to cover ourselves when such a “disaster” hits — and when I mean insurance, I am referring to emergency funds and enough liquidity to tide you over during the storm. Does this mean we should have at least 1 years’ worth of expenses in cash? Maybe so, especially since nasty recessions can last that long! If you’ve got unemployment benefits covering you for 6 to 9 months plus a one year stash of cash, you could get through this nail-biting ride.

So let’s hunker down in the basement and see if we can ignore the angry winds out there for now. I’m doing it by starting the ball rolling on some portfolio rebalancing efforts (gah!) and selling off investment losers.

So let’s check what else is on the minds of our favorite financial bloggers, shall we?

• Consumerism Commentary: Take Control of Your Finances Part 5: Build A Better Budget
• Five Cent Nickel: Ted Turner on The Economy
• Free Money Finance: Is Your 401k Dying?
• Credit Karma: Are You Financially Prepared For Disaster?
• Rich Credit Debt Loan: Getting Rich By Leveraging Debt
• Lazy Man and Money: Oil’s Well That Ends Well
• Brip Blap: The Results Oriented Work Environment
• Frugal Dad: Looking For Happiness In All The Wrong Places
• Gen X Finance: Is an Extended Warranty on a Used Car Worth It? The Good, Bad, and Ugly of These Service Contracts
• Million Dollar Journey: Common Job Interview Questions
• One Mint: Can You Take A Loan On A Simple IRA?
• My Simpler Life: Fitting In Household Chores
• The Personal Financier: Thoughts on Citi in Trouble, Market Swings, Stock Charts

Notable Mentions Around The Web

• MSN Money Blog mentions our post on 10 signs of a stock market bottom.
• WSJ’s The Wallet Blog mentions our post on last minute gift ideas.

Recent Carnivals

• Carnival of Financial Planning
• Work At Home Blog Carnival
• Carnival of The Vanities
• Money Hacks Carnival

This is a post from The Digerati Life.

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Those who run real estate investment clubs have a big challenge in lining up speakers for each meeting.  Clubs do not usually have the kind of budget that would allow them to pay for speakers, therefore they need to do their best to locate those that will speak for free.  This invariably results in the talk being given by someone who has a specific agenda or something to sell.  This is not necessarily a bad thing, you just need to keep the speakers ultimate motivation in mind when you listen to the spiel.

Some of these speakers are quite good and their knowledge is obvious.  On the other hand, some of the speakers leave you scratching your head and wondering if they have ever owned an investment property.  Investing veterans have little difficulty in separating the fakes from those who are the real deal.  Novice investors may mistakenly assume that if someone is speaking to a group he must know something.  Hopefully they will learn before they are burned by one of these phonies. 

 My primary purpose for attending monthly club meetings is for the networking and resulting connections ( see: Getting the Most From Your Real Estate Club ), however I do enjoy hearing from good presenters. My local real estate club had two very well qualified speakers at a couple of recent meetings.  While both were very obviously qualified to speak about real estate investing, their styles and agendas were a world apart.  

 Guru #1

At our May 2008 club meeting we had a speaker who specialized in foreclosures.  Certainly a timely topic and on that I was looking to learn more about.  I had seen this speaker once before and knew that he was a good presenter and very knowledgeable.  After introducing himself and providing his background, he openly stated his agenda.  He was not there to sell books, tapes or home-study courses, in fact he didn’t have any of that.  The business model for his company was to purchase bank REO (foreclosures) properties in bulk.  He then sold these properties as-is or after light rehab to investors at wholesale prices.  To do that he needed two things, properties to buy from banks and investors to sell them to.

What he was pitching was a two day seminar on how to locate, buy and finance the acquisition of these properties.  He was charging $1800 for the seminar with the guarantee that he would refund your money after the first day if you didn’t feel it was worth it.  He then proceeded to spend the next hour sharing some of his knowledge of the subject.  He was truly impressive and it was a great example of what you would get in his workshop.  He had over twenty people sign up and most of them were veteran investors who are not easily impressed.

 Guru #2

At our most recent club meeting we had another speaker with impressive credentials.  He is currently featured on one the house flipping shows and has a real estate company on the east coast.  The club heavily promoted the meeting because they do not usually have a name speaker and the resulting attendance was much larger than normal.  Many of the regular meeting segments were cut short to allow this speaker to have as much time as possible.

This speaker had an array of tapes and course material displayed, so his agenda was obvious to anyone who was paying attention.  He began his talk with his background in real estate and talked about all of the mistakes he made when he began.  He kept telling us that he was going to teach us how to do this, that, and the other thing during his talk.  I kept waiting for him to actually “teach” something but all he really did was talk about what he was going to tell us.

As the talk progressed it was laced with sales pitches for a computer program, home-study courses and his five-day boot camp.  Some of the pitches were very subtle while others were blatant commercials.  After 90 minutes he closed with a final pitch for his boot camp.  The regular price was $5,000, but is you signed up now it was only $2,497.  But wait, there’s more! He would include a $500 credit for your travel expenses and the first few people to sign up would receive the $2,000 computer program for $1!

A handful of people did sign up.  From what I saw they were newcomers to the club or novice investors.  None of the veterans were impressed enough to part with their cash. 

The Bottom Line

Both of the gurus were qualified to speak about real estate.  However their value was very different.  One was geared to marketing courses and boot camps to novice investors.  Those who sign up would most likely gain valuable knowledge, but would it really be worth the price?  The second guru was targeting experienced investors with a desire to participate in the foreclosure market.  I spoke to several of the attendees who agreed that there was definite value, but it was not for everyone.

If you are ever inclined to sign up for some gurus course, do so with your eyes wide open.  Is the course geared to someone with your level of experience?  What do you hope to gain from the seminar or boot camp?  Will you be able to implement what you learn or are you just falling for a sales pitch from a smooth-talking speaker? Buyer beware.

The great difficulty in education is to get experience out of ideas.
George Santayana

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

A Tale of Two Real Estate Gurus

In a clear sign the federal government is far more concerned about the financial health of mortgage finance giants Fannie Mae and Freddie Mac than its public comments indicated as late as Friday, the U.S. government Sunday night announced what some are calling a “massive aid” package to the two shareholder owned and run companies officially cementing a government relationship that till now was only implied but never admitted to.
According to a Reuters dispatch, the plan, which will require swift approval from Congress, is designed to “head off a potential meltdown in financial markets.”

Here’s what the government is offering Fannie and Freddie:

1. Access to its emergency cash–the so-called discount window
2. A huge “temporary” increase in the line of credit available
3. The U.S. Treasury will, for the first time ever, purchase equity in both companies should it be needed
4. Investigation by the Securities and Exchange Commission to stop the spread of “false information.”

Both Fannie and Freddie are vital to the housing market–they buy mortgages from banks and other lenders and either keep them or repackage them into securities that are sold to investors.

“Welcome to the socialist state”

Strong words from some critics are already greeting the government plan. Josh Rosner, the managing director at Graham Fisher in New York told Reuters, “It’s outrageous. It’s offensive. Welcome to the socialist state. In capitalism, winners are supposed to reap rewards and losers are supposed to take losses for bad risk management. These are private companies.”

But others are deeply concerned that should Fannie and Freddie fail–though they both say they are well capitalized–the shockwaves would cause a financial meltdown world-wide.

The most troubling part of the government plan,perhaps, is the possibility the Treasury might buy equity in Fannie and Freddie. Some critics charge this could end up costing taxpayers enormous sums of money.

It will be interesting to see whether Wall Street gives the plan a thumbs up or thumbs down during Monday’s trading.

Here are 2 more articles worth reading:

• Government as the Big Lender
• Treasury Acts to Save Mortgage Giants

Advertisement: Real Estate Investing Forums Discuss real estate, network, or learn about investing on our forums!

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

FEDS BAIL OUT FANNIE AND FREDDIE; EMERGENCY MEASURES TAKEN

INDYMAC IS OFFICALLY CLOSED!!!

In the past minutes newswires around the country and world are now reporting that the Federal Government has shut down IndyMac Bank and has handed it to the FDIC (Federal Deposit Insurance Corp.) as conservator.

Couple the shut down with the Fannie Mae/Freddie Mac troubles, and we’re in for some really rocky waters next week. I’m willing to bet a lot of money that the announcement was held back from being made prior to the close of the stock market because of fears of a massive crash. Well . . . I think we’ll be seeing that happen this coming Monday!

Fasten your seat belts, people . . . we’re in for a ROCKY RIDE!

IndyMac Bank’s assets were seized by federal regulators on Friday after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures.

The bank is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said.

Yahoo Finance

In the biggest bank failure of the housing downturn to date, federal banking regulators today closed IndyMac Bank FSB, naming the Federal Deposit Insurance Corp. as conservator.

The FDIC said it will transfer insured deposits and “substantially all the assets” of IndyMac Bank, to a newly created successor, IndyMac Federal Bank, which will be operated by the FDIC.

Insured depositors and borrowers will automatically become customers of IndyMac Federal, FSB and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and writing checks. Depositors of IndyMac Federal Bank FSB will have no access to online and phone banking services this weekend, but will regain access to them on Monday.

Inman News

IndyMac Bancorp Inc. became the second-biggest federally insured financial company to fail today after a run by depositors left the California mortgage lender short on cash.

The Pasadena, California-based bank specialized in so-called Alt-A mortgages, which didn’t require borrowers to provide documentation on their incomes. Its home state has been among the hardest hit by foreclosures.

Bloomberg

What’s next? Anyone?

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

BREAKING: IndyMac Bank is Shut Down and Taken Over by Feds

The August 2008 issue of Consumer Reports — one of my favorite personal finance magazines — features two articles that may be of interest to readers of Get Rich Slowly. The first offers tips for cutting expenses. The second gives a brief overview of budgeting.

Cut your spending by $500 per month
The Consumer Reports Money Lab looked for easy ways for the average American to save money. They came up with six suggestions and estimated potential savings for the average consumer. Here are their suggestions (with links to relevant articles at GRS).

1. Find cheaper auto insurance. By shopping around, the average person can save $65 per month. Need help? Here are 10 expert tips for saving on car insurance.
2. Optimize your life insurance. Premiums have dropped in the past ten years, the article notes. It may be worth replacing an existing policy. Also, by adopting a healthier lifestyle, you can cut costs. Average savings? $110.
3. Shop smart for food. CR cites U.S. Department of Agriculture data indicating the average family of four can drop its grocery bill by nearly $200 per month though smarter shopping. We just discussed grocery shopping tips on Monday.
4. Stop paying bank fees. The average U.S. household pays more than $25 per month in bank fees. There’s no reason to do so. Learn how to avoid overdraft fees and get yourself a high-interest bank account.
5. Call up cell phone savings. According to the U.S. Bureau of Labor Statistics, the average family spends $90 on phone-related expenses. Consumer Reports suggests checking to be sure you’re not paying for too many minutes.
6. Pay off your credit card. If you can get out of debt, you’ll not only save on finance charges, but you’ll also free up the cash that was going to pay the principal. Estimated monthly savings: $65.

Consumer Reports also encourages readers to increase contributions to their 401(k) plans. This helps prepare for the future and reduces that tax bite today. You can read the entire article at the Consumer Reports web site.

Create a spending strategy
Last autumn, I shared my notion of a spending plan, which I called a “budget for non-budgeters”. Consumer Reports likes spending plans too:

That’s what a household budget really is — a plan to track your spending and keep it within boundaries. Done right, a budget lets you spend without guilt. Here we offer ways to make your budget — oops, spending plan — simple and painless.

Their advice will be familiar to long-time GRS readers:

• Set goals. I believe that the road to wealth is paved with goals. Consumer Reports believes that long-term goals help you achieve big things, while short-term goals keep you motivated.
• Track expenses. It doesn’t matter how you do it, but track your spending. You can use a notebook, computer software, or even online tools.
• Plan for surprises. If you haven’t already, start an emergency fund. Most experts advise saving three to six months of living expenses, but CR suggests a “personal escrow” approach instead.
• Set priorities. Know which bills get paid first. For most people, this means the big things like food and home. (If you pay yourself first, it may be your retirement.) Whatever’s left after your expenses is your discretionary money.

The full article includes tips on how to create a web-based spending plan. The rest of this month’s issue includes ratings of large kitchen appliances, tips on buying tickets to shows and ballgames, and a tests of two dozen running shoes. (They didn’t test the pair I bought last month, though.)

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Related Articles at Get Rich Slowly:

• The Consumer Reports Mother’s Day Gift Guide
• Credit Card Advice from Consumer Reports
• How to Drive a Great End-of-Summer New Car Deal
• 20 Free Ways to Save Energy
• Consumer Reports Auto Issue Round-Up: Top Picks for 2007

On Thursday I’ll be interviewing personal finance columnist Scott Burns. Burns may be best-known for his “Couch Potato” investment portfolio. He’s also the brains behind Asset Builder and the co-author of the new book Spend ‘Til the End, which explores the notion of “consumption smoothing”, or how to maintain a stable standard of living throughout your life. If you have you have personal finance questions you’d like for me to ask Burns, please let me know.

Meanwhile, here are a few recent personal finance articles from around the web.

First, Flexo at Consumerism Commentary believes that the idea of getting rich slowly may be a fallacy. Or does he? In “7 Ways to Lose Your Money”, he takes issue with a recent MSN article that promises seven ways to get rich a little more quickly. The problem? Flexo points out that these methods can also lead to financial ruin.

Meanwhile, Five Cent Nickel notes that cheap is not necessarily frugal. Quality may cost more initially, but in the long term, it usually pays for itself. (But don’t confuse quality with “name-brand” — they’re not necessarily the same.)

Jim at Blueprint for Financial Prosperity recently had his home’s roof replaced, and in the process learned some lessons about finding contractors. One of his tips? It’s not all about price. Kris and I have learned this lesson, too, over fifteen years of homeownership. For us, it’s more important to find quality workers than cheap workers. It’s a balance.

Finally, Love Food Hate Waste recently shared 5 sure-fire ways to save money on your food bill. The average household with children in the U.K. throws away £610 in food every year. This article offers tips for buying and storing food sensibly.

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Related Articles at Get Rich Slowly:

• Daily Links: PearBudget Edition
• Daily Links: E-Book Edition
• Money Hacks Now at Get Rich Slowly
• links for 2006-09-12
• Daily Roundup: Bringing Home the Bacon Edition

The month of May brought the largest number of visitors to date for Money Smart Life!  Many of those visitors came from sites in the the Money Writers and Money Blog networks whom you are familiar with via my weekly mentions.

I also wanted to say thanks to 10 other personal finance sites that sent over the most visitors by recommending an article on Money Smart Life.  I’ve listed each site and a recent article you might find interesting:

US News World Report (Kimberly Palmer) – Six Ways to Save Money on Vacation

MSN Money Blog (Donna Freedman) – Why is it so Easy to Throw Things Away?

The Simple Dollar – Financial Independence as a Goal

Frugal Dad – Used Car Buying for Teenagers

My Two Dollars – 29 Free or Low Cost Ways To Save Energy & Money

Frugal for Life – Slowing Down Takes Time

Not Made of Money – Four Tips to Saving Money on Home Improvement

Money Under 30 – How I Organize My Financial Records

Moolamy – Carnival of Personal Finance – Family Edition

Frugal Law Student – Save Time & Money by Working Out

With a divorce rate of around 50% and many people not marrying until they are in their thirties, it is surprising to find that there are still many women who aren't financially educated. Most of this can be traced back to two factors: upbringing at home and society. In both cases, boys have often been given much more training and many more resources than girls have and the effects are damaging women financially today as they face a world in which they have to take care of monetary issues on their own but have never developed the skills to do so.

The Safe, Secure 1950's

In the 1950's most women quickly married and settled down to raise families. Very few of them worked outside the home, and finances were handled by the men. It was a financially prosperous time and women were expected to focus on the home and child-rearing. This focus on home-making was passed on to daughters while sons were groomed to the "breadwinners" of the family.

The obvious separation between girls and boys activities also managed to keep girls "sheltered" from financial concerns. They weren't expected to pay for anything on a date and parents didn't often expect them to hold down jobs. Boys, on the other hand, were expected to get a job at a young age, even if it was merely a paper route. The expectation was that a young man needed to "take on some responsibility" and "contribute."

As the generation raised in the 1950's grew up and raised families of their own, they passed on the financial biases that had been instilled in them to their own children. Many of today's parents have made the same mistakes their own mothers and fathers did, ignoring the obvious need for women to understand and learn to handle their own finances in favor of hoping that their daughters wouldn't have to face the harsh financial facts of life.

The belief that men would take care of women's financial needs was so ingrained that many of the "big picture" financial lessons were overlooked. Women tended to learn how to shop for bargains at the grocery store, stretch the budget at the holidays and that was about it. More complex lessons such as long-term investments, retirement planning and stock portfolio development were not a part of the picture.

Boys learned how to manage their money, save for a rainy day, and make smart investments and a host of other financial strategies.

Play and School Contribute to Gender Gap

Interestingly, boys more than girls tend to develop habits that are more geared toward understanding numbers and how they relate to finances from a very young age. While girls tend to be "collectors," says Joline Godfrey, founder of Independent Means, "boys develop informal economies based on relative value from the age of six on while trading cards and other items. By the time boys start trading stocks and bonds, it's just another form of the game." Independent Means is a company which promotes economic independence and growth for girls and women aged 14 to 24.

Even in school settings, boys are rewarded more consistently for being risk-takers, and investing is often perceived as a risky venture. Girls aren't encouraged to take risks and aren't rewarded for these types of behaviors and instead are likely to be cautioned to be careful. When faced with the prospect of learning about investing in the stock market or learning about retirement options, these same girls - now women - are more fearful of making decisions and less sure of themselves in making choices for themselves.

Statistics Show Gender Bias

A recent survey showed some startling discrepancies even today between teenage boys and girls and how much education they have received in the very basics of finance. Some of the findings include:

* Many more teenage boys than girls report understanding of how to write a check and how a credit card works, including accrued interest. * Teenage girls are much more likely to be in debt than boys, with almost 50% reporting credit card debt as opposed to less than a quarter of teen boys having any debt. * Girls are more likely to report that learning about investing is boring, while boys report a real interest in learning about it. When asked to elaborate, girls often pointed out that this wasn't something they would be doing in the future, while boys indicated that it was important to learn so that they could be successful.

The perception that girls shouldn't have to worry about their financial future in the long term (based upon the faulty premise that a man will take care of her or that she can hire a financial consultant to handle all of the boring stuff) is still present in many homes. Fortunately, the balance is beginning to shift as more parents realize that women who are successful in their careers must also be able to guide their own financial futures, not rely on others to do it for them.

Programs Aim at Closing the Gap

Today's girls are more likely to learn how to handle money at a young age. Cautionary tales in the news and on talk shows about women left destitute and the fear that social security can no longer support an individual in their golden years has, perhaps, contributed to this. After all, with most women outliving their spouses and more than half of women divorced, it's likely that today's girls will be supporting themselves in their retirement years - understanding Roth IRAs suddenly becomes very important.

Companies and organizations are also stepping to the forefront with programs designed to educate teens in general and girls in particular. Boys and Girls Clubs of America, in collaboration with Charles Schwab, offer Money Matters: Make It Count programs in cities across the country.

Visa works with Girl Scouts of the USA to provide two resources, the Cashin' In workbook and the Makin' Cents web game, to teach girls aged 13-17 financial responsibility. The web game specifically challenges players to find real-world solutions for characters' financial challenges.

With such programs increasingly popular and the need for women to understand finances now a hot topic, it's to be hoped that this generation of fathers will teach their daughters as much about finance as they teach their sons.

Carrie Carter: Author of: Think Your Way to Riches Kids' Style

For more information or to arrange an interview with Carrie Carter at 810.252.2281 e-mail: carrie114cr@aol.com or visit: www.ThinkYourWayToRichesKidsStyle.com

Carrie's passion is to help people on their inner journey to discover their personal road map for abundance, peace, and happiness. Her main passion is to give children worldwide the "Tools" which are lacking in the normal educational system and understanding to create the abundant lifestyle they are all worthy of. Experience Carrie's educational seminars, workshops, and private life coaching.

About the Author

Carrie's passion is to help people on their inner journey to discover their personal road map for abundance, peace, and happiness. Her main passion is to give children worldwide the "Tools" which are lacking in the normal educational system and understanding to create the abundant lifestyle they are all worthy of. Experience Carrie's educational seminars, workshops, and private life coaching.

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