Entries Tagged 'Credit Cards' ↓

So since March, the stock market has been going up. I haven’t heard anyone on tee vee, except for one or two who are quickly dismissed, explain why. Instead we hear about all the amazing earnings surprises, returns to profitability… a bunch of crap.

Companies are showing “profit” because:

(1) They fired a few million people, reducing expenses.
(2) They CUT INVENTORY, and so spent less.
(3) Their income is coming from sales overseas, but not here.
(4) They froze or reduced salaries, benefits, etc. for the workers they have left.
(5) And plenty of other bookkeeping tricks to show “profit”, “growth” and “productivity”.

Goldman, JP Morgan, etc. etc., they are hugely profitable because why? Because unlike us average Americans, they have been getting interest free loans from the government. We are not talking about TARP here, but the loans available through FDIC, the Federal Reserve and other agencies, in the trillions of dollars. And our money has been used by Treasury to buy the bad assets off their books at inflated prices, prices no other Wall Street firm would ever pay. So, of course the S&P is up, since it is weighted with financial stocks.

If a firm has billions of free money to invest, and you invest it in the market for your own account, and you don’t lend any to anyone else, and you drive the market with your volume – what do you think happens? The firm makes money of course. It’s a pyramid scheme to rival Bernie Madoff.

And how many people still working are still putting money into their 401K accounts? And how many pension funds are still putting money in? The price of stocks will go up as long as someone buys these instruments, regardless of their value. That the index is higher, does not mean there is value there, the “value” is illusory.

Don’t be fooled. Nothing has changed. There is little or no money being lent, because the TARP money has been used to shore up the capital requirements of the companies that got the money. They were virtually bankrupt. They used taxpayer funded loans to make it look like they were profitable. As one talking head said this week, if today we were to try to strengthen our banking system by increasing capital requirements we would bankrupt these “too big to fail” banks.

Basically, the Government is doing nothing for the average American but borrowing our children’s meager finances. We are going into more and more debt. China and Japan are going to resist our habit eventually. There is no reason a crash like last fall can’t happen again tomorrow – there are zero safety nets in place other than the Fed’s willingness to print as much money as they can as fast as they can.

And how can any company be profitable if they aren’t selling anything? If we don’t have jobs, and are under a ton or debt, and aren’t buying as much crap as we did when we re-fi’d our houses to buy bigger plasma tee vees, where are all these amazing profits supposed to come from next year and the year after that? Our “growth” was based on credit. Well there ain’t no more credit now, so now what? No one who is telling you things are getting better can explain that one.

What can you do? Where do you invest in 2010, or for your long term future? You can’t just put money into an account today, and leave it for teh “long term”. You need to stay on top of what you are invested in, where that market is headed, and be ready to switch as the markets do. Learn to invest money and build your plan accordingly. Don’t count on stable markets, because for now, there is no such animal. There really never was, that was a story made up for the non-investor middle class…

Based on what I hear from economists who are HONEST about what’s going on, investments that might look good right now are some foreign currencies, some muni bonds, Asian stocks, and shorting the dollar. Keeping an eye on oil prices too. You can’t “buy and hold” or you will get burned. (Six months up does not mean you’re in the clear.) Instead, PAY ATTENTION. Learn for yourself about investing and what works for YOU, don’t spend time listening to bullshit con artists on cable tee vee. Read books, listen to alternative opinions. Make your own informed decisions. If you don’t want to do the work, you shouldn’t be in the market.

In today’s economy, getting a new credit card is tough. But also, as banks start raising fees and interest rates to ridiculous proportions, you might consider getting rid of credit card debt altogether and getting a Visa cash card. A Visa cash card is a prepaid credit card that you can load with money, so the amoutn you spend is money you already have in the bank so to speak. There is no interest rate charged, and you can use it to avoid needing credit or rebuild a bad credit history of you need to.

You can get a card without needing good credit, since it’s secured alredy with payment. In fact, using one of these cards is how to pay off debt and rebuild your credit. While you won’t pay interest, you will pay some application and processing fees w3hen you apply and for the ongoing management of your acount. Be sure to check what fees you’re paying before you sign up.

So can you save money with a Visa cash card? It depends. If you’re paying higher fees, you need to calculate what the difference is in payments for you. Are the monthly maintenance fees higher or lower than the interest rate you pay on credit card debt? That’s something to figure out which saves you more money.

With a cash card, it’s like a debit card because you need to make monthly deposits to your account before buying things with the card. This way, you can stop your overspending habits, and start learning to use cash, but you don’t have to carry bills around with you.

A Visa cash card is accepted at all stores which accept regular Visa cards. You can also use them for buying online. For some accounts, you can even have your paycheck deposited right into your cash card account by your employer, and that way you don’t have to wait to use the money nor do you have to have a checking account.

You can even findcash cards with rewards and rebates. Did yo know that Visa debit cards have a major part of the market compared to their competitor? The Visa Cash card is so popular, it’s bound to give you some opportunities to save money by using less credit.

As a result of the financial turmoil, there are plenty of families which will be torn between putting aside money for retirement, and saving for college for their children’s college education.  Many parents now paying for private school in grades K-12 are now rethinking that decision.  As for college costs, they keep rising, and enrollment in local community colleges is skyrocketing. Yet do parents always have to pay for college?  If high school age children are encouraged to do everything they can to apply for all available grants, treating it almost like a part time job, they may find that there is cash available.  In addition, holding down a part time job or two in the summer can give teens a way to afford school.  When parents give up financial security in their old age in favor of paying tuition today, that is probably a far bigger danger than the impact on their children of having to attend a community college instead of a major private university.

There are plenty of state colleges that are priced under $20,000 per year for state residents, including tuition, fees, books, and room and board.  A part time job that pays $10-15 an hour can cover a large portion of that amount.  Community colleges are far less, especially if the student lives at home for a year or two.

Spend Less for Entertainment

Do you really have to cut back on entertainment jut because your budget is cut back?  Not really.  There are really hundreds of things you can do, for less.  One website, GoCityKids, offers lists of things to do, free and paid, for dozens of locations around the country.  Public libraries are now swamped with requests for movie rentals, music rentals, and the old-fashioned book.  Many municipal and college libraries show films to the public.  Schools, colleges and local orchestras offer free concerts.  Some communities sell discount tickets to events like theater and concerts, along with movie and museum tickets.

Are We Addicted to Debt?