Shutdown could harm US economy

Financial markets are taking the partial shutdown of the US government in their stride in hope of a swift political breakthrough.

Australian shares ended Wednesday's trading session 0.2 per cent higher, while the Australian dollar was modestly lower at around 93.5 US cents.

US Congress failed to reach a compromise on its budget ahead of the US financial year-end on September 30, prompting the shut down that sent about 800,000 public servants home without pay and left only essential government services open.

Bank of America Merrill Lynch economist Saul Eslake said, if the shutdown lasts a few days, there should be only a minor impact on the world's largest economy.

Longer than that and the consequences become more significant. If it extends to a couple of weeks it could reduce US growth in the December quarter by 0.5 per cent.

Any longer could wipe out all growth in the quarter.

The bigger concern will be if the US Congress doesn't agree to lift its debt ceiling by the middle of this month, risking default for the first time.

'If Congress isn't able to resolve this impasse before the US hits the debt ceiling, one of the possible consequences could be a fall in the US dollar and further unwelcome (upward) pressure on the Australian dollar,' Mr Eslake told ABC radio.

'The Reserve Bank clearly wants a lower exchange rate and is quite frustrated about its inability to fulfil that.'

The Reserve Bank of Australia (RBA) left the cash rate unchanged at 2.5 per cent at its monthly board meeting on Tuesday.

But RBA governor Glenn Stevens said a lower currency would assist in rebalancing growth in the economy.

Economists believe that after slashing the cash rate to an all-time low, the central bank will be reluctant to cut much further.

National Australia Bank has pushed back its expectation of a further rate reduction to February 2014, rather than next month.

But NAB still expects economic growth to slow to around two per cent by the end of the year, and well below trend at around three per cent.

This will put pressure on employment and with the new federal government shedding public servants the jobless rate could hit 6.75 per cent in the second half of 2014.

The rate was 5.8 per cent in August.

'With the big picture still unmoved, we continue to see a cut coming but right now there is no rush,' NAB group chief economist Alan Oster said in a note to clients.

The improvement seen in confidence, retail spending, manufacturing and house prices since the August interest rate cut failed to extend into August building approvals, which fell by a larger than expected 4.7 per cent.

Housing Industry Association chief economist Harley Dale said, while approvals are still trending higher, the recovery has been too slow and too narrow geographically.

'This has been the case for some time and the situation simply isn't changing,' Dr Dale said in a statement.

source: skynews.com.au

Medicare levy increase to fund disability plan

The average worker will pay an extra $1 a day in Medicare levies to support the federal government's national disability care scheme.

Prime Minister Julia Gillard on Wednesday announced details of the levy increase, which starts on July 1, 2014, saying the money raised will go into a special national fund.

'The choice that I and my colleagues have made is that DisabilityCare Australia should be supported by a 0.5 per cent increase in the Medicare levy,' she told reporters in Melbourne.

This would take the total annual Medicare levy on wage earners to two per cent.

Under the change, an average worker on $70,000 a year would pay the equivalent of $1 a day, Ms Gillard said.

The government then intends to use some of the money going into the special fund to make grants to the states and territories under 10 year arrangements.

A quarter of the total would be given to those governments to help them build up to running the full disability care scheme across the nation.




 After 10 years, there'll be a review of the funding share between federal, state and territory governments.

Ms Gillard says she'll take the levy increase plan to the next election due on September 14, after last year ruling out such a change.

She says the amount of tax money coming to the government isn't what they expected, adding that it's also clear the states need extra help to afford their share of the scheme.

The prime minister's acknowledged it's not an easy choice to make for Australian taxpayers, but it is the right one for people with disabilities and their families.

Ms Gillard stressed the money raised from the Medicare levy increase would not cover the complete cost of the disability care scheme when it was fully operational.

'The government will need to make savings for that full cost and there will be no free ride for states and territories - they'll need to step up too,' she said.

Treasurer Wayne Swan said money would accumulate in the fund during the early years from mid-2014, ready to 'kick-start' the scheme when it came into full operation in 2018/19.

The accumulated money would total about $20 billion.

The scheme will cost $8 billion a year, while the levy measure will raise about $3 billion.

Disability reform minister Jenny Macklin also tried to allay the fears of families worried about reports the government was planning changes to the disability support pension in the May budget.

'There will not be further changes to the disability support pension in the coming budget,' she said.

She noted changes to the pension in recent years had led to a drop in the number of new pension recipients.

'Major changes have been delivered but I do want to reassure those people who need the disability support pension ... that this very important part of the social security safety net will remain.'

Mr Swan said he expected some 'political pain' to come from the plan to raise the Medicare levy.

'There's a greater public good here,' Mr Swan said.

Ms Gillard said it was the right decision for Australia's future.

'I know I'm asking Australians in their millions to step up and pay an increase in the Medicare levy,' she said.

'Australians will be able to ask of themselves that question when they vote in September - whether or not they think it's worthwhile, just like Medicare is, when we all contribute and we all benefit to have DisabilityCare.'

'We are prepared to fight for this,' she said.

Legislation to support the levy rise would likely be considered by the next parliament.

'Obviously, we will see what the responses are in the parliament as to what people's dispositions are on the legislation but I anticipate the legislation will need to be dealt with in the next parliament,' Ms Gillard said.

The plan is expected to fund about 60 per cent of the commonwealth's additional expenditure for the scheme, Mr Swan says.

It will raise $3.2 billion for NSW, $2.3 billion for Victoria, $1.9 billion for Queensland, $976 million for WA, $727 million for South Australia, $216 million for Tasmania, $192 million for the ACT and $92 million for the Northern Territory.

'It's the same proposition that Labor fought for election after election ... on Medicare, which is that we all contribute and we all share,' Ms Gillard said.

Ms Gillard said federal Opposition Leader Tony Abbott also needed to step up.

'Mr Abbott needs to shoulder that burden too and if he's got a different way of doing this, spell out every dollar and every cent,' she said.

source: bigpondmoney.com.au

Budget Revision May 2013

So the time has come once again for me to revise the budget. Every few months I take a look at my budget and see if any changes need to be made and I go ahead and tweak the budget if I need to. I was previously working on a year long rolling budget in Mint…although I don’t really know why since I have a rolling annual list in a Google docs spreadsheet anyway.

I found that the rolling budget had gotten messed up because of Mint’s tendency to classify some things in certain ways. I would have to go and update a few of the ‘rules’ I had in classification and it was really throwing me off.

I figured I would just go in and remove all the prior rolling amounts and just start them over since I needed to adjust the budget now. I have a new bill coming up in a few months and paying it would put me over my budget as it currently stands.




Even though I don’t need to begin paying it until July I decided to adjust the budget now and reduce things like food and household expenses now.That way I have two months to get used to the reduced spending on those two areas before I actually HAVE to spend less.

I also made a few other tweaks here and there and reduced a few categories by $10 or $20. The changes to the individual categories are not very high but the total does make a big difference to the total budget.

I am on a VERY strict budget because of school and we don’t get paid very much so I really cannot afford to splurge and get carried away because I do need to pay tuition!

Tuition payments for summer school are actually only a few days away and it will be a big drain to see that money come out of my account.

source: howisavemoney.net

40 or Older? You Can Still Whip Your Finances Into Shape

If you’ve recently celebrated the big 4-0, congratulations! For the next several decades, you’re going to get happier, and experience less stress. (At least that’s what the studies say!)

Of course, this does not exactly give you license to just sit back and take it easy. You’re about halfway through your working life, which means that you have half the time left to pull in the money that will sustain you for the rest of your life.

And, not to be pessimistic (although pessimism can be good for your finances), but that’s only true if you work until your intended retirement age. Unfortunately, a lot of people face early retirement—or can’t get hired at all in their later years, as one manager revealed to us.

But we’re here to talk about solutions, so we’ve rounded up the seven most common financial challenges facing people in the 40+ set. Our goal: ensure that your 80-year-old self can sit in a rocker and watch the clouds drift by.

1. If You’ve Been Avoiding Your Finances Entirely …

Think your financial situation is bad? Well, whatever you fear now is better than the situation you’ll face if you put this off for another year. So here’s how you can take action today:

• Review how much you have saved for retirement.
• Check your savings to determine just how many months you could fund basic expenses if you lost your job (we recommend at least six).
• Figure out if you’re in debt, and if so, how much you’ve accrued.
• Get your credit score via the steps in this checklist.

And the key to healthy asset growth is simple: You need to stick to a budget, which will ensure that you spend less than you make, and save for the future. But how much, exactly, should you spend on dining out versus contributing to savings? The 50/20/30 Rule will tell you–and Money Center users will automatically be guided in how to set up their budget according to this rule.

2. If You’re Living Beyond Your Means …

Keeping up with the Joneses is a human tendency—not a personal failing. We’ve got an entire article on how to cure comparisonitis, but, in short:

• Forgive yourself.
• Pinpoint what you envy. It may not be your friend’s six-figure salary, but it could be her intrepid travels.
• Be grateful for what you already have.

If you’re in debt, use this checklist to get out—and make sure that you know the top debt mistakes. For some added inspiration, check out how these people got out of debt, whether it was $20,000 or $60,000.

Then look into making more money. You can start by reading our Negotiating 101 guide, as well as get tips from real people who’ve gotten raises.

Finally, cut your costs. If your mortgage is too high, refinance. If your utilities bill is too steep, rethink your energy efficiency.

3. If You Aren’t on Track to Save Enough for Retirement …

The amount you need to squirrel away for retirement is the largest stash of money that you’ll ever need to save. To find out if you’re on track, do you know how much …

• you need to save in order to support yourself for 25 years or more?
• you need to put away every month in order to reach this goal?
• you’ll need to live on every month in retirement, taking inflation into account?

If you don’t know the answer to each of these questions, you must start contributing–or increase your contribution–to your retirement account(s) today.

If you have a full-time job, start contributing at least 5%—or more, if you can swing it—into your 401(k) or other employer-based account. And those with and without full-time jobs should also boost their IRA contributions—up to the limit. If you’re unsure of the kind of accounts you need, use these 401(k) vs. IRA flow charts to find out, based on your tax filing status:

If you haven’t opened an IRA, use this checklist to learn how to open an investment account.

4. If You Have Young Children or Plan to Have Kids …

Your biggest challenge is college tuition fees, which will hit you around the same time that you’re in the home stretch of saving for retirement. Your top takeaways:

• Between saving for retirement and saving for college, retirement takes priority. Why? While there are loans for college, there are no loans for retirement.
•  
• You can, however, save for retirement and college at the same time. Create a budget by calculating how much you need to contribute to retirement each month, compared to college contributions.

If you’re expecting, consider taking the Baby on Board Bootcamp to find out how to accommodate your little one financially.

Finally, do this incredibly important thing: get life insurance. Need convincing? Read how life insurance saved this family, and then check out our Life Insurance 101 guide and this checklist.

5. If You’re About to Pay for College …

If your little ones are, well, big, then you need to know how to take out student loans smartly, and how to apply for financial aid. (Review these top student loan mistakes, so your kid gets the right education for the right price. And be aware that private student loans are a bigger financial burden than federal aid.)
Don’t let your child become another statistic in the student loan crisis–or one of the 20-somethings out there with high debt and few employment prospects.

The top things to consider:

• The amount of the loans vs. the earning potential of the student post graduation: Does it make sense to take on $150,000 in debt for a job that maxes out at $35,000 a year
• Should your child start out at a junior college or a community college and then transfer to a four-year university? (Many community colleges also now offer four-year degrees through reciprocal programs with state universities.)
• Can your child work part-time while in school or do a work-study program? Both of these opportunities will teach your kid the value of time management—and offer practical work experience.

Finally, if you’re a little late to the 529 game and wondering if opening one now still makes sense, check out Saving for College 101.

6. If You’re Getting Back Into the Workplace …

After taking a few years off, your top financial priority should be to save for retirement, since you may have some catching up to do. Here are some tips for your re-entry to the workforce:

• Don’t discount experience from outside the workforce. You were likely exercising some skills that would be of interest to a potential employer—whether you coached a team or organized an event for your child’s class. Explain in your résumé or cover letter how these skills could translate to the job opening.
•  
• Evaluate all job offers carefully—even those with low salaries. Generous benefits could make up the difference.
•  
• Negotiate. Brush up on your negotiating skills, learn this interviewing tip and pick up these secrets from hiring managers.
•  
• Excel on the job. Check out these tips from bosses, and learn what steps you should take to get set up at your new job.

7. If You’re Starting to Take Care of Your Parents …

Make sure that you have all of the financial, medical and legal information you need, such as:

• their bank accounts and passwords
• the names and contact info for financial professionals, such as attorneys and brokers, along with permission granted for you to speak with these advisors
• insurance policies
• tax returns
• medical records and contact information for primary and specialty physicians
• estate planning documents, including wills, trust documents and powers of attorney
• regular bills that need to be paid, like utilities and newspaper subscriptions

Start accompanying your parents on visits to financial advisors, doctors or attorneys. And be wary of anyone who refuses to let you join—unscrupulous people may try to take advantage of your parents if they think that no one is watching.

If you’re researching long-term care options for your parents to cover medical and non-medical needs for long periods of time, be aware that, in most cases, Medicare won’t pay for long-term care—so evaluate other resources, such as veterans’ benefits. If you’ve heard that you need to encourage your parents to “give away” or “hide” resources in order to qualify for Medicaid coverage of long-term care expenses, consult an attorney who specializes in elder care for proper guidance.

Retirement and Beyond
Now that you’re 40, you may also be thinking about your own needs down the road. While you’re still young and in good health, it may make sense to purchase long-term care insurance. In addition, now is a great time to make sure that your own legal documents are updated, especially if you’ve had kids or if you’ve gotten divorced since you drafted your will. Also, double-check those IRA accounts or you may end up disinheriting your current spouse in favor of your ex!

Remember that your top financial goal as you head into the last half of your working years is to save for retirement, followed by prioritizing for your child’s college education, your parents’ long-term care options and any student loan debt that you still owe.

And remember that every money challenge is temporary and can be handled–the way countless other people have managed it before you.

source: foxbusiness.com

How to Do Your Own Debt Consolidation and Get Out of Debt

Debt consolidation companies often give you a fantastic pitch that promises to help you lower your monthly payments and eliminate debt.  All you have to do is work with them, combine all your debt obligations into one low monthly payment, and save tons of money.  Is it really that fantastic, or just a fantasy?

Personally, I have heard both sides.  On one hand, I have heard of good stories where individuals successfully worked with one of these companies and got their debt problem under control.  On the other hand, I have heard of horror stories where individuals placed their trust in these companies, made a couple of payments, and later got late notices from their creditors. The debt consolidation company was a fraud and they got into more trouble because of it. So the question is not only: should you pay a debt consolidation company?, but also how can you find the right company?




 In this article, I am going to outline some steps where you can consolidate debt and get this problem under control on your own.

Change Your Attitude About Money

Before you even try to figure out how to get rid of your debt, you have to get rid of the habits and lifestyle that got you into this mess in the first place.  If you habitually spend more than you can afford, you need to fix this first.  Learn to manage your expenses and live within your financial means.  Otherwise, all your effort will be for naught and you’ll end up even worse.

How To Consolidate Your Debt

Now that you have your spending habits under control, it’s time to start working on your debt.
1. Make a list

Make a list of your debt obligtions with the creditor’s name, amount owes, interest rate, and type (i.e., secured loan versus unsecured loan).

Since your secured loans are collateralized, you could lose your home, car, or other valuables if you default on these loans. Therefore, these are the most important loans to keep your eyes on.  Whatever you ended up doing, your plan must be able to support the monthly payment of these loans.

Next, focus on debt obligations with the highest interest rates.  These are usually your credit card balances.  You want to get rid of your high interest loans as quickly as possible to save money on interest expenses.

In short, you should have a list grouped by secured versus unsecured status, and sorted by the interest rate.

2. Negotiate with your lenders

Many people often overlooked the option of negotiating with credit card companies and other lenders as a way to lower your interest rates and payments. Now call each of your lenders and ask them for a lower interest rate or a different payment term.  Some will work with you and some will not.  The important thing is to ask and see if you can lower your interest rates and minimize expenses.

3. Find Alternative Funds

You may think it’s crazy to borrow more money at this point, but the important thing to do is to lower your monthly expenses and interest rates as much as possible.  Therefore, IF you can borrow money at a much lower interest rate, you should do it and use that money to pay down your higher interest loans.  The primary goal is to reduce the number of loans and the overall interest rate.

Here are some alternative funding sources that you can investigate:

• Cash out refinancing — If you own a home, you could look at refinancing your home and cash out a portion of your equity.  Use this cash out amount to pay down your high interest loans.  The caution here is that your mortgage is a secured loan, so make sure you can afford to make the new monthly mortgage payment, or you could lose your home.
• Home equity loan — This is similar to cash out refinancing, but you are taking out a second mortgage instead of refinancing your mortgage.  The caveat is the same, a home equity loan is a secured loan.  If you do this, make sure you can make the monthly payments for both your mortgage and the home equity loan, or you could lose your home.
• Personal loan – Check with your local banks and credit unions for a personal loan.  Often, they can offer you a loan at a lower interest rate than what credit card companies normally charge.  If you can handle the fees and the payment term, consider taking out a personal loan to pay down your high interest debt obligations.
• Credit card transfers — The next option is to search for credit cards that offer 0% APR on balance transfer with minimal or no fee.  Use this as an opportunity to get rid of your higher interest loans.  However, note that the 0% APR offer usually last only 6 to 12 months and the interest rates could increase dramatically.  Be sure you know what the resulting interest rates will be, and be ready to go through another balance transfer cycle in 6 to 12 months.
• Borrow from social lending networks — A relatively new source of funds are peer-to-peer lending networks, such as Lending Club and Prosper.  With both of these networks, you can borrow up to $25,000 per loan with a fixed interest rate and a 36-month repayment term.  Interest rates depend on a variety of factors including your credit score, credit history, debt-to-income ratio, and the loan amount.  Be sure to study these networks carefully before asking for a loan.  If the loan works to your advantage, take out a loan to pay off your high interest loans.
• Whole Life Insurance – If you have a whole life insurance policy, it may be worthwhile to borrow against the cash value of the policy and use the money to pay down your highest interest loans.  However, this option will lower you death benefit and significantly stunt your insurance policy value.
• 401(k) Loan — This is an option, but considers it very carefully since there are many risks involved.  If you can execute it properly, this option could be very helpful.  Read Should I Borrow From My 401k Plan? for more information.

4.  Debt Snowball

 

With the first three steps, you should be able to eliminate a few higher interest loans and consolidated them into other lower interest loans.  Now, it’s time to pay them off in a methodical way.  Of course, you have to make the minimum payments on all of your outstanding debt.  But what should you do with the extra money?  The answer is to use any remaining money to pay down your highest interest debt.  If you prefer the original method proposed by Dave Ramsey, you can pay down your lowest balance debt first.

As you eliminate a loan, redirect the amount you normally pay to that loan to the next highest interest loan.  This is why the method is called a Debt Snowball.  As each debt is eliminated, you can pay the next debt down with more money and keep the momentum going.

Conclusion

If you want to get out of debt, these steps can help you accomplish your goal more quickly and efficiently.  Remember the key is to change your spending habits and not go further into debt, otherwise, you debt repayment plan will fail.  Once you have your spending under control, the key steps are to (1) list your debt according to the interest rates (2) negotiate better terms, (3) find alternative funding sources to lower your interest rates, and (4) to use Debt Snowball to pay down your debt quickly.

Lastly, you can build on your effort by making more money so that you can put even more money toward debt reduction.

source: moolanomy.com

Ten Practical Moves to Avoid Problem Debt in 2013

To avoid your own "fiscal cliff" in 2013, I suggest you stop arguing with yourself and take 10 -- and by that, I mean 10 positive steps for a better, more prosperous new year.

Tip 1: Develop a spending plan
If you don't have a plan for your money, you will end up following someone else's plan. That's no fun! A plan puts you in control of how much you spend and on what. Trust me, plan for spending, and you will have a much richer financial life.

Tip 2: Save for emergencies
If you don't have savings, you will fail. End of story. Life can't be totally predicted, so to avoid being in a hole every time a surprise happens, you must have savings. Your goal is to save six to 12 months' worth of living expenses. Not what you earn each month, but what you spend each month. They should be different, and what you earn should be more.

Tip 3: Study up before taking on student loan debt
Starting a working career with six figures of student loan debt drastically reduces your spending options once you graduate -- that is, if you graduate and if you get a job. Be smart. Limit your student debt to what your take-home pay in your chosen career can afford. Crunch the numbers before you sign on the dotted line. Remember, it is a bill you will have to pay no matter what. If you don't have a career field in mind, don't take on any debt until you do.

Tip 4: Don't try to borrow your way out of debt
Consolidating debts into one lower payment sounds like a perfect financial move. It may not be, however. The main reason is because many people continue to add to their debt burden after the consolidation and end up with more debt than they can manage. Restructure your spending instead of your debt, and make a concerted effort to pay down what you owe as quickly as possible.

Tip 5: Never co-sign on a loan -- never, ever
You have ample opportunity to mess up your finances. Never share that opportunity with someone else. There is a reason why a professional lender won't approve this loan. So, why should you? Lend your support and encouragement, but not access to your credit.

Tip 6: Payday loans: No, no and no
You need money that you don't have, so you borrow what you need for a very large fee and a promise to pay when you are next paid. The problem, and it's a big one, is you won't have the extra money to pay back the loan when you get paid next time, either. This begins a vicious cycle of ever-increasing fees. Do without, pay something late, borrow from a friend, work part time, but don't take out a payday loan.

Tip 7: Avoid an upside-down car loan
If you need to sell your car, you need to make enough from the sale to pay off your car loan. Because vehicles depreciate so much, a large down payment will give you the freedom to sell when you want or need to sell.

Tip 8: Pay off no-interest offers as soon as you can
Having 48 months to pay means having 48 chances to let a mistake happen. One late payment, and the retroactive interest payment will make your head spin!

Tip 9: Never turn your back on a debt
As much as we would like to believe an ignored problem will go away, it doesn't. Ignoring a debt means high interest rates, large fees, a summons to appear in court, years of bad credit and a possible wage garnishment. Look that debt in the eye, and get help if you don't know what to do now, not later.

Tip 10: File bankruptcy only as a last resort
Bankruptcy is a viable choice only after all other reasonable options have been exhausted. It may not get rid of all your debts, but it will ruin your credit and job prospects, and you'll have to wait from three to seven years before you are eligible to file again. Think of bankruptcy like a financial nuclear weapon. You may be worse off from the fallout than you were before.

Copyright 2012, Bankrate Inc.

source: foxbusiness.com

Why Your Credit Score Matters

How much do you know about your credit score? That three-digit number is tied inseparably to our financial lives, yet many young adults haven't given it the attention it deserves. Your score can play a role in your ability to rent an apartment, qualify for a loan or even get a job. It can also affect how much you'll pay on interest charges, insurance and even cell phone contracts.

Make building a stellar score a priority while you're young and you could actually save hundreds or thousands of dollars over your lifetime. However, if you don't take your credit seriously, a bad score -- or even a nonexistent score -- will cost you.

Who's keeping score?

Your credit score is basically used to predict the possibility that you won't pay your bills. They are compiled by Fair, Isaac & Co., and are sometimes called FICO scores. The top possible number is 850, but topping 800 is probably unrealistic. A median score usually falls in the 720-to-725 range, meaning half of consumers fall above that point, half below. Even if you haven't given your FICO score much thought, there are plenty of others who have or will, so you'll want to aim for the mid-700s to make the best impression on:

 1. Lenders. This group is the one most people associate with their credit score. Having a good rating can help you qualify for the best rates on a mortgage, car loan, credit card and even a small business loan if you've got that entrepreneurial spirit. A nonexistent score can make it impossible for you to qualify for a loan or credit card at all. (Learn how to overcome this obstacle below.)

2. Insurers. The majority of auto insurance companies use your credit score when determining your rates, and the practice is also common among home insurers. A recent survey by Consumer Reports among eight popular auto insurers found that drivers with top scores could pay up to 31% less on their premiums than if credit scoring wasn't factored in, while those with bad scores would pay as much as 143% more.

3. Landlords. Increasingly, you may need a good credit score to rent an apartment. Landlords view your credit rating as a measure of your responsibility to pay bills on time. If your rating is below par or you don't have a credit score yet, you may have to find a friend or relative to co-sign your lease, or you could be required to pay a higher rent or security deposit.

4. Employers. When you're applying for a job, potential employers can pull your credit report as long as they notify you first. And, in fact, about 35% of them do, according to the Society for Human Resource Management. Why? Bad credit can be a signal of irresponsibility, or employers might be worried you'll spend more time fretting about your financial woes than concentrating on the job.

5. Cell phone carriers. Even cell phone service providers may check your credit before signing you up for a plan. They want to make sure you're responsible and will pay your bill each month. Some utility providers may pull your report as well. If you have credit issues, you may not qualify for the best plan rates, you could be required to pay a deposit, or you could get turned down.

True cost of your score

So, how much does your credit score affect your finances? Say we have two friends, Jim and Mark. Both took steps right out of college to start building a credit report by getting their first credit cards and an auto loan. Jim made all his payments on time, never maxed out his credit cards and often paid more than the minimum required. Mark, however, frequently paid late, overextended his cards and applied for new credit to bail him out of his mismanaged debts.

Now both are ready to buy homes, and they each apply for a $250,000 30-year mortgage. Through Jim's responsibility, he's been able to build a score of 750, qualifying him for a loan with a 6.2% interest rate, according to Fair Isaac, a credit scoring bureau. Mark's score comes in around 650, netting him a rate at 7.3% interest. Jim's monthly mortgage payment is $1,536 while Mark pays $1,718 -- a difference of $182 per month. If they both live in their homes for ten years before selling or refinancing, Mark will pay $21,840 more in monthly payments than his friend. Ouch.

Mark also gets burned on a new auto loan -- paying $1,332 more over three years on a $20,000 loan than Jim. Plus, Mark probably paid much more for his car insurance than Jim.

How to get started

Even if you don't plan on applying for a loan, or getting a new apartment or a new insurance policy anytime soon, it's a good idea to start building your credit score now so it's there when you need it.

When you're starting from scratch, a good place to begin is in college where lenders hand out credit cards like candy. But don't rush to indulge. Janet Bodnar, Kiplinger.com's Money-Smart Kids columnist, advises students to get just one card their junior or senior year, use it occasionally and pay off the balance each month. It's much easier to qualify for a credit card while you're in school than after you graduate (lenders figure that Mom and Dad will bail you out while you're in college if you can't pay your bill).

If you're already out of school, or you don't trust yourself with a full-fledged credit card yet, a secured card will help you get off on the right foot. This card allows you to make a deposit with a lender (such as your bank or credit union), and the amount usually becomes your credit limit. The issuer takes on zero risk because if you don't pay on time, it can dip into your account to cover the bill. Most issuers require a deposit of $300 to $5,000. You build a history just as fast with a secured card as with a regular one. And after making payments on time for a year with a secured card, you should have an adequate history to switch to an unsecured card and get your deposit back.

A new scoring system from FICO may soon help young adults trying to build a credit history. It is based on alternative data such as whether you pay your electric bill on time and maintain a clean checking account (learn more.) So you'd do well to keep all areas of your finances in tip-top shape.

Boost your score

Knowing what goes into your credit score can help you manage your debts well. Here's how to make the best impression on your credit history:

• Pay on time. 35% of your score depends on your payment history.
  
  
• Don't max out your cards. 30% of your score is based on how much you owe. You want to keep your "credit utilization" ratio -- the percentage of your credit limit that you've actually used -- no higher than 30% of your available credit limit.
  
  
• Start while you're young. 15% depends on the average age of your accounts.
  
  
• Avoid opening several accounts at once. Not only will this lower the average age of your accounts, but lenders will worry that you might go on a borrowing binge. 10% of your score depends on new credit.
  
  
• Get the right kind of credit. This accounts for the final 10% of your score. Your experience with revolving credit, such as credit cards, on which you control how much you charge and pay off each month, carries more weight than installment debt, such as car loans and mortgages, with fixed payments. But don't simply stock up on a pocketful of Visas -- lenders like to see that your money skills are well rounded.
  
  source: kiplinger.com
  
  
  
  
  

How to Save on Your Halloween Costume

Halloween is just a few weeks away, and if you’re like me, you may still be scrambling to think about what your costume is going to be. But one thing I know for sure is I’m not going to bust my budget on the costume. Several years back, I spent way too much money on a pricey costume I bought online. It was a nice costume, but it was overpriced, and I will probably never use it again. Instead, I’ve vowed to plan ahead and get creative with my costumes, and be sure to shop at the places that will save me money. Here are affordable costumes and where to find them:






There are many costumes that don’t require any purchases whatsoever. There are two ways to find a costume. First, you can make a list of costume ideas you’d like to scour stores for. Or, you can have a blank canvas, and search your own home and affordable stores for inspiration for a costume.

Different Decade

It’s easy to mix and match pieces from your wardrobe to come up with an outfit that looks like it’s from another decade. A white undershirt, jeans, black sunglasses, and black leather jacket can easily pass for the 50’s, flared jeans and a tie-dye shirt works for the 70s, and through on bring neon shirts and leggings for the 80s.

Career

 Whether it’s in your own closet or something from a friend, uniforms from a doctor, police officer, nurse, construction worker, or fireman can be borrowed to wear as a practical costume.

Celebrity

You’d be surprised at how just styling your hair a different way, putting on specific makeup, or throwing on a certain outfit, could pass for a celebrity costume.

Things that require only an accessory

You can buy or make cat ears, and simply wear all black to go as a cat. Purchase a pair of wings or a halo, wear all white, and you’re an angel. A black dress only requires a witches hat, and you’re all set. A fedora hat can turn a men’s suit into a different era costume.

Place to find affordable costumes

Friends and Family

Why pay for a costume when you can get one for free? Ask your friends and family to borrow a costume or even another type of uniform or outfit they may have. You can also suggest and organize a costume swap amongst your friends, family, or neighbors and community. People can bring their old costumes from years back to switch for a new one.

Thrift Store

Even if you can’t find an actual Halloween costume, you’ll be able to use the eclectic items at a thrift store to put something unique together.

Craigslist

Many people in your area may be selling an old costume online. And it isn’t just after Halloween. Last year, I found there were several costumes for sale the weekend before Halloween since some people celebrate early.

Dollar Store

The dollar store is perfect for super affordable little accessories and pieces that can give you a fantastic costume.

Craft Store

The craft store is the perfect place to get creative with your costume. You can find unique items that can add a lot to your costume.

source: financialhighway.com

What You Need to Know Before Going Into Debt

Let’s face it, if you want to get ahead in today’s world, you’re going to need to go into debt, at least a little. The key is managing your debt properly and avoiding common traps. Not all debt is bad, even if we have been trained to think that it is. Going into small amounts of manageable debt with a goal of increasing your future income is known as leveraging your debt and this is a very smart practice.

Before you rush out and apply for credit cards willy nilly, there are a few things that you need to consider before going into debt. It is all too easy to fall into a bad debt trap, when you could have used those funds much more wisely. Let’s go over a few points that you must never forget when it comes to handling debts.

First and foremost, never go into debt beyond your means. This is not a good strategy and it rarely pays off. If you’re just starting out, you want to keep the amount of overall debt to a small amount that you could easily pay off if you had to. This helps you build up your credit score and helps you learn the ropes of proper debt management. It’s a good rule of thumb to keep your initial debts to less than three months of your current salary. This will make sure that you don’t get into too far over your head, but you should still have enough resources to leverage your debt properly.

Next, you never want to max out any credit card or blow through a loan. It’s easy to think of a loan or a credit card as free money, but it is anything but. Credit cards can have interest rates as high as 30% and once you start that process of maxing out a card, you’re going to have to deal with over limit fees (check out How A Credit Card Limit Is Determined), higher interest rates and it will take longer to pay back that debt. Use your loans and cards wisely, and leverage them to start making money for you. This means that you should avoid frivolous spending and focus on how to make that debt pay off for you in the future.

Lastly, it is vital to make sure that you are able to keep making your payments so that your debt doesn’t ruin your credit rating. One of the easiest ways to give yourself an insurance policy is to add up six months of your monthly minimum payments and put this aside in a savings account. If you should lose your job, you’ll have that six month cushion that will help you stay on track with paying your bills. This is a good strategy for all of your bills actually and can be very useful in many situations.

The key to proper management of your debt is using your debt for the right reasons. Spend that money wisely so that instead of ending up with a bunch of things you don’t need, you’ll have income coming in thanks to your leveraged debt.

source: richcreditdebtloan.com

Chase, NYSE Websites Targeted in Cyber Attacks

J.P. Morgan Chase (JPM: 41.25, -0.09, -0.22%) and NYSE Euronext (NYX) experienced website trouble Wednesday after being targeted by apparent cyber attacks. The problems come a day after Bank of America experienced prolonged issues following a separate attack.

Flashpoint Partners, an intelligence gathering network specializing in cyber threats, said it believes the Chase outage is "likely due to a sustained denial of service attack." A Flashpoint analyst told FOX Business the attack was probably caused by "a large botnet," a tactic commonly used by hacking group Anonymous. Generally, botnets function by controlling a large number of computers that have been compromised without the knowledge of the machine's owner.

Flashpoint also said that the website of NYSE Euronext’s (NYX: 25.85, -0.26, -1.00%) New York Stock Exchange is subject to a cyber attack from a group called "SaudiAnonymous1." This attack, the Flashpoint analyst said, utilized a different type of denial-of-service tool called a "webhive."

A person familiar with the matter told FOX Business a small number of users in the U.S. had trouble accessing NYSE.com Wednesday in a situation that lasted about an hour. The person said the problem was not widespread and did not impact any of the exchange operator's trading systems. It was unclear as to whether the apparent cyber attack caused the connectivity issues. At 5:30 p.m. ET, the Big Board's website was readily accessible.

A spokesman from NYSE Euronext said the exchange has a policy against commenting on "security matters."

Against this backdrop, a financial-services industry group raised its threat level to “high” from “elevated” on Wednesday, citing "recent credible intelligence."

The Financial Services Information Sharing and Analysis Center warned of the potential for DDoS and other cyber attacks against financial institutions and said members should "maintain a heightened level of awareness," apply all appropriate updates and "ensure constant diligence in monitoring and quick response to any malicious events."

Users attempting to log onto Chase.com were greeted with an error screen, blocking their access to their online bank accounts, though as of about 5 p.m. ET the site appeared to be working properly.

New York-based J.P. Morgan confirmed it was suffering from website issues, saying on its official support Twitter account that Chase.com has been hit by “intermittent issues.” It added, “We’re working to restore full connectivity & apologize for any inconvenience.”

Sitedown.co, which lists website outages, started recording reports of outages on Chase.com as early as 9:21 a.m. ET.

It’s not clear if Chase's website problems are directly tied to the issues that caused slowness and intermittent outages of Bank of America’s website a day earlier. A source confirmed to FOX Business on Tuesday that BofA was hit by a cyber attack focused on its domain name service infrastructure.

However, J.P. Morgan wasn’t named in a threat posted online by a group called “Izz ad-din Al quassam Brigades” that claimed responsibility for the BofA attack and also promised to attack the website of NYSE.

The group claims to be allied with Muslims and was expressing anger over a recent YouTube video mocking Islam. However, there is no way to confirm that this group is indeed Islamic or tied to the terrorist group Izz ad-din Al quassam.

J.P. Morgan didn’t respond to a request for comment.
Shares of J.P. Morgan closed up 0.19% to $41.34. NYSE Euronext shares edged up 0.23% to $26.11.

source: foxbusiness.com

Billy Corgan promises ‘an emotional, enthusiastic Smashing Pumpkins show’

“We made a lot of people a lot of money just by being weird.”

That’s Billy Corgan pretty much summing up the success of the Smashing Pumpkins, the Grammy-winning alternative rock band that sold over 30 million albums worldwide.

Corgan and company will perform on Wednesday night at the Smart Araneta Coliseum. That’s one day later than originally scheduled, courtesy of the massive floods in Metro Manila on Tuesday.

In a press conference at the EDSA Shangri-La Hotel on Monday, the outspoken rocker and only remaining original member of the band that helped define alternative rock music in the ’90s gamely talked about a lot of things ranging from the band’s current line-up, their latest album, career outlook, his thoughts on the music industry, his musical heroes and yes, his enormous respect for Filipino family values.

“I grew up in the outskirts of Chicago and I have many Filipino friends,” he revealed. “They respect they give to their elders, their grandparents. For them, family means a lot, it’s real and I have great respect for that.”

And family is how Billy, now 45, prefers to treat his bandmates which currently consists of guitarist Jeff Schroeder, bassist Nicole Fiorentino and drummer Mike Byrne.

“We eat together, we travel together,” he continued. “These guys were fans of the band before they even met me. So there is musical respect. More important than that, there is also personal respect, something that was lacking in my earlier bands. For them, what we mean to people is more important than our commercial value.”

And for Corgan, commercial value is not the reason why he reformed the Pumpkins and continues to use the name after officially breaking up and holding a farewell concert back in 2000. Unlike many other bands who already broke up only to reform again, the Pumpkins did not come back only to make money off their back catalogue.

“We can’t be in the oldies business,” he said in justifying why he continues to make new music. “If I was still 25 years old, I’d be worried about impressing everybody in the room. But I talked to fans in places we have played and people want to value that experience of connecting to us on a new level.”

That Corgan said is what introducing new material is about—to stay relevant, to move audiences, both old and new.

“If we connect to a younger generation of fans, great. If we don’t, then we don’t. But without the young fans, there is no future for the Smashing Pumpkins.”

This also explains why the band had planned to play the 13-track “Oceania” in its entirety for the first half of the concert.

“Because you need it,” he quipped in response to a question. “The basic storyline in that album is reclaiming your innocence without losing your wisdom. The live experiences displays the depth of the work we’ve done on the album. If people connect to it, then I’m doing a good job and that’s all I care about.”

Billy said he expects an “emotional, enthusiastic show” here. “I’m going to make you people cry because that’s part of what I do,” he vowed.

Corgan does not find it ironic that the Pumpkins also continue to cover classic tunes in just about every show. In one of their shows for the ongoing tour, the set list included David Bowie’s “Space Oddity.”

“I like covers. I consider it one of the key moments of each show,” he admitted. “When we play the classic tunes of people like David Bowie, Bob Dylan and John Lennon, for me it’s like playing Picasso or Monet. I feel the best way to honor them is to play their songs in the Smashing Pumpkins tradition.”

Although he only listens to Bach and Beethoven nowadays, Corgan talked about many other diverse musical influences over the course of the press conference, including Iggy Pop, Black Sabbath, Queen, Scorpions, Wire, the Velvet Underground and yes, even the Carpenters.

“I was sitting in the pool in the morning and I noticed you play a lot of the Carpenters here in Manila. Is she (Karen Carpenter) like the queen bee here or something?,” he asked smiling. Not that he really minds, of course. “To me, ‘Superstar’ is one of the greatest songs ever written.”

source: interaksyon.com