By Heather

No matter how you look at things, the

Wall Street maestro Jim Melcher told the New York Sun that he is “worried about a recession. Not a normal one, but a very bad one. The worst since the 1930’s. I expect we’ll see clear signs of it in six months with a dramatic slowdown in the gross domestic product.”

Enough with the negativity! We all know what is coming for us and now, it’s time for everyone to sort out their game plan and try to weather the storm. Below, I give you five tips to help you survive the impending recession:

Don’t Panic! – Ah, it’s easier said than done, isn’t it? However, it is crucial that you think with a clear head when dealing with money. Don’t let your emotions get the best of you, lest you pass up some great money opportunities out of fear. Remember, the market will fluctuate and you may kick yourself later if you rashly pull out of some lucrative, long-term deals.

Diversify Your Investments – Hopefully, you have heeded the most basic personal finance advice and already have a diverse portfolio. If not, now is the time to start making safer bets until things stabilize. This will minimize your losses during the recession.

Update Your Resume – No, you won’t be jinxing yourself by preparing for the worst. Think of it as staying one step ahead of your competitors if it comes down to job loss. Professional traders are especially nervous in a bear market and for good reason. Keep your resume updated and handy, then tell yourself that there are plenty of opportunities for you, should your job security be threatened.

Start Saving – If you aren’t a frugal person; it’s time to tighten your belt and learn to be one. Start setting aside a bit of cash each month, even if it’s only a little. Cut out unnecessary spending, clip coupons, whatever it takes to make yourself more liquid.

Live in a Home You Can Afford – In other words, avoid foreclosure! If things are getting a bit tight with mortgage payments, consider other options before you become another statistic in this housing crisis. Selling a home isn’t easy right now, so if you have to downsize, you could even consider renting out your home.

It’s always best to think ahead when a storm is brewing. If you are an amateur investor, now is the time to have a meeting with a trusted advisor. Weigh your options, err on the side of caution, and remember not to panic. Good times will come around again and those of us who are prepared won’t suffer in the coming months.

By-line:

Heather Johnson is a freelance writer as well as a regular feature contributor for Reward Programs, a website which specializes in helping consumers select among the numerous AMEX rewards programs. Heather invites your writing job inquiries as well as comments and questions at her email address: heatherjohnson2323@gmail.com

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By Jeremie

Isn’t being young a fun time in your life? There are numerous reasons why people always say “Man, if I was only young again I would do this “thing” or go to that “place,” but now that I’m too old I can’t do it anymore.” Whenever someone that is older than you says that statement, you should write it down and see if you should go out there and do it. Experiencing things and going to new places is a great way to develop your mind, body and soul. Remember that having a “NO” attitude will end up making you a person that will have numerous regrets in the future. And how can you directly link this perception on life into your finances? Take risks that older people do not have the ability to take. I’ve spoken to numerous twenty year olds about finance and they sound more conservative than fifty year olds that read AARP magazines.

One thing that did please me is the fact that some twenty year olds really do have some financial sense, but are taking the extremely slow and steady approach to money. With interest rates getting cut on a near monthly basis, that savings account and CD won’t look so attractive pretty soon. Are there still conservative investment vehicles out there that won’t open you to a mound of risk? Sure there are, but you still have to do your homework to find them. What’s a few hours of homework if you can retire 10-20 years earlier? If someone told you to do a certain activity every week and that you would retire earlier with a lot more money, wouldn’t you want to know what it is? Well, it’s not a secret and people have been doing it for a very long time. Invest now, let your money compound, and spend it later.

I had a conversation with a particular friend that has accumulated a small fortune for a 25 year old guy. He has about $60,000 in a CD yielding about 4.5% which will be available for withdrawal in a few months. Here’s some more background about my friend: He is looking to purchase a home and a new car in the next year or two and wants to put a nice down payment on both items. What do you think he should be doing with this money? I told him that he is investing like a 50 year old about to purchase their second home. He is a smart individual with a great education (he has an MBA from a great university) and is currently making a big move in his career. With all these tangible and intangible assets he posses, he should be a bigger risk taker.

First, let’s tackle him wanting to purchase a house in the next couple of years. He says he wants to put down a sizable down payment because that’s what his parents told him to do. Well times have certainly changed. In those times, people lived in their first house for more than ten years. That’s incredibly hard to do with the ever changing job market forcing you to relocate on a drop of a dime (especially in your early career). I told him to put less money down and try to find a mortgage that will suit his needs for the next seven to ten years. Why so long if they won’t be living in that house for an extended period of time? Because padding your risk with a few more years will be more beneficial in long run.  Heck, I would tell him to only get 30 year fixed rate mortgages for the rest of his if he wants to be extremely conservative. This will allow him to put less money down and keep money in his pocket to invest in different things. He can also put the money that he saved on his house into purchasing his new car.

His $60,000 has a lot of potential if he used the money in a correct way. I actually told him he has too much savings! You don’t run into an individual like this every day. His money is tied up in savings and not in a retirement account. All the interest he receives is still being taxed. I told him to open a Roth IRA and immediately max it out. What type of investments should be in his Roth? I told him that index funds are his best bet. If it was me, I would find five to six companies that pay a good dividend and let it ride. I always love going to my investment account statements and seeing a nice fat dividend that will be reinvested. It’s a beautiful thing.

No matter what your financial position might be. Always remember that you are only young once and that you should live for the present and invest for the future. Do not limit your present day fun for the dreams of doing it in the future. Because in the future do you want to be the person that says “God, I wish I could be young again so I could have done that” or do you want to be the person that traveled around the world? Be Christopher Columbus he was a bad a$$.

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By Jeremie

Whether Democrat or Republican, I think you’ll get a kick out of this!

A little boy goes to his dad and asks, “What is Politics?”

Dad says, “Well son, let me try to explain it this way:

I am the head of the family, so call me The President.

Your mother is the administrator of the money, so we call her the Government.

We are here to take care of your needs, so we will call you the People.

The nanny, we will consider her the Working Class.

And your baby brother, we will call him the Future.

Now think about that and see if it makes sense.”

So the little boy goes off to bed thinking about what Dad has said.

Later that night, he hears his baby brother crying, so he gets up to

Check on him .

He finds that the baby has severely soiled his diaper.

So the little boy goes to his parent’s room and finds his mother asleep.

Not wanting to wake her, he goes to the nanny’s room. Finding the door

Locked, he peeks in the keyhole and sees his father in bed with the nanny.

He gives up and goes back to bed

The next morning, the little boy says to his father, “Dad, I think I understand the concept of politics now. “

The father says, “Good, son, tell me in your own words what you think

Politics is all about.”

The little boy replies, “The President is screwing the Working Class

While the Government is sound asleep. The People are being ignored and the Future is in deep shit.”

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By Ali

The Federal Reserve and the condition of the market have combined to make the home mortgage industry revert to much more traditional lines. This has had several effects on both lenders and consumers. For consumers, the situation is a two edged sword, though lenders stand to gain as much as ever, albeit at a slower pace.

For consumers, this means that credit ratings are no longer the yardstick by which your loan paying abilities will be measured. While for some this may be a bad thing, for others it can definitely help out. These consumers are those with good income but who have a less than stellar credit rating due to past indiscretions and poor financial management.

Since credit scores no longer have so much emphasis placed on them, a borrower’s income will be used to judge whether or not a loan should be extended to them. This is actually a much wiser way of doing business than by simply extending a loan to any consumer that has a good credit rating. That way of doing business is partly responsible for the housing market crisis now enveloping the nation.

Lenders stand to gain simply because their loans are much more likely to be paid in a timely manner. By only extending finance options to consumers with a proven income sufficient to make the payments, lenders can begin to rebuild their industry with a much more sound financial footing.

So, while the new lending procedures may seem out of place, they actually stand to benefit both lenders and consumers through better loans, better payment ratios and a better economic position for both parties. While it may take more time than some would like, this promises to be the best way to rebuild the housing industry and the home mortgage loan industry.

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By DavidPusey

What it was for school choice in Georgia. A good start to be sure, but there is work to be done. Thursday, the House passed HB 881, a bill that would create a state-level alternate authorize for charter school, by an overwhelming 120-48 count. This was a bipartisan effort and the debate really underscored the desire of legislators to do the right thing on one hand, and some to fully entrench the power of school boards and educrats on the other.

Change is needed and that is the bottom line. I won’t bore you with statistics, but in Georgia, public education generally sucks. Even where schools do measure up to standards, the bar is so incredibly low that many high school grads cannot compete against other American kids, let alone those from abroad. Unfortunately, reform is 15 years from implementation by many accounts. Charter schools are a viable, proven alternative to traditional public schools. Critics call for more funding, better teachers, but at what cost and when? Why should we sacrifice a generation of children to the alter of the bureaucrat? Charter schools are an interim solution, one that can sustain us until we can get meaningful reforms. To reject them if qualified betrays not only the taxpayers that are supposedly represented, but it betrays our children who deserve better than to be educated based on where they live.

Choice is needed. Charter schools are public school choice. Isn’t it odd that the same liberals that call for us to come in line with the rest of the world on issues of defense, trade, and the global income redistribution scheme that is global warming but ignore the rest of the world on issues of education, healthcare and taxation?

Regarding healthcare, liberals the government to control access to plans and heavily regulate medicine, pharma, and insurance. However, the British, who have had a heavily socialized system of healthcare for half a century are beginning to seek privatization of services. The same goes for the Canadians, who routinely come to the US and pay out of pockets for life-saving services that may take weeks to be administered at their neighborhood hospital.

As for taxation, we are nearly the only Western nation left that has a graduated income tax and our liberal friends are calling for a steeper graduation. Obviously 1% of the population paying over 35% of taxes just isn’t enough. The most other nations have a flat tax that is truly equal. And by the way, a graduated income tax is tenant #2 of the Communist Manifesto.

Finally, we come to education. Go take a look at Sweden, my conformist liberal friends. The Swedes are in the early years of implementing a fully private education system. It is vouchers for everybody and their achievement, along with their neighbors the Fins, is among the highest in the industrialized world. Oh yeah, “free” public education, tenant # 10 of the Communist Manifesto. You won’t find that little fact at a campaign rally, will you?

Choice breeds excellence. Choice breeds innovation. Choice breeds achievement. Take a look at public schools before charter schools entering the market and after. Look at the postal service in the post-UPS world. Compare the USSR and US during the Cold War.

In Georgia, we have a chance to better the lives of our children and make this state a better place to live by giving parents more options in education. Don’t stop this progress. Be part of the solution, not the problem. For once, be anti-establishment on an issue. Support public school choice. Support HB 881.

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By Jeremie

Tonight I had the opportunity to watch the State of the Union; which outlines Bush’s final plans for America in the coming year. As the President’s final months come to pass, he is also trying to set some of his legislation chiseled in stone. Of course I am referring to his tax cuts that he introduced in 2001 and 2003. Here is just someone’s opinion on what the tax cuts could do if they are implemented in the tax code for good.

“If Congress makes the tax cuts permanent, the major economic benefits begin in 2011. For example,

Total employment will rise by 1,087,000 jobs per year, on average;
Annual GDP will be over $111 billion higher, after inflation;
Personal savings will grow by $163 billion per year, on average, after inflation; and
After-tax household income will grow by an annual average of $274 billion per year, after inflation.”

Am I true believer of the tax cuts that the Bush administration has put into place over the past eight years? Take a wild guess? No, of course I don’t. Do I believe in lowering taxes? Hell yes I do, but the administration is still going about it the wrong way. I’ve said this over and over now, but the mainstream media still won’t cover the real long-term damages that these tax cuts will have on America without cutting spending. How does the government really expect to purchase all this fancy military equipment without increasing taxes? I am not in favor in cutting military budgets, by any means. I would love to see an increase in domestic military spending and a large decrease in international spending though. It’s like the game of ‘Risk.” It’s much easier defending your boarders than to have your armies spread out all over the map. The Bush administration needs to cut their credit card in half and burn it.

People need to understand that I am not in favor of increasing taxes. I truly believe that raising them will inevitably throw us into a depression, but we must lower our spending habits to save our nation’s future. My first idea that the government could implement that could save them a lot of money, while also cutting taxes for all Americans, is lowering government spending in the private sector.

There are many government programs that tax every single business, but only benefit a few. Here is just an example that helps one industry, but damages another. If the government gives a 10 billion dollar grant to an oil company for global expansion, this will inevitably hurt the alternative oil industry. What happened to the invincible hand of economics that we’ve preached about in econ classes for so many years? Here’s a quick definition - “Smith claims that, in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “the invisible hand”. He argued that each individual maximizing revenue for himself maximizes the total revenue of society as a whole, as this is identical with the sum total of individual revenues.”

The other factor here is that every single business will have to pay for some of this “free” grant money. A small business owner in Georgia that makes doo-dads will not see a return in this situation. All they will see is a tax hike in their quarterly payment. Imagine this scenario but a 100 times larger. Government spending has corrupted our nation and truly damaged our economic future. We need to let business fuel themselves and add the real sense of an American meritocracy. In a perfect environment a large business would loan a company the 10 billion dollars and expect some kind of return. That is the true sense of American investing. Business investing in business for the betterment of both parties.

Can we really get out of this hole we’ve dug by implementing tax cuts and still allow rampid spending? Something needs to change… What do you think? What do other people think?

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By Ali

With recent months as economically challenging as they have been for the mortgage and lending industries and the housing market, it should come as no surprise that expert economists and financial thinkers are keeping a close watch on the credit card debt situation. Many are concerned that credit card debt could experience a similar bubble burst type of disaster, meaning even more losses for financially struggling lending institutions.

According to a widely published January 23, 2007, Associated Press report, Capital One experienced significant fourth quarter profit loss. One of the nation’s leading credit card companies, Capital One saw a 42 percent reduction in profit as compared to the previous year’s fourth quarter earnings. American Express also, according to recent reports, experienced fourth quarter losses of just under 10 percent. Some fear that this could be a part of a trend, as financially strapped consumers struggle to make ends meet.

The New York Times recently reported that “credit card debt is growing at the fastest rate in years,” pointing out that the rate of growth “may signal coming trouble for the banks that issue them.” According to MarketWatch.com, this increase in debt seems to be because “consumers loaded up on credit-card debt to make up for a loss in the purchasing power they once wielded by refinancing mortgages during the real-estate boom.” Delinquencies in credit card debt payments are starting to edge up, and not only among those with bad credit.

Lenders and investors throughout the word are still staggering from the blows they took during the bursting of the housing bubble and the mortgage and lending meltdown, and most economists agree that neither of those situations have reached bottom yet. With the potential financial danger involved with a similar crisis happening in the credit card market, there will be many eyes – those in America and beyond – watching those numbers during the next few months.

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By Jeremie

Now that the Fed cut the rates again, what do you really think will happen? Is this short-term vaccination going to bring a long-term disease? I would have to say YES! Can we seriously keep on prolonging the real issue any longer? Our nation is in over 9 trillion dollars in debt and people still think that a 150 billion dollar tax check will end up fixing our economy. This is the craziest thing I’ve ever heard. With interest rates going even lower, our debt increasing everyday and our national budget is still out of control, yet the government still wants to give out money…. How is this fiscally able to happen without kicking our country in the a$$ in the future?

What type of package do you think the federal government should implement without stubbing the toe of the American economy? I really haven’t seen anything that jumps out at me. There really isn’t any long-term plan that seems to be important enough to really cover. The stock market is not only going down because of the consumer credit market. It’s also going down because investors are taking a lot of money out of American companies and investing it abroad. They are scared that the 9 trillion dollars will end up killing the American economy in the long run.

Instead of trying to increase the dollars value and decrease our debt, analyst want us to reduce rates so low that we end up in the same situation we were in five years ago -an artificial housing boom that ends up hurting our country even more. It’s pretty amazing to me that no presidential candidate wants to talk about our national debt because everyone is so consumed about our short-term economy, the war and healthcare. We won’t even have a country if we do not correct the wrongs of the past.

Here’s my idea  

-Slash international spending

-Slash domestic spending

-Lower taxes for all Americans

-Reform our current tax system to increase domestic investments

-Remove the capital gains tax (increases investment activity)

-Increase Federal spending on education (if there’s any type of government spending I believe in, education is the way to go.)

-Cut the corporate tax code to increase business activity in America

-Reform Social Security and Medicare

 
What do you think?

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By Jeremie

Are we really in a recession or has the dream bubble burst? Did we really expect the housing market to always go up with no top on the horizon? Come on now… When I was working at the bank and I was supposed to sell home equity lines and loans to clients that had about 30% debt to income ratio, I knew something was going to happen. Our software actually promoted the idea to sell loans to people that were in the 30-40% debt to income range. I was a simple “banker” (really just a fancy word for salesman of financial products) and I could see what was going to happen four years ago. It just amazes me that financial institutions were so leveraged to the mortgage business even though a high school student with one semester of forecasting could predict it blowing up.

This situation does not have to get you down though. This market had a self-destruct button and it was hit a long time ago. Companies did this to themselves and the ones that can’t take the heat are going to be burnt. Badly burnt. But as you know, there are plenty of companies that are just getting brought down by the huge sell off that’s been going on for a while now. Some companies that seemed too expensive just a few months ago are now extremely cheap. It’s going to me hard making a positive return in this market, but you can certainly build a nice position while the market is low. Dividends are a huge key to be successful in this market, but there are plenty of other ways to get a pay off. Diversification could be a winner here if you choose the right fund. Fidelity reopened the Magellan fund; which brought some nice returns even in a pretty crappy market in the 80’s and 90’s. Fidelity is opening up the flood gates for new investors and maybe you should be part of the rush.

I know it seems depressing when you turn on the TV and all you see is the Dow sinking even further. I wouldn’t recommend putting all your money in one stock or purchasing a ton of stocks at one time. You need to purchase slowly and keep buying even if the market keeps sinking. The best idea is just let an index fund do everything for you. Just keep on dumping $300 dollars a month (if you can) in an index fund that is spread over the S&P 500, raw materials, minerals, and petroleum. The stock market will go up and you just need to buy it as the market goes down. There will be a U-turn at some point and investors will be happy that they bought when everyone was selling.

I also think that boom markets will be produced from this mortgage disaster. There’s still a lot of older people out there that are about to retire. This situation alone will send up certain sectors to new highs. Medical and anything influenced by an aging population will send stocks soaring. And because the whole market is hitting new two year lows, this offers the opportunity to own lots of stocks for real cheap. Happy investing and I would love to hear some new investing ideas you might have.   

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