My finance tips

Archive for May, 2009

Money And Meltdowns..

Given what is going on in the financial world I wanted to comment as I believe all of us as taxpayers let alone business owners need to actively participate in this conversion before we all get stuck with something that could cause us problems for years to come.nbsp;

So for what it is worth here are my thoughts on the bailout. Firstly I believe it is necessary. There are a number of good free market Darwinesque arguments against it but on balance I believe that it should be passed for the greater good of both the US and the world economy. This however should only happen provided certain stringent conditions are attached. These are below:

1 Tax payer equity ownership in the companies bailed out. Ie we all become stock owners in the companies that are rescued under the plan. This to me is basic free market common sense investing as it means that we will all benefit over the coming 5 15 years as these companies recover and prosper.

2 Independent regulation and oversight. As has been seen time and again the idea of any industry self regulating is ludicrous because they simply don’t do it. So independent bipartisan regulation group here we come.

3 Golden parachute / income caps. Obviously those senior execs departing the company should not be allowed to walk away with million dollar severance packages. However we do need to reward the incoming execs in such a way as to make them work as hard as possible to make our new companies provided 1 has occurred profitable. To me this looks like reasonable salaries plus highly lucrative deferred stock options the kind they can’t exercise for 5 plus years I have no problem with someone earning 20 million if they have turned a bankrupt company into one generate billions a year… I just have a problem with the ones who bankrupted it earning that.

4 Mortgage relief for homeowners. Some kind of system needs to be put in place to help people stay in their homes such as lowering their monthly payments but extending the length of the mortgage as the trickle down effect of mass evictions / repossessions cannot be calculated plus from the banks perspective better to have some money coming in than a house sitting empty and unsold over the long term. However I do not agree with extending this philosophy to regular consumer debt cars credit cards etc that’s what debt plans are for.nbsp;

So like I say my opinions for what they are worth. I present them not because I am in any way an expert but because as I stated earlier I believe this is a discussion and decision that will effect us all for decades to come and we all need to take responsibility for getting our voices heard. I would welcome any thoughts or comments and await the final plan with baited breath.

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About the writer:  Miata Edoga is a working actor and founder of Abundance Bound Inc the financial education company for actors and artists. She recently released The Artists’ Prosperity Home Study System designed to give anyone who wants them the tools to take control of their money.

How To Survive The Mortgage Meltdown And The Subprime Lending Mess

The news isnt good. Over 30 subprime lenders closed their doors this year so far with many more to come in the next few months. And one of the biggest subprime lenders New Century is ready to bite the dust. With all this and more I would consider the subprime market effectively dead until this shakeout is finally finished.

Many of you have asked what can be done to stop the mortgage hemoraging and how youll be able to survive the new realities of the marketplace. In response Ive put together some of the best feedback and tips from fellow warriors like you.

FOR YOUR CURRENT SUBPRIME BORROWERS HERE ARE A FEW IDEAS:

1. Try to restructure their financing arrangements. If its a purchase will seller carry some of the closing costs or reduce the price? If you can rework the DTI and LTV on the loan you might have a chance.

2. Can you consolidate any debt on the loan? Can you get rid of seconds and HELOCS paid off at the table? How about paying off any other debt too? This will help your debt ratios.

3. Put borrowers on hold until their credit score increases. Can they wait a few months while they sort themselves out? A better score would greaten their chances of getting a loan. Do you have a credit repair company that you work with?

4. If the borrowers are already deep into foreclosure or bankruptcy and will lose the house within a month I would give up on the loan. Yes it could possibly be saved but it isnt worth your time or aggrevation. Despite what you hear these loans are a nightmare to deal with when it gets this late in the game! I know of NO REPUTABLE LENDERS that will touch these loans because who wants to take on the risk!

5. An extreme option may be hard money lending which is private funding from opportunistic investors with little to know underwriting requirements. They make their own rules and as such make their own high exorbanent interest rates.

6. If the borrower is in a really tight bind they could call one of those we buy houses ads and dump the place. Yes it helps them. But doesnt give you a penny in your pocket. Again its a last resort.

7. Be sure to call all of your subprime wholesale account representatives and get updated criteria for their lending rules. Youll want to make sure that they can still do your loans that you have in process.

8. Refer your borrowers out to a debt management firm who can help them get back on track. Again you dont get anything from this. Just a thank you and some gratitude. Theyll remember you and hopefully send you some referrals.

I hope these tips help give you some ideas on how to survive the subprime shakeout.

About the writer:  Rob Lawrence is ranked one of top national trainers in the mortgage industry. He is the currently the CEO of Battlecall.com coaching tools and resources to turn mortgage professionals into mortgage warriors. Visit http://www.battlecall.com for his free Sink Or Swim weekly newsletter mortgage training marketing advice and more! Jumpstart your career in the mortgage business starting today.

Understanding Car Insurance

Insuring your vehicle is probably one of the least enjoyable aspects of being a car owner. But as its a legal requirement its unfortunately not something that can be avoided.

With thousands of insurance companies to choose from each using unfamiliar terminology finding car insurance can be quite a daunting task for a new driver.

Without guidance searching for car insurance quotes and finding the right policy can be a challenge. Here are some tips to help simplify the process of understanding car insurances.

Different Types of Policies
When you apply for car insurance you will be faced with the following policy options:

Third Party
This is the minimum amount of cover that insurance companies can offer you. It only covers damage costs if you injure someone else or their property in a motoring accident. Any damages or injuries sustained to yourself or your vehicle will be down to you to pay for.

Third Party Fire and Theft
This is the minimum amount of cover that some companies will offer. You will be protected if you injure or damage someone elses property. It also covers your own vehicle if it is stolen or burnt. What it wont cover you for is the cost of your vehicle if its involved in an accident or is vandalized. This type of insurance is most appropriate when you have a vehicle that is of low value.

Comprehensive
This is the most expensive form of insurance but it covers you for almost every eventuality. What it covers can vary depending on insurer but most fully comprehensive insurance will cover you for accidental damage to your own vehicle injury to someone else damage to their vehicle and damage to your vehicle from fire and theft. Some policies will cover you for items that are stolen from your vehicle and also medical expenses if you are injured.

Excess
When applying for your for car insurance you will be asked to agree on an excess fee. This means that if you are involved in an accident that is your fault then you will be required to pay the first 100 500 of the claim. . If you are trying to reduce your policy then you can pay a higher excess but in the event of an accident that is your fault you will be required to pay this amount when you make the claim. It is important to note that with some insurers you may be required to pay a young drivers excess if you are under 25 years of age.

No claims Bonus
This is the number of years that you have had car insurance without making a claim. The more years you have the better as this proves to the insurance company that you are of low risk which will lead to a reduction in the amount you have to pay. If you do happen to make a claim which is proven to be your fault then you can lose you no claims bonus. If you have a number of years built up then your insurance company can offer you protection on those years so you dont lose them in event of an accident that is your fault.

About the writer:  Nick is a UK based writer