DIY Finances

• 15Aug

  U.S Inflation rate Rises as Food and Energy Costs Increase

  Market and Investment News, Markets No Comments

  Last month the United States inflation rose a startling 5.6%, the first time it has rose that fast in 17 years. With this number also came a 0.8% rise in the consumer-price index, showing consumers the effect of the increase in cost for food, energy, clothing and airfare.  In the previous month there was a 1.1% rise that accompanied a 0.3% rise in core inflation (excludes food and energy).  This is a significant rise of 2.5% from the previous year and well surpasses the Federal Agency’s “comfort zone” of 1.5% - 2.0%.

  Economists are attributing this rise to recent reports of the U.S dollar and commodity prices.  The dollar had increased to its highest value compared to the Euro since February and oil had dropped in price for over a week. As imports have become cheaper, the economy still shows weakness, leading to the inflation.

  To help combat inflation, Bernanke could raise interest rates, a rollback of previous efforts meant to help borrowers and get money back into the economy.  It is expected that the rates will not changed until the beginning of 2009 at earliest, but as inflation becomes a major issue, a rate increase may be seen beforehand.

  Gary Stern, President of the Federal Reserve bank if Minneapolis, and other economists believe that if energy and other commodities continues to drop, and a slight wage increase ensures, inflation may lower in the next several quarters.

  Due to this held belief, economists maintain doubt that, “the Fed will actually pull the rate trigger” as Dimitry Fleming puts it. They are thus relying on commodities to drop in price. Thursday’s report showed no hope for this idea though. Last month energy rose by 4% to accompany a 4.1% increase in gasoline, 7.4% rise in natural gas prices, and a 0.9% increase in food and beverage costs. Transportation, vehicle, medical-care and clothing also saw increases ranging from 0.2% to 1.7%.

  As prices rose, the average weekly wages for workers fell by 0.8% (rate adjusted for inflation), showing that as prices rise, the wages are not keeping up. Despite this, the jobless claims lowered by 10,000 a week ago, placing the levels of jobless claims well below the rate most economists use to show a recession is present.

  The recent drop in prices in oil may start a trend for other commodities and help combat inflation, but as war in Georgia continues, prices may well spike up again.

  Tags: Bernanke, clothing, dollar, economists, energy, gasoline, inflation, interest rates, natural gas, reserve board, umemployment

• 15Aug

  Greenspan Criticizes Housing Bailout

  Market and Investment News, Markets No Comments

  Alan Greenspan, former Chairman of the Board of Governors of the Federal Reserve criticized the government’s response to the issues that arose from the mortgage giants, Fannie Mae and Freddie Mac’s recent troubles. While he often supports his opinions with a laundry list of clauses, side notes and various comments, he simply referred to this response as, “bad.”

  This week, he also stated his belief that the United States house prices will be stable, or at least stabilizing during the first 2 quarters of 2009. “Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009,” Greenspan said. He then added that, even when the bottom is hit, “prices could continue to drift lower through 2009 and beyond.”

  Mr. Greenspan has long been considered an expert on housing markets, and it is known that he currently has an office at his home that is covered with the latest print outs of charts of housing stats from government and trade association reports. With current information on hand he held the belief that the stabilization of the market will not just help Americans but will be a “necessary condition for an end to the current financial crisis.”

  “Stable home prices will clarify the level of equity in homes, the ultimate collateral support for much of the financial world’s mortgage-backed securities,” he said. “We won’t really know the market value of the asset side of the banking system’s balance sheet — and hence banks’ capital — until then,” he said.

  Some have criticized Mr. Greenspan for being part of the problem however. They believe that by his keeping the interest rates low, it encouraged risky loans that have been part of the problem. He also has been off he mark on this issue in recent years. In 2006 he stated, “I think the worst of this may well be over.” Since he made these comments, housing prices have fallen an additional 19%.

  Nonetheless, Alan Greenspan believes in allowing the market to correct itself, stating hat government interference such as taxes or policies to increase construction will simply delay the beginning of the market’s correction process.

  Tags: Fannie Mae, feddie mac, greenspan, housing, market

• 12Aug

  Saving Money For Your Children’s College Fund

  Savings No Comments

  Children’s education is an important chapter in the life of any parent. Most of the children plan to attend colleges to receive higher education in any particular field in which they have interest. Since the tuition fees are increasing day by day, finding a means to meet the educational expenses disturbs students and parents equally.

  	1992	2005 (MU 2006)	% pts increases	Top-Bottom gaps
  At public four-year colleges and universities
  Lowest 20% income families	57%	73%	16%	50% pts (1992) 64% pts (2005)
  Middle 20%	17%	23%	5%
  Highest 20%	7%	9%	1%
  At public two-year colleges
  Lowest 20% income families	50%	58%	8%	44% pts (1992) 51% pts (2005)
  Middle 20%	14%	17%	3%
  Highest 20%	6%	7%	1%

  Fig: Financial burden put by college fees on families:

  There are various ways in which parents can find a solution to meet such high expenses coming in their child’s life. Scholarships, loans and grants are a few of them, while the best method is to save money starting from the birth of the baby so that, parents will have enough money with them, by the time the child is ready for a college life.

  The method chosen depends on the financial status of the family. If you have a better sound finance, you can go for a trust fund in which you will collect interest as it matures with the growth of the child. You will have the freedom to decide how to use this trust fund and can decide that the fund is not disbursed until the child is proving that he is going to attend the college.

  You can approach banks and other financial institutions for starting such funds that grow in size according to the investment or the periodic deposits made or flow of funds from other locations. You can work with the help of an investment firm who will help you in saving money for your children’s college education. They will allow professionals to use your money for making investments in stocks and exchanging the stocks to get cash and bonds when the child is ready for a college education.

  People who don’t have a good financial status need not worry in the future for their child’s education. You can have other methods which can be started with small money in your pocket. You can invest that small amount of money in a savings account in a bank that will offer you a high rate of interest on that account. You should manage from the household budget in a way so that you will have enough money to increase the size of the savings account every quarter. You will have a reasonably good amount of money in your account by the time the child turns 18.

  You can check if you are eligible for some special interest rates strictly adhering to the regulations. If you are making withdrawals in a way that you will save more than spending, you will be able to make chunk amounts for your child’s education.

  You will get financial assistance in the form of loans and many parents try to shelter the funds they have with them so that they get a good amount as loans. It is always better to encourage children to get scholarships and grants based on merits. Such grants will help you to save the money earned through the above methods for helping the children start a new life in the future. You will have enough money with you for your child’s education as well as career.

  Tags: colege fund, Savings, tuition

• 05Aug

  Platinum as an Investment

  Investments, Site News No Comments

  Out of the several precious metals on the earth, platinum is one of the scarcest. With its scarcity also comes a relatively new arrival into the financial market as well; compared to gold and silver, it has not been a metal used as investments until recent times. Platinum is currently traded on the New York Mercantile Exchange (NYMEX) and the London Platinum and Palladium Market.

  Part of the appeal to platinum in recent years is its relative scarcity. Mining productions of this precious metal produces approximately 5 million troy ounces a year. Gold however produces 82 million ounces a year, and silver production is approximately 547 million ounces. Due to this it tends to sell higher per unit than other similar metals. Its elemental make up brings about a rarity in coin production as well, investments in platinum usually consists of the metal as a whole unit, rather molded into coinage.

  If you are in possession of platinum coins, jewelry or the metal in any other form, now is the time to hold onto it, as its value has drastically risen, and is expected to keep running in a bullish market. Its demand is rising, especially in today’s environmentally conscience society. As concerns about the exhausts we emit and its effect on the environment rises, it can be expected that the price of platinum will rise as well. This is so because platinum is used in making the autocatalysts that control vehicle exhaust emissions of hydro-carbons, carbon monoxide and other exhaust waste. As a matter of fact, over 50% of platinum production is used in the automobile industry, making it an attractive investment as the industry continues to expand in developing economic powers such as China and India. As demand goes up, your investment’s value will keep on rising.

  Tags: bullish, Investments, Platinum

• 05Aug

  Silver as an Investment

  Investments No Comments

  Silver has awed investors of precious metals for centuries. It has been on a long Bullish market trend for years, and for those looking for long term investments, this white gold, or silver, fits your needs. Everyone understands the value of silver, just as they do the value of gold, but few realize how it has performed in the market in the past few years.

  Starting in July of 2003 and heading into November of 2006, the growth of several markets will demonstrate how much silver’s value has substantially risen. In this time period the growth of the DJIA was 35%. Gold saw an even larger growth with an amazing 84% growth. In just 3 years your investments in the DJIA and your Gold had risen up to 84% in value. While these numbers seem attractive, there is one more number that might interest you, and that number is 205. Yes, silver’s value had risen 205%  in a span of 3 years.

  The rise in its value has been attributed to the fact that the world demand for silver has outpaced the world’s supply.  This has been consistently true since 1990 after the United States released billions of ounces of silver into the world market. America was once the largest stockpiler of silver., but after the 90’s it has been looking to get back a lot of the silver they let loose into the market, and we all know that as demand goes up, so do the prices.

  If you own silver or would like to invest in this fine material, now is the time to do so. It saw a 205% rise in value over 3 years, and has been bullish for over a decade and a half. As the value of the dollar lowers, don’t you want to know something you are in possession of is still growing in value? Silver is your answer.

  Tags: bullish market, Investments, silver

• 06Jul

  Incorporation Form of Business and Its Tax Advantages

  Taxes No Comments

  Operating a corporation form of business is much more advantageous than to the other forms like sole proprietorships .The tax and legal system provides several benefits and relative immunity specifically to the corporations and their owners.
  Among many of the major and minor tax advantages, you will find the following as most relevant and useful for your own business corporation.
  Owners at Ease with Business Liabilities: A Legal Protection
  The biggest advantage of operating a corporation is a legal shield provided to its owners from their business related liabilities. Majority of the corporation owners prefer this legal protection. A corporation has its own locus standee in terms of both legal as well as the taxation. Separation of legal and tax entities enables a corporation for incurring debt and liabilities related transactions as an independent business entity. As a result, the owner remains free from the liabilities and enjoys relative immunity from the business debt.
  Such type of business arrangement becomes very crucial if it is a risky venture involving various types of legal and tax complications. It is also equally pertinent if the owner of the corporation is wealthy as well.
  However, the protection under law is not limitless and becomes open to all such applications when the lender makes it mandatory to possess a guarantee of the corporate stakeholders against any corporate debts.

  Tax Deductions with Fringe Benefits
  Tax advantages related to the fringe benefits are a plenty for a corporation. Various types of tax deductions can be availed favouring the business, employees, and family members of the owner. The benefits are equal even if you are the sole stakeholder in the business.
  Miscellaneous tax advantages available to all include health insurance, life insurance, travel insurance, entertainment expenses, and several others. There are specific deduction slabs that could be advantageous for everyone in your business. For instance, business corporations have been allowed to deduct 100% medical insurance premium paid.
  Another intelligent move would be to remove the self-employment tax cap and by reducing the investment in “Social Security Tax” along with the “Medicare Tax.” Individual’s tax liability thus also is reduced this way and you become an employee of your own corporation.
  Deriving Tax Deduction Benefits with Business Losses
  Business losses incurred, if any, also come under the purview of tax deduction benefits and give you a safe hand. There are no upper ceiling limits for incurring business, capital, and operating losses. Meaning thereby, you can freely carry forward or carry back your losses to the previous as well as the subsequent tax-years.
  On the contrary, the business entities that are not incorporated legally have to face far stricter provisions and do not enjoy limitless transitions of business and corporate losses. For instance, in case of a sole proprietorship business entity the owner is not permitted to claim a tax deduction for a business loss incurred for more than $3,000 if there are no offsetting capital gains.
  Sharing and Shifting Income for Tax Benefits
  Among other benefits of incorporating, the ‘Income Sharing’ is an important factor. In simplest terms, it is an act of dividing the income among the business, the corporation, and its shareholders. An intelligent tax consultant would design this division in such a way that the overall tax liability automatically comes down substantially.
  For an individual who is running a small-scale business but its stakeholders are falling into the higher tax brackets this type of income classification is extremely helpful.
  In case of the corporations having less than 100 employees on their payrolls would not attract the corporate tax rates implications. Here the business profits are generally paid out already in forms of tax-deductible salaries and other fringe benefits to the employees.
  However, no business would prefer to pay out its complete business profit in such a way. It is never a better option for a small corporation. Substantial part of the profit proceeds would be required for further expansion of operations and increasing the product line. An increased investment may also be required to invest in the advertising. For all such future investment plans, the profits retained would attract a tax at an initial rate of 15% only.
  This way a business corporation can easily retain its earnings with itself and that too without transferring any tax liability to its stakeholders. Because of this very tax advantage, we are observing an exponential growth with upcoming new corporations.
  Taking Benefits of Dividends Received Exclusion
  If you are lucky, enough to run a cash-rich corporation and your shareholders are not inclined to withdraw any cash assets you can surely take an advantage of “dividends received “exclusion. It is extremely beneficial for your business.
  The tax burden is relaxed almost by more than half even. For example, an individual receiving corporate stock dividend otherwise would  have to pay tax for all of its value would be required to pay even less than half of its value if the corporation is falling under the ”dividends received” exclusion category.
  Tax Saving Strategy with Assets
  Substantial tax savings can be availed for movable and immovable assets acquired. A corporation may acquire a leasing real estate, an automobile, and many other properties and assets. As a business owner, your own assets would also be covered under corporation umbrella and you can avail of the tax savings.
  This tax saving strategy is almost similar in nature with the income shifting. However, it is not free from in-depth scanning and scrutiny by the tax authorities. You must be very careful while adapting to this measure and any action taken therein must be in consultation with an experienced tax consultant or attorney.

  Tags: Corporation Tax Advantages, Corporation Tax Planning, Fringe Benefits, Tax Saving Strategies for Corporations, Tax savings for Incorporations

• 06Jul

  How To Budget Your Money With Today’s Rising Food Prices

  Budgeting No Comments

  The effect of food crisis is being felt throughout the world. Jumps in food prices are very painful because we spend approximately 12.8% of our incomes on feeding ourselves. Are you amongst those who have already tried a number of ways to cut down on monthly food expenses but haven’t been successful? Given below are some of the effective ways to plan and reduce your food expenses without compromising the quality.

  Shop the Food Ads- Grocery stores pick out something to put on special, and that’s what they feature in their own ad. Generally these food items are available at good discounted prices. You can buy these items in bulk and save money, but ensure that they are not just stocked items at their regular prices.

  Shop Around- Don’t just shop at one store for all your food items. It is always advisable to go around a bit for comparison of prices. Most of the times, one or other grocery store is offering discounts. You can find information about these discounted deals online saving your money.

  Don’t bulk up unnecessarily- Certainly getting food items in bulk will cost less but they are not worth the discounted rate if they go waste or get spoiled owing to improper storage. You need to be careful in selecting the quantity of such food items, so as you can make the most out of such deals.

  Check out warehouse deals- There are some specific food items which are available at cheap rates in warehouses. You can visit a nearby warehouse once every month to get sufficient quantity to serve your family for a month. One such food item is eggs, which can be availed at cheap rates from warehouses.

  Poultry perfect- Poultry prices have been climbing up steadily from quiet a long time. This can be due to increase in petroleum which affects transportation. You can save on poultry by buying whole bird, if you have no major problems in its cutting and storage. Another alternative is to go for drumsticks and thighs as they have more flesh.

  Carry coupons with you- Although coupons avail you a discount of 50 cents on a food item, but in a long run they can help in increasing your savings. Most of us tend to forget these coupons at home while going for shopping. You can also stack coupons to get double discounts.

  Skip the brand name- The store brand is less expensive and can also come from the same diary as you favorite brand. If you do not have a discount coupon against your favorite brand then it is better to go for a local brand after checking its contents and packaging.

  Buy skimmed milk- Skimmed milk is 10% less expensive and 5% more nutritious for you. Some people complain about its taste, you can add various artificial flavors to it in the beginning so as you can adjust to its taste.

  Commit to a budget- This approach can be very effective. Complying with monthly budget can help you plan your food items correspondingly and slowly you will learn to shop optimum food stuff in your budget.

  Keeping above points in mind you can surely shop food items and make good savings without compromising on quality.

  Tags: ethanol, food prices, increasing, rice, rise

• 04Jul

  What To Do With Your Economic Stimulus Check

  Taxes 1 Comment

  What are you going to do with your tax rebates?

  You may need to ask yourself this question come springtime if the federal government economic stimulus package passes as it’s expected to. The package is expected to boost the ailing U.S. economy that is currently in a recession; the plan would give billions of dollars back to consumers. The rebate check would range anywhere from $300 to $1200 per household as early as spring. Individual taxpayers would receive anywhere from $300 to $600, couples would receive up to $1200 with an additional $300 added for every child in the household.

  Here are some easy ways to not waste your money.

  1. Start an emergency fund. As fun as spending your money on appliances, electronics and clothes might be, starting an emergency fun will be much more rewarding in the long run. Everyone should have an emergency fund that can cover a few moths of bills in case something happens i.e. you lose your job, you go through a divorce, or you go on sick leave. You can use your tax-rebate check to get this emergency fund started.

  2. Pay off your bills. If you’re struggling with the bills using this check to pay them off would be a great idea. Not only would you have some extra money to spend but also you would be able to go to sleep at night knowing your bills are paid off.

  3. Pay off your credit card. Credit cards can be great but only if you pay off the full balance every month. If you start to neglect your credit card bill you wont have anything good in store for you in the future. If you have a balance on your card especially if it’s a card with 18% or more interest pay it off. You can save up to $730 if you transfer a $2,000 balance from an 18-percent card to an 8.25-percent card and then pay off your balance at a rate of $50 a month.

  4. Invest in your future. If you have been putting off your retirement fund now would be a good time to start investing. You can use you Stimulus check to kick-start that retirement fund you haven’t started yet. Most employers will match your contributions up to a point, they will contribute $.50 for every $1 you put in up to 6% of your income. You could also start a college fund for your child.

  5. Invest in your potential. You should seriously consider taking 2 or 3 classes to give you that edge in the workplace. You might want to go back to school at night or whenever you have free time and get another degree. You might want to go to a computer school because every company needs an IT professional and someone who can fix/maintain a computer network because a computer network in a big company is essential to success. So take that check and do any of these things and you will be worry free when it comes to money. Money does not bring happiness but you can rest easy knowing you have money in your pocket.

  Tags: Bush, congess, households, Investments, retail, Savings, stimulus

• 02Jul

  Budgeting Your Gas

  Budgeting No Comments

  In today’s world with gas prices on the rise there are many ways to budget your money. With the average household income of the U.S. at $53,100 gas prices can really cut in your budget. At $4.03 this week, the average price of a gallon of gasoline nationally is now almost a dollar higher than it was a year ago, according to the U.S. Department of Energy. Gas prices are rising and experts predict that in 5 years gas will be $10 per gallon, so here are a few ways to ease the pain at the pump:

  1. Don’t push vehicle upkeep off to the side. Just doing simple things such as putting air in your tires and clearing the excess junk out of your trunk can increase fuel efficiency.

  2. Slow down. Gas mileage decreases rapidly when you are traveling at over 60 MPH. “Each five miles per hour over 60 mph is like paying an additional 20 cents per gallon of gas,” ASE reports. Use cruise control to help you maintain a constant speed.

  3. Look harder. You should look around town for cheaper gas prices. Different sides of town can have different prices at the pump.

  4. Don’t drive out of the way just to get one thing, try to get as many things done in one trip as you can.

  5. Carpool to work. Have 3 or 4 of your co-workers trade off driving everybody else to work. Then have everybody chip in on the cost of the ride.

  6. Think small. SUVs may be fun, but maybe it’s time to switch. Smaller cars and hybrids are more fuel-efficient. If you’re in the market for a new car, visit the U.S. Department of Energy’s Fuel Economy site (fueleconomy.gov) or the EPA’s Green Vehicle Guide  (www.epa.gov/greenvehicles) for information on which vehicles get the best gas mileage. If you live near the border of Mexico, such as in lower California or Texas then go below the border. The gas in Mexico is about half of what it is a block from the border in the US. This is due to the government setting the national cost of gas.

  7. Fill up on weekdays. Gas is much cheaper on the weekdays. Gas prices usually rise on the weekends.

  8. Do not make too  fast of starts or sudden stops.  This can waste up to $.050 a gallon because it overexerts your engine and burns extra fuel. Gradual acceleration  helps automatic transmissions run better.

  9. Buy smart. Buy a fuel-efficient car. When pricing cars, factor in long-term fuel costs. Keep in mind that sunroofs add to wind resistance, lowering the mileage per gallon.

  10. Don’t drive everywhere. Rather than drive your car to the corner store or a friend’s house, walk or ride your bike there. Not only does this save you money at the pump but studies show that waling everyday lowers your risk of heart disease.

  To save money at the pump just be smart about the way you drive. If you follow some of these simple tips you can save hundreds on gas every year.

  Tags: barrel, gas prices, managing money, oil, speculation

• 17Jun

  Investing in Gold as the Value Rises

  Investments No Comments

  

  Year to 31st Dec.	Gold Price (US$/oz)
  		(adjusted to 2006 dollar)[6]
  1910	20.67	421.84
  1920	20.67	208.79
  1930	20.67	249.04
  1940	34.50	500.00
  1950	40.25	335.42
  1960	36.50	248.30
  1970	37.60	195.83
  1980	641.20	1567.73
  1990	423.80	654.01
  2000	272.15	318.68
  2005	513.00	529.41
  2008	1,002.00	790.40

  Gold has made substantial gains in value per ounce since 1910. It has risen (adjusted to 2006 levels) from $421.84 to $790.40 over a span of almost 100 years. This rise can make gold a very attractive option to investors looking for ways to diversify their assets. Gold has maintained a high value for centuries and has always had a high value, making it a stable investment as well.

  Tags: bullish, gold, increase in value, Investments, value

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