Saving Yours Money

Is Credit Repair Legal? STOP! The 1 Credit Improvement Technique That Could Get You Arrested

2010-08-17T05:46:00.000-07:00

Is credit repair legal? Can you get in trouble for hiring a credit repair clinic, service or attorney? Are there any laws about fixing your credit you should know BEFORE You begin? In this article we are going to take a quick and easy look at the finer points of LEGALLY improving your credit file... without finding yourself in one hot mess of trouble! Curious to know more? Continue reading as we take a closer look below!

The GOOD News? Credit Repair is Your RIGHT (and totally kosher, too!)

Yes, you have the right to challenge information on your credit report. Yes, you can hire a professional credit attorney, service or clinic. (even though you don't need to) And YES you should expect your credit file to be 100% accurate... and if it's not, you DO have the right to demand negative items come off immediately. (even if they are technically correct otherwise)

Are there laws that govern credit? How is the government involved?

Yes, the Fair Credit Reporting Act and it's 25 years of revisions, interpretations and amendments was passed to protect YOUR interests. It was created, by Congress, to ensure that you are NOT punished for negative entries on your report that can NOT be verified. Items that are old cannot be held against you, either. (7 years for most things...10 years for more severe entries in most cases) Believe it or not....while the credit industry is a MASSIVE one, in many respects, being a "small" guy has it's advantages. Hundreds of thousands of people have improved their credit on their own in DRAMATIC fashion.....and with very little expense. (including yours truly..:-)

Okay....but what is the 1 credit improvement technique that can get you in REAL trouble with the law?

Honestly? File segregation scams, or obtaining a secondary federal ID number for the purposes of applying for credit, CAN cause you real legal problems. Many credit clinics teach this approach....and it truly doesn't work. (it essentially requires you use an alternative to your social security number for credit applications.....often a business tax identification number) Many people have gotten into REAL trouble for pushing these sorts of schemes, and more than one person has gone to prison for fraud as a result. (Plus it's NOT necessary......not effective and not ethical to boot!)

Credit Card Debt Cancellation - Free Debt Relief Resources For Credit Cards

2010-08-17T05:44:00.000-07:00

With credit cards being used to extremes in the past years, it is no wonder that so many people now have to deal with the negative outcome of this situation mounting debt. Having foreseen the situation, the authorities have created a stimulus package that can tackle any type of debt, and especially credit card debt.

The first thing you need to understand is that you cannot legally make your debt disappear completely, since this would harm your creditor and ultimately the economy. But you can use different debt relief methods instead in order to minimize and take control of it, thus giving you power over your problem. One of the most effective ways of eliminating substantial amounts of debt is debt settlement or its legal cousin, debt resolution. Through a good settlement, you can cut your debt in half by negotiating with your creditor and explaining that you can no longer afford your monthly payments, but would like to do something about your debt nevertheless.

If he agrees, he may cut off annual fees, payment penalties and a lot of accumulated interest along it other costs in order to eliminate forty to sixty percent of your debt. The eliminated amount will never have to be repaid and you can more easily handle the rest since the interest on it will be significantly lowered. This strategy is a much better alternative to bankruptcy or simply not paying your bills, since it actually takes care of the problem instead of simply ignoring it or giving up on it.

This also means that you will not be faced with the negative effects that bankruptcy brings with it, like a mark on your record or a very low credit score that you cannot increase. Settling will leave you perfectly able to take out loans and credit in the future as well as not go on any record. All in all, if you want a good solution for eliminating your credit card debt, settlement is most likely the way to go. You will not regret it when you see how your financial situation improves.

Securing a Balance Transfer Credit Card

2010-08-05T06:50:00.000-07:00

Okay, answer me honestly: how often have you found yourself maxing out a credit card, only to turn around and apply for another one? All too frequently, when people who have a problem with getting that 'insufficient funds' warning when they slap down that plastic card for a purchase, they simply get another card. Instead of facing the fact that they have a credit card problem, they simply max out another card.

Well, if this describes you, consider the choice of putting all of those maxed out cards onto one card by securing a balance transfer card. Often, you can take advantage of lower interest rates and fees, plus experience other features, such as being waived for the annual charge when you pay your bill faithfully every month.

When securing a balance transfer credit card, you can breathe a little easier when it comes to keeping track of all those other cards that have been maxed out, as well as the monthly bills on each card that shows up throughout the month. There can be some peace of mind knowing that you only have one credit card bill showing up each month to address.

Banks and lending institutions are all too aware of the spending habits of many people today and that their tendency can be to max out the limit of their credit cards. This is the number one reason why balance transfer cards are so popular to begin with and why they are so available. So, how do you get one of these balance transfer cards?

In a nutshell, first insure that the interest rate is better than the one on your current cards. If not, it will not be worth the effort, simply because you want to save money in interest charges as well as consolidate your credit card debt. After determining this to be the case, when you sign up for a balance transfer card, you are given the option of transferring all of your other credit cards to the new balance transfer card. Often these balance offers lock you in to a lower, fixed rate for a period of time; usually six to twelve months. What a great deal, right? So, the next question you may be asking yourself is: why do they make these balance transfer cards available?

The answer is very simple and comes down to one word: competition! There are numerous credit companies around and they are all competing for your business. They may well be getting you off the hook by offering you a lower rate and a chance to transfer all your credit card balances, but they are also betting that you will stay with them and that will earn them your money!

That being said, be sure to go into this transaction with your eyes wide open. If not, you could turn this opportunity to consolidate all your credit card debt into a trap. It is imperative to point out that, by taking advantage of this opportunity, it does not give you license to keep on spending like there is no tomorrow. After all, that is what got you to this point in the first place, and you don't want to go backward, right?

Keep in mind that, in order to take full advantage of any balance transfer card, you have to use it as a tool to turn this credit card ship around. Reason being, any new balance transfer card will come with a time limit on the lower interest rate and, if you keep maxing out this card, your low interest rate will balloon and you will end up worse off than before in interest fees and charges. Should this happen, you will never get out of credit card jail!

Money management is an important fact of life and we want to give you the information you need to make wise decisions in all your personal financial situations. We are always adding new pertinent finance related articles to our web site. Whether it has to do with investing, or dealing with credit card debt, we are your one-stop location to help you with all your financial needs. For more free financial debt solutions, simply go to http://eliminatingdebtforever.com where you will find a wide variety of articles addressing all things financial.

Free Credit Help

2010-08-05T06:49:00.001-07:00

Credit is a delicate subject that most people find hard to understand. We are here to provide free information and allow the consumer to do their own research. Consumers are provided the opportunity to join the conversation the creditors and bureaus are having about them. Consumer reporting companies are their to report negative information about the consumer to allow creditors to charge a higher interest rate.

The information in your credit report affects whether you can get a loan or insurance or even a job. As consumers you are allowed one FREE copy of your credit report yearly, obtain your yearly report and make sure everything is reporting accurately about you. If you notice negative or inaccurate information tell the consumer reporting company Trans Union, Experian, Equifax in writing, what information you think is inaccurate. Include any paper work that support your position. It is totally FREE to dispute the inaccurate or out dated items on your credit report.

The credit card industry has changed a lot since the global slow down, it's a new ball game out their, the consumer is on the batting plate. We have more control than ever over our credit score. The Consumer Credit Protection Laws that allow the consumer to check and repair their credit if any negative or inaccurate items are reporting against you. Credit repair is legal do not allow any one to fool you, you might not need professional help.

1st step check your credit
2nd step investigate your reports your trade lines that are old or inaccurate.
3rd step repair your credit send dispute letters to all three major credit bureaus.
4th step is start living your dream and being financially free.

Creating a formula of how long it would take you to reach your goals is most important thing. How much is your debt? Divide by your annually income equals how long it would take you to pay off your debt.

Econometrics in Finance

2010-07-24T07:47:00.000-07:00

Econometrics refers to developing quantitative methods to analyze economic principles. Theoretical econometrics uses statistical properties while applied econometrics usually applies econometric methods to the various theories. Finance domain is increasingly using the technique like risk management, portfolio management etc.

Econometrics is used in finance to evaluate quantitative problems and uses various techniques like financial models, volatility estimation, capital asset pricing, risk adjusted returns etc. Financial econometrics is viewed as a merger of economics, finance, statistics and applied mathematics. For the various issues in financial world, economics renders theoretical foundation while statistics and applied mathematics using quantitative techniques are used to solve quantitatively. The vast amount of data generated in financial markets on asset returns, volatility usually requires study over a period of time using techniques like time series. Econometrics is widely used for derivative products like options, futures etc.

Regression analysis is one of the primary methods. It usually involves modeling and analyzing various variables to establish a relationship between dependant variable and many independent variables. This technique is useful to understand the changes in the dependant variable to any changes in independent variable. Methods of Moments, Bayesian methods, Generalized Method of Moment etc are other important methods used in econometrics.

The general steps involved in developing an econometric model are:

• Understanding the problem - It involves formulation of a theoretical model to relate two or more variables.

• Collecting data - It involves accumulating relevant data from public domain like Reuters or any published information and also from surveys.

• Selection of method - This step involves choosing an appropriate estimation method like single or multiple equation technique.

• Statistical evaluation - It involves framing assumptions for estimating parameters of the model and analyzing the aptness of the estimates in relation to the data.

• Evaluating the model - The model is then assessed from theoretical perspective.

• Implementation of the model - the model is then used for the identified issue and also for making forecasts. The step also results in courses of action needed.

Econometrics is being widely used in fields including finance and knowledge of its various techniques helps investors manage their portfolios well.

For more information on econometrics and its importance, you can visit jrank.org, it helps you find the exact site that would provide more information and you can also integrate to this free search engine into other websites. Statistics plays an important role in financial analysis and you can find detailed information on it in the finance category of Jrank encyclopedia

Top Ten Money Saving Tips

2010-01-23T03:44:00.000-08:00

"The big money is moving into gold" - Bill Murphy

2010-01-06T06:10:00.000-08:00

Tuneboy - Money Talks Bullshit Walks (Hardstyle Masterz Remix)

2010-01-04T09:38:00.000-08:00

Steve Forbes: Capitalism Will Save the U.S. - CBN.com

2009-12-15T04:48:00.001-08:00

5 Easy Ways to Save Money in a Recession

2009-11-02T09:37:00.001-08:00

President Promises Better Future for Unions

2009-09-16T07:38:00.000-07:00

Where Do Jobs Come From

2009-09-05T05:19:00.000-07:00

Save Money on your electricity costs & Save the Planet with Solar Energy Certificates

2009-08-13T02:05:00.001-07:00

How I Make $40,000 a Month From a Blog

2009-07-14T18:19:00.001-07:00

My Blog Business Model from John Chow on Vimeo.

Even Forbes Is Pinching Pennies

2009-06-15T11:12:00.000-07:00

With its yearly list of the most fabulously wealthy and legion of articles lionizing business leaders, Forbes magazine has long been a synonym for riches, success and a belief that business, left to its own devices, will create a better world.

That last part has not worked out so well lately.

If there ever was a bad time to be named Forbes — and there probably is not — now might qualify. Their signature magazine, founded on the words of Bertie Charles Forbes, “Business was originated to produce happiness,” is struggling in an age of financial misery.

Although circulation has been basically stable at about 920,000, the average price per issue on subscriptions has been dropping steadily, which means Forbes — like a lot of magazines — is fighting to hang on to its subscribers.

Read more

LPACTV: The American System (1): Intro to National Banking

2009-06-10T03:44:00.000-07:00

NCUA and Jane Bryant Quinn Your Funds in a Federally Insured Credit Union are Safe

2009-06-10T03:42:00.001-07:00

6 New Cars That Can Save You Cash

2009-05-31T03:52:00.000-07:00

When it comes to buying a car these days, it's hard to deny that it's a buyer's market. Automakers are offering record cash incentives and attractive financing deals of as low as 0%. However, as good as the deals on those '09 models may seem now, it may pay to wait for the automakers 2010 lineup to hit the lots.

SmartMoney.com visited the New York International Auto Show — which opens to the public Friday — to see the automakers' latest lineup of low-priced, fuel-efficient vehicles, some of which carry price tags of below $14,000. But the low retail prices on these cars are just the beginning.

Thanks to the stimulus plan, car buyers can deduct state and local sales tax on vehicles worth up to $49,500, netting some consumers who buy a bargain ride as much as $600 in savings.

Then there are the individual savings. Ford's Fusion, for example, still qualifies for a hybrid tax credit of $1,700. And Kia is already offering 0% financing for up to 36 months on its 2010 Soul; while Nissan is offering recent graduates a $500 discount on its boxy-shaped Cube.

Here are some of the least expensive cars of the 2010 lineup and breakdown of the savings you could reap

Surviving a Job Loss

2009-05-19T06:20:00.000-07:00

How To: Save More Money in 2009

2009-05-19T06:17:00.000-07:00

Paul Krugman Supports Stimulus, Warns No Quick Fix

2009-05-13T06:05:00.001-07:00

Joseph Stiglitz - Bail Out Homeowners, Not Banks

2009-05-13T06:03:00.000-07:00

Joseph Stiglitz - Problems with GDP as an Economic Barometer

2009-05-13T06:02:00.001-07:00

Saving Money in Plain English

2009-04-26T17:21:00.000-07:00

Saving by:Solar hydrogen home Michael Strizki

2009-04-24T17:40:00.001-07:00

How To: Create a Budget

2009-04-23T04:31:00.001-07:00

Average U.S. gasoline price rises 10 cents a gallon

2009-04-12T20:15:00.001-07:00

NEW YORK (Reuters) – The average U.S. retail gasoline price rose about 10 cents a gallon over the past three weeks due to environmental costs linked to warmer weather, though the price was 40 percent lower than a year earlier, according to the Lundberg survey released on Sunday.

The average national price for self-serve regular unleaded gasoline was $2.048 a gallon on April 10, up 9.58 cents from March 20, according to the survey of gas stations.

The price was a whopping $1.27 below a year ago levels, when crude oil prices soared.

"The major cause of the rise of nearly a dime in three weeks is seasonal gasoline demand, not only because our consumption rises month by month, but because of the cost of environmental compliance," Survey editor Trilby Lundberg said in an interview.

As the weather warms, refiners are required to limit vapor pressure in order to avoid smog production. This adds to the cost per gallon, she said.

"It's already kicking in this month in some parts of the county," she said.

The cost of crude oil has remained fairly constant over the past three weeks, Lundberg said.

The lower gas prices could spur demand, which is likely to result in a rise in prices, but nowhere near the record $4.112 per gallon set on July 11, 2008, "unless there's a crude oil shock, and that does not seem likely either," she said.

The lowest price per gallon was in Newark, New Jersey, at $1.83, while Anchorage, Alaska, saw the highest at $2.40 per gallon. Los Angeles, the biggest U.S. market for gasoline, had an average price of $2.32 per gallon.

The nationwide Lundberg survey polls about 5,000 gas stations in U.S. metropolitan areas

' Worst economic collapse ever'

2009-03-30T08:28:00.000-07:00

money-saving tips

2009-03-13T01:30:00.000-07:00

** Cut your home phone bills
BT may seem to behave like a monopoly but it most definitely is not one. If you must use your phone there are scores of cheaper alternatives from cable companies that package your telephone, television and even broadband internet access to low-cost dial-up services that give you access to cheaper calls using your existing BT line.

money-saving tips

2009-03-13T01:29:00.000-07:00

**Consider installing a water meter
We take our tap water for granted. And why not? The companies behind the supply exist to make a profit, we pay them to supply water and have every right to expect it to flow from our taps. But if it doesn't rain, supply runs dry and the price goes up. So you may want to consider the possibility of installing a meter. If you have a big home with few occupants you may be surprised to learn you could halve your annual bill.

money-saving tips

2009-03-13T01:27:00.000-07:00

** Clear your credit card debt
One of the golden rules of financial planning is to clear your most expensive debts first, in other words your credit cards. OK, credit cards offer a convenient way to pay for goods and services but if you can't clear the balance every month, consider a low-cost loan as an alternative. Do the sums: a credit card debt (APR 15%) of £2,200 over three years will cost £545 in interest. A loan at 6% will cost £209. A saving of £336.

money-saving tips

2009-03-13T01:24:00.000-07:00

Change your attitude to your mortgage
The most expensive item you are ever likely to buy is your home. If you're not in the privileged position to pay cash, make sure the loan you use to finance it is the best available. For example, if you are paying your lender's full standard variable rate (SVR) you are probably paying hundreds of pounds a year more than you need to.

There are thousands of deals to choose from and while it is vital to check the small print for hidden catches, this is a relatively easy way to save a lot of money. Remember: loyalty to your bank benefits your bank, not you. Even better, if you can afford to make overpayments on your mortgage, you'll clear your debt several years early and make massive savings. For example, if you borrow £100,000 at 6% over 25 years, you'll pay it back at £643 a month. The total charge for credit will be £93,000. But if you can overpay by £100 a month you'll clear the loan in less than 19 years, giving you 6 years of mortgage-free living and saving a staggering £25,000 in interest.

Social Policy After the Economic Crisis

2009-02-24T16:46:00.001-08:00

Should the GOP Move Right To Save Itself? - Ramesh Ponnuru

2009-02-22T04:08:00.000-08:00

Oil above $35 amid grim economic news

2009-02-19T08:41:00.000-08:00

VIENNA (AP) -- Markets shrugged off a steady barrage of grim U.S. economic news to push oil prices above $35 a barrel Thursday, with a drop in the dollar encouraging investors to buy crude.

A report by the Fed predicting a sharper economic contraction and raising forecasts for unemployment was offset by a 1.1 percent drop in the dollar against the euro, to $1.2667. Oil tends to rise when the dollar drops as investors use the commodity as a hedge against inflation.

Light, sweet crude for March delivery jumped by $1.23 to $35.85 a barrel by midafternoon in Europe on the New York Mercantile Exchange. The contract on Wednesday fell 31 cents to settle at $34.62.

The March contract expires on Friday, and traders switched their focus to the April contract, which rose 62 cents to $38.03.

Besides the boost oil prices received from the drop in the dollar, the economic news was gloomy.

The Federal Reserve on Wednesday confirmed what many investors already suspected -- that the U.S. economy has significantly deteriorated in the last few months.

The Fed said it expects the economy will contract between 0.5 and 1.3 percent this year. Its previous forecast from November had a 0.2 percent contraction as the worst case scenario.

The Fed also said the unemployment rate will likely rise to between 8.5 and 8.8 percent this year, higher than its previous forecast of between 7.1 and 7.6 percent.

The current global economic slump began in 2007 with a crisis in the U.S. sub-prime mortgage sector, and the housing market continues to buckle under the weight of surging foreclosures.

A report from the Commerce Department on Wednesday said construction of new homes and apartments plunged 16.8 percent in January from the previous month, to a seasonally adjusted annual rate of 466,000 units, a record low.

"The housing data suggests the recession is even worse than we thought," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "We need to see the housing market stabilize because consumer sentiment is very much correlated to it."

Investors are skeptical that a $787 billion stimulus bill signed this week by President Barack Obama will spark a quick recovery. The White House on Wednesday said the government will spend $75 billion to help prevent millions of Americans from losing their homes.

The program would provide incentives to mortgage lenders to help borrowers reduce their payments in an effort to counter a souring housing market at the core of the economic crisis.

While a number of analysts said the program might limit the hemorrhaging in housing prices, the market's cool reception seemed to show how much investors have lost confidence in government bailouts.

Crude investors are also concerned a jump in oil inventories is reflecting a steep drop-off in demand.

Analysts expect crude stocks will grow by 3.5 million barrels when the Energy Department releases inventory data for the week ended Feb. 13, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Inventories have risen more than 30 million barrels in the last six weeks.

"Inventories are the focus now," said Moltke-Leth. "If they rise again, it will put more downward pressure on crude."

Net crude oil stocks rose to a 20 month high for the week ended February 6th. It was the eighteenth weekly increase out of 20.

"Bottom line, nothing has changed," said energy analyst Stephen Schork. "There is no way to construe the current fundamental picture anyway other than bearish."

The Organization of Petroleum Exporting Countries has struggled to bolster prices as output cuts fail to keep up with falling demand.

Venezuelan Oil Minister Rafael Ramirez said Wednesday the group may cut production again at a meeting on March 15, on top of the reduction of 4.2 million barrels a day announced since September. Ramirez said the 13-member cartel would like prices to rise to $70 a barrel.

"OPEC is looking very weak right now," said Moltke-Leth said. "There's a lot of chatter from them, but the market isn't really listening."

Moltke-Leth said prices will likely fall to about $32 a barrel, which would test the 10-year average price.

"$32 and a half is a significant line in the sand," he said. "It's a key support level, and I expect the market to test how strong it is."

In other Nymex trading, gasoline futures rose 2 cent to $1.09 a gallon. Heating oil gained 3 cents to $1.17 a gallon, while natural gas for March delivery jumped 4 cents to $4.25 per 1,000 cubic feet.

In London, the March Brent contract rose 99 cents to $40.54 on the ICE Futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.

Nearly 5 million are getting unemployment benefits

2009-02-19T07:39:00.000-08:00

WASHINGTON (AP) -- The number of laid-off workers receiving unemployment benefits has jumped to an all-time high near 5 million while new jobless claims remain well above 600,000. Both figures were worse than expected and new projections from the Federal Reserve show unemployment rising for the rest of this year.

The Labor Department reported Thursday that the number of people receiving regular unemployment benefits rose 170,000 to 4.99 million for the week ending Feb. 7, marking the fourth straight week those receiving benefits have been at a record level on data going back to 1967.

The continuing claims figure also was significantly above the year-ago level of 2.77 million and underscored the difficulty people are having in this recession finding another job once they are laid off.

An additional 1.5 million people are receiving benefits under an extended unemployment compensation program approved by Congress last year, bringing the total number of people receiving unemployment benefits to 6.54 million for the week ending Feb. 7.

In other economic news, wholesale inflation surged unexpectedly in January, according to the Labor Department. Wholesale prices jumped 0.8 percent last month, the biggest gain since July and well above the 0.2 percent increase that economists expected.

The acceleration was led by a 3.7 percent surge in energy prices with gasoline prices jumping 15 percent, the biggest gain in 14 months. Even outside the volatile food and energy sectors, wholesale prices showed a bigger-than-expected increase, rising by 0.4 percent.

New applications for unemployment benefits totaled 627,000 last week, the same as the previous week, according to the department. But that was still more than the 620,000 claims economists expected.

It also remained near the 631,000 claims filed three weeks ago, which was the highest tally since October 1982, when the economy was emerging from a steep recession, though the labor force has grown by about half since then. A year ago, initial claims stood at 342,000.

The four-week average for claims rose to 619,000 last week, up from 608,500 the previous week which was the first time the figure had topped 600,000 during the economic downturn.

The cascade of layoff notices in recent weeks has heightened concerns about the current recession, already the longest in a quarter-century.

Goodyear Tire & Rubber Co., said Wednesday it will cut nearly 5,000 jobs, or almost 7 percent of the biggest U.S. tire maker's work force, this year after it posted a fourth-quarter loss and revenue sank 21 percent. The cuts follow the elimination of about 4,000 jobs in the second half of last year.

General Motors Corp. and Chrysler on Tuesday filed plans with the government more than doubling their request for aid to a total of $39 billion and announced plans for thousands more job cuts. GM alone said it would cut 47,000 jobs globally by the end of the year -- 19 percent of its work force, and Chrysler said it will cut 3,000 more jobs.

The Fed released a new economic forecast on Wednesday that reduced its growth forecast for 2009 and increased its unemployment rate projections. The new forecast predicts that unemployment will hit between 8.5 and 8.8 percent this year, up from the current level of 7.6 percent.

And in an appearance at the National Press Club, Fed Chairman Ben Bernanke said Wednesday that "strong and aggressive action" would be able to overcome the current recession and jolt the economy back into growth. But he said "if we fail ... then the situation will continue to deteriorate."

President Barack Obama pointed to the deteriorating economy to win quick passage of an $787 billion economic stimulus program which he signed into law this week. On Wednesday, Obama unveiled a $75 billion program aimed at halting the surging level of mortgage foreclosures in the wake of the worst slump in housing in decades.

For the week ending Feb. 7, the states with the largest increases in jobless applications were Kentucky and Arkansas, which blamed the jumps on rising layoffs in the mining, trade and manufacturing industries. The biggest decreases were recorded in California and Tennessee, which reported fewer layoffs in the construction, trade, service and manufacturing industries.

Revolving Credit

2009-02-11T04:49:00.000-08:00

A revolving line of credit, also called "open-ended credit," is made available to you for use at any time. Examples of revolving credit are credit cards such as Visa, Mastercard, and department store cards. When you apply for one of these cards, you receive a credit limit based on your credit payment history and income. When you use the credit line, you must make monthly minimum payments based on the total balance outstanding that month. Some lines of credit will also have an annual account fee.

While revolving credit is a convenient way to borrow, it can also become an endless pit of minimum payments that barely cover the interest due. Many cards charge annual rates of interest of 18% or higher. As you pay off your debt, the minimum payment is also reduced, thus extending your payoff period and, consequently, the interest you pay. Paying just the minimum due on a $2,000 credit card loan could mean making monthly interest payments for 10 or more years!

Revolving credit, in addition to being convenient, eliminates the need to carry a lot of cash and can help establish you as a creditworthy risk for future loans. The itemized monthly statements also can help you track your expenses. But some people can easily yield to the temptation that the convenience of credit cards offers. Impulse buying, failing to compare costs, and purchasing large items you can't afford are all downfalls brought on by always available purchasing power. Spending more than you earn in any given period is a dangerous practice at best, but doing it over an extended period of time can be financial suicide.

Installment Debt vs. Revolving Debt

Lower interest rates and an amortizing repayment schedule can make installment debt a much cheaper alternative to revolving credit.

Installment Revolving
Beginning Balance $2,500 $2,500
Interest Rate 10% 18.5%
Years to Repay 4 30*
Interest Cost $544 $6,500
*Paying 2% minimum monthly payment.

Sources and Costs of Debt

Source Type of Debt Cost
Banks and Credit Unions Personal, secured Low
Personal, unsecured Moderate
Mortgage Low
Credit Card Low to High
Mortgage Companies Mortgage Low
Department Stores Revolving High
Insurance Companies Personal, unsecured High

Installment Debt

2009-02-11T04:48:00.000-08:00

Debt comes in many forms, and most types help us in our daily lives -- when used responsibly. Most people cannot buy a home without some financial help, and many cannot buy a car (especially a new one) without some sort of financing. The money borrowed to purchase large-ticket items is called installment debt: The debtor pays a portion of the total at regular intervals over a specified period of time. At the end of that time period, the loan with interest is paid off.

Installment debt allows you to purchase items at a competitive interest rate: for example, 5% to 7% for a 30-year home mortgage and 8% or 9% for a car loan. The loan is paid back on an amortizing schedule, monthly payments of a fixed amount that remain constant over the life of the loan. At first, most of the monthly payment consists of interest. In later years, principal begins to be paid down.

Installment debt is easily budgeted and the debt is eliminated on a predetermined date. Even for those who may actually have the cash to purchase the desired item, installment debt can make financial sense if you can earn a higher return (after taxes) on your investment of cash than you must pay on your installment debt.

Managing Debt and Credit

2009-02-11T04:44:00.000-08:00

Credit was once defined as "Man's Confidence in Man." But in fact, the definition of credit today is more like "Man's Confidence in Himself." Using credit today means you have confidence in your future ability to pay that debt. Forty years ago, your parents may have paid cash for their homes and their cars, a largely unheard-of event today. If they borrowed money at all, chances are it was from a relative or friend, and not a financial institution.

Today debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced.

Valerie Jarrett: "America Stands Ready to Lead Again"

2009-02-05T06:29:00.001-08:00

Tips:How to save

2009-02-02T01:55:00.000-08:00

Recycle and reuse. The plastic bags for your groceries make good trash bags too. If you really want to become efficient, consider things like saving your cooking grease (baby boomers already know that) or reheat that half-full pot of coffee… if you want two cups of hot tea tonight, one bag is probably sufficient.

Insulate. Insulation for your attic, walls (including outer wall electrical outlets) will absolutely save you money over time. Much of this, you can do yourself. While you are at it, check the weather stripping around the doors to the outside; if you can see daylight between the door and frame -- purchase a roll of adhesive foam door seal and close those cracks.

Consider investing in reusable items. Rechargeable batteries are a good option if your battery consumption is high – the question you should ask yourself is: why is your battery consumption high and what can you do to reduce that?
Quit smoking. OK, this is obvious. Aside from the $150 a month, there are the enormous added costs to your health and life (and possibly auto and home) insurance and a very strong (almost guaranteed) potential for extraordinary health costs.
Limit alcohol. Alcohol is an added expense you may be able to eliminate altogether, or at least significantly reduce.

Stop gambling. If you gamble (unless you are consistently making money and you know that from tax returns, of course)… stop. Quit. Nix. Never. The odds against winning the Powerball lottery are around 150 million to 1 against you.
Stop using paper napkins and paper towels. Cloth towels are more absorbent and can be used over and over again. Cloth napkins can be made from an old table cloth. They also clean much better than paper.

Think about every purchase before you make it. Ask yourself whether you need it or simply want it. Do you already own something that will perform the same task? Is it of good quality or will it need to be replaced after a few uses? Most importantly, are you willing to put off your savings goals to have it? If an item is superfluous, just say no.

Use the 24 hour rule. Wait 24 hours before making the purchase for non-critical items.

Grow a garden. Even a small plot can yield significant amounts of fresh food. You can of course spend a fortune at the garden store but shop around, ask neighbors and grow your own starts

How to Reduce Expenses

2009-02-02T01:53:00.000-08:00

An important way to save money is to reduce expenses. There are a lot of ways you can stretch your dollars and help avoid that "too much month at the end of the money" feeling. Some of these steps will take a bit of planning and investigation but they will be well worth the effort. Others you will be able to implement immediately. Some will require a small up-front investment but have a substantial long-term payoff. Your ability to implement those will depend on available cash and your budget.

What you’ll need first, is a clear idea of where your money is going; then you can look at ways to cut fluff and lower the cost of your required living expense. Always keep in mind that it’s not just about cheaper; it’s about efficiency. Analyze your needs and do the math. Most importantly, however, is to understand that reducing expenses is a lifestyle change and a change in your thinking patterns. Never let yourself believe that pennies don't count

Determine where you spend your money. If you don’t know where your money is going, you are most likely spending too much. You can get a solid idea in as little as one month and as you continue, you’ll see patterns develop that you can address. Write down everything you buy down to the last dollar. Don’t stop at the obvious things like rent, utilities, gasoline and food – include the ancillary items like sodas and snacks as well as gum or tobacco. What about happy hour? Did you rent a movie? Use a Row-by-Column ledger, spreadsheet or other software to keep track every month. If you exclusively use a debit card for your purchases, the bank will do this for you.
Immediately eliminate unnecessary routine purchases. While it’s likely this won’t be the largest savings area, it’s important and easy. Is the coffee shop on your way to work really necessary? How critical are the three sodas or snacks a day you buy from the office vending machine at $1.50 each? A cup of coffee that you made at home is only 25-35 cents, as is a soda you bought in a store as part of a 12 pack. Do you seriously have to rent all those movies (and pay those late fees) each month? Have you checked to see whether your library has movies, or calculated the cost of switching to Netflix and BlockBuster Online? Those ten lottery tickets… the odds against you are astronomical. This is quick and most of it is habit. There will be some psychological pain at first but when you add up the dollars you’ll see a big difference instantly.
Address your utilities.

Heating and cooling (gas or electric): When you leave the house, set your thermostat to an "away" setting (a note of caution here: don’t set it so far from comfortable that it takes an inordinate amount of time to return to comfort when you get home: 65°F or 18°C in the winter and 80°F or 27°C in the summer might be reasonable numbers to use). Consider investing in ceiling fans – you can get these for as little as US$20 and they dramatically reduce cost of heating and cooling by circulating the air more efficiently. If your expenses are already low, and you won't be staying where you are for long, you may not save enough to pay for the fan, however.
Electric: Lighting is expensive. When you leave a room, turn off the light. The idea that it takes more energy to turn on a light than to keep it on is completely false, as turning on a light only burns as much electricity as burning it for fractions of a second.[1] Energy efficient bulbs really work. This is an investment that will pay off over time but there is a significant savings to be gained. (this energy calculator can help). Turn off your computer/laptop when you’re not using it – (probably) the only reason you leave it on is convenience. Any voltage adapters (including the ones in stereo components) still use electricity even if they're not charging or plugged in to the device. If you have a digital box with an auxiliary AC outlet, plug your TV into it, and program the box to shut off the outlet when the box is turned off. For stereo components, plug them all into a power bar that can easily be switched off when not in use.Open the drapes during the day for light instead of burning electricity. Only use electricity when you absolutely need it.
Water: Save water, save money. Invest in a shower-reduction kit – they cost nearly nothing and will start saving you money immediately. They work by reducing the flow to the shower head and the change is barely noticeable. Learn to take quicker showers – an inexpensive egg timer is a good way to help. Repair leaky toilets and faucets – this is an enormous waste of water and easy to fix. Reduce your lawn watering to minimum needs. If you have a pool, keep it covered when it’s not in use to reduce evaporation – also, if it’s heated that will dramatically increase evaporation as well (only heat your pool to keep it from freezing, and invest in a thermal blanket). Also if you're not using the faucet turn it off -- e.g., when brushing teeth do not leave faucet running.
Gas and Miscellaneous: Do laundry as often as necessary but as little as possible – for a lot of people this is a pleasant step. Reduce the temperature of your shower by a couple of degrees; the less work your water heater does the more money you’ll save. Use the microwave instead of the oven whenever possible – the cost just to preheat an oven is more than the cost to cook a meal in the microwave. Open the windows when it’s nice outside to reduce heating (and cooling) costs.If you live where natural gas is used only in the winter months, arrange with your local utility to do a seasonal shutoff so that you are not saddled with fixed monthly service charges for the "privilege" of being connected to the gas service even though you are not using it. With one supplier, it is $17/month. In the 8 months that you don't need the service, you're charged $17 X 8 = $136, but the season shutoff and turn on costs $54.
Cable and Telephone: Seriously, do you really, really need a thousand channels and every single premium channel available including the high definition packages? You can save the full $100+ on your cable bill every month by watching TV for free online. However, if you have cable internet, it may actually be CHEAPER to keep basic cable than to pay for internet alone. If you want to save money take a close look at your priorities. For your telephone, shop around based on your use. If you make a lot of long-distance calls to family and friends, perhaps one of the unlimited plans would save money. If all your calls are local you probably can get by with a bare-bones option. Consider that your cell phone may have free long distance; therefore, removing the necessity of having long distance on a land line. Look into the Voice-Over-IP (phone over the internet) for your telephone solutions. This is not an option for people with DSL, which is tied to their land line. One such solution is Vonage, [2], but there are several others.
Cell phone: "wat r u up 2" "nm gtg ttyl" Text messages cost money. "Oh no, I have unlimited text!" Oh? How much does that option cost you? Do you actually even need a cell phone? Does everyone in your family actually need a cell phone? Parents – lay down the law on cell phone usage – is your eleven-year-old sitting around the house texting… are you? Another thing to consider is if you really require a cell phone then do you really need a land line at home? Consider consolidating. If your cell phone use is occasional only, consider a pay-as-you-go plan.
Reconsider Gasoline and Miscellaneous Auto: When gas was rationed during World War II, a popular slogan was "Is this trip really necessary?" Ask yourself that every time you get in your car. Make a list before you go to the store so you don’t have to make additional trips. Don’t go for a drive for pleasure – walk instead or choose other forms of entertainment (reading,exercising for example). Check the pressure in your tires. Convertibles get better mileage with the top up. A poorly running engine is a huge waste – even a spark plug change can make a big difference, as can clean oil. Also, the less you drive the less frequently you’ll change tires, oil, require maintenance, etc. That’s a savings-over-time, of course, but it will mount up. Another way to save gas (and money) is to change your driving habits. By simply driving more slowly, and/or less aggressively, you can save significant amounts of money (calculate for yourself at this web site [3]).
Cut Down on Entertainment: It’s astounding how many people complain about money then describe the latest release of a movie along with the cost of theater popcorn. Also, professional sports event, a music concert or tickets to a play can run hundreds of dollars for a couple on a date. Seriously, can you really tell the difference (blindfolded) between a $30 bottle of wine and a $9 bottle of wine? When you do dine out, actually think about the prices on the menu first. Consider a meal share if the restaurant offers that option. Never, ever order delivery. Look for vacation bargains – consider taking the kids camping instead of one of the super expensive amusement parks.
Focus on Food: The only real difference between a $1.99 can of corn and a $0.63 can of corn is $1.36 (sure there are exceptions; people on low-sodium diets will definitely have to pay more). The grocery store is a place you can save big.
Look for foods that are marked "WIC" for savings. Those have been approved for the Women, Infants and Children program by the USDA Department of Food and Nutrition Services… healthy, nutritious and inexpensive. That ring of cooked shrimp is on sale and sure looks tasty… how about a nice grilled chicken breast with green beans and rice? Make dining in an experience instead of just a convenience. It’s quite possible to spend as much on home food as you would by eating out if you are wasteful.
Invest $10 in a coffee pot. Making your coffee at home instead of purchasing your $1, $3, or $7 custom latte at the coffee shop will save you money.
Consider taking your lunch to work instead of buying lunch each day. Even an inexpensive lunch out is several dollars a day – do the math.
Use coupons whenever possible. Make sure these are on items you would normally eat so you don't purchase things that will be wasted by sitting in your cupboards forever or spoil in your refrigerator. Also use buy store specials and use store customer cards when possible toward food purchases.
Look into joining a warehouse club. The price of the membership is usually made up in the first shopping. They carry name-brand products and will take coupons. Also, by not having to shop as often, you spend less money by not being in the store every week and risking impulse purchases. Warehouse club shopping must be done with discretion or you will not save money.
When purchasing meat items, aim for pieces where you can identify the body part from which it came. Ground beef, although cheap, is processed which increases it's price. Tougher cuts of meat can be slow-cooked and made incredibly tender. Also larger pieces can be cooked in bulk and used for several different recipes. (Cook one large piece and when tender, tear it up for use in enchiladas, sandwiches, stews or soups, etc. Simply store in individual portions, labeled with the type of meat and date, for later use.) Organ meat (chicken hearts and gizzards, beef hearts, tripe) are often far cheaper than normal cuts, and can be used to make tasty and filling stews.
Avoid large packages of fresh produce to avoid spoilage; frozen produce will extend the shelf life of all your fruit and vegetables.
Measure product use carefully (like soap powder); don't be wasteful with the products just because it comes in a large container.
Buy products you will actually use instead of substituting just because it's on your list and the only item available. Are you really going to enjoy that box of cereal that's not your regular brand, or is it going to sit on your shelf?
Address your insurance costs: The fastest way for some people to reduce monthly expenses will be in the area of health, auto and life insurance. Companies that sell those are incredibly competitive. Get some bids from different companies. When you do this, bear in mind that lower initial premiums will not always be the most cost efficient!

Auto Insurance: Look at your deductible. Don’t jump to increase your deductible – analyze the entire plan based on your needs and expectations; do a risk analysis first. If you have an inexperienced driver in your house and you don’t have savings, having a high deductible might not be the best choice – also if your car is financed you may have minimum insurance requirements. However if you have a long history of good driving and you own your car, outright, you might consider a high deductible to save on premiums.
Health Insurance: Investigate alternatives. Shop around for plans that are consistent and cost efficient with your lifestyle. Consider your actual needs vs. what you have. A single man in perfect health in his mid-30’s might choose a plan with a higher copay or co-insurance and lower premiums, whereas a married couple wanting to start a family might do better with higher premiums but more extensive coverage. In other cases, prescription benefits might be the most important. The point is to look at what you must have .
Life Insurance: There is no question that this is important – for many people. The rule of thumb for someone with a family is three to five years' replacement income. However, if you’re a 20ish single consider carefully and determine if you’re over-insured. If you’re married in your mid-60’s have you looked at comparative plans from places like AARP? If you’re most interested in "burial policies" then, again, these companies are incredibly competitive. We all would like to leave our loved ones wealthy in the event of our demise, but not at the expense of your quality of life right now.
Home (and Renter’s) Insurance: This can be a large expense and many home owners have no idea how much they’re paying because it comes out of their house payments – out of sight, out of mind. Review your plan with your agent. Are your personal possessions really and truly worth the $250,000 you have on the policy? Also look for areas that are lacking. Is water damage covered; snow damage; hail damage? Think whether or not you’ll need those. Is anything important excluded? Is anything irrelevant included? Yes, Great-Aunt Martha’s rocking chair has sentimental value but do you really need a special rider to cover it?
Consider pre-owned items: This is a great way to save significant amounts of money while recycling! If you absolutely must buy something, there are options other than a mall anchor store or a big-box superstore. There are large thrift stores (e.g. Goodwill) and smaller church-run stores that have some incredible bargains on everything from home knickknacks to appliances to clothing. It’s amazing how fast a 4-year old will outgrow shoes (when that happens, re-donate them so somebody else can benefit). Look for garage sales – your neighbors will definitely not think less of you because you bought the winter jacket they are trying to sell – hold your own garage sale and they just might want what you no longer need. There are online sites that often have bargains (like Craigslist.org, Overstock.com and eBay.com).
Actively manage your credit: A poor credit score costs tens of thousands over the years in increased interest rates and insurance costs. You may even lose your job or lose out on a job application. Pull all three reports; challenge everything that appears incorrect. Pay all bills on time or early. Pay off revolving debt (credit cards) and put those cards away.

Incredible Way to Run Your Car On WATER - NO GAS

2009-02-02T01:44:00.002-08:00

How To CONVERT A CAR To Run On WATER

2009-02-02T01:44:00.001-08:00

How To Make A CAR Engine Run On WATER - Plans Instructions

2009-02-02T01:43:00.001-08:00

Water powered car! Why aren't these mass produced?

2009-02-02T01:42:00.001-08:00

Run Your Car Using Water And Save Money

2009-02-02T01:41:00.001-08:00

800 Billion Sent to China !! Foreclosure of USA ! Amero

2009-01-30T01:51:00.001-08:00

U.S. Dollar Currency Collapse Within 30 Days - Gold Update

2009-01-30T01:50:00.000-08:00

Top Ten Money Saving Tips

2009-01-29T18:05:00.001-08:00

Finance and Insurance as Powerful Forces in Our Economy and Society

2009-01-28T06:55:00.000-08:00

You need to Save Your Money - 3 Tips

2009-01-28T06:40:00.000-08:00

Buying Gold USA

2009-01-28T06:32:00.000-08:00

World Central Bank is on its way

2009-01-20T07:05:00.000-08:00

The Economy, The Illuminati, & 2012 - The Final Cut:Pt2

2009-01-15T14:28:00.001-08:00

The Economy, The Illuminati, & 2012 - The Final Cut:Pt1

2009-01-15T14:25:00.000-08:00

ARE YOU READY FOR 2009? Part 1 of 2

2009-01-15T05:41:00.001-08:00

ARE YOU READY FOR 2009? Part 2 OF 2

2009-01-15T05:39:00.000-08:00

Save Economy Spend $7 a Day Starting Jan 20 "Inauguration Day"

2009-01-15T05:37:00.000-08:00

Citi gives control of brokerage to Morgan Stanley

2009-01-14T02:49:00.000-08:00

NEW YORK (AP) -- The original financial supermarket is dead. Citigroup signaled the end of a decade-long experiment to create one-stop shopping for financial services -- everything from consumer loans to investment banking -- with Tuesday's announcement that it was merging its Smith Barney brokerage into a joint venture with Morgan Stanley.

The deal, which will give Citigroup $2.7 billion in badly needed cash as it gives up control of Smith Barney, comes as the company still struggles in the aftermath of the mortgage and credit crisis. There is speculation that CEO Vikram Pandit, who for months supported Citigroup as a "universal bank," will be taking further steps to simplify and streamline the company.

And many people on Wall Street believe Citigroup could be headed for an even larger-scale dismantling if the federal government -- which now has a stake in Citi thanks to its recent bailout -- has its way.

"I think within 12 months, Citigroup no longer exists," said William Smith at Smith Asset Management, who owns Citigroup shares. He has been calling for a breakup of Citigroup for years, and believes the government will force that fate in piecemeal fashion over the coming year.

Citigroup was the quintessential financial supermarket, cobbled together over decades by Sandy Weill -- the former CEO who is both lauded for bringing Citigroup its biggest profits ever and criticized for creating an unsustainably massive, impossible-to-manage conglomerate.

The idea behind the supermarket is that the average person can do all his saving, borrowing and investing with one company. Citigroup had it all, the retail and business banking operations, the investment banking business, the brokerage, even Travelers insurance. Whether that one company does it better than a number of specialized companies does, though, has been the big question facing shareholders since the deregulation of the banking industry in the 1990s. And Citi's announcement Tuesday further undermines the idea that one company can handle such diverse businesses at once.

To be sure, JPMorgan Chase & Co.'s model is essentially a supermarket, too, but it does not have as large an international presence as Citigroup has had. Bank of America Corp. has many disparate businesses, too -- including the recent government-brokered acquisition of Merrill Lynch, the world's largest brokerage -- but it maintains a strong focus on its U.S. operations. Perhaps more importantly, analysts argue that these banking giants were managed and integrated much better over the years than Citigroup was.

"The problem with Citi is the model, the execution, the management," Smith said. "How do you go a decade without integrating?"

Bank of America and JPMorgan Chase also took fewer risks than Citi took when it came to the now-failed investments in mortgage-backed securities, and so their losses were much less than the big financial supermarket suffered.

Weill, helped by the force of his personality, made the concept work during his years at the helm, although he presided over the spinoff and sale of the Travelers businesses starting in 2002. The company, whose stock price is now only about a tenth of what it was just two years ago, has struggled since Weill retired in 2006.

In late November, Pandit called the universal banking model "the right model," and that Citigroup's strategy is "to be the world's truly global universal bank." Days later, the government lent the embattled bank $45 billion -- more than other big banks have received -- and agreed to absorb the losses on a huge pool of mortgages and other assets.

Citigroup and Morgan Stanley plan to combine Citi's brokerage, Smith Barney, with Morgan Stanley's wealth management business.

The deal was announced after the close of stock trading. Citigroup rose 30 cents, or 5.4 percent, to $5.90, while Morgan Stanley rose 7 cents to $18.86.

The capital from the Morgan Stanley deal, however, is likely not enough to make up for upcoming losses. And if the government decides it does not want to continue propping up banks like Citigroup, its dismantling could accelerate.

The new administration could "come to the realization that the whole economy does not hinge on the banks," said Octavio Marenzi, head of financial consultancy Celent. "Banking is important. The banks themselves are not."

President-elect Barack Obama has said he might rethink the way the remaining $350 billion of the financial bailout will be used.

This is a huge underlying concern as banks release their fourth-quarter earnings in the coming weeks. While other banks don't appear to be in as much disarray as Citigroup -- which is expected to post its fifth straight quarterly loss next week -- the industry is still clearly troubled.

Wall Street will get an earlier-than-expected reading on the financial sector this week when JPMorgan Chase & Co. reports earnings on Thursday, nearly a week ahead of schedule.

"They've done so well so far through the credit crisis. If you see real weakness there, it bodes badly for the rest of the industry," Celent's Marenzi said of JPMorgan Chase.

Though investors largely expect banks to issue bleak fourth-quarter and full-year reports, the concern is that their credit problems are growing -- and spreading to loan portfolios that up until this point had been relatively stable -- setting up 2009 to be another year of multibillion dollar losses.

As the housing market tanked and defaults on mortgages spiked, nearly all banks were forced to set aside huge amounts of cash to cover losses in their mortgage portfolios last year. What will be different about the fourth quarter, and subsequently this year, is that problems in other portfolios, like credit cards and auto loans, are likely to be more pronounced than in previous periods, reflecting the deepening recession.

While Citigroup's troubles have been exacerbated by its sheer size and the scope of its global business empire -- which includes everything from retail banking to credit cards to corporate lending -- analysts see other banks struggling to maintain sufficient capital this year.

"We consider the financial services industry significantly undercapitalized," wrote Friedman, Billings, Ramsey & Co. analyst Paul Miller in a recent research note. "Current capital levels, which should be considered inadequate in even the best of times, pose an even greater risk entering 2009, a year that will remain challenging for financials."

Specifically, Miller is cautious about Bank of America and Wells Fargo & Co., noting their thin common equity. Both banks made sizable acquisitions last year, and therefore are likely to feel some strain as they integrate operations.

In the past year, Bank of America scooped up Countrywide Financial Corp. and Merrill Lynch & Co.; Wells Fargo bought Wachovia Corp.; and JPMorgan Chase acquired failed Bear Stearns Cos. and Washington Mutual Inc. Most analysts agree that it's too soon for these banks to have reaped any substantial benefits from the acquisitions in the fourth quarter.

SEC accuses man of $50 million Ponzi scheme

2009-01-08T09:26:00.001-08:00

WASHINGTON (Reuters) – Securities and futures regulators charged a Philadelphia-area fund manager with operating a $50 million Ponzi scheme, where he paid off earlier investors with money from later investors, officials said on Thursday.

The Securities and Exchange Commission, which has been criticized for not uncovering Wall Street financier Bernard Madoff's alleged $50 billion fraud, said it obtained an emergency court order freezing Joseph Forte's assets.

The SEC and the Commodity Futures Trading Commission allege that Forte told investors that he would invest funds in an account that would trade in securities and futures contracts, including S&P 500 stock index futures and metals futures.

Forte reported consistent returns to his investors even though he consistently lost money, withdrew millions of dollars in fees for personal use and used investor funds to repay other investors, the regulators said.

According to the government complaints, Forte conducted the Ponzi scheme since at least 1995 and he solicited about $50 million from dozens of individuals and entities to participate in a commodity futures pool.

The SEC complaint said that in late December 2008, Forte admitted to federal authorities that he had been conducting the Ponzi scheme and that he did not have the funds to repay investors.

The CFTC also charged Forte with failing to register as a commodity pool operator, along with sending customers false account statements.

(Reporting by Rachelle Younglai; Editing by Tim Dobbyn)

Experts' Rx on How to Get Out of This Mess

2009-01-06T04:53:00.000-08:00

Nothing focuses the mind like a crisis, and the global financial crisis and the recession that it produced have focused the minds of economists like no other event in their careers.

At the American Economic Association's meeting in San Francisco over the weekend, an annual event that draws economists from around the world, there were dozens of panels devoted to examining aspects of the global downturn -- to say nothing of the hundreds of informal discussions that popped up along hotel hallways and over cocktails and coffee.

The overarching question: How are we going to get out of this mess? Here are 11 prescriptions:

Barry Eichengreen, University of California, Berkeley: There needs to be a two-pronged approach. First, an additional $300 billion for banks and a mechanism for removing toxic waste from their balance sheets. Second, a minimum of $800 billion for fiscal stimulus. "I would like to see mainly payroll-tax cuts and block grants for states," he says. "Infrastructure means bridges to nowhere."

Kenneth Rogoff, Harvard University: At a time when people are making analogies to the Great Depression, a little inflation would be a good thing, inducing people to spend, making it easier to pay off debts and, most important, quelling worries about the possibility of deflation. Central banks should make it clear that they believe this and that they control the printing presses. "Worrying about a couple of years of elevated inflation is like worrying about the measles when you're going to get the plague," he says.

Robert Hall, Stanford University, and Susan Woodward, Sand Hill Econometrics: Infrastructure spending can cause bottlenecks -- if there are only so many people who can install broadband, much of a big broadband package will go to overpaying the installers, for example. But moves like tax rebates just increase saving. So the husband-and-wife team argues for a massive sales-tax holiday, which would induce consumers to spend more, putting the stimulus right where it is needed. To compensate states, "have the federal government buy out sales taxes," says Mr. Hall. The handful of small states with no sales tax could have the federal money go to their coffers instead.

Robert Shiller, Yale University: The consensus on fixing the economy seems to be to first put in short-term policies to get things going again, and then put in longer-term stuff. But that may be getting it wrong. "We want to make changes that are long term rather than these fixes -- people perceive them as fixes," he says. One thing he'd like to see is subsidies for financial advice, so people aren't making mistakes going to a mortgage broker to find out how much house they can afford.

Alan Blinder, Princeton University: The downturn is still young, it is going to go on for much longer, and it will be very deep. "We need to think of having time-release capsules," he says, that will help boost the economy a year from now. Infrastructure spending, which some economists argue against because it takes awhile to be put in place, does exactly that.

Anil Kashyap, University of Chicago Booth School of Business: Policy makers should stay focused on recapitalizing the banking system. The $350 billion of funds from the Troubled Asset Relief Program hasn't been sufficient to repair the balance sheets of financial institutions sitting on hundreds of billions, if not trillions, of dollars in losses. And financial firms won't start lending again until their balance sheets are in better shape. But bad banks should be shut down or nationalized more aggressively. "It is a complete waste of taxpayer money to bail out somebody who is insolvent," he says.

Jeremy Stein, Harvard: The government needs to aggressively audit banks, separating the insolvent from the solvent. The key underlying problem is the ad hoc bailouts that have taken place so far. That leaves market participants uncertain of the government's strategy "and therefore paralyzes potential private-sector investors," he says.

José Scheinkman, Princeton: After determining which banks are insolvent, the next step is figuring out what to do with them. "We have three options," he says. "You can merge them with good banks, invite foreign banks that are not so active in the U.S. to take control, or have the government nationalize them and clean them up. I suspect we will need all three."

Adam Posen, Peterson Institute for International Economics: Part of the U.S. problem is that the banking system has become much bigger than it needs to be -- similar to the situation Japan faced, and was glacially slow to deal with, in the 1990s. "Fiscal stimulus will work fine in the short term, but you've got to shrink the banking sector before the fiscal stimulus runs out," he says.

Douglas Diamond, Chicago Booth: There needs to be a better way to resolve problems at bank holding companies than their threatening bankruptcy and then getting bailed out. "You have lots of carrots and no sticks right now," he says. One alternative would be legislative changes that would allow regulators to quickly wipe out existing shareholders at problem banks without invoking bankruptcy, and convert long-term debt issued after the legislation went into effect to equity. That would effectively recapitalize the bank without the need for government money. And it would give big incentives to investors to buy banks' debt, and to banks to raise capital in order to keep their shareholders from being wiped out.

Markus Brunnermeier, Princeton: Putting in a new regulatory framework for the financial system may seem less urgent than getting the system going again, but waiting around could mean that the political will to make important changes will no longer be there. One of the things that led to the crisis is that regulators concentrated on the riskiness of individual banks, rather than the risks posed to the system. "What they should focus on are risk spillover effects," he says. "What damage can a bank's failure cause to other banks? We need new risk measures on this."

—Jon Hilsenrath contributed to this article.

Money Saving Tip: Where To Find Coupons

2009-01-03T17:29:00.001-08:00

Retiring: New ways to save

2008-12-29T04:09:00.000-08:00

Question: People have been telling my husband and me that we should increase the percentage of pay we put in our 401(k) account so that we can make a lot of money when the market rebounds. What do you think -- should we up our contributions or keep them the same? --Dawn Bennett, Dwight, Illinois

Answer: I've been getting emails from a lot of people lately who are considering reducing or eliminating their 401(k) contributions because the balance seems to keep going down.

I think taking such a short-term view of the long-term process of building a nest egg is a big mistake, so I'm glad to see that there are people out there like you and your husband who are thinking about saving more for retirement instead of less.

But even though I think it's a good idea for most people to at least consider boosting their 401(k) contributions -- particularly if their employer has scaled back matching contributions -- I don't advocate it for the reason you're being encouraged to do it, i.e., to capitalize on a market rebound.

Why? Well, I don't see the logic in tying the size of your contributions to how you expect the market to perform over the short-term. I mean, if you believe it makes sense to boost contributions to take advantage of the higher returns that often come as the market recovers, would you then lower your contributions to avoid losses if you think the market is heading south? It seems to me that you're getting into the same guessing game that market timers play, except that instead of moving in and out of stocks, you're toying with the amount you contribute to your 401(k).

That said, there is a more compelling reason to consider plowing more dough into your 401(k). I'm not talking about a temporary increase. I'm talking about re-thinking how much you need to save in light of the market's lousy performance recently.

Up your contributions
Let's say that someone is 35 years old, makes $40,000 a year and will receive 3% annual pay increases during his career. If that person contributes 10% of salary each year to a 401(k) and earns an annual return of 10%, he would have a 401(k) balance of just under $900,000 at age 65.

But what if those 10% annual returns don't materialize? What if his 401(k) investments earn 7% a year? Well, instead of a balance of almost $900,000, he would have about $535,000, or about 40% less. If you were counting on something close to $900,000 and ended up with an account balance under $600,000, you would probably have to make some serious adjustments to your lifestyle in retirement.

So what could this person do to avoid a radical downsizing of his standard of living in retirement?

Clearly, we have no say over what size returns the financial markets deliver, and we have limited control over how much of the returns the markets generate end up in our 401(k). So even if our hypothetical 401(k) owner began to sense at some point that he was falling short of earning 10% a year, it's not as if he could simply revamp his investing strategy to get back to double-digit returns and avoid ending up with a stunted nest egg. Indeed, if he tried, he'd have to take on a lot more risk, raising the possibility that he could suffer big losses and end up with an even smaller amount.

But there is another way he could enter retirement with a hefty nest egg even if he earned the lower return of 7% a year. He could save more. Specifically, if boosted his annual 401(k) contribution to 17% of pay, he would end up with $900,000 even at the lower annual return of 7%.

Of course, in the real world we don't have the luxury of knowing what returns we'll earn over the next 30 years, or even the next few days. So we can't calibrate our contribution rate to end up with precisely as much money as we would like at retirement.

And even if we did have some magic crystal ball that predicted returns, we might not be able to save as much as is necessary to get the same size nest egg in the face of lower returns. Going from 10% of pay to 17% might not be manageable for many people.

But the point is that to the extent you can boost your contribution rate, you'll end up with a larger 401(k) balance at retirement time than you otherwise would. For that matter, you'll also be in better shape if the markets take a big hit, as they have recently, just before or after you retire.

Crunch some numbers
Of course, the extent to which you can or want to boost the amount you contribute to your 401(k) or other retirement accounts depends on your situation -- how much you earn, what other obligations you have, how much you're willing to rein in spending now so that you have more security in the future. So I can't give you a specific percentage to shoot for.

But I can suggest this exercise.

Go to a retirement calculator like our Retirement Planner or Fidelity's myPlan Retirement Quick Check and plug in how much you've saved and how much you're contributing to 401(k)s and other accounts. You'll get an estimate of what size nest egg you might have and how much retirement income you're on track to receive.

Then ask yourself how you would feel going into retirement if you had 20% or 30% less than those amounts and whether or not it would crimp your style to live off the smaller figure. If you think you might have a problem getting by, run some scenarios in which you boost your savings rate by different amounts.

If this sort of number crunching isn't your thing, you can ask an adviser to do it for you. Or, you can take a seat-of-the pants approach and simply boost your savings rate a couple of percentage points each year (or sign up for the automatic contribution increase option, if your 401(k) offers it.)

To put it simply, the investing experience of the past 10 years and the market plunge of this year have proven that the notion of retirement-planning that held sway in the 80s and 90s -- that you could save relatively little and count on outsized investment returns to build a big nest egg -- was dangerously flawed. Yes, smart investing still counts for a lot. But I think there's a growing realization that saving is just as important as investing, if not more so.

So by all means boost the percentage of pay you contribute to your 401(k) to capitalize in the eventual market rebound. But hold your contribution rate after the market has regained its lost ground. You might even want to consider boosting it again later on. Because in the end, saving more is your best defense against the possibility of lower-than-expected returns

How to Make Money With Rates at Zero

2008-12-29T04:04:00.000-08:00

Treasury bonds don't offer much in the way of income anymore. Here are some better ways for investors to profit in 2009.

Federal Reserve Chairman Ben Bernanke may eventually be hailed as an economic Santa Claus if the Fed's dramatic rate cut helps bring an end to this recession.

But if you're an investor relying on a fixed income, Bernanke is The Grinch Who Stole Your Yield. Now that interest rates are effectively at zero, you won't get much from owning Treasurys. The U.S. 10-year note sports a puny yield of 2.19%, for example.

With many experts predicting rocky times through 2009, it's more important than ever for investors to own stocks and bonds that offer decent yields and a margin of safety.

One way to do that is with stocks that pay dividends. Many blue-chip stocks have yields well north of 5%, companies such as AT&T (Sure, some of these so-called "widow and orphan" stocks may not seem terribly exciting. But you know what? Earning 5% with a boring blue chip is better than losing all your money with Bernie Madoff.

"Many investors are concerned the market may be flat for many years. We feel that's unlikely, but even if that were the case, earning a 5% yield might not be that bad," said Steve Neimeth, manager of the SunAmerica Value fund. "Even if the market is flat for two to three years, investors could get paid to wait for a recovery."

Neimeth, who owns Verizon, Pfizer and AT&T in his fund, also likes food giant Kraft (KFT), which yields about 4.3%.

Of course, it's always worth asking if a dividend-paying company is financially healthy enough to keep paying out.

Bank stocks' high yields looked attractive earlier this year, but many institutions have since slashed their dividends - some near a penny per share - because of the credit crunch.

And one fund manager said that any bank asking the Treasury Department for capital is irresponsible if it continues paying dividends.

"Banks should not be paying any dividends if they are going to the government for money," said Don Wordell, manager of the RidgeWorth Mid-Cap Value fund.

Instead, Wordell said he's focusing on technology companies that he believes are healthy enough to keep paying their dividends. Two of his top holdings are Intersil (ISIL), a semiconductor company with a 5% yield and no debt, and Harris Corp (HRS)., which makes radio communications equipment and has a yield of 2.2%

Paul Alan Davis, co-manager of the Schwab Dividend Equity fund, sees good opportunities in the beaten-down energy sector, including natural gas company Williams Companies (WMB) and oil firms Chevron (CVX), Exxon Mobil (XOM) and Occidental Petroleum (OXY). These stocks all pay yields ranging from about 2% to 3.3%.

These yields may not sound that lucrative, but Davis said it's more important to focus on companies with the potential to grow their dividends, not just those with super-high yields. After all, the yield is the dividend divided by the stock price, so an extremely high yield could actually be a warning sign.

Don't Ignore Bonds

Dividend-paying stocks aren't the only way for investors to profit from a steady income stream. Sabur Moini, manager of the Payden High Income fund, has found plenty of opportunities in the world of high-yield corporate bonds.

Yes, many high-yield bonds are inherently risky. But Moini said there are values now because the market is pricing in higher default rates than he thinks are likely next year.

"Clearly we are in a recession and 2009 won't be good," he said. "But a number of companies that raised money in 2005 and 2006 are fine and won't have to refinance or have debt coming in due in the next year."

The key, Moini said, is to focus on companies in defensive industries that generate strong cash flow.

"The bonds we own have attractive yields and the companies will be around for the next few years. We are staying away from autos, homebuilders and more cyclical companies," he said.

Some of Moini's top investments are high-yield bonds of cable company Cablevision (CVC), satellite TV firm DirecTV (DTV), hospital operator HCA, which was taken private in 2006, and privately held California supermarket chain Stater Brothers. The bonds for all four companies yield more than 10%

Jeffrey Saut, chief investment strategist for Raymond James Financial, said he's looking more closely at high-yield investments and finding the best values in funds that invest in municipal bonds.

Even though the credit crisis has many state and local governments dealing with major budget problems, Saut said the pessimism in the muni bond world is overdone.

"Unless all municipalities go bankrupt, there are some funds trading at big discounts with the potential for stock-like returns," he said.

Three funds he recommends are the Nuveen Insured Dividend Advantage Municipal (NVG) fund, which yields about 7.5%, the BlackRock MuniHoldings Insured Fund II (MUE), which yields almost 8%, and the Lord Abbett Bond Debenture fund, which yields nearly 9%.

Rob Arnott, chairman of Research Affiliates, a Newport Beach, Calif.-based money management firm with about $30 billion in assets under management, agreed that investors should look to bonds for bargains.

He said that while the stock market is probably accurately factoring in the likelihood of a long recession, bond investors are much gloomier and are pricing in another Great Depression.

"The out-of-mainstream parts of the bond market are wildly attractive. Why would anyone hold cash yielding zero when they can get double-digit yields?" asked Arnott, whose firm is the subadviser for the PIMCO All Asset fund.

10 Ways to Save Money on Food Shopping..(continued3)

2008-12-27T17:17:00.000-08:00

How to eat cheap – but healthfully – despite rising grocery costs.(continued)
Healthy Food Is Cheaper Food continued...
9. Buy and cook in bulk. Joining a bulk shopping club, like Sam's or Costco, can be cost-effective if you frequent the club regularly. Bulk purchases can be a great way to save money -- as long as they get used. You might also look in your community for shopping cooperatives that sell food in bulk at a substantial savings. Cooking in bulk can save both money and time, says Tallmadge. "Prepare food in bulk and freeze into family-sized portions, which saves time in the kitchen," she suggests. For example, making a big batch of tomato sauce will less expensive (and probably tastier) than buying some.

10. Plant a garden. For benefits that go beyond cost savings, plant your own produce. There's nothing better than a summer-fresh tomato from the garden. Tomatoes even grow well in containers if you don't have space for a garden, and some neighborhoods offer community gardening spaces. Start small, and see how easy it is to grow fresh herbs or a few simple vegetables. And if you invest a little time in freezing or canning your harvest, you can enjoy summer's bounty all year long.

10 Ways to Save Money on Food Shopping..(continued2)

2008-12-27T17:16:00.000-08:00

How to eat cheap – but healthfully – despite rising grocery costs.(continued)
Healthy Food Is Cheaper Food continued...
5. Save on protein foods. When possible, substitute inexpensive, vegetarian sources such as beans, eggs, tofu, and legumes for more expensive meat, fish, or poultry. Eat vegetarian once a week or more to increase your consumption of healthy plant foods while saving money. Eggs are an excellent, inexpensive source of protein that can be eaten for breakfast, lunch or dinner. You could also try using a smaller portion of meat, fish, or poultry and extending the dish with whole grains, beans, eggs, and/or vegetables.

When you do buy meat, choose smaller portions of lean cuts. For example, lean cuts of beef are those that include the terms "loin" or "round." (You can tenderize lean cuts of meat mechanically or by marinating it.) You can also buy a whole chicken and cut it up instead of paying the butcher to do it for you, or buy the cheaper "family pack" and portion it into airtight freezer bags.

6. Waste not, want not. Before you toss perishable food into your grocery cart, think about exactly how you'll use it. The Environmental Protection Agency estimates that Americans generate roughly 30 million tons of food waste each year. Using leftover vegetables, poultry, or meat in soups, stews, salads, and casseroles minimizes cost and demonstrates your creativity in the kitchen. For example, have a roasted chicken for dinner one night, and use the leftovers for dinner the next night. Try topping a bed of fresh greens with vegetables, fruits, and slices of leftover chicken. Add a loaf of whole-grain bread, and presto! You've got a nutritious meal in minutes. You can also eat leftovers for breakfast or take them with you for lunch.

7. Go generic. Consider buying store brands instead of pricier national brands. "All food manufacturers follow standards to provide safe food and beverage products of high quality," says Earl. Many grocery companies buy national-brand products made to their specifications and simply put their own label on the products. Read the ingredient list on the label to be sure you're getting the most for your money. Ingredients are listed in order by weight. So when you're buying canned tomatoes, look for a product that lists tomatoes, not water, as the first ingredient. Also look for simpler versions of your favorite foods. For example, buy oatmeal or simple flaked or puffed cereals that contain fewer additives and are less expensive (and often healthier) than fancier cereals.

8. Buy prepackaged only if you need it. Unless you have a coupon or the item is on sale, buying prepackaged, sliced, or washed products comes with a higher price tag. Still, people living alone may find that smaller sizes of perishable products or bags of prepared produce eliminate waste and fit their needs best, despite the extra cost. You can also save money (and boost nutrition) by passing up the aisles with processed foods, cookies, snack foods and soda.

10 Ways to Save Money on Food Shopping..(continued)

2008-12-27T17:14:00.000-08:00

How to eat cheap – but healthfully – despite rising grocery costs.(continued)
Healthy Food Is Cheaper Food continued...
"The ideal food is nutrient-dense, not calorie-dense, and the least expensive may be fresh, frozen or canned," Tallmadge says.

And if you're craving something sweet?

"Save money by passing on calorie-dense cakes and cookies; instead, opt for seasonal fruit," says American Dietetic Association president Connie Diekman, RD. "Fruit is fat-free, high in nutrients and fiber, and a natural energizer."

Look for sales or coupons for light ice cream or nonfat frozen yogurt to enjoy with your fruit, and you have a delicious, fat-free, low-calorie dessert.

Here are 10 simple strategies to beat the rising cost of food and help your grocery dollars go further:

1. Buy produce in season. Check the food section in your newspaper to find the best buys for the week, based on fresh produce in season. Food in season is usually priced to sell. During the summer months, corn on the cob can cost as little as 10 cents an ear; at other times of the year, it may cost 10 times as much. Also, shop your local farmers' market for great deals on local produce; the prices won't include shipping costs.

2. Use sales and coupons. Planning meals around what's on sale can lower your grocery bills, especially if you also use coupons (make sure they're for item you would buy anyway). Sunday newspapers are full of coupons and sales circulars to get you started. It's also a good idea to stock up on staples when they're on sale. "Buy one, get one free" is basically a technique to get you to buy twice as much as you need at half the price. At some markets, though, the product rings up half-price -- so you don't have to buy more than one to get the savings. Use your freezer to store sale items that can be used at a later date.

3. Brown-bag it. Making lunch and taking it with you is a great money-saver and an excellent use of leftovers for meals at work, school, or wherever your destination. "Packing your lunch not only saves you money, but you can control all the ingredients so they are healthy and low in calories," says Diekman, who is nutrition director at Washington University. Pack a simple sandwich, salad, soup, wrap, and/or a hearty snack of cheese. Use freezer packs and containers to keep food at the proper temperature unless you have access to a refrigerator.

4. Think frozen, canned, or dried. Next time you're gathering ingredients for a recipe, try using frozen, canned, or dried foods. They may be less expensive than fresh, yet are equally nutritious. Produce is typically frozen, canned, or dried at the peak of ripeness, when nutrients are plentiful. Fish and poultry are often flash-frozen to minimize freezer damage and retain freshness. With frozen foods, you can use only the amount you need, reseal the package, and return it to the freezer. If it's properly stored, there's no waste. Canned foods are often sitting in a bath of juice, syrup, or salty water, and usually require rinsing. Dried fruits are concentrated in flavor and a great substitute for fresh fruit. Also consider using powdered or evaporated versions of milk in soups, casseroles, mashed potatoes, or desserts. Buy the form that gives you the best price for your needs.

10 Ways to Save Money on Food Shopping

2008-12-27T17:11:00.000-08:00

How to eat cheap – but healthfully – despite rising grocery costs.
By Kathleen M. Zelman, MPH WebMD Feature

We're paying more these days not only at the gas pump but also at the grocery store. Blame it on rising oil prices, disappointing crop yields, global warming, and/or the weak dollar. Robert Earl, director of nutrition policy for the Grocery Manufacturer Association, says there are many factors affecting food prices.

What it all means is that shoppers are looking for ways to save money when they're food shopping without sacrificing nutrition. WebMD asked some experts for tips and strategies on saving money on your grocery bill while still eating healthfully.

Planning Can Help You Save Money on Food
Planning ahead is the most important step to getting more bang for your buck at the grocery store, says Katherine Tallmadge, RD, a spokesperson for the American Dietetic Association.

"Take inventory of what you have on hand so you don’t overbuy, create a detailed shopping list based on your needs and weekly menu plan, and take into account how you plan on using leftovers," she says.

Have a light snack before you go shopping, and stick to your grocery list to help avoid impulse purchases or costly mistakes like falling for the displays at the end of the aisles.

Before you plan your weekly menu, check the ads to see what’s on sale and use coupons to take advantage of sales and money-saving coupons. You can even sign up online to receive coupons and email alerts from your favorite grocers.

Healthy Food Is Cheaper Food
Eating healthier foods can actually save you money, according to a 2002 study published in the Journal of the American Dietetic Association. The researchers found that when families went on weight loss diets, they not only lost weight but reduced their food budgets.

The savings came from reducing portion sizes and from buying fewer of the high-calorie foods that tend to increase the amount spent at the grocery store, according to authors of the yearlong study. People tend to spend a lot on those "extras" -- foods that add calories but little nutritional value, like sodas, bakery items, and chips.

You can get more for your money if you consider the nutritional value of food for the price. For example, sodas and flavored drinks deliver mostly empty calories and could easily be replaced with less expensive sparkling water with a splash of a 100% fruit juice like cranberry.

"When my clients start eating more healthfully, their grocery bills plummet," says Tallmadge, author of the book Diet Simple.

She recommends comparing food prices based on the number of servings you'll get, along with the food's nutritional contribution. For example, a pound of peaches yields three to four servings. So when you divide the cost per pound, the cost is usually quite reasonable.

Oil dips below $37 on bad US news

2008-12-24T08:13:00.000-08:00

VIENNA, Austria – More bad economic news from the U.S. sent oil prices tumbling Wednesday, with a barrel of crude briefly fetching less than $37 in thin Christmas Eve trading.

Expectations of further buildups in U.S. stocks also kept a low ceiling on prices.

After dipping as low as $36.63, light, sweet crude for February delivery recovered slightly but was still down $1.87 at $37.11 a barrel by afternoon in Europe in electronic trading on the New York Mercantile Exchange. The contract fell 93 cents overnight to settle at $38.98.

A steady stream of dismal U.S. economic and corporate data during the past few months has hammered investor confidence and sent oil prices reeling 74 percent since July.

More bad news emerged Wednesday with consumer spending falling for a fifth straight month in November, the longest weak stretch in a half-century, while incomes declined under the weight of massive job layoffs.

Separately, new claims for unemployment benefits rose more than expected last week, as layoffs spread throughout the economy, more evidence the labor market is weakening as the recession deepens. The Labor Department reported that initial requests for jobless benefits rose to a seasonally adjusted 586,000 in the week ending Dec. 20, from an

Tips to Save Money in 2008!

2008-12-21T22:12:00.000-08:00

Ways to save money

2008-12-16T07:16:00.000-08:00

11.Pay your bills on time and avoid late fees: Get organized about your regular bills. If possible, automate the payments. Most utilities and other recurring bills can be set to be charged to a credit card or deducted from a checking account these days. Also, many banks offer free bill pay programs. So there really is no excuse for forgetting to pay a bill on time and forking out the late fees. Say, by chance you do forget a bill, if you are a first time offender, call the company and request politely to waive the late fees, and more likely than not, they will oblige.

12.Be aware of your bank balance and avoid over draft fees: If you use your checking account often or have some bills that are paid automatically from your checking account, be aware of the balance and avoid overdraft fees.

13.Avoid ATM fees: Be aware of the ATM withdrawal fees charged by your bank. While some banks waive fees for all ATM transactions on any ATM machine, most don’t. So be sure to use only those ATM machines where your bank will not charge the fees, or withdraw directly at your bank.

14.Avoid credit cards with annual fee: Credit cards with their cash back bonuses and reward points are a great way to save some money. Just make sure that the card does not charge you any annual fees! There is no dearth of cards that offer fee-free reward plans, so there really is no reason to pay the annual fees.

15.Disconnect land line if possible: Unless you have small kids in the house or older people to take care of, it is more than likely that you will be able to survive with only the mobile phones and can get rid of the land line. We have survived without any problems for over 4 years now with out a land line. Our Internet comes via cable.

16.Instead of buying books, borrow books from the library: Whenever possible, borrow your books instead of buying them. The card to your public library is free and the libraries are generally well stocked. In my city, the chain of public libraries is connected and the available books can be checked online. If there is some book that I cannot find in my local branch, I can make a request online for it to be brought in from one of the other branches to mine which is very convenient.

17.If you have to buy books, check if you can buy it used: Used books do not quite give the same feeling as leafing through the crisp pages of a brand new book. But considering that you can get used books for almost as much as half the price of a new book, it is a small price to pay. My favorite place to buy used books is a local chain called “Half Price Book Store”. Check if you have something similar in your city. For text books, look online on bulletin boards, mailing lists etc, and price compare on websites like addall.com.

18.Price check before buying anything expensive: For other items that are expensive, do a price check before buying the item. If you can wait for a while you can track the prices and grab a great deal when it comes along. Frequently available online coupons make it even more easy to save some money. This is especially true while purchasing any electronics.

19.Avoid impulse buying: Make it a habit to avoid impulse buying. Many of the things you want to buy do not seem all that necessary, if you only you wait for a day or two. Also, waiting means you will be able to check prices and make an informed decision to buy it at the best possible price.

20.Bottle your own water: Drinking water is good for your health. I always make it a habit to keep some at my desk at all times. Bottled water is the most convenient since it can provide protection against accidental spills. That said, buy bottled water only once in a while, and then reuse that bottle to fill your own water. If you are not happy with tap water, invest in a Brita Filter – in the long run it can save a lot of money.

Ways to save money

2008-12-16T07:11:00.000-08:00

1.Cook at home often: If both the husband and wife work, this is likely to be very difficult. Start out with the habit of cooking at home once a week and slowly increase the frequency until you find a balance between saving money and getting stressed out.

2.Make your own coffee: Everyone seems to have heard of the latte factor. Even though the author may have overestimated the savings from skipping a latte at Starbucks, don’t underestimate the ding it puts in your pocket in the long run. You don’t have to entirely ban drinking coffee, but skip it as often as possible unless you make it at home.

3.Brown bag lunch at least a few days a week: Lunch times are great opportunities to network and make connections that could improve your career growth. So unless there is a common eating area for brown baggers, you may choose to limit brown bagging lunch to three days each week. Find a balance between saving some money and making the connection. In my case, I take my lunch with me 2-3 times a week and eat out the rest of the time.

4.Make a list before going shopping: They call it impulse buying for a reason. Humans simply have a very tough time resisting the temptation to purchase extras while shopping. Without a list you will buy items that you simply do not need. Even worse is when your forget to purchase the actual item you came to the store for in the first place. If you plan on cooking at home, pre-plan a rough menu and make a list before you go grocery shopping. Getting all that you need in one trip can help avoid another unnecessary trip and temptation.

5.Go grocery shopping while you are in a hurry: Maybe you need to go out in a couple of hours. Or your favorite show is going to be on TV after a couple of hours. Try to squeeze in the grocery trip in that intermediate time. Armed with your grocery list, you should be in-and-out very quickly with little time for meandering and getting tempted to buy things you don’t need.

6.Watch out for expiration dates on perishable goods: This one seems intuitive when you read it, but I am surprised at how many people do not pay attention to expiry dates. No point getting a gallon of milk if it is going to turn sour with a couple of days. Same goes for meat, eggs, yogurt, spreads, frozen items, deli/bakery items etc. Some people say you can use a few items a few days after expiry – but I personally value my health more than money and would rather avoid buying such items in the first place.

7.Buy in bulk whenever possible: When it comes to non-perishable items, buy in bulk whenever you find something on sale. The items I usually stock up on are, cereals, tinned goods, rice, beans, pasta, coke, toothpaste, body wash, shampoo, toilet paper etc. For such items, shopping at warehouse stores like Costco, Sam’s Club etc can save you quite a bit of money, provided you stick strictly to your shopping list when you shop at these places.

8.Buy generic products whenever possible: Does it really matter whether your cereal is made by Kellogg's or is the store brand? Does it matter if your milk is Oak Farms or the store brand? For a few things (like soda in particular), I prefer brand name products. For others, I do not mind generic store brands if they can save me money. Find what works for you and switch to generic brands for at least a part of your grocery list.

9.Use grocery store bags to line trash cans: This may not work if you use a massive trash can but we use a small sized one for which the grocery bags are a perfect fit. This not only helps us save some money, but reduces our environmental foot print and avoids the kitchen from stinking from a huge overflowing trash can.

10.Consolidate and pay off debt as soon as possible: If you carry any debt, focus on consolidating it to a lower interest and paying it off as soon as possible. Money paid in interest is money thrown away! Why spend your hard-earned cash to make the financial institutions rich

Money Saving Tip - Couponing Online

2008-12-09T05:03:00.000-08:00

6 Ways to Save Money

2008-12-03T17:07:00.000-08:00

Ford CEO will work for $1 to get federal loans, will cancel bonuses, accelerate electric cars

2008-12-02T08:02:00.000-08:00

DETROIT (AP) -- Ford Motor Co. will tell Congress that it plans to return to a pretax profit or break even in 2011 when its CEO appears before two legislative committees this week.

Also, CEO Alan Mulally said he'll work for $1 per year if the automaker has to take any government loan money.

The plan Ford is presenting to Congress this week also says it will cancel all management employees' 2009 bonuses and will not pay any merit increases for its North American salaried employees next year.

Other cost-cutting actions include a plan to sell Ford's five corporate aircraft, the company said.

Mulally said in an interview with The Associated Press on Tuesday that Ford will emphasize its cost cutting efforts with the United Auto Workers union and will give much more detail to Congress than it did when lawmakers grilled the automakers' CEOs earlier this month.

The company said it also will accelerate plans to roll out electric vehicles as part of the plan it will present to Congress this week. The vehicles will come out starting in 2010 and include the Transit Connect small van and a car the size of the Ford Focus compact.

Mulally says Ford will seek $9 billion in government loans but may not need them. The Dearborn-based has said it has enough cash to make it through 2009 without assistance.

All three Detroit automakers are scheduled to appear before congressional committees Thursday and Friday to seek a total of $25 billion in government loans. Chrysler LLC and General Motors Corp. have said they are perilously low on cash and need the government loans to survive the recession and the worst auto sales environment in 25 years.

Mulally also said he will encourage other automakers to join forces to develop new battery technologies in the U.S. for future electric cars.

An electric car and profitability are hallmarks of a plan Ford submitted to Congress Tuesday.

Ford's plans call for an investment of up to $14 billion to improve fuel efficiency over the next seven years. The company said would improve the overall efficiency of its fleet by an average of 14 percent in 2009.

The company's plans to achieve profitability or break even by 2011 are based on industrywide sales estimates of 12.5 million units in 2009, 14.5 million in 2010 and 15.5 million in 2011.

The seasonally adjusted annual sales rate dropped to 10.6 million vehicles in October.

Third-quarter GDP revised down to negative 0.5%

2008-11-26T04:57:00.000-08:00

WASHINGTON (MarketWatch) -- In a sign of trouble ahead, the U.S. economy contracted at a slightly faster pace in the third quarter than initially estimated, government data showed Tuesday.

The economy contracted at a real annual rate of 0.5% in the third quarter, not at the 0.3% rate reported last month, the Commerce Department said Tuesday.
According to the median forecast compiled by MarketWatch, economists had expected a revision in GDP down to negative 0.6%. See Economic Calendar.
Real gross domestic product has grown 2% over the past four quarters.
Economists have said they believe the weakness in the July-through-September quarter is a harbinger of further weakness ahead. Growth in the current quarter is on track to fall at a 4% annual rate.

"As bad as the third quarter was, the fourth quarter will undoubtedly be worse," economists at RBS Greenwich Capital wrote to clients.
Business and consumer activity ground to a halt between mid-September and mid-October.

Revisions

As with the initial estimate, the story behind the weakness in the third quarter was all about the sudden drop-off in consumer spending. Read full government report.
The main source of the revisions was less spending by American households than first estimated.

Read more...

Tips to Save Money in 2008!

2008-11-21T19:22:00.000-08:00

How to Make Your Money Last Longer in Retirement

2008-11-19T09:35:00.000-08:00

For investors still fighting with themselves over whether to stay invested or head for the hills, a fascinating new study sheds light on exactly why these decisions are so hard to make.

It's not just the "in or out" decisions, but also the ones revolving around whether to save for retirement or the kids' college education, whether to take a minimum IRA distribution from cash holdings or stocks and more. In this kind of market, everything seems a bit tricky, and has the potential to go against conventional wisdom.

The November issue of the Journal of Financial Planning features a piece by finance professors Robert Weigand of Washburn University in Kansas and Robert Irons of Dominican University in Illinois, looking at the effect of "withdrawal sequencing on the longevity of retiree's portfolios."

In plain English, that means it's looking at whether you should unload your stocks or bonds first in order to make your money last the longest.

The authors looked at three possible withdrawal strategies: one where the retiree sells all of their bonds first, another where they sell stocks first, and a third strategy where they pull the money they need to live from each asset class in a 50/50 split.

Based on 136 years of historical data, the professors concluded that consuming the entire bond portion of one's retirement portfolio first results in the portfolio lasting longer than the other two strategies roughly 90% of the time. The strategy - which eventually will leave a retiree with an all-equity portfolio -- on average extends the life of the holdings by 2.3 to 3.8 years.

Portfolio Preservation

Look at a chart showing the historical returns of stocks and bonds, and the result is hardly a surprise. Past performance shows that equities outperform bonds over the long run; consuming bonds first gives stocks more time to deliver that edge.

That's why there is plenty of retirement research and conventional wisdom suggesting that retirees keep a big slug of their money in equities regardless of market conditions.

The 50-50 split is the second-best choice historically, because it captures at least some of the equity edge, with the sell-the-stocks-first strategy providing the fewest years until the portfolio is depleted.

With that research in hand, it would be easy to assume that the authors would push investors to stay fully invested in equities.

But these are interesting market times that sometimes require going against conventional wisdom and history. The authors suggested that retirees go against the grain and consider selling stocks first, even if it has the potential to exhaust a pool of assets more quickly.

Specifically, the professors found that the bonds-first approach worked best at times when the spread between stock and bond returns was biggest. They found a sure-shot indicator of when to go bonds-first by studying the 10-year trailing earnings for stocks and bonds and looking for the widest possible spreads.

Right now, that indicator shows that, despite the historical results, it's not worth the risk to sell the bonds first in a retirement portfolio.

Retirement Minds

Without getting too deep into the study, the results come back to the crux of decision-making problems.

Many investors believe they know the "right way" to go, but market conditions make it so other decisions not only feel good and look tempting, but may in fact turn out better. An investor who has stayed in the stock market, for example, clearly knows that it's a bit late to head for the exits now, without becoming the poster-child for buy high, sell low.

But they lacked the foresight to get out of the stock market a year ago (or longer), and they can't rewind the clock. They can only go forward, balancing the decision between the way conventional wisdom says things will turn out versus the way they feel when they open their 401(k) statement.

Likewise, I recently received a letter from Nanci F. in Natick, Mass., whose oldest child will head off to college next year, but whose retirement nest egg has been gashed roughly by the amount she has set aside in a college-savings account meant to pay tuition. She's wondering whether she might want to dump the 529 plan in favor of plugging the big gap in her retirement savings.

There's no "right" decision. Joseph Hurley, who runs SavingforCollege.com, notes that if the 529 account is in the red, the money can be withdrawn without penalties or taxes (otherwise, any profits in the account could face a 10% penalty plus ordinary income tax).

But the real issue, he points out, is "What are you going to do with the money, and how do you make sure that it pays for something you value -- like college for the kids or retirement for you -- rather than just making a move because it feels good right now."

Similarly, many seniors facing required minimum distributions on their individual retirement accounts are wondering whether they should take the payout from cash or whether they should liquidate stocks.

The longevity argument -- as detailed in the Journal of Financial Planning article -- would indicate that someone who doesn't need the money might want to let the long-term investments ride. (An investor can withdraw money from the account without liquidating securities, so that shares in stocks or mutual funds are simply transferred to taxable accounts.)

"Either way, cash or stock, the taxes are the same, because they are based on the value of earnings in the account," says Ed Slott of E. Slott & Co. in Rockville Center, N.Y. "It comes down to what someone can get comfortable with.

"That's the way it is with a lot of decisions right now," Slott added. "There is what you have done to now, and what you have to do to be comfortable next, and it's not always as easy as looking at some formula or figuring out the tax rules. Sometimes, it's just what it feels like in your gut."

Chuck Jaffe is a senior MarketWatch columnist. His work appears in dozens of U.S. newspapers.

Sharp rise in unemployment as financial crisis hits jobs market

2008-11-13T05:45:00.000-08:00

British unemployment today posted its biggest rise since the country's last recession 17 years ago as the financial crisis filtered through to the jobs market.

Official figures showed unemployment measured by International Labour Organisation (ILO) standards rose by 164,000 in the three months to August from the previous quarter to stand at 1.79 million. The rise took the jobless rate up half a percentage point to 5.7%, also the biggest jump since July 1991.

"These numbers are truly horrendous and much worse than I had feared," said David Blanchflower, a labour market expert and member of the Bank of England's monetary policy committee.

He told guardian.co.uk his earlier prediction that unemployment would rise to 2 million by Christmas now looked conservative. "Unemployment will be above 2 million by Christmas. I am particularly worried at the 56,000 rise in the number of young unemployed people. These are school leavers who are unable to get a job or claim benefits, which is why the claimant count has not risen even faster than it has," he said.

The number of Britons out of work and claiming jobless benefits rose by 31,800 last month to 939,000, the eighth monthly increase in a row, and August's rise was revised higher to 35,700. The City had expected a 35,000 increase for September.

This so-called claimant count measure is always lower than the broader, internationally recognised ILO measure which includes people not claiming benefits, because some unemployed people are not entitled to claim benefits, or choose not to do so.

The rise took the claimant count jobless rate up to 2.9%, its highest level since January 2007.

The prime minister, Gordon Brown, responded to the figures this morning by pledging the government would do everything it could to create jobs in the UK economy, which is teetering on the brink of recession.

The government also announced today it was making an extra £100m available to retrain workers who lose their jobs.

The employment minister, Tony McNulty, said the jobs data painted a "bad picture" of the UK economy: "But the job is to look forward and see how we can deal with any dip in employment rather than talking about the causes."

The number of employed people dropped 122,000 to 29.4million over the three-month period.

The FTSE 100 fell more than 3% this morning, wiping out all of yesterday's gains. The mood darkened after the unemployment figures, and the index of leading shares fell more than 150 points to 4235.6.

The Liberal Democrats' work and pensions spokeswoman, Jenny Willott, urged the government to turn its attention to unemployment and inflation, now the banking rescue package had beeen agreed.

"Real families across Britain are suffering, not just those working in the Square Mile. As the number of vacancies shrink, it will be harder and harder to get people back into work. It will not simply be a case of retraining the unemployed if there are no jobs for them to return to," she said.

The number of job vacancies dropped by 62,000 from a year ago to 608,000 in the three months to September. And 147,000 people faced redundancy in the three months to August, up by 28,000.

For many people, a bleak Christmas lies ahead as the fallout from stockmarket turmoil spreads to the rest of the economy.

Brendan Barber, the general secretary of the TUC, said: "We are now seeing the effect of the credit crunch on the rest of the economy. I fear that the whole economy will soon feel the impact of the problems in the banking sector."

He urged the Bank of England to cut interest rates again to avoid a severe recession.

Derek Simpson, the joint general secretary of the Unite union, said: "Government intervention should not just stop with the banks. Action across the wider economy is necessary to protect jobs and the economy in a recession."

Alan Clarke, UK economist at BNP Paribas, said: "If you look at the claimant count number, it wasn't as bad as expected, but if you look at the ILO, it was simply awful. These numbers are falling off a cliff."

In a sign that consumer price inflation - now at a 16-year high of 5.2% - is not feeding into wages, annual average earnings growth slowed to 3.4% in the three months to August, its weakest in five years.

"As for pay pressures, the average earnings numbers remain very subdued," said Philip Shaw, the chief economist at Investec. "The labour market appears yet again not to be an inflationary threat to the economy which helps to justify the cut in interest rates last week."

Economists believe it is going to get worse. Thousands of jobs are being lost in the City, where banks have merged or collapsed, and on the high street, where growing numbers of retailers are going bust.

Manufacturers laid off 46,000 workers in the three months to August, taking the total number of manufacturing jobs to 2.87million, today's figures from the Office for National Statistics showed.

Job losses are spread across the economy, with Cadbury announcing 580 job cuts this week and ITV cutting about 1,000 jobs. The Centre for Economics and Business Research estimates 62,000 financial jobs will be lost by the end of next year.

Nigel Meager, the director of the Institute for Employment Studies, said: "No part of the country is spared. Much attention has focused on high-end jobs in the City. In an economic downturn, however, the real human cost is likely to hit lower-skilled workers who find it harder to move into another job and have less of a financial cushion to see them through difficult times.

"As vacancies continue to evaporate, competition for any job available will become fierce and the existing long-term unemployed, as well as young people entering the labour market will be particularly disadvantaged."

Unemployment hits highest since 1997

2008-11-13T05:26:00.000-08:00

Ashley Seager guardian.co.uk, Wednesday November 12 2008 09.58 GMT Article history

Unemployment in Britain jumped to its highest level since 1997 in the three months to September, official data revealed today, while the claimant count suffered its biggest rise since 1992.

The Office for National Statistics said the Labour Force Survey - the broadest measure of joblessness - showed a rise of 140,000 in the third quarter of the year to a total of 1.825 million, the highest level since the final quarter of 1997.

The jobless rate on that measure rose to 5.8%, the highest since the first quarter of 2000.

Meanwhile, the claimant count - a narrow measure which only counts those drawing unemployment benefit - leapt 36,500 in October to 980,900, the biggest rise since December 1992 and one which took the jobless rate up to 3%. It also marked the ninth consecutive monthly rise.

There was more bad news as the total number of people in work fell by 99,000 in the three months to September to a total of 29.4 million.

The TUC's general secretary, Brendan Barber, said: "The dole queue is now growing by a 1,000 people a day - each one a human tragedy of wasted potential. And the signs are that redundancies are coming even faster since these figures were collected. Countering unemployment must be public policy priority No 1.

"And the newly unemployed are facing a bigger cut in income than in previous recessions. Increasing benefit is the best way of stimulating the economy and will help cushion the financial shock of losing a job."

There were also clear signs that the slowdown in the economy is putting downward pressure on wages. Average earnings rose 3.3% in the third quarter of the year compared to a year ago, the slowest rise since July 2003. The September figure on its own was just 3%, suggesting the headline three-month rate could fall further next month.

"The last recession in the early 1990s saw 31 consecutive monthly rises in unemployment so we are likely to have plenty more bad news on the labour market to come," said James Knightley, economist at ING Financial Markets.

"We suspect (the claimant count) will push towards 2.5 million in 2010. The LFS measure of unemployment currently stands at 1.85 million and this is likely to push above 3 million over the same time period."

Explainer: The worse your credit record, the more you pay

2008-11-13T05:20:00.000-08:00

Credit cardholders can pay just over twice the 3% base rate - Barclaycard has one piece of plastic that charges 6.8% - or a massive 13 times at Vanquis with its 39.9%. And that's just published rates as some cards hit holders with poor credit records with even higher annual percentage rate (APR) interest levels, some top the 60% mark.

So can holders expect a fall now the base rate has hit a 50-year low? The banks claim they can't afford it, card rate cuts are not on the agenda. Barclaycard, the UK's biggest plastic lender with 12m accounts, says the cost of financing cardholder spending is a small part of overall expenses so changes in base rates are insignificant.

Most costs are not interest-rate related. Sending out plastic cards, replacing those that have been lost or stolen and posting monthly statements are among the expenses incurred before borrowing to finance customer spending.

But one of the biggest costs comes from cardholders who default. Banks are guarded over figures but the higher cost cards such as Vanquis and Capital One Classic go to those with poor credit ratings - they've missed payments or had county court judgments or have moved home several times. At the other end of the scale, triple A-rated holders can pay under 10%.

About half of all customers pay their bills in full each month, incurring no costs, subsidised by interest paying holders.

Many credit card rates have remained unaltered for two years despite eight base rate moves - both up and down - since January 2007.

A number of cards are still on the same rates as 2005.

But the APR rate is only part of the story. Banks make money in penalty fees, extra costs for using the plastic overseas and from the percentage - typically 3% - levied on balances moved from one card to another

The ways to develop the habit of spending less than you make.

2008-11-10T06:05:00.000-08:00

-Combine your cable, internet and telephone service. Companies now offer combined services that not only cost less, but offer the convenience of a single bill.
-Slow down your internet service. I went to the slower internet service option with my cable company and saved $15 per month. And I haven’t noticed a difference when surfing the Net.
-Send away for and follow up on rebates. After you buy a product with a rebate, send in the form that day. Then mark your calendar to remind yourself to follow up with the rebate company if the check hasn’t show up.
-Buy a refurbished Mac: I’ve written about this before because it is a great way to buy not only computers, but iPods and iPhones as well. You can check out the details on how to buy a refurbished iPhone here.
-Convert to a gas water heater. They are more efficient and will save you money in the long run.
-Request a reduction in the interest rate for your home equity line of credit. I did and my mortgage company agreed to reduce the rate by more than 0.50%. And if you are looking for a home equity loan, LendingTree Home Equity Loans is a great place to check out available options.
-Request a reduction in the interest rate on your credit cards. As with home equity loans, credit card companies sometimes are willing to reduce the interest rate. It can’t hurt to ask.
-Refinance you mortgage. If you can reduce your interest rate by one percent or more, it is often beneficial to refinance. This is particularly true for those with high rates due to less than stellar credit scores. If your score has improved, you may qualify for a better rate. I would start by asking your current mortgage lender about lower rates. Here’s a refinance calculator to help you determine if refinancing is right for you.
-Get rid of Private Mortgage Insurance. If your down payment was less than 20%, you are probably paying PMI. Once you have a 20% cushion through reducing your debt and home appreciation (yes, prices do go up from time to time), contact your mortgage company to start the process of removing the PMI.
-Get your books from the library. I love books and read every day. While I buy some of the books I read, most come from the library. Simply put, it’s hard to beat free.
-Get DVDs from the library. Many libraries now have movies on DVD that can be checked out. If your library offers this service, it sure beats paying Blockbuster or Netflix.
-Get DVDs from Red Box. If your library doesn’t offer DVDs, get your moves from Red Box. It costs just one dollar per night. You find Red Box locations here.
-Read magazines at the library or online. Too many magazines can cost a fortune. And how many times have you bought a magazine based on the cover and been disappointed by the lack of substance. At the library you can read magazines for free. And many magazines now offer their content for free online.
-Subscribe to magazines that are must reads. If you must have a certain magazine each month, subscribe. Subscriptions offer substantial savings over the cost at the newsstand. Update: Amazon offers some great deals on personal finance magazines.
-Buy your car over the internet: Search the internet for information on the car you want and then send e-mail requests to dealers for the best price. Even if the dealer is located in another state, the cost to have the car delivered may still be worth it. I paid $500 to have a Honda Odyssey shipped 500 miles and still saved $1,000 over the best local price available.
-Request a discount on trash service. For some reason this is a highly competitive business. If you get a better offer in the mail for trash service, call your current trash company and ask them to beat the offer. My trash service has reduced its rates twice in six months to match competing offers.
-Never pay checking account fees. I hate bank fees. With so many free checking account plans available, there’s no reason to pay a fee. And if the bank happens to charge you one, ask them to reverse the fee or take your business to another bank.
-Get a rewards card. There are many reward cards that pay out in cash or points that can be redeemed for travel or products. Many of these cards don’t have an annual fee. I recently traveled to my college reunion for free using points earned from a credit card. My favorite rewards card is American Express Gold Card. It does have an annual fee, although follow this link (American Express) to apply and the first year fee is waived. You can also check out my review of several travel reward credit cards.
-Don’t pay interest on credit cards. This is obvious, but I soon as you fail to pay off the credit card in full, the high interest payments start to eat away at your monthly budget. If the temptation to spend more than you can pay on a credit card is to great, get rid of the credit card (and ignore the previous tip!).
-Take advantage of 0% credit card offers. I’ve saved thousands of dollars using 0% balance transfer credit cards. Again, as long as the cards won’t cause you to spend more, they can offer substantial savings. Make sure, however, that you keep an eye on the balance transfer fee, which can wipe out your savings.
-Replace incandescent bulbs with compact fluorescent light (CFLs) bulbs. These bulbs use 75% less energy and last 10 times longer. They do take some getting used to, and they won’t work in every light fixture. But use them where it makes sense and save energy and money.
-Drive your car longer. The buy new versus used debate often overlooks the most important factor–how long you own your car. Drive it as long as you safely can for substantial savings.
-Pay your life insurance annually. Insurance companies charge you more if you pay monthly, quarterly or semi-annually. Pay once a year and you’ll pay less.
-Pay car insurance semi-annually. At least with my car insurance, they offer quarterly and semi-annual payment options. It costs more to pay quarterly, and twice a year is more convenient anyway.
-Increase insurance deductibles. Most of us don’t need to be insured for all losses over $100 on our car, for example. Although we wouldn’t want to pay a $250 or even $500 deductible, we could. If that’s you, find out how much you’d save from raising your deductible. I’ve raised my deductibles on my auto insurance and home owner’s insurance and saved a considerable amount.
-Think before submitting an insurance claim. My rule of thumb is that I won’t submit a claim on a loss that is less than twice my deductible. So for a $250 deductible on an auto loss, I’ll pay out of pocket any loss up to $500. Why? The $250 I’d receive from my insurance company is not worth the increased premiums I’m likely to pay. You may want to call your insurance agent to find out how a claim will impact your premiums before filing the claim.
-Get rid of your home telephone. This is a great way to save money. Many don’t do it because of the 911 service, and that’s understandable. But if you’re comfortable relying on a cell phone, there’s no reason to keep a land line. If you do, consider reducing your service to the minimum and only use the phone in an emergency.
-Consider VOiP telephone service. We use Internet phone service and have saved substantial money over Verizon service. The phone service has been very reliable, and you’d never even know the signal was being carried over the Internet. Lingo is a great option for VOip telephone service, which costs just $21.95 a month for unlimited local and long distance calling in the U.S. and over 20 countries, and even gives you the first month of service for free (check out my Lingo Review).
-Shut vents in unused rooms. This isn’t advisable if you have forced air heating, but shutting vents in unused rooms can save on your heating and cooling bill.
-Eliminate some cable service. Note that I’m not recommending getting rid of cable completely, although that’s certainly a way to save money. If you must have cable, take a look at all the charges on your cable bill and consider getting rid of some of the service. Try it for a month and see if you really miss those last 500 channels.
-Agree to limit gift giving. At Christmas our extended family and we go overboard when it comes to gift giving. Agree in advance to limit the gifts and save everybody some money.
-Get healthy. Your health will directly impact the cost of life insurance and, in some cases, can reduce the cost of your health insurance.
-Cancel the health club membership. Seems to contradict the previous tip, but evaluate how much you really use your health club. Less expensive options may include a gym at your work or a gym at your local parks and recreation center. Some offer pay as you go options rather than monthly fees, which can be great for those of us who aren’t as consistent in our routines as we’d like to be.
-Pass on extended warranties. A $129 two year extension on a $300 product is just not worth it. Warranties are insurance, and we rarely need to insure such a small amount.
-Take your lunch to work one more day a week than you do now. Eating out at lunch is fun, so I wouldn’t eliminate it completely. But taking lunch just one more day a week will keep money in your pocket.
-Buy low cost mutual funds. This is easy to miss because the money doesn’t come out of your pocket each month. But keep an eye on the cost of the mutual funds in your 401(k) and other investments. My rule of thumb is that no fund should cost more than 1% and the combined cost for all your funds should be less than 0.50%. If you don’t believe that even a half percent can make a big difference, read this.
-Take advantage of employer 401(k) matches. If your employer matches 401(k) contributions, do everything you can to take full advantage of that match.
-Use flexible spending accounts. FSAs allow you to pay certain medical, dental and child care expenses using pre-tax dollars. If your not taking advantage of these accounts, you’re wasting money. Enrollment at many companies is occurring now, so check with your HR department if you have any questions about FSAs.
-Get tires from Costco or other wholesale clubs. Simply put, they cost a lot less than buying them at the dealer or even a chain tire store.
-Keep tires properly inflated. It keeps you safe and costs less on gas.
-Stop smoking. Need I say more?
-Drink less alcohol. It costs money and ads calories.
-Buy term life insurance. Any other life insurance product is just not worth the extra cost.
-Buy generic over-the-counter medicines. They are exactly the same as their branded counterparts and cost less.
-Get organized and avoid missed payments. I’ve missed a payment or two because the bill got buried beneath a stack of papers. Get organized and avoid those late payment penalties. If you do miss a payment, call your creditor and ask to have the penalty removed. They’ll usually accommodate the request, at least the first time.
-Buy online when it saves you money. I’ve used Amazon to buy more than just books. It sells just about anything and sometimes at substantial savings.
-Consider MythTV PVR in replace of TiVo type services. I just ran across MythTV and am still investigating it. I pay $15 a month to my cable company for a DVR box and would love to save the money. If you’ve used MythTV, let us know how well it works.
-You can get more information about MythTV here.
-Use Open Source software when possible. I use GIMP instead of Photoshop. GIMP is free; Photoshop ain’t.
-Check the insulation in your home. Extra insulation can easily pay for itself in one or two years, and it helps save the environment, too.
-Buy energy efficient appliances. Look for the Energy Star on appliances and consider the annual energy cost before buying. More efficient appliances cost more, but you make up the extra cost and then some over the life of the product.
-Stay married. Yes, I did say 51 “painless” money-saving tips. Yes, I know that some marriages end because of abuse and other extreme circumstances. “Isn’t marriage about love”, you ask. Sometimes. “You don’t know my situation”, you say. True. But I lived through the emotional and financial pain of two divorces as a child, and I’ve been married to the same women for more than 19 years, so I know plenty. Am I telling you not to get a divorce? Of course not. I am telling you that divorce will wreck your finances and your spouse’s finances.

Tips on Saving Money

2008-11-10T06:02:00.001-08:00

Going hand and hand with an effective household budget is saving money on those things that you truly need. To start saving, take an inventory of your needs to see where you can shave the dollars. Begin with the biggest items first, where the most potential for savings is, and move down the scale to the less expensive items. A moderate savings on one of the big items (houses and cars) combined with savings on the smaller items (food, clothes, etc.) can reap a large reward in your total budget. The following are some thought starters:

General Tips

Distinguish between Wants and Needs: You will save a ton of money if you don't mistake wants for needs. Needs are pretty simple to identify--those items that are necessary to sustain: Shelter, food, clothing, transportation. Wants are those things that enhance or possibly improve our family life. A car is a need. Unless necessary for your business, a $40,000 Sport Utility Vehicle is a want, even if a lot of people don't see it that way. Have you ever heard (or said) "I absolutely need...?" when the actual meaning was "I really want?" This is not to suggest that you shouldn't be able to have the things you want--only that to delude yourself into believing that a want is a need--and busting your budget in the process--is a recipe for financial disaster.

Is less better? Perhaps it was due to the booming economy, perhaps "keeping up with the Joneses", maybe its ego, but for many of us, we often seem to insist on the biggest and the best, no matter what the cost. When a $15,000 new car may be more than acceptable, we stretch the seams of our budget to afford a $25,000 vehicle. We buy $25 shirts with $35 designer labels attached. We opt for the $100 dinner at the trendy restaurant when a $20 meal would have been just as delicious. Think about where you are spending the family money--and how--to see if there couldn't be savings found with minor changes in habits.

Try before you Buy: This goes a long way in helping to avoid the silly purchases of things you rarely or never use. Before you buy something, especially items with big price tags, borrow one, rent one or try one out before you plunk down the cash. If you are bored with it, or determine that it truly is not something you need before you buy it (and you will be on a certain percentage of items) you will definitely be bored with it, or find it not that necessary, after! Example: You feel that you absolutely must have a new Jet-Ski, at a cost of $4500 (and that is before financing and taxes). You go to the lake, rent one, and 45 minutes into a one hour rental you are saying, "geez, this is a long hour." Saved: More than $4500 (perhaps a year of college fees for the kid!)

AAA Gas Saving Tips

2008-11-05T14:18:00.000-08:00

6 Ways to Save Money

2008-11-03T16:14:00.000-08:00

How To Install a Storm Door - The Home Depot

2008-10-29T03:36:00.000-07:00

Stocks fluctuate as investors weigh economy

2008-10-27T07:52:00.000-07:00

NEW YORK – Stocks fluctuated Monday as investors tried to determine how the government's efforts to prop up the banking sector and aid the economy might help stave off a protracted global recession.

Investors around the world are nervous that the evaporation in available credit in the past month has hurt lending to the point where it will be difficult to avoid recession. But the U.S. government is implementing some of its measures this week to help the banking sector, including a plan to purchase stakes in banks.

Beyond that, investors were cheered after sales of new homes last showed an unexpected increase in September. While median home prices have dropped to the lowest level in four years, investors appeared pleased that the market was beginning to chip away at an inventory glut. The Commerce Department reported that sales of new single-family homes rose by 2.7 percent in September to a seasonally adjusted annual rate of 464,000 homes. Economists had expected sales would drop from August.

The median price of a new home declined by 9.1 percent from a year ago to $218,400, its lowest level since September 2004.

News that the Treasury plans to start distributing money to major banks this week is offering investors some room for optimism, even as economic worries remain. But investors are worried that the credit crisis has hurt the world's economy.

"Clearly, what's most important is that the funding crisis needs to be contained at this point," said Chris Orndorff, director of equity strategy at Payden & Rygel in Los Angeles.

"The banks need to start taking on some more risks," he said. "I think it's going to take months."

In midmorning trading, the Dow Jones industrial average fell 53.84, or 0.64 percent, to 8,325.11.

Broader stock indicators also fell. The Standard & Poor's 500 index declined 8.41, or 0.96 percent, to 868.36, and the Nasdaq composite index fell 20.13, or 1.30 percent, to 1,531.90.

The Russell 2000 index of smaller companies fell 5.24, or 1.11 percent, to 465.88.

But even with several pieces of welcome news, investors around the world remain worried about the prospects for economic expansion. A surge in the yen illustrated investors' nervousness about how much economic activity could slow. Japan's Nikkei 225 index dropped to its lowest close in 26 years as investors worried that the high yen will hurt Japanese exports and further disrupt economic activity. The currency moved to the 93 yen level and near 13-year highs. The yen is seen as a safe haven holding for investors who contend the Japanese economy will fare better in a global recession.

Wall Street appeared comforted by the Treasury's announcement that it signed agreements with nine banks and will buy stock in the companies this week. The proceeds from the stock sales are intended to bolster the banks' balance sheets so they will begin more normal lending and help ease the continuing credit crisis.

The market is facing the uncertainty as it awaits the start of a regularly scheduled two-day meeting of the Federal Reserve. There is speculation that the world's major central banks could announce coordinated rate cuts; the Fed is expected to lower its fed funds rate by a half-point to 1 percent on Wednesday.

The ongoing selling is due in part to the belief that a worldwide recession is likely inevitable, but it's also being triggered by hedge funds and other investors unloading stock because they're being hit by margin calls. In a margin call, a broker who lent money to an investor calls in the loan, forcing the investor to sell stock to repay the loan.

Yahoo profit drops; at least 1,430 to lose jobs

2008-10-21T17:18:00.000-07:00

Yahoo on Tuesday reported a 64 percent drop in net income for the third quarter, issued cautions about a weakening advertising market, and confirmed that layoffs are indeed on the way.

"As we saw the online ad market decline in the third quarter, I decided Yahoo needed to accelerate the process of getting more competitive," Chief Executive Jerry Yang said in a conference call. "We anticipate we will reduce headcount by at least 10 percent" by the end of the year.

With 14,300 employed at the end of last quarter, that means at least 1,430 are losing their jobs in 2008. And Yang indicated there could be further cuts in 2009.

For the third quarter, Yahoo reported net income of $54 million, down from $151 million in the year-earlier quarter. Excluding some items, the company's had revenue of 9 cents per share, meeting expectations of analysts surveyed by Thomson Reuters. However, revenue excluding commissions of $1.325 billion, a 3 percent increase, was less than the $1.37 billion that had been expected.

Yahoo said the layoff is the centerpiece of a new financial goal to cut its current annualized expenses of $3.9 billion by $400 million by the end of 2008. The company employed 14,300 at the end of the second quarter.

Other changes will come, too: Yahoo will relocate operations to lower-cost regions of the world, consolidate real estate, improve procurement, and standardize its infrastructure, Yang said.

The big issue is display advertising, which weakened overall for the company.

"As economic conditions and online advertising softened in the third quarter, we remained highly focused on our 2008 strategy to invest in initiatives that enhance not only our long-term competitiveness, but also our ability to deliver for users and advertisers," Yang said in a statement. "We have been disciplined about balancing investments with cost management all year, and have now set in motion initiatives to reduce costs and enhance productivity."

The balance of cost containment and weakening advertising showed Chief Financial Officer Blake Jorgensen's forecast about fourth-quarter results. "Given the weak economic climate, we're lowering the full-year revenue outlook but maintaining our operating cash and free cash flow outlook," he said.

Yahoo layoffs have been widely expected; the company hired Bain & Co. to evaluate its options and signaled that job cuts are one of several cost containment measures the Sunnyvale, Calif.-based company will undertake.

The Internet pioneer is under pressure. Microsoft's attempt to acquire Yahoo for a price that rose as high as $33 now looks even more notable given that Yahoo's stock has dropped to nearly $12. And the company is under pressure from the prevailing economic troubles, which many expect will cut spending on the graphical display ads on which Yahoo relies.

Yahoo also makes revenue from search ads, which many believe are more easily tied to actual performance measurements such as customer purchasing and therefore better able to weather the economic storm. But Yahoo's top rival, Google, makes vastly more on search ads, and a partnership under which Yahoo would show Google search ads is under heavy scrutiny by Justice Department antitrust regulators.

Jorgensen also said Yahoo was "disappointed" with its light revenue though pleased with the company's ability to keep that from hurting profitability.

"An increasingly challenging economic climate and softening advertising demand contributed to revenues this quarter coming in at the low end of our outlook range. While we are disappointed with our results, we're pleased that we continue to benefit from the aggressive cost management efforts we have pursued during the year," Jorgensen said. "These efforts helped our adjusted operating cash flow come in above the midpoint of our outlook range for the quarter, despite significant investments in our strategic objectives. We have the balance sheet strength, liquidity, and free cash flow we need to continue to make progress on our core strategies as we address this slowdown."

President Sue Decker said display ads were weakest in the areas of finance, autos, real estate, and travel.

Citigroup posts another loss amid credit woes

2008-10-16T11:20:00.000-07:00

NEW YORK (AP) -- Citigroup Inc. suffered its fourth straight quarterly loss and said it has cut 11,000 jobs since June, drubbed again by the relentless downturn in housing and turmoil in the financial markets.

The New York-based bank said Thursday it lost $2.8 billion, or 60 cents per share, in the third quarter, compared with a profit of $2.2 billion, or 44 cents per share, a year ago. The deficit for the July-to-September period brings Citi's total losses over the past 12 months to $20.2 billion.

The shortfall for the quarter was narrower than anticipated. Analysts polled by Thomson Reuters expected a loss of 70 cents per share.

But the results were hardly reassuring. Citi wrote down $4.4 billion in investments, plus another $612 million from a settlement related to auction-rate securities; recorded $4.9 billion in credit losses; and took a $3.9 billion charge to boost reserves. The bank has written down the value of its investments tied to souring mortgages and other bad debt by some $51 billion since this time last year.

Shares fell $1.15, or 7 percent, to $15.08 in midday trading.

The frailty of the financial system has led the government to pledge $25 billion to each of the big four U.S. banks -- Citigroup, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. Of these four institutions, Citi appears to be on the shakiest footing. It is the only one to have posted quarterly losses over the past year, and it is shrinking while its peers are growing.

With $2.05 trillion in total assets now, Citigroup has officially forfeited the title of largest bank by assets, falling behind JPMorgan Chase's $2.25 trillion in total assets. Bank of America currently has $1.91 trillion in assets, and will have more when it completes its buyout of Merrill Lynch, which on Thursday reported a $5.2 billion loss. Wells Fargo has assets of $622 billion ahead of its acquisition of Wachovia Corp.

Citi not only eliminated 11,000 jobs during the third quarter -- bringing its total headcount reduction so far this year to 23,000 -- but it also shed $50 billion in assets. CEO Vikram Pandit announced in May that Citi intends to rid itself of nearly $500 billion in assets to get out of businesses such as risky mortgages; the bank said that over the past year, it has lopped off $308 billion in total assets.

Meanwhile, the bank has not made any major acquisitions. While JPMorgan Chase snapped up Bear Stearns Cos. and Washington Mutual Inc., and while Bank of America nabbed Merrill Lynch, Citigroup lost the bid for Wachovia and its massive deposit base to Wells Fargo.

"With Wachovia out of the picture, there is no doubt that Citigroup will pursue another acquisition," said Isabel Schauerte, an analyst with the research and consulting firm Celent, in a note. "However, if anything, these results suggest that the bank should focus on repairing its troubled balance sheet while waiting for another buying opportunity that has the scale Citi is hungry for."

On the positive side, Citigroup's write-downs were smaller than in the second quarter. Expenses were down $1.2 billion compared with the previous quarter and the bank maintained a Tier 1 capital ratio of 8.2 percent. A Tier 1 capital ratio essentially measures equity against risky assets. Citi's ratio is considered strong by historical measures, and is expected to tick higher when the government takes its stake.

But as JPMorgan's and Wells Fargo's third-quarter reports illustrated on Wednesday, the credit environment, particularly when it comes to consumers, is worsening.

During a conference call with investors, Chief Financial Officer Gary Crittenden said that if the unemployment rate keeps rising above 6 percent and the economy keeps slowing, there will be negative consequences -- "that card losses could exceed their historical peaks, and that mortgage losses could continue to grow."

In North America, more credit card holders became delinquent and more had to be written off, Citi said. The credit loss rate jumped to 7.3 percent from 6.46 percent in the second quarter and from 4.37 percent a year ago. Credit card loss rates worsened in Latin America and Asia, too.

Citigroup also said defaults in residential real estate loans, notably first mortgages, increased.

As the bank tightened its lending standards, average loans to consumers grew by a mere 1 percent year from a year earlier, while corporate loans were down 15 percent.

"We are very focused on client profitability," Crittenden said.

Consumer prices are flat in September

2008-10-16T11:18:00.000-07:00

WASHINGTON (AP) -- Consumer prices were flat in September as retreating costs for gasoline, clothes and new cars helped to offset rising prices for food, medical care and other things.
The new reading on the Consumer Price Index, the government's most closely watched inflation barometer, came after prices actually dipped by 0.1 percent in August, the Labor Department reported Thursday.

Those two months, however, had offered Americans a rare reprieve. Consumer prices have marched upward most of the year, spiking by an eye popping 1.1 percent in June.

The toll of galloping prices for much of this year is eating into paychecks, further straining consumers who are pulling back sharply. Recent readings on retail sales were grim. The prospects that consumers will retrench further would spell more trouble for the already ailing economy.

Other economic reports showed that filings for unemployment benefits remained elevated and big industry production plunged by the most since late 1974, largely reflecting fallout from hurricanes Gustav and Ike.

On Wall Street, the Dow Jones industrial fell more than 100 points.

In the inflation report, when energy and food products are stripped out, "core" prices inched up by just 0.1 percent in September, an improvement from a 0.2 percent advance in August.

The latest showing on inflation was better than economists expected. They were forecasting a 0.1 percent increase in overall prices and a 0.2 percent rise minus energy and food.

Paychecks continued to shrink.

Weekly wages dropped by 2.5 percent in September compared to a year ago, the 12th straight month in which wages have been down.

Another Labor Department report showed the number of new people signing up for unemployment benefits last week dropped. Even with the decline, new claims totaled 461,000 -- a figure associated with deep troubles in employment conditions.

Indeed, the four-week moving average of jobless claims is at a seven-year high. And, the number of people continuing to collect jobless benefits rose to 3.7 million, the highest since late June 2003, when the labor market was still struggling to get back on its feet after the 2001 recession.

Vanishing jobs, dwindling nest eggs and shrinking paychecks are straining millions of ordinary Americans. Economic anxiety is the voters overarching concern as they get ready to head to the polls in just a few weeks to select the country's next president.

Whether that's Democrat Barack Obama or Republican rival John McCain, the next leader will be confronted by a troubled economy.

A report from the Federal Reserve said that production at the nation's factories, mines and utilities plunged 2.8 percent last month, on top of a 1 percent drop in August.

The Fed estimated that disruptions related to the hurricanes accounted for about 2.25 percentage points of the total drop in industrial production in September. In addition, a strike affecting the commercial aircraft industry also was a factor in the poor showing, accounting for around a half percentage point of the overall decline, the Fed said.

Fed Chairman Ben Bernanke warned Wednesday that a quick rebound is not in the cards for the stumbling economy -- even if financial turmoil were to disappear.

With the economy in for a period of weakness that could extend well into next year, inflation should also moderate, Bernanke and other Fed officials predict. Tamer inflation would give the Fed more leeway to slice rates again or at least keep them at low levels for some time.

"The rapidly disappearing inflation threat is providing the Federal Reserve full latitude to move to an easing bias on rates to combat the recession as well as the ongoing financial crisis," said Brian Bethune, economist at Global Insight.

Many economists believe there's a strong chance the Fed will lower rates at its next regularly scheduled meeting later this month. In an unprecedented assault on the financial crisis, the Fed and other major central banks together reduced rates last week. The Fed's main rate dropped to 1.50 percent, from 2 percent.

Oil prices on Wednesday dipped below $75 a barrel for the first time in 14 months, suggesting gas prices will keep falling. Oil prices have plunged almost 50 percent since hitting a record high of $147.27 in mid July.

The retreat in these and other commodity price "as well as the likelihood that economic activity will fall short of potential for a time, should lead to rates of inflation more consistent with price stability," Bernanke said.

Stocks fluctuate as market tries to assess economy

2008-10-16T11:15:00.000-07:00

NEW YORK (AP) -- Wall Street remained tense Thursday, swinging between sharp gains and losses as investors examined mixed economic and earnings data for clues about the economy. The Dow Jones industrials, down 380 at one point, later rose more than 100; the major indexes were also seeing wide swings.

Stocks were seeking a direction after the previous session's steep dive, and turned sharply lower after a disappointing report Thursday morning on manufacturing. Wednesday's drop, which took the Dow down 733 points, followed a stream of bad economic news that underscored the likelihood that the country is either in a recession or will be in one -- and that the downturn will be severe.

It was clear from Thursday's trading that the market will continue having extreme reactions to any economic news.

"I don't think the markets have a clear sense about the economic environment as of yet. They're clearly nervous," said Subodh Kumar, global investment strategist at Toronto-based Subodh Kumar & Associates.

Investors initially appeared cheered by a better-than-expected reading from the Labor Department on consumer prices. The flat reading on September's Consumer Price Index compares with August's 0.1 percent decline, which was the first in nearly two years. The core index, which eliminates food and energy prices, rose 0.1 percent. Economists had been expecting CPI would rise to 0.1 percent and that core CPI would increase 0.2 percent. Investors are relieved to see any economic pressures ease on consumers.

Meanwhile, a weekly snapshot of the job market showed that first-time claims for unemployment benefits declined last week. The Labor Department said new claims fell 16,000 last week to a seasonally adjusted level of 461,000 -- below the 475,000 that had been anticipated. Still, total unemployment remains above the level that economists often associate with recession.

But the Philadelphia Federal Reserve said regional manufacturing conditions weakened in October. The bank's regional index came in at a negative 37.5 compared with a positive 3.8 for September.

Kumar said markets are jittery because many investors' expectations about the economy were too rosy heading into the summer and the monthlong freeze in the credit markets has dealt the economy another blow, making it harder and more expensive for many businesses and consumers to get loans.

He said the volatility buffeting the markets reflects investors tinkering with their portfolios to match their more sober take on the health of the economy and some investors simply cashing out. That means vehicles like mutual funds and hedge funds are entering a market already short on buyers and being forced to sell.

Because of investors' great anxiety about the economy, Wall Street is expected to remain extremely volatile, as it has been over the past month since the credit markets began tightening and stocks plunged. The gyrations this week have been particularly intense, with the Dow industrials soaring 936 points Monday and falling 733 Wednesday following a weak report on retail sales and a disheartening assessment of the economy from the Federal Reserve.

In early afternoon trading, the Dow fell 133.73, or 1.56 percent, to 8,444.18.

Broader stock indicators were mixed. The Standard & Poor's 500 index slipped 17.26, or 1.90 percent, to 890.58, and the Nasdaq composite index fell 4.36, or 0.27 percent, to 1,623.97.

Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 1.07 billion shares.

In Asian trading, Hong Kong's Hang Seng Index lost 4.8 percent, and Japan's Nikkei index dropped 11.41 percent, following the pattern of trading in the U.S. In Europe, Britain's FTSE 100 fell 5.65 percent, Germany's DAX index fell 4.91 percent, and France's CAC-40 fell 5.92 percent.

While the credit markets are performing better than they were last week given several unprecedented actions by governments around the world -- including the decision to buy stakes in private banks -- they are hardly operating normally.

Treasury bills, considered the safest assets around, remained in demand. The three-month Treasury bill on Thursday was yielding 0.44 percent, higher than 0.20 percent on Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.94 percent from 3.98 percent late Wednesday.

Investors also were troubled by Citigroup Inc.'s third-quarter results, which, while better than the Street expected, were still a reminder of the banking problems that have contributed heavily to the faltering economy. The bank posted its fourth straight quarterly loss due to credit-related troubles and cut another 11,000 jobs. The company said it lost $2.8 billion, in the third quarter compared with a profit of $2.2 billion a year earlier. Citigroup fell $1.16, or 7.2 percent, to $15.07.

Merrill Lynch & Co., which recently agreed to be acquired by Citigroup Inc. rival Bank of America Corp., early Thursday posted a net loss of $5.1 billion. The loss was wider than analyst forecasts. Merrill fell 50 cents, or 2.7 percent, to $17.74.

The dollar was mixed against other major currencies.

Light, sweet crude for November delivery fell $4.53 to $70.01 a barrel on the New York Mercantile Exchange. On Wednesday, crude settled at $74.54, its lowest close since Aug. 31, 2007.

Bank of America agrees to buy Merrill for $50 bln

2008-09-15T06:03:00.000-07:00

Monday September 15, 8:20 am ET
By Madlen Read and Tim Paradis, AP Business Writer
Bank of America agrees to buy Merrill Lynch in $50 billion all-stock deal

NEW YORK (AP) -- Bank of America on Monday began adding another slice to its growing financial services empire, buying Merrill Lynch in a $50 billion deal that would create a bank offering everything from fixed-income trading to credit card lending.

It will rival Citigroup Inc., the biggest U.S. bank in terms of assets.

Bank of America Corp. said early Monday it would acquire Merrill Lynch in an all-stock transaction worth about $50 billion that should lift the uncertainty shrouding Merrill since the start of the credit crisis over a year ago.

Charlotte, N.C.-based Bank of America has the most deposits of any U.S. bank, while Merrill Lynch & Co. Inc. is the world's largest and most widely recognized brokerage.

"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders," Bank of America Chairman and Chief Executive Officer Ken Lewis said in a statement. "Together, our companies are more valuable because of the synergies in our businesses."

Under terms of the transaction, Bank of America would exchange 0.8595 shares of Bank of America common stock for each Merrill Lynch common share, the statement said.

The deal values Merrill at $29 a share. That represents a 70 percent premium over the brokerage's Friday closing price of $17.05, but well below what Merrill was worth at its peak in early 2007, when its shares traded above $98.

Merrill's stock dropped further last week as ailing Lehman Brothers Holdings Inc. raced to find to a buyer. Early Monday, Lehman, the No. 4 investment bank in the U.S., filing for Chapter 11 bankruptcy.

Bank of America said its buyout is expected to close in the first quarter of 2009. The deal been approved by directors of both companies and is subject to shareholder votes at both companies and standard regulatory approvals, the bank said.

Under the agreement, three directors of Merrill Lynch will join the Bank of America Board of Directors.

"Merrill Lynch is a great global franchise and I look forward to working with Ken Lewis and our senior management teams to create what will be the leading financial institution in the world with the combination of these two firms," Merrill Lynch Chairman and CEO John Thain said in the statement.

Strategically, most industry analysts are saying it's a good fit. If the deal goes according to plan, Bank of America will be able to offer Merrill's retail brokerage services to its huge customer base. There is not a great deal of overlap between the two companies -- Bank of America does have an investment bank already, but it has never been terribly strong.

Where there is duplication, however, the combination of the two companies could result in more layoffs. Both Merrill and Bank of America have already cut thousands of investment banking jobs over the past year.

And the deal does not come without risks to Bank of America. Merrill Lynch, like many of its Wall Street peers, has been struggling with tight credit markets and billions of dollars in assets tied to mortgages that have plunged in value. Merrill has reported four straight quarterly losses, and its stock has been sliding.

Officials from the government and various banks met this weekend to discuss what to do about Lehman Brothers. When Bank of America balked at buying Lehman, the government urged it to buy Merrill instead.

The deal differs from JPMorgan Chase & Co.'s buyout in March of Bear Stearns Cos. in that Bear Stearns was sold at a steep discount and with financial backing from the Fed. While Merrill Lynch is burdened with soured real estate investments, its financial position is stronger than Bear Stearns' was.

AP Business Writer Joe Bel Bruno contributed to this report.

Wall Street awakes to 2 storied firms falling

2008-09-15T05:57:00.000-07:00

Monday September 15, 7:41 am ET
By Joe Bel Bruno, Christopher S. Rugaber and Martin Crutsinger, AP Business Writers
2 storied Wall Street firms fall as US financial markets roiled by further shock waves

NEW YORK (AP) -- When Wall Street woke up Monday morning, two more of its storied firms had fallen.
Lehman Brothers, burdened by $60 billion in soured real-estate holdings, filed a Chapter 11 bankruptcy petition in U.S. Bankruptcy Court after attempts to rescue the 158-year-old firm failed. Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction.

The demise of the independent Wall Street institutions came as shock waves from the 14-month-old credit crisis roiled the U.S. financial system six months after the collapse of Bear Stearns.

The world's largest insurance company, American International Group Inc., also was forced into a restructuring.

And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.

U.S. stocks were headed for a sharply lower open and Treasury bond prices soared as the market reacted to the news.

The aim of the bank consortium, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.

Ten banks -- Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS -- each agreed to provide $7 billion "to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."

The Federal Reserve also chipped in with more largesse in its emergency lending program for investment banks. The central bank announced late Sunday that it was broadening the types of collateral that financial institutions can use to obtain loans from the Fed.

Federal Reserve Chairman Ben Bernanke said the discussions had been aimed at identifying "potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses."

The European Central Bank, the Bank of England, and the Swiss central bank also made more short-term credit available to banks. European stocks fell sharply, with the FTSE 100 Index off 3.42 percent in London, the CAC-40 down 4.27 percent in Paris, and Germany's blue-chip DAX 30 falling 3.38 percent. Asian stock markets also tumbled, with India's Sensex sinking more than 3 percent. Japan and Hong Kong were closed for holidays.

Financial stocks were hard hit and the dollar fell against the pound and the euro.

Futures pegged to the Dow Jones industrial average fell more than 250 points in electronic trading Sunday evening, pointing to a sharply lower open for the blue chip index Monday morning. The stunning weekend developments took place as voters, who rank the economy as their top concern, prepare to elect a new president in seven weeks. It likely will spur a much greater focus by presidential candidates -- Republican John McCain and Democrat Barack Obama -- and members of Congress on the need for stricter financial regulation.

Samuel Hayes, finance professor emeritus at Harvard Business School, said the Bush administration may get a lot of blame for the situation, which could benefit Obama.

"Just the psychological impact of this kind of failure is going to be significant," he said. "It will color people's feelings about their well-being and the integrity of the financial system."

Lehman Brothers' announcement that it is filing for bankruptcy came after all potential buyers walked away. Potential suitors were spooked by the U.S. Treasury's refusal to provide any takeover aid, as it had done six months ago when Bear Stearns faltered and earlier this month when it seized Fannie Mae and Freddie Mac.

In an effort to calm the markets, Lehman pre-announced third-quarter results on Wednesday. In an affidavit filed with the bankruptcy court, Lehman Chief Financial Officer Ian Lowitt said that action "did little to quell the rumors in the markets and the concerns about the viability of the company." He said the uncertainty made it impossible for Lehman to continue.

Employees emerging from Lehman's headquarters near the heart of Times Square Sunday night carried boxes, tote bags and duffel bags, rolling suitcases, framed artwork and spare umbrellas. Many were emblazoned with the Lehman Brothers name.

TV trucks lined Seventh Avenue opposite the building, while barricades at the building's main entrance attempted to keep workers and onlookers from gumming up the steady flow of pedestrians flowing in and out of Times Square.

Some workers had moist eyes while a few others wept and shared hugs. Most who left the building quietly declined interviews.

People snapped pictures with cameras and their phones. Observers pressed up against a police barricade drew the ire of one man who emerged from the building and shouted: "Are you enjoying watching this? You think this is funny?"

Its businesses in Britain were placed in administration Monday, said the administrator, accounting firm PricewaterhouseCoopers, and employees carrying boxes and bags were walking out of Lehman's London offices.

Merrill Lynch, another investment bank laid low by the crisis that was triggered by rising mortgage defaults and plunging home values in the U.S., agreed to be acquired by Bank of America for 0.8595 shares of Bank of America common stock for each Merrill Lynch common share.

That values Merrill at $29 a share, a 70 percent premium over the brokerage's Friday closing price of $17.05, but well below what Merrill was worth at its peak in early 2007, when its shares traded above $98.

Charlotte, N.C.,-based Bank of America has the most deposits of any U.S. bank, while Merrill Lynch is the world's largest brokerage. A combination of the two would create a global financial giant to rival Citigroup Inc., the biggest U.S. bank in terms of assets.

Strategically, most industry analysts say it's a good fit. If the deal goes according to plan, Bank of America will be able to offer Merrill's retail brokerage services to its huge customer base. There is not a great deal of overlap between the two companies -- Bank of America does have an investment bank already, but it has never been terribly strong.

Where there is duplication, however, the combination of the two companies could result in more layoffs. Both Merrill and Bank of America have already cut thousands of investment banking jobs over the past year.

The deal would not come without risks, however. Merrill Lynch, like many of its Wall Street peers, has been struggling with tight credit markets and billions of dollars in assets tied to mortgages that have plunged in value. Merrill has reported four straight quarterly losses.

Bank of America's own finances are far from robust. As consumer credit deteriorates, the bank has seen its profits decline, and the company is still in the midst of absorbing the embattled mortgage lender Countrywide Financial, which it acquired in January.

Insurer AIG, hit hard by deterioration in the credit markets, said Sunday it is reviewing its operations and discussing possible options with outside parties to improve its business after a week when its stock dropped 45 percent amid concerns about the company's financial underpinnings.

The Wall Street Journal and The New York Times both reported early Monday on their Web sites that the American International Group is seeking an additional $40 billion in emergency funds -- possibly from the Federal Reserve -- to help it avoid a credit rating downgrade, which would make it more expensive for AIG to raise money. The insurer has already raised $20 billion in fresh capital this year.

AIG was working with New York Insurance Superintendent Eric Dinallo and a representative of the governor's office through the weekend to craft a solution that protects policyholders, according to Dinallo's spokesman David Neustadt.

"It's clear we're one step away from a financial meltdown," said Nouriel Roubini, chairman of the consulting firm RGE Monitor.

The meetings that began Friday night were a who's who of financial heavyweights: Treasury Secretary Hank Paulson, Timothy Geithner, president of the New York Fed, Securities and Exchange Commission Chairman Christopher Cox, and a host of CEOs, including Vikram Pandit of Citigroup Inc., Jamie Dimon of JPMorgan Chase & Co., John Mack of Morgan Stanley, Lloyd Blankfein of Goldman Sachs Group Inc., and Merrill Lynch & Co.'s John Thain.

For all their efforts, Lehman had to file for bankruptcy.

The end of Lehman may not stop the financial crisis that has gripped Wall Street for months, analysts said. More investment banks could disappear soon.

The independent broker-dealers "are going the way of the dodo bird," said Bert Ely, an Alexandria, Va.,-based banking consultant.

That's partly because some of the firms, particularly Merrill, made bad bets on real estate. But several analysts said that investment companies will need the deep pockets of commercial banks to survive the next few years.

On Sunday, there was also an emergency trading session being held at the International Swaps and Derivatives Association to "reduce risk associated with a potential Lehman Brothers Holdings Inc. bankruptcy." The ISDA, which arranges trades for derivatives, said it was allowing customers to make trades and unwind positions linked to Lehman.

Roubini said it's difficult to accurately gauge the health of companies like Merrill because their financial health depends on how they value complex securities. As a result, their finances aren't very transparent, he said.

That can lead to a loss of confidence in the financial markets, he said, which can overwhelm an investment bank even if it is financially healthy by some measures.

"Once you lose confidence, the fundamentals matter less," he said.

The common denominator of the financial crisis, analysts said, is the bursting of the housing bubble. Home prices have dropped on average 25 percent so far. Roubini predicted they could drop another 15 percent.

The crisis has begun to slow the broader economy as banks make fewer loans and consumers have begun cutting spending. Many economists are now forecasting that the economy could slip into recession by the end of this year and early next year.

That, in turn, could cause additional losses for commercial banks on credit cards, auto loans and student loans.

The Fed is widely expected to keep interest rates steady at 2 percent, below inflation, when it meets Tuesday. It was possible, however, that the central bank might decide in coming weeks to cut rates if such a move is seen as needed to calm turbulent financial markets.

The International Monetary Fund predicted earlier this year that total losses from the credit crisis could reach almost $1 trillion. So far, banks have only taken about $350 billion in losses.

Commercial banks are also starting to feel the pinch. Eleven have closed so far this year, including Pasadena, Calif.-based IndyMac Bank, which had $32 billion in assets and $19 billion in deposits.

Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets.

Individual customers are starting to get nervous about the financial health of their banks for the first time in generations, he said. Whalen's firm analyzes the safety and soundness of banks for business clients, but began receiving inquiries from individuals in the past two months for the first time, he said.

"If we don't get ahead of this, we are going to face a run on the retail banks by election day," he said.

AP Business Writers Madlen Read, Tim Paradis and Stephen Bernard in New York, Martin Crutsinger in Washington, Ieva Augstums in Charlotte and Michael Liedtke in San Francisco contributed to this report.

August Auto Sales Fall; Some Say Worst May Be Over

2008-09-03T18:07:00.000-07:00

By TOM KRISHER AP Auto Writer
DETROIT September 3, 2008 (AP)

Nearly every major automaker saw its U.S. sales drop in August, but many are seeing signs that the worst slump in recent history may have bottomed out.

Most upbeat were executives from General Motors Corp., which posted a 20.3 percent sales decline from a year ago but a 31 percent improvement over July's totals.

Much of the gain came from offering all buyers employee discounts on many models, but Mark LaNeve, GM's vice president of North American sales, said there's hope that June and July were the trough for U.S. sales.

"We are very encouraged by what we saw in August. It gives us reason to think that we are starting to pull our way out of this," he said Wednesday in a conference call with reporters and industry analysts.

Overall, U.S. sales fell 15.5 percent compared with August of last year but rose 10 percent from July's dismal figures, according to Autodata Corp. The seasonally adjusted annual sales rate for August was 13.7 million, up from 12.5 million in July, the worst month in 16 years. Read more

Oil falls to $113 in Asia on stronger dollar

2008-08-12T02:48:00.000-07:00

By ALEX KENNEDY, Associated Press Writer
35 minutes ago

SINGAPORE - Oil prices fell Tuesday in Asia to a 3-month low as a stronger dollar and weakening crude demand from China weighed on investor sentiment.

Light, sweet crude for September delivery fell $1.45 to $113 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore. The contract lost 75 cents overnight to settle at $114.45, the lowest close for a floor session since May 1.

A report from China on Monday that the country's crude oil imports in July were down 7 percent from last year fueled expectations that the economic slowdown affecting the U.S. and Europe may be spreading to Asia and cutting demand for oil.

A stronger dollar is also pushing prices down. The euro fell Tuesday to $1.4894, while the dollar was holding near 110 yen.

A weak dollar helped boost oil prices earlier this year, because dollar-denominated commodities are often used as hedges against inflation and a falling U.S. currency. But gains in the currency are reversing that trend.

In London, Brent crude for September delivery fell $1.21 to $111.46 a barrel.

Prices fell despite concerns that the widening conflict between Russia and Georgia over the breakaway province of South Ossetia could disrupt supplies in the region.

Russian forces pushed a second front deep into Georgia on Tuesday, seizing towns and a military base in the western parts of the country. Georgian President Mikhail Saakashvili said his country had been effectively cut in half with the capture of the main east-west highway near the central city of Gori.

Russia's massive and multi-pronged offensive has drawn wide criticism from the West, but Russia has ignored calls for a cease-fire and justified its actions as necessary to protect its citizens; most of the residents of the separatist regions have Russian passports.

The province broke away from Georgian control in 1992. Georgia, whose troops have been trained by American soldiers, began an offensive to regain control over South Ossetia last week, launching heavy rocket and artillery fire and air strikes that pounded the regional capital Tskhinvali. Georgia says it was responding to attacks by separatists.

Nymex crude is down about $33, or 22 percent, from its high of $147.27 on July 11.

In other Nymex trading, heating oil futures fell 1.31 cents to $3.1064 a gallon (3.8 liters) while gasoline prices dropped 1.42 cents to $2.8524 a gallon. Natural gas futures rose 0.1 cent to $8.35 per 1,000 cubic feet.

Industries News:Toyota sees potential for exporting U.S. trucks

2008-08-12T02:44:00.000-07:00

By Soyoung Kim
Mon Aug 11, 1:46 PM ET

TRAVERSE CITY, Michigan (Reuters) - Toyota Motor Corp (7203.T) is considering exporting U.S.-made vehicles as it sees potential demand for its large pickup trucks and sport utility vehicles overseas, the automaker's U.S. manufacturing chief said on Monday

Toyota could also cut more temporary U.S. manufacturing jobs if the downturn in the U.S. auto industry deepens, as it has cut U.S. truck production amid a collapse in demand for the once-popular, gasoline-thirsty vehicles, the executive said.

Toyota, now No. 2 in U.S. sales behind General Motors Corp (GM.N), is facing the unprecedented problem of excess capacity in the U.S. market as demand for large vehicles such as its Tundra pickup trucks and Sequoia SUVs has tumbled in the wake of record gasoline prices.

The automaker is also contending with a strong yen, which eats into profits earned abroad when foreign currencies are converted into the Japanese currency.

Steve St. Angelo, senior vice president of Toyota Motor Engineering and Manufacturing in North America, said the automaker is evaluating the idea of exporting the Tundra pickup and the Sequoia SUV, now exclusively built in the U.S. market.

Better-selling cars such as the Camry and the Corolla are not part of that consideration because Toyota "cannot build the cars any faster than right now in the United States," a Toyota spokesman said later.

Toyota has already cut about 500 temporary jobs this year and sees a possibility of additional reductions depending on a "fluctuation in the market," St. Angelo told Reuters on the sidelines of an industry forum in Traverse City.

Temporary workers account for 10 percent of Toyota's 30,000-member U.S. manufacturing work force.

St. Angelo said Toyota is considering measures to minimize the work force reductions, such as relocation of workers at plants producing larger vehicles to its Georgetown, Kentucky, plant, which builds better-selling, better-mileage cars such as the Camry, Avalon and Solara.

Toyota's U.S. sales fell 7.6 percent year-to-date through the end of July, with a 15 percent drop in truck sales.

Hit by a demand meltdown for pickup trucks and large SUVs, Toyota cut its U.S. sales forecast for 2008 to 2.44 million vehicles from 2.64 million. The new projection would represent a 7 percent fall from 2007.

The deeper-than-expected downturn in U.S. industrywide sales has already forced automakers including GM, Ford Motor Co (F.N) and Nissan Motor Co Ltd (7201.T) to reduce truck production and lay off thousands of factory workers.

To respond to fast-chancing consumer needs, Toyota last month announced a major overhaul of its U.S. manufacturing plans to shift to more fuel-efficient cars.

It now plans to build its Prius hybrid, instead of the Highlander SUV, from 2010 at a factory under construction in Mississippi. Toyota also suspended production of slow-selling big trucks -- Tundra pickups and Sequoia SUVs in the United States -- for three months starting Friday.

Toyota is still looking to resume truck production in early November, but it is hard to predict the exact timing due to volatile gasoline prices, which have prompted a consumer defection from trucks and SUVs, St. Angelo said.

(Editing by Gerald E. McCormick and John Wallace)

Industries News:GM offers more fuel-efficient pickup trucks, SUVs

2008-08-12T02:41:00.002-07:00

By DEE-ANN DURBIN, AP Auto Writer
Tue Aug 12, 12:11 AM ET

DETROIT - General Motors Corp. is releasing new, more fuel-efficient versions of its full-size pickup trucks and sport utility vehicles later this fall.

The XFE — or extra fuel economy — versions of the 2009 Chevrolet Silverado and GMC Sierra trucks and Chevrolet Tahoe and GMC Yukon SUVs will get one mile per gallon more in both city and highway fuel economy than non-XFE versions. The boost will give them a total of 15 miles per gallon in the city and 21 on the highway.

On XFE models, GM improved the aerodynamics by extending the front lower air dam, lowering the suspension and revising the chassis tuning. The automaker also reduced the mass with aluminum parts, including an aluminum spare wheel and 17-inch aluminum wheels, gave the vehicles low rolling resistance tires and powered them with a 5.3-liter, ethanol-capable V-8 engine that has an aluminum cylinder block and heads.

GM stressed that the vehicles still have the same towing capability.

The XFE pickups and SUVs will be available in the fourth quarter of this year. GM spokesman Brian Goebel wouldn't say how much more they will cost than non-XFE versions.

GM began offering an XFE version of its Chevrolet Cobalt small car earlier this year. The automaker said it sped development of the XFE trucks and SUVs because of consumer demand for more fuel-efficient vehicles. GM's truck and SUV sales fell 23 percent in the first seven months of this year.

GM also offers hybrid versions of the Tahoe and Yukon and plans to bring out hybrid versions of the Silverado and Sierra in the first half of 2009. The company said last week that about 4 percent of its Tahoe and Yukon sales have been hybrids so far this year

Industries News:GM offers more fuel-efficient pickup trucks, SUVs

2008-08-12T02:41:00.001-07:00

Hot News:Cisco Profits on Service, Shares Advance

2008-08-06T10:14:00.000-07:00

Cisco Systems Inc.'s (CSCO) fiscal fourth quarter net income rose 4.4% amid strong service revenue growth in the face of uncertain macro-economic conditions.

Chief Executive John Chambers said, "The market is clearly in transition, and we will use this time as an opportunity to expand our share of customer spend and to aggressively move into market adjacencies."

The networking gear giant, often cited as a bellwether for technology companies, reported net income for the quarter ended July 26 of $2.01 billion, or 33 cents a share, compared with $1.93 billion, or 31 cents a share, a year earlier.

Excluding items, Cisco's per-share earnings rose to 40 cents from 36 cents.

Revenue grew 9.9% to $10.36 billion.

The mean per-share earnings estimate of analysts polled by Thomson Reuters was 39 cents on revenue of $10.31 billion.

Cisco's gross margin held steady at 64.3%. Product sales rose 8.8%, while service sales climbed 16%.

Cisco typically updates its outlook in its conference call.

Cisco has said it hopes to expand its market-share during what are challenging times in the networking industry. However, the company is vulnerable to economic changes and in February noted that its customers in Europe and the U.S. had become "increasingly cautious." Chief Executive John Chambers indicated in an interview last month that the company's corporate customers don't foresee economic recovery until early next year.

Cisco's shares recently changed hands up 1% at $22.89 in after-hours trading.More...