Buying a Home in Time for the Tax Credit

So, normally this time of year, home buying slows considerably in any year, since most people in the United States are focused on holiday spending and holiday activities. However, that might not be the case this year, as the first-time home buyer tax credit has been expanded and extended by Congress.

In order to qualify, you have to have a contract in place by April 30, and the credit is up to $8,000 for true first time buyers and $6500 for repeat buyers.

From the WSJ:

To be considered a first-time home buyer, an individual must not have owned a home in the past three years. And to be eligible, existing homeowners need to have lived in the same principal residence for five consecutive years during the eight-year period that ends when the new home is purchased.

AC DC Tickets in San Jose

So AC/DC is coming to San Jose. Click here to see all of the cheapest AC DC tickets in San Jose at one time.

The band is currently pounding through Europe but soon will be in the U.S.. These guys are definitely one of the bands that still sounds strong and hasn’t lost their Hell raiser sensibilities.

Penske Knows What GM Doesn’t

Roger Penske, former race car driver and current mega businessman, has scored a killer deal and he knows it. Only four days after General Motors announced that the company was moving into bankruptcy, Penske Automotive swooped in an bought up the Saturn brand. There’s a lot to this deal, which I wanted to discuss, but there’s a lot more to learn from this deal.

First, let’s talk about the speed at which this occurred. It’s possible (and highly likely) that GM and Penske had been in talks before this week’s announcement. That means that there’s a good chance that when the Obama administration descended on GM, they came in understanding that GM is not well-run, is bloated and needed to get smaller, all things which GM should have already figured out, but didn’t.

Penske scooped up Saturn within days because the brand is worth a fortune and he knows how to use it. This means that GM labored on the Saturn brand for 19 years and never turned a profit on something that will probably be profitable for Penske right away. Does that put how badly run GM has been into perspective? It should.

Second, Penske isn’t completely going into the car building business. He’s going to outsource care manufacturing back to GM, and several other manufacturers. This takes business leverage to a fantastic level. See, here’s where Penske understands how great this opportunity is. He can buy a car company without actually paying to build factories, create a brand name, go into engineering or anything. Sure, his company will get into some of that, but what they are really doing initially is just deciding what should be built and how to sell it. Genius.

This should show why nobody should be crying for GM. It’s terrible that unemployment is so bad now in Michigan and most of the people who worked for GM are absolutely not at fault. But it also shows how the Obama administration knows more about how to run a business than GM, and that’s not good for a car manufacturer.

Scary As Heck Financial Stories

Yahoo! has an article on 14 financial horror stories, which are really fourteen little blurbs about id theft, Nigerian money scams and a little corporate underhandedness thrown in.

A few days ago I got a Nigerian-scam type email that was extremely well written and without any grammatical mistakes. It was an email, probably written by a pro. The thing about this email is that it tells me that when times get tough, more people turn to crime, and their methods get better.

This is another reason I put together the Credit Padlock, so people can arm themselves against these types of horror stories on the cheap.

The Bailout: Necessary & Evil

It’s crazy, and it really makes me angry. We’re stuck.

One one hand, you’ve got a bunch of politicians who lobbied their way into deregulation and made horrible business decisions, and now they’ve managed to do their jobs so badly that they’ve cracked the economy. It would be really nice to see these guys suffer, get what’s coming to them and put them on the soup line.

On the other hand, like a parent who has to make the hard choices when their children screw up, we have to make moves to keep the economy stable. All the hand wringing in Washington is pointless, and there is NO option. The US government is a behemoth with massive, unprecedented cash reserves, built from decades of prosperity and it will be forced to push money into the financial markets to keep them afloat.

In other words, the bailout has to happen. We have to grit our teeth and do it, even though it feels like…well, it is… giving some very greedy people a pass.

The issue here, is not this particular bailaout. The issue is that what happens in a few months if another big company, left to it’s own devices, wipes out another big chunk of the economy? And then another? What about five companies?

How many ‘bailouts’ can the US afford? Even though the United States is rich, it is not unlimited wealth. Our resources, vast as they are, remain finite, and with the US dollar falling against the Euro, our wealth diminishes by the minute.  Writing a check for $700,000,000,000 isn’t something the US can be flippant about.

Don’t bother to email me with political posturing and rants. We need real solutions, and the current system has failed us. People who want to argue about political parties and nonsensical issues should go to the back of the room while the adults figure this one out.

I do hope everyone is actually paying attention.

Credit Freeze How To

I’m going to be offering a comprehensive guide on how to freeze your own credit in the near future, so let me know if you have specific questions you want me to research.

The Housing Market: Up or Down?

Okay, so we’ve all heard about the government takeover of Fannie Mae and Freddie Mac. What does this mean?

For one thing, expect banks to have to step through a lot more red tape.  However, this entire development is concerning. On one hand, this had to happen, or the mortgage industry stood a good chance of collapsing, which would crash the weakened US economy.

On the other hand, we now have a government that can’t manage it’s own finances running the biggest mortgage lenders in the world.

Lifelock Gets Busted

It turns out that the touted LifeLock service isn’t as bulletproof as they claimed. The CEO of LifeLock would appear in advertisements and state his SSN as a stunt to prove how safe the service is.

But it turns out, it isn’t as safe as they claim.

Craigslist Hoax Costs Oregon Man Property

After I saw this story about a man who lost a lot of his personal property after some criminal posted his address on Craigslist, and I hope all of these people get prosecuted.

A pair of hoax ads on Craigslist cost an Oregon man much of what he owned.

The ads popped up Saturday afternoon, saying the owner of a Jacksonville home was forced to leave the area suddenly and his belongings, including a horse, were free for the taking, said Jackson County sheriff’s Detective Sgt. Colin Fagan.

How people get rich with payday loans

Often financial specialists will mention how people should avoid getting a payday loan, but I wonder how many people really understand why they shouldn’t? I think that people see the fee that is charged for a Payday loan as being small, almost a convenience fee. I want to explain today why it isn’t.

First, let’s talk about why someone would take out a payday loan. It’s because you have a bill or an emergency and you need, like $80 or $100 to pay the bill on time. That is an issue that can honestly be solved by putting away even $10 a paycheck for a few weeks, although most people never do. I know this because years ago I did exactly that – I was making minimum wage, and saving 10% of my salary was a pipe dream. But, most people never even save a single dollar, so they are constantly living paycheck to paycheck, and that means when a bill falls on a day between paychecks, there’s a problem.

I am not writing about living from paycheck to paycheck at length today, but if you really want to understand how to keep from waiting on payday, check out the awesome program Everything You Know is Wrong! and Living on a Dime, which is an excellent resource for learning how to start making choices to improve your financial life.

Now let’s go to the other side of the spectrum, people who make decent salaries and manage to save money. One of the things these people look to do is earn income on their saved money, whether it be in the stock market, saving accounts, or real estate. Getting a return of 5% per year is okay, but people hope to get 12% over time from the stock market. If someone has $100,000 invested, it’s easy to see why they would rather earn $12,000 per year than $5,000.

Earning 10% per year is about the most people can accomplish through normal investments. Without investing in a new business, the returns are not going to be astronomical. Earning 20% per year, for years on end, is unheard of. Even earning 15% is considered stellar performance. Even if someone managed to earn 20% on their money every year, their money would not double for four years, and like I said, that number is gaudy.

Here is where the payday lenders get into the act. If they loan out $250 for two weeks and collect a $25 fee, they make 10% in less than two weeks. It’s basically legal loan sharking. If you started with $200 in the first week of January, and made 10% every two weeks, and “reinvested” all the proceeds, by the last week of December, you’d have $2,679, which is a whopping growth rate of 1,339% in a single year. Now, payday lenders don’t make 1,339% on all of their money because of defaults. People write bad checks and they lose money. But you can see the potential. Basically, people who don’t save money are willing to pay a “convenience fee”, which the payday lenders use to earn massive interest. If a payday lender can make a 200% gain in a year, you can see why they want so badly to loan money to everyone.

The wise thing to do is avoid those places, put away a few bucks every week and then start investing the money yourself. Earning a few dollars interest per year is much better than giving someone else hundreds of percent return.

Again, I urge you to check out some great resources like Everything You Know is Wrong! and Living on a Dime.