Short-Term Borrowing: Pros, Cons and Why

Of course debt is to be minimized and avoided. We have all heard this time and time again. But not everyone’s life circumstances are perfect. What were once two-earner households are now one-income households. That will stretch a budget very thin very quickly. Throw in a healthcare problem, an expensive (and poorly-timed) car repair, on top of an underwater mortgage, and you will find that life can be quite imperfect, despite all your best efforts.

These are the grey areas, the shaded nuances of personal finance. You can be a frugal and restrained shopper. But while your weekly savings from coupon clipping might be $75 or $100, that $5000 deductible on your health insurance can wipe out a year’s worth of savings in one playground accident. So how do you manage? Particularly if you lack a rainy day fund or credit line with a credit card issuer?

Short-term loans are one option. Even if you have imperfect credit and no collateral to offer, you can get one in the form of a payday loan advance. These are designed to be small and paid back within 30 days or less (on your next payday). It’s emergency money for times that absolutely call for it, with three distinct benefits:

1. Psychologically easier – These loans do not ride on your back for months and years, as is usually the case with credit card debt. You know that it is a necessary financial tool, but that you will settle up the debt in just a few days or weeks.

2. Long-term financial damage is limited – The comfort is more than psychological. A short-term loan is far less expensive than one held for the long term. The cost of debt always rises with the longer that debt is held.

3. Reduces the negatives of missing due dates – Short-term borrowing is often done to make timely payments on key bills. If you make a required payment on certain debts, you avoid penalties, higher interest charges and poor credit reports.

For the busy working person, the other benefit is that with online technologies these are faxless payday loans. The time required to process an application is about five minutes and can be done any time, day or night, from one’s personal computer.

How Much Did Your Money Grow In The Past 12 Months?

How Much Did Your Money Grow In The Past 12 Months?

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As a member of Bo Sanchez Truly Rich Club. I would like to share some Soul Food that I was received from these club. And it was very interesting to learn on how to invest in the stock market. Here are some story to tell example of Bo to his members.

Pamella, Penelope, and Petunia are sisters.

The three of them are very responsible young women. They work in regular jobs and know how to save their money. After many years of savings, each of them had P100,000.

It was their mother who taught them to save a part of their income each month. Sadly, her instruction ended there. She never told them where to put their savings. Pamella hides her P100,000 under her bed. Result? Her money never grows at all.

Penelope thinks she was wiser than her sister Pamella. Because she places her money in a bank. Result? Her money grew by 1% a year.   (That’s the normal interest rate of savings accounts.)  Her P100,000—after one year—grew to P101,000.

Here’s the truth: Penelope isn’t really that much wiser than Pamella. I pity the Pamellas of the world. They’re hard working. They’re disciplined. They save each month. But they lack financial knowledge. (Do you know of people like Pamella? Are you like Pamella?)

Let me tell you about Petunia, the third sister. Last year, Petunia became a member of my TrulyRichClub. Last year, following my guidance, she started investing in the Stock Market.

She read in my Stocks Update Report (which I send twice a month to my TrulyRichClub Members) what Stocks to buy. Late last year, I instructed my Members to buy the following Stocks: Ayala Land, Energy Development Corporation, DMCI, Nickel Asia, Metrobank, and for those with extra money, Lepanto.

Penelope divided her P100,000 into these companies. Result after one year?

Her money in Ayala Land grew by 49%.

Her money in Energy Development Corporation grew by 33% since we recommended it last March 2010.

Her money in DMCI (DMC) grew by 64% since we recommended it last Sept 2010.

Her money in Nickel Asia grew by 49% since we recommended it last Oct 2010.

And her money in Lepanto grew by 157% since we recommended it last Dec 2010.

(Note: Please don’t buy most of these stocks today. I’m recommending a new set of Stocks right now.)

Result? Her money grew over 50% to 60% in less than a year! That growth is absolutely phenomenal. Because even at only 20% growth a year, Petunia would have P4 Million in 20 years. That’s if she doesn’t add money each month. 

But that’s not our method. I always tell our Members to add their small investments each month. Even if Petunia adds only P2000 per month, at the end of 20 years, she’ll have P11 Million.

Question: Do you want to be Pamella, or Penelope, or Petunia?

Petunia is very happy with her earnings.

She’s also happy that because of the TrulyRichClub, she’s not going into the Stock Market blind. (As you can guess by now, her real name isn’t Petunia, nor does she have two sisters named Pamella and Penelope. But their story is absolutely true, reflecting the stories of thousands of people I know.)

By the way, my letter today isn’t for everyone. 

Please disregard if this isn’t your concern.

I don’t expect everyone to join my TrulyRichClub.

If this isn’t for you, I apologize for bothering you with this letter. Because today,I’m specifically writing to people who want to grow their financial life—and who want my guidance in investing in the Stock Market. Are you tired of being stuck in a rut in your finances?

Are you tired of your lingering debts?

Are you tired of feeling the pain of wanting to help people you love, but can’t, because you don’t have the resources?

Are you tired of your big fears and uncertainty?

Are you tired of working very hard every day, only to realize that you don’t really have any savings for your future?

Just in case you’re that person, let me help you.

You can start growing your finances.

You can learn how to invest your money in the best way.

To know more about my TrulyRichClub, click the link below:

Yes Bo, teach me how to grow my money!

Tell me more about the TrulyRichClub

May your dreams come true,

Bo Sanchez

PS. By the way, the TrulyRichClub isn’t just about Stock Market investing.  That’s only one part. In the TrulyRichClub, aside from teaching people how to grow in their financial life, I also teach people how to grow in their spiritual life. 

For what’s the use of growing in your finances if you lose your soul? 

To know more about the TrulyRichClub, click the link below:

Yes Bo, teach me how to grow my money!

Tell me more about the TrulyRichClub

8 Smart tips to avoid monetary worries

The U.S economy has not recovered from the devastating effect of the recent financial crisis. Unemployment rate is still quite high (9%, says the labor department) and consumer debt is soaring. Therefore, it is no wonder that monetary crisis is the foremost problem in most American families these days. Under the circumstance, you need to be smart in money matters. You should follow some simple yet effective rules to say goodbye to fiscal problems. Here are some great money tips for you:

1. Maintain a rainy day fund: Do you think you don’t need an emergency fund? You are wrong. An unexpected financial crisis can push even a well-off person into debt. It would be great if you can use a high yield savings account for this purpose. Contribute at least twice a month towards your rainy day fund. Make sure that you do not touch this money for trivial reasons.


2. Get organized: Difficult economic climate demands prudent money management. Therefore, consider keeping your entire financial information in one place. You might take advantage of free services of websites like mint.com. Also, there are several other free personal finance softwares that would allow you to get an idea about your financial health, analyze your finances, and start a budget.


3. Get rid of your debt: Consumer debt has become a major issue in America. But you can easily come out of it if you follow an effective strategy. For instance, you might want to check out the debt avalanche method, which is advocated by Robert Kiyosaki. According to Mr. Kiyosaki, it is always a wise decision to eliminate the debts with higher rate of interest first. If you stick to this strategy, you are bound to get out of debt within a reasonable period of time, and you would also be able to save money.


4. Debt consolidation: Depending on your situation this can be a good move. Debt consolidation refers to merging all your debts and paying them off by taking a single loan. This debt relief process works best for people with several credit card debts. The best thing about debt consolidation is that it does not hurt your credit rating.


5. Do not mess with retirement accounts: Your debt payments are important. So are your everyday expenses. But that does not mean you will borrow from your retirement account. Retirement accounts like 401(k) guarantee you a secure future. They would help you to support yourself and your family when your income drastically drops after retirement. Consider liquating 401(k) and other similar accounts only to avoid serious situations like bankruptcy.


6. Hire a financial advisor if you can: A lot of people believe that financial advisors are exclusively for extremely rich people. This is a rather misleading theory. You certainly do not need to hire a FA with extremely high fees. But hiring someone with reasonable fees might pay off. A FA can spice up your investment strategies and help you to reap huge profits.


7. Be careful with stocks: Stocks can make you a millionaire, but they can ruin you too. Remember that investment in stocks demand a certain level of expertise and a thorough knowledge of the market. If you are a newbie, but you want to put your money in stocks then better invest a small amount to play safe.


8. Set short term and long term goals: It is very important to have a clear idea about what you want from life. So make a list of your goals and make plans accordingly. Are you planning to buy a house? Do you want to retire early? Are you determined to save for your child’s higher education? These are goals which require planning. So make your moves carefully.

Money management is a very tricky business. So you should always remember the above tips and maintain fiscal discipline while managing your finances.

Hierarchy of Financial Needs

Hierarchy of Financial Needs

Survival Money:

These are funds that you need to make ends meet. The most basic type of survival money is the amount that your household needs for food, clothing and shelter etc. Typically these funds should be in very liquid instruments for easy access.

Therefore savings or checking accounts are the best vehicles for this purpose. A household that may have extra funds can go to short-term deposit placements in order to generate some return from these funds.

Another type of survival money is one you need for emergency situations. A leaky pipe, the car engine unexpectedly conks out, or some minor home repair that needs to be undertaken immediately are examples of minor emergencies that you need to prepare for. 

A good size emergency fund is around six to nine months worth of expenses. Typically these funds will be in short-term instruments like, savings, checking, treasury bills, or money market mutual funds. A stand-by loan facility from a bank might be used as part of your emergency funds. Accident, health, and auto insurances can greatly reduce the need for liquid emergency funds.

Safety Money:

These are funds needed to meet life’s unexpected turns. Normally, safety monies protect whatever real assets you have accumulated in the past like your home for instance. In this regard, fire insurance will be the best investment option to protect this type of asset. General liability insurances can protect your business from unexpected developments. 

However, while there is a need to protect your assets, it is even more important to protect the person that generates these assets. This is where life insurance comes in.

Freedom Money:

While it is important to save and invest for your future, it is equally important to have funds that you can use for your non-basic needs. These are funds for activities that give you enjoyment and fulfillment. After all, life does not start after retirement.

It started on the day that you were born. Certain activities like having dinner with old friends or going to the mall with your kids, or that all-important annual family vacation should not be disregarded in order to save for long-term needs. We need to keep in mind that God did not put in this world to make a living but rather to make a life.

However, these activities will have substantial price tags attached to them and therefore it is important to actually prepare for them. For this purpose, short term instruments like savings and checking accounts, treasury bills and money market funds will be your be your best options.

Another life goal that gives you fulfillment and a high sense of security is home ownership. This is probably one of the biggest single expense that you will incur in your lifetime. Home mortgages can play a vital role for this purpose. However, you need to keep in mind that borrowing money from the bank will require you to put up approximately 20% of the value of the property and this not going to be a small amount. 

Therefore, it is an excellent idea to plan for this activity several years in advance so you can save for the banks equity requirement. Medium to long-term instruments like mutual funds, government or corporate bonds will be the best option to maximize on this type of savings.

Gift Money:

As you go higher in the hierarchy of needs, you develop a need to provide for people or causes that you care deeply for. This could be some kind of charitable institution or foundation or some family member that you want to take care of. But the most common use for gift money is to provide for education. 

Saving for education early on through long-term vehicles like mutual funds, note and bonds, or trust products, will make it more efficient and easier on the pocket. Another typical example for this type of financial need is the desire of parents to leave a reasonable amount of estate for their children. Again, this can be accomplished through long-term instruments. For people whose investment horizon is short or those who may not have enough resources to accumulate a substantial estate, the best way to create one instantly is to buy life insurance. 

On the other hand, for rich individuals who are more concerned with the inheritance taxes that their heirs will need to pay for, a good solution is to get a life insurance coverage equivalent to the taxes that will be incurred by their heirs.

Dream Money:

Dream money pertains to funds that you need to have for all the things that you dream of being, having, or doing. These goals can pertain to your retirement, or the kind of lifestyle you want before or after retirement. Normally these are funds that you will need after you have gone beyond your peak income years. 

Therefore, these types of needs will require large amounts of monies. Long-term vehicles like mutual funds, note or bonds are the best instruments for establishing your nest eggs for this purpose. While more and more people are becoming aware of the need to save for retirement, very few people realize that a big portion of their retirement funds will be spent on medical needs. In this regard, it is prudent to set aside funds specifically for the purpose of funding for medical expenses after retirement.

In my situation, Survival money is done although six months only. Now im preparing for the next level which is safety money. I hope within this coming year 2012.   How about you? Which Hierarchy of Financial Needs are you now?

Pesos and Sense Video Episode 7

Pesos and Sense Video Episode 7

Pesos and Sense

Watch these Pesos and Sense videos and learn why we should get out of debt and stay out of debt.

Pesos and Sense Video Episode 7 Part 1

Pesos and Sense Video Episode 7 Part 2

Pesos and Sense Video Episode 7 Part 3

Pesos and Sense Video Episode 7 Part 4

Happy viewing!!
Pesos and Sense Video Episode 7

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Marriage and Money

Marriage and Money

Marriage and Money

While Im reading of some blog post from my blogroll. I've got an interesting article from Millionaires Act that I would like to share in relations with investing. The article is goes like this: Marriage and Money

Admit it or not but in today’s generation, a lot of people have considered financial stability as one criteria in marriage. Practically speaking, who doesn’t want to have a comfortable life anyway? Most often, women want to marry men who are financially stable for a secured future.

Here in the Philippines, it is very common to see Filipina women looking for foreigners to marry through chatting in their hopes to uplift their lives.

When marriage is set in a scenario when there’s a huge difference between assets of husbands and wives, sometimes prenuptial agreements happen before marriage to avoid monetary interests. Once a marriage is completed with all the necessary papers signed, assets of both husbands and wives are considered conjugal.

Having said that, I’d like to share to you a story of a young and pretty lady who posted a question on a popular forum that asks: “What Should I do to Marry A Rich Guy?” which goes: 

I’m going to be honest of what I’m going to say here. I’m 25 this year. I’m very pretty, have style and good taste. I wish to marry a guy with $500k annual salary or above. You might say that I’m greedy, but an annual salary of $1M is considered only as middle class in New York. 

My requirement is not high. Is there anyone in this forum who has an income of $500k annual salary? Are you all married? I wanted to ask: what should I do to marry rich persons like you? Among those I’ve dated, the richest is $250k annual income, and it seems that this is my upper limit. If someone is going to move into high cost residential area on the west of New York City Garden, $250k annual income is not enough.

I’m here humbly to ask a few questions:

1) Where do most rich bachelors hang out? (Please list down the names and addresses of bars, restaurant, gym) 

2) Which age group should I target? 

3) Why most wives of the riches are only average-looking? I’ve met a few girls who don’t have looks and are not interesting, but they are able to marry rich guys. 

4) How do you decide who can be your wife, and who can only be your girlfriend? (my target now is to get married) 

Ms. Pretty 

Apparently, a reply came in from a CEO of JP Morgan describing the difference between beauty versus money: 

Dear Ms. Pretty, 

I have read your post with great interest. Guess there are lots of girls out there who have similar questions like yours. Please allow me to analyses your situation as a professional investor.

My annual income is more than $500k, which meets your requirement, so I hope everyone believes that I’m not wasting time here. From the standpoint of a business person, it is a bad decision to marry you. The answer is very simple, so let me explain.

Put the details aside, what you’re trying to do is an exchange of “beauty” and “money” : Person A provides beauty, and Person B pays for it, fair and square.

However, there’s a deadly problem here, your beauty will fade, but my money will not be gone without any good reason. The fact is, my income might increase from year to year, but you can’t be prettier year after year.

Hence from the viewpoint of economics, I am an appreciation asset and you are a depreciation asset. It’s not just normal depreciation, but exponential depreciation. If that is your only asset, your value will be much worse 10 years later. 

By the terms we use in Wall Street, every trading has a position, dating with you is also a “trading position”. If the trade value dropped, we will sell it and it is not a good idea to keep it for long term – same goes with the marriage that you wanted. It might be cruel to say this, but in order to make a wiser decision any assets with great depreciation value will be sold or “leased”. 

Anyone with over $500k annual income is not a fool; we would only date you, but will not marry you. I would advice that you forget looking for any clues to marry a rich guy. And by the way, you could make yourself to become a rich person with $500k annual income. This has better chance than finding a rich fool. 

Hope this reply helps. If you are interested in “leasing” services, do contact me.

signed,

J.P. Morgan CEO

While physical looks is considered an asset in a person, it can be subject to exponential depreciation as the CEO has just said.

The greatest assets I consider in my would-be wife in the future are attitude and intelligence as I believe that every man’s success is a woman behind him. Two heads are always better than one.

Marriage should be bounded by love and not money. Look for spouse that is considered as an asset not only on the physical and financial well-being but also on some other aspects. Someone who will be there through thick and thin to support you and to give you a helping hand in whatever situation you may be. Someone who is not only considered as a husband or wife but as a friend as well. After all, a power couple can achieve great success in life once they have a common goal.

Source:

www.millionaireacts.com

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Project Atlas Shrugged!? (2): THE EURO ZONE

I have a German friend told me that there is absolutely no reason for them, German, to retire at 65 while the Greece to retire at 57 yet need their financial help...

Looking at the current situation, people would wonder how to keep all the countries in Euro Zone to work together... For they have their very own and broad range of cultures, social benefits, productivities, etc.

Attached is a link to an article on the cause, current situation and potential effect that may hit the world.

It's All Connected: An Overview of the Euro Crisis.

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1.  It Starts With The Euro ...

In 1999, most countries in the European Union adopted the euro as a common currency.  This union allowed poorer countries like Portugal, Italy, Ireland, Spain and Greece to borrow money at the same low interest rates as rich and financially prudent Germany, even though their inflation rates were higher.  That give them a strong incentive to borrow.

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See from the excerpt...  How could one lend more money to those companies that are continuously losing money with no particular plan to do better, and just hope that they can perform better and return the money in the future?

With the computer aided simulation, one can simulate to send a rocket into the space and turn a few rounds about the earth and bring it back before the real one is actually launching.  As, all these financial data has been there all the while and more importantly the trend was there, yet the politicians need to wait till last minutes to inform the public with no plan in advance.  What's going on wrong?  

Therefore, there is reason to "re-think" about the whole thing...

What was the Real INTENTION to create EURO?

Was the Euro Zone create to last or Intentionally created it to Fail?

Now, if one were to compare the current Euro Situation with the story line in the Book "Atlas Shrugged"... He can find similar situations...

In Greek mythology, Atlas was the primordial Titan who supported the heavens.  You may have seen some of his pictures - who holds the world on his shoulders.  By the name of the book, "Atlas Shrugged", Atlas wondered why should he support the world by himself all along...  and he just let go and shrugged.

In the book, there were a few genius, lead by John Galt, believed that the system that they lived-in was not set up right and wanted to change the world.  They secretly persuaded the world's creative leaders, including inventors, artists and businessmen on by one to quit and disappear from their position and join him. They organized the team in an effort to "stop the motor of the world" and bring the society to collapse - so that they can carry out their plan.

They did not just sit aside, just shrug and watch, rather they planned in every detail and executed their plans religiously to speed up the collapse of the system.  So, that when the government cannot handle the chaos, they eventually have the opportunity to step up as heros to execute their blue print in mind.


On one of the tactics in speeding up the process, by Francisco d'Anconia, one of the central characters, was to create good investment opportunity to bring in huge funds from the society and then destroyed it on purpose.  At about the end of the story, he personally destroyed the world's largest copper mining empire that he owned by inheritance.


Doesn't it looks like what is happening to the global financial system now?

"Give me control of a nation's money and 

I care not who makes it's laws" 

- Mayer Amschel Bauer Rothschild

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-------------------------  Add on @ 1 Aug 2012  --------------------------

What is the implication of the "Fall of EU"?
Here is an excellent interview: start from 8:00min.
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The political and economical crisis of the EU might help a new European Hitler to emerge, warns historian Geoffrey Roberts. He believes the current rise of ultra-nationalism in Europe resembles that one of 1930s as history tends to repeat itself.
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YouTube Link : <- (If there is a problem watching it here)