RSS Feeds Facebook Facebook Twitter Twitter
Frontpage | About | Contact | Subscribe

Christmas Spending – Weekly Round-Up

Christmastime is often the season when personal finances are wrecked. Some people just throw commonsense out the winder because, well, it’s Christmas after all. Doing this is not only careless; it can also give you a year-long burden. This doesn’t necessarily mean though that you should stop holiday spending altogether. There are many ways to celebrate Christmas frugally. We have compiled a list of blog posts below that will help you spend the holidays wisely:

The blog My Super Charged Life featured a post titled “Stop Procrastinating and Start Kicking Butt”. For all the procrastinators out there, this post is very motivational. Start moving after you read these tips. If you have large, complicated tasks to do, don’t be intimidated. Instead, break it down into smaller tasks to avoid mental block. Multitasking is another mistake people make. Try to focus on one thing at a time until it’s finished. These tips are very timely especially during the busy holiday season.

Dana @ The Observer wrote an interesting blog post titled “Christmas Spending Woes”. Basically, she talked about how frenzied the season can become with all the shopping, cooking, and catching up that needs to be down. Meanwhile, the bigger economic impact of the holidays is also briefly looked into as she discussed a poll that revealed Americans intends to spend $638 on the average which is the same as last year.

The Shanghai Family Finance blog provided a lot of frugal tips in the post “Control Your Christmas Spending”. The post is quite helpful because it outlined a lot of practical guides. For instance, it said that you need to make a list, know your spending limit, and don’t use your credit card when shopping for gifts and other items. Every tip provided makes good financial sense especially with the tough economic conditions today.

More Taxes in the Pipeline

As if life wasn’t hard enough, legislators now want to charge Americans what else but more taxes. A nationwide tax on all goods and services is being considered to plug the runaway federal deficit. The war in Afghanistan, bank bail-outs, and even the aid to many third-world partners are definitely taking its toll. The question is, would it be right to impose taxes on individuals who have nothing to do with the deficit anyway?

Many members of Congress want to junk the proposal, preferring to cut back on spending or impose higher taxes on the rich. The former might be the best idea. Taxing the rich might sound attractive to some but it might not be good over the long term. It will pull the upper class downward instead of lifting up the poor and the lower middle-class to achieve equity in the economy.

But while it is easy to say that it is just not right to impose additional taxes on struggling Americans who are already dealing with a tough labor market and health care costs, it might be inevitable. Bad decision making has made it necessary. According to Charles McLure who worked for the Reagan administration, “We have to start paying our bills eventually.”

The favored tax route is the value-added tax (VAT). Currently, the US system uses the sales tax wherein only the final product or service is taxed. The VAT system will impose taxes on every step on the production chain. Though this system works well in many other countries, it might erode US competitiveness further because it will drive the prices of everything upwards.

The current system should generate enough revenue to sustain the economy but it doesn’t. Curbing unnecessary expenses might provide is important because it will improve the economy without eroding the country’s competitiveness in the global marketplace. However, with the problems today and with the cost of US health care being sky high, it might no longer be enough.

Among the legislators who invoked the VAT system include Nancy Pelosi, John Podesta, and two former Fed Chairmen: Paul Volcker and Alan Greenspan. Their decision might be right given the current conditions but it wouldn’t have been necessary if legislators and regulators haven’t made such as mess of things in the first place. Why should Americans have to pay?

Stock Index Funds: Weekly Round-Up

Index funds are notable in the sense that it doesn’t require its managers to continually pick and choose stocks for investments. Rather, it contains a large sample of stocks in a chosen index. For example, S&P 500 Index Fund will contain all stocks from the index. In essence, investors will own a tiny part of all companies included in the index fund. This feature provides this type of fund certain advantages. For example, there are no trading costs such as commissions because the net asset of the fund is calculated each day.

If you are interested in know more about index funds and how to invest in it, the list below provides more information.

Mike @ Gather Little by Little wrote an interesting post titled “Investing Strategies with $10,000 or Less” The benefits of index funds are basically described in this blog entry. It requires very little costs with high profit potential. Investors who are looking for a relatively safe medium should consider this option. Meanwhile, Mike also talked about management fees and other considerations in this post.

JD @ Get Rich Slowly nailed the topic about index funds in the article “Index Funds: Why Choose Anything Else.” The post was quite helpful in helping individuals decide where to put their money. Among the advantages he outlined include lower risks, lower costs, and added bonus. In essence, index funds let you know exactly where your money is at unlike other forms of investments where only the manager has complete information.

Roger @ The Amateur Financer uploaded an article about index funds titled “Great Debates: ETFs vs. Index Funds.” The information provided in the article is quite extensive. The blogger delved into many related issues including its flexibility, tax efficiency, and lower tax ratios.

Threat to Your Home Value: The Neighbor’s Mortgage

Traditionally, homes will have good value if it has a good location, near offices or within proximity of renowned schools. It also helps that homes like these are usually situation in well-maintained neighborhoods with friendly communities. However, the above-mentioned factors no longer provide homeowners with the assurance that their homes will hold its value. Why? The neighbor’s mortgage.

It is estimated that around a third of all mortgage holders are holding a loan balance that is higher compared to the market value of their property right now. They are known as “underwater” borrowers and they are unlikely to many of them are unwilling to pay more for a home that actually costs less.

The finding released by the Congressional Oversight Panel on the Troubled Asset Relief Program points out that when troubled homeowners experience further financial distress, they are likely to lose their homes due to little or no incentive to keep their properly. The resulting empty properties, especially when concentrated in certain communities, will have a dramatic adverse effect on the home prices at that area.

Home Abuse: It is Not Wanted

New developments typically look fresh and finishing touches like landscaping are usually still being added. But John Sullivan of the National Associated of Exclusive Buyer Agents report that new subdivisions are experiencing home abuse. Lawns look straggly, the paint appears dirty, and the windows are dark from dirt. These are all signs that the previous owners experienced mortgage problems.

When the mortgage debt declines 20 percent below the property value, there is a high likelihood that it will be foreclosed. Evan Feldman from ZipRealty tries to inform potential home owners about this threat. Buying a home is the single biggest investment you will make. By getting all the information about the neighborhood and the community, shock and financial losses can be avoided later on.