Business and Finance

Archive for June, 2011

Some people, stuck for ideas for a suitable gift for a friend or member of their family, may feel uncomfortable giving hard cash. Gift cards may be an option but it isn’t always easy to know which card to go with. Prepaid cards and virtual online credit cards may give an alternative worth considering.

Why Give Virtual or Prepaid Credit Cards as Gifts?

This solution simply suits some people better than giving cash or having to choose the right gift card. Giving either an online or a prepaid card as a gift may work better. This kind of gift may, for example:

* Show a little more thought than just handing over cash.
* Suit any occasion where a gift is needed.
* Allow the gift recipient to spend the money as they like on whatever they like.
* Help teens and young people start using cards without the risk of getting into debt.
* Allow for some personalization with pictures and/or a gift message added to the card itself (standard prepaid products) or to the notification email/letter (virtual products).

But, before deciding on whether to give either a virtual or a prepaid card as a gift, it may be wise to think about how these products work and whether there may be any downsides.
Things to Consider Before Giving Prepaid or Virtual Credit Cards as Gifts

Although these cards can be a quick and easy way of giving a gift, this doesn’t mean that they suit everyone. It may be worth checking out a few different card options and reading their terms to check that there will be no potential issues. It may, for example, be worth thinking about.

Earnings season propelled the stock market in July, 2010 to its best month in a year, with the Dow gaining 7.1% as corporations continually shattered earnings estimates and revenue consensus. Technology (Apple, Intel), financial (Goldman Sachs, Wells Fargo), big oil (Exxon, Chevron), automotive (Ford), and most other sector heavyweights were weighing in with stellar quarterly reports. Containment of the Gulf oil spill as well as the passing grade received by 84 of the 91 European banks given the “stress test” also helped make July a winner.

Valuation of the market at large continues to be beneath historical levels. Although corporations are turning large profit and many are flourishing, it remains to see if July was a temporary reprieve of market mediocrity or a springboard to a rally that will bring share prices in line with value. I believe that the triangular depressive forces of unemployment, housing, and debt (both European and domestic), will continue to suppress the market for sometime and keep the market undervalued. This is bad news for those currently invested in the market, however, it provides nice entry points for the long-term value investor who has the opportunity to buy company shares at a discount.

On July 30th, it was announced that the United States gross domestic product grew at 2.4% for the second quarter, a number below first quarter growth as well as analysts’ expectations. On August 6th, the Federal Labor Department will report on the national unemployment rate, currently at 9.5%. Housing reports have continually been uninspiring, and the previously mentioned European stress tests of the 91 banks have been coming under increasing scrutiny that they were lenient and ultimately ineffective gauges. This continually tepid news continues to offset the corporate earnings successes, so the question is, what specific news has to come over the wires to get the market winning again?

Of course, any positive report tends to put the market up for the day, however what would trigger and sustain a rally? I believe that unemployment is the most important of the three depressive factors, and that it currently weighs as the largest bear. Not until unemployment falls under 8% do we have a chance to party like it’s October, 2007. There is just too much money on the sidelines and too much depressive mood when unemployment is this high. It appears that it will take sometime for the unemployment rate to get that low, however a surprisingly good number like 9.2 on August 6th would at least display that the United States is slowly but definitively putting people back to work.

Time will tell if the European banking stress tests had validity. If for example, Moody’s decides to give a downgrade to the financial health of one or more of the European nations, this will reinforce criticism of the test and re-invoke anxiety surrounding the global system. On the other hand, if negative news lays dormant and investors begin to gain some measure of confidence that the continent will not collapse; this will go a long way in reintroducing some panicked money back into the game.

People will be avoiding foreclosure, buying new homes, and increasing the value of their current home through renovative improvement when they are back to work. Home buying tax credits and record low interest rates have been unable to boost the industry because of high unemployment, however, at least a floor seems to have been established and pockets of increasing real estate value are beginning to appear in a small number of markets. In addition, homeowners have been able to refinance their homes at these record interest rates that have saved many a family from falling into foreclosure as well as bankruptcy, two positive points which strengthens that floor. But, not until reports surface that new homes are being built at generational baseline levels and homes are selling again will the market be in a position to reach its potential.

The fundamentals are in place for a bullish run. Hopefully, the preponderance of excellent corporate earnings translates into increased employment the way this correlation existed in the 1990′s. If the triangular forces of high unemployment, debt, and a poor housing market do not show improvement, it appears that we may hover in the 9000-11,000 range indefinitely. I do not subscribe to the bearish claims of Armageddon. Europe is not going to collapse, unemployment rates and housing appear to have bottomed out as they do now and again show flickers of light, and our domestic banking system is in much better condition than it was in the fall of 2008.

Credit verification is standing in your way? You cannot get financing due to the lack of proper credit? You would be surprised at how much people is currently in your same situation. Under these circumstances, the smartest way to go is to resort to a secured loan. However, not everybody is a homeowner. Yet, the good news is that there are lenders offering bad credit unsecured loans which require no collateral and are approved regardless of your credit score or history.

The Lack of Security

The lack of security is one of the main features of these loans. People with credit difficulties tend to have problems obtaining finance and though secured loans are easier to qualify for as they have less harsh requirements, ownership is rarely a characteristic of bad credit borrowers. Therefore, the fact that these loans require no collateral to be approved is a very attractive attribute.

But even those who have a property may not be able to use it as collateral for the loan. Mortgage loans are increasingly difficult to pay off and therefore, home equity creation has become slower which in turn hinders the ability of borrowers to obtain secured loans of high amounts (the amount limit on secured loans is the amount of available equity on the property being used as security). In such situations unsecured loans will be of great aid.

Bad Credit Approval

Now that the lack of collateral obstacle has been solved, there is still another obstacle which needs to be addressed: bad credit. A low credit history can hinder loan approval for many loan types because the risk that a low score represents scares lenders away. However, there are loan specially designed for people going through credit difficulties that can be easily qualified for.

Of course, the interest rate charged on these loans will be significantly higher than that of unsecured loans for people with good credit. Nevertheless, the loan payment can remain affordable by extending the repayment schedule of the loan. These loans can be repaid within 5 years, 7 years and up to 10 years time. The longer the loan repayment program, the higher overall interest that you will have to pay but the payments will remain lower because the loan principal will be divided into more installments.

The Bankruptcy Issue

The bad credit problem aggravates when the borrower has gone through a bankruptcy process within the near past. Most lenders require for two years to pass before any kind of loan can be approved. Moreover, there are lenders that will require 5 years or up to 7 years since the bankruptcy’s discharge for approving any kind of loan regardless of its type or terms with the sole exemption of payday loans or cash advances.

However, there are sub prime lenders willing to approve bad credit unsecured loans even with past bankruptcies. Again, you should expect to pay higher interest rates from these non traditional lenders because they are taking a greater risk by lending to someone with a past bankruptcy. Yet, if you are in need of funding, it is probably the best solution available for someone that has experienced financial failure.

Earthquake Hazards in the United States

Although the West Coast and Alaska generally has the greatest earthquake activity, the potential for earthquakes exist almost everywhere in the United States. Active areas in the Midwest include: 1) The New Madrid Seismic Zone in southeastern Missouri which has the potential to impact eight states: Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee; and 2) The Wabash Valley Seismic Zone along Illinois-Indiana border that would impact three states: Illinois, Indiana, and Kentucky. In Eastern United States, another active region is the Charleston area in South Carolina.

Earthquake Prediction in California and the Midwest

California has 99.7% probability of having a moment magnitude Mw = 6.7 earthquake (same as Northridge event) during the next 30 years. The southern segment of San Andreas Fault has the highest probability of generating such an earthquake in Southern California with a 67% chance of striking Los Angeles Area, while Hayward Fault is the most likely earthquake source in Northern California with a 63% chance of striking San Francisco Bay Area. Larger earthquakes are less likely during the same time frame; 94%, 46% and 4.5% for Mw = 7.0, 7.5, and 8.0, respectively. On the other hand, the probability of a New Madrid earthquake of Mw = 6.0 or greater occurring in the next 50 years is 25-40%, while a repeat of the 1811-1812 earthquakes of Mw = 7.7 is 7-10% according to the United States Geological Survey. However, most structures in the Midwest were not built to withstand earthquake shaking. Moreover, earthquake awareness and preparedness in the Midwest have lagged far behind as compared to the West Coast.

What if your Home is Destroyed or Partially Damaged?

Many people wrongly believe that the United States Government will take care of all their financial needs if they suffer losses in an earthquake which is not true. In fact, the federal disaster relief programs are designed to help you get partly back on your feet but not to replace everything you lose. In the meantime, homeowners insurance does not cover earthquake damage to your home and possessions. Therefore, most of the property damage caused by an earthquake will end up being handled and paid for by you. In addition, you are still responsible for your existing debts such as mortgage, auto loans, and credit card payments even if your home is destroyed or partially damaged.

How to Protect your Assets and Investments?

If you own your home, it is probably your biggest financial asset. You have worked hard to secure your piece of the American Dream to become a homeowner. Your assets and investments made in personal belongings may be at risk when an earthquake strikes as your home will probably have some level of damage. How do you plan to protect these assets and investments from the costs of destructive earthquakes? Earthquake preparedness plans that include retrofitting your home and mitigating its contents are effective ways for protection against earthquake damage. Another option for managing the potential costs is to buy earthquake insurance.

Earthquake Insurance

Earthquake insurance provides coverage for ground shaking that may destroy your home, business, and personal belongings. Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is provided by standard homeowner and business insurance policies. On the other hand, cars and other vehicles are covered for earthquake damage only under the comprehensive part of the auto insurance policy. The states of California, Washington, Missouri, Tennessee, Oregon, Illinois, New York, Kentucky, Florida, and Indiana are the top 10 largest markets for earthquake insurance coverage. Earthquake insurance premiums differ widely by location, insurance company, and the construction material of your home. Older buildings cost more to insure than newer ones. Wood-frame structures benefit from lower rates than unreinforced masonry buildings as they tend to withstand earthquake forces better. A wood frame house in the Pacific Northwest costs $1-3 per $1,000 worth of coverage but less than $0.50 on the East Coast, while an unreinforced masonry home costs $3-15 per $1,000 in the Pacific Northwest but $0.60-0.90 in New York.

Do You Need Earthquake Insurance?

A wise decision on earthquake insurance is crucial if you live in an active seismic region. My family and I survived the 1995 Kobe Earthquake because I decided to live in a relatively new reinforced concrete apartment building although the rent was higher than traditional Japanese wooden houses. The three story main building stood still after the earthquake except an extension that partially collapsed, while many of the surrounding traditional houses completely collapsed. However, the apartment contents were damaged including the refrigerator, a microwave, and a large TV. The answers to the following questions may help you to decide if earthquake insurance is right for you:

Do you know the plausible earthquake hazard at your home? How much would it cost to repair/rebuild your home? Can you afford paying the mortgage while also paying to repair/rebuild your home? Can you afford losing your home equity? How much would it cost to replace your household expensive possessions (furniture, computers, HDTV’s, refrigerators, etc) if destroyed? How much would temporary accommodations cost if you cannot live in your home after the earthquake?

Interesting Facts on Earthquake Insurance

It is surprising to know that only 12% of California residents currently have earthquake insurance coverage down from 33% in 1996 when the devastating 1994 Northridge Earthquake was still fresh in people’s minds. On the other hand, 35% of Missouri homes have earthquake insurance coverage which seems reasonable.

Concluding Remark

On January 09, 2010 the powerful Mw = 6.5 Offshore Northern California Earthquake caused moderate damage to the City of Eureka and elsewhere in Humboldt County. Few days later, on January 12, 2010, a catastrophic earthquake of magnitude 7.0 struck Haiti which is considered to be one of the deadliest quakes in the last four decades. These earthquakes are wake up calls for individuals living in active seismic regions to re-consider retrofitting their homes and mitigating their contents to protect themselves and their families; to develop, update, or maintain their own earthquake preparedness plans; and to re-consider buying earthquake insurance to manage the potential costs of future inevitable earthquakes.

Who do not want to have his own independent business venture and face every challenge and risk by himself? You too perhaps love to face such challenging situations and combating it. But for you starting a business of your own may not be that easier as for others because the credit record you are holding is really poor in score. Finding a suitable lender to assist you in your business often proves to be tough as your criteria do not matches with his. Under such circumstances the bad credit business loans can help you good in setting your own business.

Bad credit business loans are made with an aim to aid the bad credit holders only. You will not get to pay higher interest rate in these loans thus building up your own business venture will be quite easier for you. For a big business set up you can approach the secured bad credit business loans or for a small amount the unsecured loans are also the best. Secured loans will demand a security from you against which the money to be provided is decided. An amount up to

When you consider the state of the current economy: jobs being lost, houses being foreclosed on and people just wondering in some cases, where the next meal is coming from, you might think that payday loans usage is something that you should use more often.

After all, living expenses seem to keep rising, and wages, well, not so much. However, this is not rising as quickly as you may imagine. Indeed, many people have taken the old axiom of “doing more with less” to heart and are looking for ways to cut expenses while trying to maintain a decent standard of living. That said, there are always occasions where something unexpected comes up.

But even though this can happen, it pays to consider how continual payday loans usage can affect you and your family. Consider for a moment what happens as you decide to go for a payday loan. You’re more than not upset, sometimes frantic depending on the emergency. As such, you may not be in the proper frame of mind to apply. Your state of mind plays an important role in everyday life and governs how the world around you reacts to you. This is even more relevant in business dealings.

And that is exactly what payday loans usage is: a business contract between you and the lender. Now, why is there so much emphasis placed on having a cool state of mind? Simple: you may wind up overcompensating and applying for (and getting) more than you need. On the one hand, this is understandable as you want to be prepared for next time. But if you take a step back and consider the future, you may just want to apply for only what you need to solve the current crisis.

Why?

The more you take, the more you will have to pay back. And the reason you’re applying in the first place is because you don’t currently have the funds yourself. So, when considering payday loans usage, why would you want to owe more money than you need to? Another thing to consider is that you need to be able to pay back the loan as expediently as possible as there are interest charges to consider. In fact, these can add up to be more than the principal of the loan, if not paid off in a timely fashion.

Something else you may want to consider is the affect of getting a large payday loan will have on your family. Any trips or special times you may have been planning for may need to be postponed in order to pay off the loan. And should you get a larger loan than needed, the temptation will be to use that money for frivolities as the above.

In short, payday loans usage is something that you need to step back and think about regardless of the current crisis facing you, for it is a decision that will have an affect. That said, if you work with your lender to set up a repayment schedule that fits into your monthly budget, and stick to it, then this is something that should not worry you.