JPMorgan Chase reports lower profits, gives cautious economic outlook

NEW YORK, United States - JPMorgan Chase reported a drop in second-quarter profits and warned that a weakening global economic outlook prompted the firm to set aside additional funds to cover potential bad loans.

Executives sketched out a complex economic picture, with US households still relatively well off in terms of savings, a strong job market and robust consumer spending.

But headwinds -- including high inflation, geopolitical uncertainty and fast-changing Federal Reserve policy to sharply curtail liquidity and raise interest rates -- "are very likely to have negative consequences on the global economy sometime down the road," said Chief Executive Jamie Dimon in a statement.

While consumers are "in very good shape," there are "a serious set of issues" that threaten the outlook, Dimon told reporters on a conference call.

These include the worry that Russia will cut off Germany's natural gas supply and the possibility the Federal Reserve's aggressive plan may not be sufficient to rein in inflation.

"The markets will be volatile," Dimon predicted. "You can't have all these kind of things going on and not have volatile markets."

Global equities have been under pressure throughout 2022 as economists increasingly highlight rising recession risks, although some believe any downturn would be relatively mild.

The big US bank posted earnings of $8.6 billion for the second quarter, down 28 percent from the same three months of last year, in results that missed analyst expectations.

Revenues were $30.7 billion, up one percent.

The bank said it added $428 million in credit reserves due to a "modest deterioration in the economic outlook." In the year-ago period, JPMorgan's profits were boosted by a $3 billion release in reserves.

Dimon said even in the case of a recession, JPMorgan would need to hold "a lot less" in reserves compared with the $15 billion it set aside early in Covid-19. 

The bank experienced $657 million in charge-offs for bad loans in the second quarter, up only modestly from the level in the previous quarter.

JPMorgan enjoyed a boost from higher net interest income following Fed interest rate increases. But the bank also incurred higher expenses on salaries, technology and marketing.

The bank temporarily suspended share buybacks to meet new federal stress test requirements for managing risk assets, Dimon said.

Consumers still spending 

The results came as the Labor Department this week reported another large spike in wholesale and consumer prices, which are the heart of investor fears about the consumer-driven US economy.

But JPMorgan Chief Financial Officer Jeremy Barnum said "there's essentially no evidence" at this point of a drop-off in consumption.

The bank's credit card data confirms that consumers are spending more on food and gasoline, but that they are still also spending on travel and dining.

"That indicates to us that consumers still don't feel so pinched by inflation that they're cutting back on discretionary spending, and that's a relatively positive sign," Barnum said.

Persistently high inflation has also raised fears that the Fed will adopt an even tougher line on monetary policy after the central bank announced a 0.75-percentage-point hike, its biggest since 1994.

The latest inflation readings have prompted talk of a potential for full point rate increase at the policy meeting later this month -- one that Fed Governor Christopher Waller said Thursday he could support if coming data show no signs of a slowdown.

Dimon said there is evidence of the hit from the Fed shift, but the impacts could worsen if the US central bank is unable to slow the economy with a "soft landing," Dimon said.

JPMorgan shares finished down 3.5 percent to $108.00.

The suspension of share buybacks is "spooking" investors, said Briefing.com, calling it "a signal that management feels the need to be cautious with its money."

Agence France-Presse

Democrats say Trump 'plunging country into chaos'

Washington, United States -- US Democratic leaders charged Monday that President Donald Trump was "plunging the country into chaos" with multiple crisis and said he was offering no way to end a government shutdown.

Nancy Pelosi, who takes over next month as House speaker, and Chuck Schumer, the top Democrat in the Republican-led Senate, complained that White House aides were giving inconsistent messages on what Trump would accept to restart the government.

"It's Christmas Eve and President Trump is plunging the country into chaos," the two said in a joint statement.

"The stock market is tanking and the president is waging a personal war on the Federal Reserve -- after he just fired the secretary of defense," they said.

They warned that they saw little solution to the three-day-old shutdown so long as Trump aligns himself with hard-right Republicans in the House of Representatives.

"The president wanted the shutdown, but he seems not to know how to get himself out of it," they said.

Trump has refused to sign a bill to authorize spending to keep the government functioning as he demands funding for a $5 billion wall on the Mexican border, a top election promise as he railed against unauthorized immigrants.

Trump has put off vacation plans in Florida due to the shutdown and has been frequently posting his thoughts on Twitter.

On Monday he attacked the Federal Reserve, which is traditionally shielded from political pressure, over a sharp downturn on the stock market and defended his decision to pull all US troops from Syria, which led to the resignation last week of Defense Secretary Jim Mattis, often considered the most respected member of his cabinet.

source: news.abs-cbn.com

How many credit cards do you need? 5 tips to find out

MANILA - A male customer in the United States was recently reported to own a record 1,497 credit cards. While he is no doubt the exception, the question of how many credit cards does one person need comes up quite often.

Most credit cardholders own more than one credit card. Like most credit cardholders, you may find that having a main credit card and a spare card ensures that you always have access to ready payment tools when needed. On the other hand, you may have a wallet stuffed with plastics that you cannot even monitor. If so, you may have asked yourself if you have one card too many, and wondered how to make the best use of your cards.

There are just as many reasons to have multiple cards as there are to have just one or two that you can manage. The truth is there is no magic number as to how many credit cards you should own. Your spending style, consumption pattern, and cash flow considerations are all factors that can help you decide how many credit cards you should have.

Here are five tips to help you decide how many and which credit cards you should keep.

1. How much credit you can handle?

Are you the type who would shop mindlessly and could not stop for as long as you have not exhausted your credit line? If so, then perhaps you should not hold on to too many cards and try to keep credit limits to levels that would not send you to financial disaster. On the other hand, if you need a large credit line, presumably to use in business or to accommodate your spending needs, then go for a credit card or cards that can provide you the spending power that you can handle.

2. Examine how you use your credit card.

Are you using your credit card for various unrelated needs? If so, it may be helpful to have separate cards for different purposes—say a card for your household needs, and a separate one for your office-related expenses. Having a separate card for your office needs will also be easier for recording purposes. If you regularly make purchases in a foreign currency, a separate dollar-denominated credit card may be handy.

3. Play your cards right.
When you have multiple cards, you will also have to contend with managing many records and meeting different payment deadlines. If you aren’t organized enough to remember payment schedules, then you are better off holding on to just a card or two. Any more will be too much of a hassle for you and worse, could even lead to unnecessary finance charges if you fail to remember your payment due dates.

4. Look at your cash flow.

Check each card’s statement cut-off and payment date and see if this coincides with your cash flow. It may be more manageable, cash flow wise, to have two credit cards with payment due dates that are two weeks apart from each other. In so doing, you can pay off each bill in full without saddling you with interest charges.

5. Check out annual fees.

While it may be nice to have a big credit line and multiple credit cards, make sure to keep an eye on annual fees. Credit card companies charge anywhere from P2,000 to more than P4,500, depending on your type of card. These fees are completely justifiable if you actually use your credit line, want to have emergency funds, and enjoy the other features of the card.

However, if you have many of these cards that are simply stacked inside your wallet, then you are throwing good money for nothing. Determine which cards are worth keeping and paying for, and surrender the rest.

These days, credit card companies are competing for your business and loyalty by offering gifts with your spend and rewarding you with points that you can redeem for a wide range of items. Make these count as you decide what to keep or what plastic to own.

Look into your consumption pattern and determine if there is a card that can offer you rebates or freebies in exchange for your loyalty. For instance, if you are a heavy traveller, credit cards that issue frequent flyer or mileage points may be useful for your purposes. If you patronize a particular store, it may be helpful to have a card that gives you points in exchange for your purchases in this store. Or if you like rebates, a cash back card might be right for you.

When choosing which credit card to keep and to let go, as with any spring cleaning project, one rule applies – only keep what are most relevant for your needs.

source: www.abs-cbnnews.com

To buy or not to buy? 7 ways to stick to your holiday budget

MANILA - This is probably one of the hardest times in the year to keep to your budget.

Around this time, salaried employees have most likely received a windfall in the form of the 13th month pay, and if you’re luckier, a Christmas bonus, profit sharing, and other cash incentives—all of which make you feel cash-rich.

Happily coinciding with what seems to be your increased spending capacity are lots of sales and bazaars, running non-stop just about everywhere you look. On top of these is the general feeling of festivity and generosity that is just so pervasive, with people lugging gaily wrapped packages and parties ongoing non-stop. All these can make you forget about your budget and spending plans, and potentially set you back in meeting your financial goals.

Since temptations lurk just about everywhere, and not just during the Christmas season, it helps to be prepared to deal with these more responsibly.

Here are seven tips to help you deal with those temptations that can get in the way of your financial well-being.

1. Know thyself.

Knowing your weaknesses and trigger points is the most important step in fighting temptation. Some of us shop when we are emotional, tired, or angry at someone. Others react to advertisements or are easily swayed by sweet-talking salespersons. Many find themselves buying things they do not need, often mindlessly. Knowing what tempts you, and what makes you break your plans, will prepare you mentally to avoid these pitfalls and keep you from putting yourself in a spot that you cannot get out of easily.

2. Set a budget.

Having a budget will help you keep spending in track. Set a specific amount (either in peso terms or as a percentage of your income) for everything—for the household, for entertainment, for Christmas. Set aside an amount that is realistic for each one, based on your actual lifestyle and spending patterns. This will let you plan out expenses. When faced with temptation, you would know exactly how giving in to temptation would affect your budget for different areas.

3. Make checklists.

Complementing your budget, spending checklists are important. These lists should contain only the essentials and planned expenditures. Bring along these lists when you go shopping to ensure that you get only what you need. For Christmas, prepare a gift list to help organize your shopping and to keep you within your spending limits.

4. Stay away from malls and retail outlets.

Out of sight, out of mind works well when you are an insatiable shopper or find it very hard to resist buying once you hit stores. Many of us tend to go to malls to meet up with people or to dine out, and end up buying stuff because the in-store advertising and shopping bug are just too hard to resist. Meet your friends elsewhere such as someone’s home or a coffee shop in the neighborhood. Dine in areas which are not located in malls or retail strips. If a trip to the mall is unavoidable, then don’t loiter around—finish your business and get out without window shopping.

5. Leave your cards at home.

If you are an impulsive shopper, staying on cash mode is an effective way to resist temptation. When you do not have your credit card and ATM card to whip out, you will be left with only the money in your wallet to spend, forcing you to stay on budget. This is not to say that you should throw away your ATM card and credit card; on the contrary, they are very helpful financial tools when used wisely. Not carrying them around when you are feeling vulnerable, though, allows you to think twice about a purchase and stops impulse purchases.

6. Remind yourself of trade-offs.

When you’re about to fall into temptation, think of what it means to you in real terms. For instance, getting this glitzy smartphone means I will not be able to come up with the condominium down payment in six months. Framing your expense within your personal plans will help you determine if it is worth giving in to this temptation, or if you’re better off walking away.

7. Go for other activities.

Spending can be therapeutic and entertaining to many of us, but it is not meant to be so. Distract yourself by putting time into other activities—an afternoon chatting with friends, bonding with siblings and relatives at a park or someone’s house, reading good books at home. Even better yet, pay a visit to or volunteer to help out in a charitable institution (orphanages, centers and schools for the marginalized)—you’ll find these very fulfilling and will even let you touch the lives of other people.

---

Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.

Visit www.citibank.com.ph for more information.

source: www.abs-cbnnews.com

How to pay off debt in 7 smart ways

MANILA - Do you think you are carrying too much debt? If your bills are piling up, and you are also getting calls from creditors, you should be alarmed.

Having too much debt can be stressful. While overcoming your debt problem may not be easy, especially if you are relying on a limited income, it can be done. You will need discipline and sacrifice and we have charted a road map for you below.

Here are seven debt-defying steps to set you on your way to financial freedom:

1. Know how much debt you have. When you are struggling with too much debt, you may forget how much you really owe and the details of the debt you’ve accumulated. List down all your debt, the interest rates of each, and the minimum monthly payments required. This information is essential to help you make a workable debt strategy. It also allows you to better track the payments you have to make, and know your real debt situation—which may be much better or much worse than you realize it is.

2. Choose your debt pruning strategy. It is necessary to have a good and realistic battle plan that you can implement. First, identify which debt you should pay off first—the one with the highest interest rate or the one with the lowest balance (you will save more if you retire the debt that charges the highest interest rate.) What works for one person may not work for another, so weigh your options. Once you’ve decided, make additional payments on this debt until it is totally wiped out.

3. Find ways to make additional payments. Study your income and spending patterns to find where you can get the additional money that can go toward debt servicing. This might mean either cutting back on your usual expenses, or finding new sources of income. You’ll have to make some sacrifices—bring down your entertainment budget, eat at restaurants less often, or maybe even postpone that planned vacation. New income sources can come from taking on a part-time job or selling off some stuff you’re not using.

4. Find lower interest rates. Check the interest rates you are paying on your debt. Consider taking out a lower-priced loan from other sources—possibly the bank, or even your office cooperative—to shave off the debt with the highest interest rate. Another option is to negotiate the interest rate with the lender, which you can do by writing a letter to your bank or lender. It won’t hurt to try.

5. Set realistic targets and deadlines. Let’s say you owe P100,000 on a salary of P25,000 a month. Don’t target paying off the P100,000 in four months—you can’t live on zero income and you will only set yourself up for failure. Study your needs and your cash flow to know what is realistic before you set a deadline. Giving yourself a deadline helps define your goal, which allows you to create a strategy and gives you motivation.

6. Don’t take on new debt when you’re managing existing debt. When you are struggling with debt, the worst thing you could do is to borrow some more. This will only push you deeper into the hole you’re in. Work with your creditor and explore other ways for you to manage your debt, as most of them will be more than happy to assist you. For example, they can convert your balance into a friendlier installment scheme that will make it easier for you to be up to date with your payments.

7. Reward yourself. Keep yourself motivated during this time by rewarding yourself once you’ve reached milestones—reaching the halfway mark, wiping out the largest debt, etc. After all, getting over your debt problem is a great achievement that is worth celebrating. It goes without saying, of course, that your choice of reward for yourself should not plunge you deeper into the debt hole. Try declaring a “do nothing” day or spending the day with a friend who makes you laugh the hardest, As the saying goes, the best things in life are free.

Conquering debt requires both a financial and a psychological strategy. Remember that short-term sacrifices could yield long-term benefits, and what can be a better reward than to gain financial independence and freedom from creditors? With discipline, commitment, and good planning, you can overcome your debt woes.

source: www.abs-cbnnews.com

Ways Impulse Buying Could Easily Get You Into Debt

 

Avoid the Pitfalls of Impulse Buying

The way today's society is structured it is pretty easy to outspend your means if you are not careful. Between the ease of technology and the availability of buying on credit, nowadays commercial promotions are designed to get people to spend. Between credit and debit cards, pay later plans, and other forms of deferred payment, it is tempting to make purchases and worry about making payment later.

With these many conveniences available today, on the surface they might seem like terrific options for consumers. In many ways they are - as is anything designed with convenience in mind. However, the big drawback is due to the ease of purchase without worrying about payment right away, debt has a tendency to sneak right up on you. And, if you're not paying attention, interest begins piling on your balances and before you know it you could have creditors knocking at your door demanding payments you cannot afford to make. Ways impulse buying could easily get you into debt include:

You Outspend Your Income

Continuously purchasing items without planning for them financially can lead to debt if spending exceeds income. Chances are most people have a specific monthly income, or at the very least, earn the same average amount each month.


To avoid this pitfall, prior to spending your available credit on non-necessary and non-budgeted items, it is important to pay all outstanding bills first to ensure spending does not amount to more than income does. Debt can creep up if bills are not paid first; however paying bills can give a clear indicator of how much money, if any, is left over for spontaneous shopping adventures.

Overuse of Credit Cards

Many individuals who are compelled to impulse shop frequently use their credit cards. Credit cards are a terrific convenience, however the drawback is using credit cards can lead the spender on a very slippery slope, one that will land the consumer right in heavy debt if he or she is not careful.



When impulse shopping leads to credit cards bills that cannot be paid off at the end of the billing cycle, this means interest charges will be tacked on to the original expense. Depending on the card's interest rate, this could get costly - quickly.

Impulse spenders have to be extra careful when using credit cards because it could lead to excess debt which may be hard to dig up out from.

You Lose Track of Expenses

People who tend to impulse buy also often have a predisposition to not track expenditures until it is too late. As shoppers go from store to store or website to website to make purchases without really paying as close attention to spending, debt can tally up quick.

Online Shopping

The growth of e-commerce, and now mobile commerce (or “m-commerce), in many ways helps contribute to overspending because it is so convenient. With customized ads hand-delivered to pretty much any web page, including social media and flash sales designed to get people to buy impulsively with deals that (the companies are hoping) cannot be resisted. Then there are daily deal sites and other enticements all over the web.

Online shopping is quick, and this alone makes it much easier to compile debt because a consumer can visit many stores within the matter of minutes. Add location trackers and other geo-location details and retailers may send targeted ads or deals on the spot to mobile that people accept in the fear of missing out on such a deal.  In April 2015, Mobile Commerce Daily reported on the ways Twitter's "buy button" can change the dynamics of m-commerce.

Statistics on Debt

According to figures put out by the U.S. Federal Reserve, in the United States, total outstanding consumer debt was said to be $3.34 trillion. This figure includes car loans, student loans and revolving debt. Mortgages were excluded. Reports also indicate credit card debt is steadily on the rise. CardHub reports on American spending:

"Consumers ended 2014 with a $57.1 billion net gain in credit card debt, and CardHub now projects that we will incur more than $60 billion in new credit card debt during 2015 – a 5% increase. We’ve now had six consecutive quarters of year over year increases in our credit card debt load." 

Revolving debt, which is primarily composed of credit card outstanding balances was said to be $884.8 billion as of January 2015. ¹ On the plus side, the number of people who carry credit card balances from month-to-month in the United States is decreasing.

In Canada, statistics indicate total consumer debt  as of Nov. 30, 2014 is $1.810 trillion (unlike U.S. statistics, this does include mortgages). Fifty-two percent of Canadian households carried credit card debt in 2014. This is down 2 percent from 2013.

For many, impulse buying plays a strong role.  As a result, it can lead to serious financial problems and, due to this reason, it is important to be sure to spend only within your means in order to avoid the financial hardship that comes along with excess debt. Even if you have to plan a budget. If not, they'll be financial consequences to pay.

Impulse buying can lead to excessive debt, but the good news is recognizing and avoiding the pitfalls of on-the-fly shopping can help allow you to spend and remain within your budget.

source: infobarrel.com

Why Kraft, Campbell are following shoppers into dollar stores

NEW YORK - Anielle Troyan, a call center worker in New York, shops at discount retailers such as Family Dollar for items like soap and detergent as well as groceries like Kraft macaroni and cheese and small-sized condiments.

It's "expensive to cook for one," she said. "I'm 25, I'm poor, I'm usually going to buy what's cheapest."

Customers like Troyan are one reason why Kraft Foods Group Inc reversed course after considering stopping the sale of single-serve packages of Velveeta cheese sauce, which wasn't moving in traditional grocery stores. After another look at the numbers, Kraft found that shoppers on tight budgets at dollar stores were gobbling up Velveeta sauce in the affordable small size, and the food got a new lease on life.

The fall and rise of Velveeta shows how companies such as Kraft, General Mills Inc and Campbell Soup Co are following shoppers into dollar stores, which carry a host of private label and brand name products, typically priced between $1 and $10. As an improving U.S. economy still leaves some middle class customers tumbling towards the poverty line, food companies are searching for growth where lower income consumers shop.

"We're in the business of feeding all American families, and that's where consumers are going," said Tom Lopez, vice president of growth channels at Kraft.

Packaged food sales were flat in 2014 as people increasingly avoided the brands typically found in the center aisles of grocery stores in favor of the fresher food found on the perimeter. But in other types of stores, such as dollar, drug and club, sales are growing faster than grocery store sales, prompting companies to expand distribution.

Dollar stores flourished during the recession and remain in the spotlight: Family Dollar shareholders in January approved the sale of the company to Dollar Tree Inc for about $8.5 billion in cash and stock and rejected a $9.1 billion all-cash offer from Dollar General, citing antitrust concerns.

An aging population is also driving the push by packaged food companies into dollar stores. General Mills says it's seeing more baby boomers at dollar stores looking for smaller quantities, so it expanded its snack offerings there to include the Fiber One brand. Sales in dollar and drug stores rose 8 percent last year, company officials said.

At Kraft, sales at club, dollar and drug stores also rose 8 percent in the first three quarters of 2014, four to five times faster than sales in all channels.

Improving distribution to dollar stores could help Kraft reinvigorate sales in the United States, where it has struggled with flat sales growth and higher commodity costs. Since its split with Mondelez International Inc in 2012, the majority of Kraft's business comes from sales of North America grocery items.

"They have been for a very long period of time this kind of staple of the middle class," said Robert Passikoff, president at Brand Keys, a brand consultancy in New York. "That doesn't really seem to be the case anymore. If people are not flocking to those brands, you need to be able to look for other audiences and other distribution points."

Since its spin-off from Mondelez, Kraft has appointed a 13-person team to focus on untraditional sales channels. Sales to dollar stores saw double digit percentage growth in 2014 from the prior year.

CAUTIOUS SPENDERS

The strategy faces some challenges. Even with an improving economy and low gas prices, low income consumers remain cautious about their spending.

"While on paper, it appears that the economy is improving, the low to middle income consumer who is our core customer continues to look for ways to manage her budget as she works to prioritize her spending and she trusts that we are on her side to help her stretch her budget," said Dollar General's chief executive Rick Dreiling on the company's earnings conference call in December.

Kraft operates an in-house kitchen, where it tests recipes that it hopes will appeal to budget conscious consumers and tries to figure out how families stock their pantries, said Robin Ross, director of Kraft Kitchens.

"There is no room for waste," she said. "There is no room to choose products and recipes that won't go over well in our families. We know that in some of these households there might be higher propensity to buy canned foods or vegetables because there is more of a guarantee that those products won't go bad before it's time for use."

Shrinking package sizes allows Kraft to reach higher profit margins on products, though it won't sell as many as it would in a larger store. For instance, a 12-ounce package of Velveeta Shells & Cheese cost $2.50 at the a Dollar Tree store in New York City. Meanwhile, a 2.4 ounce cup cost $1.25. That's 21 cents an ounce versus 52 cents an ounce.

Not all brands work well in dollar stores, company officials said. Many health and wellness brands can't compete on price in the channel, and food makers point out other limitations for more premium products.

A Campbell Soup spokeswoman says, for instance, that most stores have limited refrigeration space, which is needed for many of its Bolthouse Farms products.

Industry watchers expect more fresh products to eventually be available at dollar stores. "When you look at natural, organic, gluten-free foods, these are products that are demanded across all income classes," said Peter Keith, an analyst at Piper Jaffray. "It is important for the dollar stores to shift some of the mix to those items. That's where the broader population in the U.S. is moving."

source: www.abs-cbnnews.com

How Apple beat Hermes in China

SHANGHAI - Apple Inc has taken the number one luxury gifting spot in China from designer goods maker Hermes International SCA, according to a Hurun luxury report on Thursday, reflecting the iPhone maker's recent hot streak in the country.

The U.S. tech firm's focus on glitzy stores and high prices helped it post a 70 percent rise in sales in China in the last three months of 2014 and powered the company to the largest profit in corporate history.

Spending on gift-giving overall dropped 5 percent in 2014, after a 25 percent drop the year before, according to the Hurun Chinese Luxury Consumer Survey. Beijing has been cracking down on corruption and luxury spending among public officials, weighing down sales of premium liquor to handbags.

Domestic luxury spending in China dipped for the first time last year, according to consultancy Bain & Co, with increasing numbers of shoppers looking to spend money overseas.

"Travel retail continues to change the dynamics of luxury in China, with 7 out of 10 luxury goods bought by Chinese now being bought overseas," said Hurun Report Chairman Rupert Hoogewerf.

Hermes dropped to seventh from the top spot last year, while Chinese premium liquor maker Kweichow Moutai Co Ltd 600519.SS re-entered the top 10 after a two year hiatus, a potentially positive sign after sales were hit by the anti-luxury campaign.

Apple in first place was followed by LVMH Moet Hennessey Louis Vuitton SE, Kering SA's Gucci and Chanel.

The report, which has been carried out for over a decade, was based upon a survey of close to 400 millionaires with a personal wealth of 10 million yuan ($1.6 million).

source: www.abs-cbnnews.com

Why you should cut down on buying 'designer' coffee

MANILA – Spending on designer coffee can be costly if computed on a yearly basis.

Buying a cup of designer coffee at least 3 times a week will cost about P500, which amounts to P2,000 for 12 times a month, and balloons to P24,000 in one year.

“If they realize that, I don’t think a lot of people would be taking designer coffee everyday because you spend at least P120 on a small cup of coffee,” Lei Sison, managing editor of Smartparenting.com.ph told ANC’s “On The Money.”

Sison believes P24,000 can be spent wisely on other things, such as a vacation or on an investment.

“You could probably plan a trip and start a holiday fund using that amount. I know some people who use their money to invest in a condo unit,” Sison said.

“Any investment of that value is never a waste. It’s an investment you could use maybe 10 years from now,” she added.

Sison said P24,000 can also be used to fund education expenses; medical emergencies; or retirement.

But for those who can’t kick the habit of drinking coffee on a daily basis, Sison suggests investing on a coffee machine to avoid paying for an expensive cup.

“We invested on a single-serve coffee machine, which tastes as good. The coffee tastes as good but I only spend about P20 to P40 a cup. Initially, the investment will be there but in the long run, if you keep using it, I think it’s worth every peso you pay for,” she said.

Other coffee alternatives are the 3-in-1 variety, home brew, or single-drip servings.

“If you make it a regular thing, if it’s a daily thing, you should just save the designer coffee for more special occasions. Maybe your daily coffee can be from somewhere else, somewhere more affordable. That way too, it becomes something it’s meant to be for—a treat. Then it really becomes something special,” said Sison.

source: www.abs-cbnnews.com

Ruble plunges but Russians are going on shopping spree

MOSCOW - Russians are feeling the pinch from the slumping ruble, but one somewhat paradoxical result has been to unleash a spending spree as consumers snap up electronics, furniture and cars before prices soar.

In general, Russians' spending power has gone down with the ruble -- which this week hit a record low against the dollar and has lost more than half of its value against the euro due to falling oil prices and Western sanctions over Ukraine. In addition, inflation is forecast to soon climb above 11 percent.

But for those with savings who were planning to buy big-ticket imported items, now is the time to hit the shops, before prices go up drastically to reflect the new cost of imports. And for Moscow's large stores and malls, it is boom time.

In an Ikea shop on a weekday afternoon, the section selling fitted kitchens -- the highest-priced items in the store -- was packed with customers. Ikea has announced that it will put up its prices for kitchens and other goods on December 18.

At a peak time for shopping ahead of the New Year, the country's main holiday, "the number of people in the stores has gone up also because of prices going up", the Swedish chain, which has annual turnover in Russia of more than one billion euros ($1.25 billion), said in a statement sent to AFP.

Ikea had previously promised to keep its prices the same for 2014, but the chain then explained it "could not be independent from external factors".

Apple in late November upped its prices in Russia by 20 percent, without warning, after its products had suddenly become cheaper than in Europe, an opportunity that some canny consumers spotted.

Interest rates have shot up from 5.5 percent at the beginning of this year to 10.5 percent on Thursday and then 17.5 percent on Tuesday, but the central bank has not been able to keep a ceiling on inflation nor a floor under the ruble.

Many Russians are experiencing deja vu -- they have lived through several serious economic crises in the last 25 years, when many saw their savings go up in smoke.

Rush to buy

Household electronics chain M.Video confirmed it had seen footfall rise in early December, partly because of a trend to start shopping earlier for New Year gifts, but also due to the ruble's plunge.

"Customers are trying to lock in the value of their ruble savings and invest them in electronics," said spokesman Anton Panteleyev.

When the chain held a "Black Friday" event in late November, sales went up sharply and the best-selling items included flat-screen televisions, washing machines and smart phones.

"People rushed to buy expensive things like plasma TVs, tablets, notebooks and so on, trying to save their rubles that are drastically losing their value," said Maria Vakatova from Watcom consultancy group, which tracks high-street trends.

The tactic of going shopping when the economic situation gets tough may distinguish Russia from the West, analysts said.

"In this way, Russia is different from developed countries... There, when a crisis begins, people immediately start saving," said Igor Nikolayev, head of the FBK Strategic Analysis Institute.

"In our country, when a crisis comes, it is accompanied by a steep loss of value of the national currency and people abruptly start spending and for a time this softens the situation somewhat."

Such behaviour is "rational: everyone understands perfectly well that prices are going to change," Nikolayev said.

The popular weekly Argumenty i Fakty recently advised its readers to buy electronics, cars, clothes, which are generally imported and therefore directly affected by the falling ruble.

The car market also experienced a boom, with sales of the main foreign makes sold in Russia soaring in November after having been in a deep rut for most of the year.

The Association of European Businesses, which logs car sales, said the retail demand was "extraordinary".

Economist Nikolayev forecast this consumer boom will last "another couple of months, until people have spent all the rubles they are ready to spend."

After that "the most difficult period begins," he said.

The Russian central bank warned Monday that the Russian economy could contract by nearly 5 percent in 2015 if global crude prices remain at their current levels, which would cut sharply into government spending in the highly oil-dependent country.

source: www.abs-cbnnews.com

8 smart ways to save

MANILA, Philippines - We all realize the need to save money, whether to build up an emergency fund, take that vacation we’ve always wanted, make that dream purchase, or invest in something that will appreciate in value.

But whenever people talk about having to save money, the first thing that comes to mind is the need to sacrifice something, sometimes at great pain. While it is true that saving does entail discipline and a measure of self-sacrifice, saving also means doing things smartly or efficiently.

By being aware of how you conduct your everyday spending activities, you may discover areas where you can realize some savings. A good way to do this would be to review your expenses in detail for the past month. Your credit card bills and some receipts you have stored could give you a clue as to what you had spent on and what your spending patterns are. If you do not have these available, start logging your spending now. You might discover areas where you are spending more than you want to.

Here are some areas that you might want to look at:

1. Avoid penalties.

Are you habitually paying bills after the due date? Most companies either cut off your service or charge a late payment penalty to consumers to encourage early or on time payment. Check out your bills and find out how much penalties you’vd had to pay in the last three months. Late tax payments and filings – whether for income tax or property, tuition fee payments, and loan payments – also come with corresponding penalties. By paying attention to payment deadlines and planning your cash flow so that you can make these payments on time, you may avoid an unnecessary expense.

2. Take advantage of early payment discounts.

Conversely, are there early payment discounts that you can avail of and that will allow you to realize some savings? Real property tax payments are a good example, allowing you to save as much as 20% if you pay before the deadline. Even some utilities such as cable companies provide discounts on prompt or early payments. Do some research to find out which among the merchants and financial institutions you deal with offer these discounts and take advantage of these.

3. Make use of rebates.

You can save a fortune by taking advantage of rebates. Credit cards and utilities are good examples of organizations that often extend rebates to loyal customers. Note that many organizations will not automatically give you the rebate if you do not ask for it. Check out the rebate offers of the credit card and utility companies and other merchants that you regularly deal with and make good use of these.

4. Use coupons.

Don’t ignore savings that can be had from using coupons. Those sales people that meet you at the lobby of the malls? Don’t ignore their flyers that can carry limited offer coupons, which also means the discounts tend to be more generous. Also check out online sites that offer coupons . Most of these offer big discounts on deals covering different products and services—restaurants, travel packages, clothes, household furnishings, hair and skin treatments, gadgets, among others. Having said that, make sure you do not go overboard buying things or services that you do not really need.

5. Buy online.

Some services are cheaper when bought online. Hotel bookings and airline tickets are two common examples. That being said, note that there are also some online stores that charge more than traditional stores. The beauty of the internet is that it allows you to compare prices among sellers. Before making a big purchase, try to compare prices between the brick-and-mortar store and the online store to make sure you realize the most savings.

6. Buy during sales.

Sales are great money savers if you buy something that you need. Wait for seasonal sales and schedule your wardrobe shopping or supplies shopping around these times. However, if you buy items that have no real purpose from sales simply because they happen to be cheap, then you are not really saving.

7. Buy in bulk.

Take note of what you and your family consume in large quantities and buy this in the largest packaging possible. Buying in bulk would allow you to realize big savings as opposed to buying items in smaller packaging, which may come out more expensive in the long run. Toiletries and food items are good examples of items that come out much cheaper when bought in bigger packs. Make sure, however, that you buy in quantities that you and your family can consume. Going beyond this would result in wastage.

8. Plan your entertainment and travel schedules.
Eating out during weekends is fun, but do you realize that some restaurants charge higher fees during weekends and holidays? Buffet rates in most popular restaurants are 30-40% more expensive on weekends than on weekdays. If you are planning a vacation, try to schedule it during the low seasons or on weekdays, when hotel and airplane ticket prices are much lower than peak seasons and weekends or holidays.

source: www.abs-cbnnews.com

How to Achieve Comprehensive Bad Credit Repair

Are you interested to know how you can attain complete bad credit repair? If you are, then we suggest that you read the rest of this article. In the succeeding paragraphs of this piece, we have enumerated and discussed five tips that can help you succeed in your quest not only to rebuild your credit history, but also to recover your overall financial well-being.

Helpful Pointers for Credit Consumers

Pay off your debt. There is no better way for you to fully regain your creditworthiness other than paying off your credit obligations. So, to succeed in gradually paying down your debt, you need to closely examine your personal finances. Try to identify expenses that you can eliminate to free upon delinquent borrowers and credit cardholders.



Use your credit card wisely. Keep in mind that your credit card activities are being monitored and reported to the three credit bureaus. And the employees of the credit reporting agencies use your credit and payment transactions in computing for your credit rating. So, if you are serious about your desire to cause dramatic improvements to your credit history, then you need to use your credit card wisely. Make sure that you pay your credit charges on time and in full each month. And see to it that you don’t max out the spending limit set on your card account. In so doing, you can gradually push your credit score up, until such time that you can fully regain your credit reputation.

Order copies of your credit report on a regular basis. In some cases, your poor credit standing can be attributed to the outdated and incorrect entries found in your credit report. After all, the system used for updating your credit and payment transactions is not perfect and prone to human error.

This is the reason why finance experts encourage consumers, like you to regularly order copies of their credit files from the three credit reporting agencies – Equifax, Experian and TransUnion. This way, you will have the chance to determine what your latest score or rating is, and to validate the accuracy of the transactions listed on your credit report.

 Read, read, and read. We also suggest that you look for excellent sources of information that can help you achieve your goal of attaining thorough bad credit repair. You can visit the professional blogs and websites of finance advisers where you can obtain expert opinion on how you should manage your lines of credit. You may also take financial literacy courses online so that you can receive practical suggestions not only on how you can regain your credibility as a borrower, but more importantly on how you can responsibly manage your personal finances.

source: creditcreators.com

Why your Credit Score Matters

A bad credit score can make it hard for you to get approved for a loan, and may even require you to have a co-signer and/or a decent chunk of change to use as a down payment in order to get approved. A bad credit score can put a damper on your career, too – did you know that more and more employers are doing background checks that include a peek at a potential employee’s credit history? And planning for the future — trading in your current vehicle for a new one, buying a house, investing in the stock market — can be a little difficult to do when the current state of your credit makes things uncertain.

The first step to fixing bad credit is to grab the bull by the horns: contact the three credit reporting bureaus (Experian, Equifax, and Trans-Union) and request copies of your credit history. Then find a reputable company or even a bank to purchase your credit score from. With the bad news in hand, you can now go through the reports, line by line, and highlight any discrepancies. For instance, if you know you paid off the $400 balance on your Sears credit card, but it’s showing as being an outstanding balance (unpaid) on your credit report, then that’s something you’ll want to look into right away.

Once you’ve determined just how bad things are, you’ll need to decide if you’re going to fix your credit on your own, or if you’ll hire a third party to do the fixing for you. Credit repair companies, for example lexingtonlawreveiws.com, will take the time to go over your credit report in fine detail, and they’ll do the leg-work required to take care of discrepancies and disputes. Either way, fixing your credit will take time and dedication. If you don’t have the available time and resources to handle the fixing of your credit on your own, then the fees a credit repair firm charge will be well worth it. Plus, they’ll go over your report repeatedly with a fine-tooth comb, and may even be able to handle disputes in a more efficient and resolution-seeking manner than you could.

Keep in mind that repairing your credit and keeping it in good condition takes time and a willingness to change spending habits and improve on money management, but in the end, the pay-off — financial security — is well worth the effort.

source: 20smoney.com

Why you should make a 'money roadmap' for 2014

MANILA, Philippines - All motorists understand that a good map is worth its weight in gold, especially if you are navigating in difficult conditions. In this age of GPS or global positioning system, charting one’s course has never been easier. Are you doing the same with your money?

The best way to open the year on the right footing is to have an idea of where you’re going. This is why the beginning days of 2014 is a great time to work on a personal financial plan. This could serve as a roadmap that will guide you in the year ahead.

Why do you need a personal financial plan?

In a nutshell, it’s your map that would guide your spending and investment decisions to help you reach your goals. Simply put, how to get from A (your money situation right now) to B (your goals).

A personal financial plan may also be likened to a blueprint of a house that you are building. While it may be fun to think of how to decorate individual rooms and make your choice of toilet fixtures, you cannot create a sound house without having an architectural plan first.

Similarly, making spending and investment decisions that are not part of a personal financial plan could keep you from achieving your goals of having a secure financial future optimally.

What goes into a personal financial plan? It should have your goals on one hand, and your personal financial profile on the other. Here are some tips to get you started in working on the different components of your personal financial plan.

Your goals:

Look at every facet of your life and try to come up with comprehensive goals. These could cover the following aspects:

Intellectual goals.

This could include continued education, whether graduate studies or short courses. You may wish to add accreditation tests that will help further your professional career, or learn new skills to enhance your capabilities. Consider if you would like to venture into new or related disciplines as well. Also think of your educational goals for your children—possibly university education abroad or extra courses.

Professional goals.

If you are employed, think of where you would like to be in the medium and long term. Do not limit yourself to just positions within your organization, but consider what other companies you may want to work for. Also think of other disciplines that you may want to move on to. You may also be thinking of putting up your own business. Include this in this plan.

Lifestyle goals.

This would cover your aspirations on how you plan to live. It includes leisure, travel, and entertainment. Perhaps you plan to celebrate your 25th wedding anniversary or intend to have yearly vacations abroad with your family. There may also be sports that you plan to take up, or hobbies that you would like to pursue.

Relocation goals.

If you intend to move out of the country, this should be part of your personal financial plan.

Going through the list above, think of what you would like to be and what you want to have very soon, in the near future, and in the distant future. These will constitute your short, medium, and long-term plans. Define these by a timeframe – short term could mean the present up to the next three months; medium term could mean the next three years; and long term may mean anytime from five years and above.

Estimate how much you would need to achieve your different goals. For instance, if you plan to buy a car in the next six months, indicate how much you think this would cost.

Your financial profile:

List down your current income streams.

This would include your monthly pay (if you are employed), your earnings (if you have a business), interest or investment income, rental income, and all others as the case may be.

Do an inventory of your assets.

This will include your savings accounts, real estate, cars, insurance plans, shares of stock, your retirement fund, and all others as the case may be.

List down your debt.

This will include your credit card debt, amortizations on real estate or car purchases, and other personal debt that you may have taken.

Examine your expenses.

Based on your past months’ expenses, determine how much you spend on different things: utilities, rental, education, transportation, entertainment, etc. This will be helpful as you make a financial plan that will help you achieve your goals.

Your financial strategy:

Looking at your goals, now expressed in peso terms, against your current financial profile, project how much you need in savings or investments to be able to have these in the future. For this, you would need an investment plan to grow your wealth, and a spending plan, to manage your expenses.

Take note of your current life stage. Your financial strategy is determined by your current life stage—you may have just started working, you may have just had a baby, or you may be just a year away from retirement. This may also determine your risk appetite, which refers to your willingness to invest in high-yielding, but high-risk investment instruments.

Seeing your goals and financial net worth on paper will make it easier for you to design a financial strategy. If you need help in coming up with a financial plan, consult a professional financial planner. Banks and other financial firms would be glad to provide these services to you, and help you on your path to a more secure financial future.

Happy planning!

source: www.abs-cbnnews.com

How to teach your kids the value of money

MANILA, Philippines - Financial experts today encourage parents to start talking to their children about money as soon as they are able to count. You can take advantage of everyday activities to introduce the topic so that your children will not see it as concepts that they need to remember or memorize, but rather useful information.

A trip to the supermarket, for example, can be a very enlightening experience for children as they learn that there is actually a cost to the items that fill up their pantry.

Before your outing, why not share with them how much money you have allotted for groceries as well as a list of items that the household needs. Ask them to pick out their choice of specific items, say different kinds of cereals, and then explain how you decide on the final purchase based on the quality of the product and the family budget.

Apart from shopping for food, there are many other teaching moments in everyday events. Here are some of them so you can take advantage.

1.    Buying a new pair of shoes for your child?

They will likely go for a brand whose advertisement they saw in a magazine or watched in television. Their pick can also be based on style, or what is popular. Talk to them about the value of comfort and durability, and how all these determine the product price and ultimately your selection. You can also take about Needs versus Wants. The style they Want is nice but their Need may require a pair of shoes that will last for the school year.

2.    When you’re filling up for gas, direct their attention to the gas pump meter showing how much a liter of gasoline costs.

Translate that cost into everyday things so that your child will have a better idea about the value of money. Point out that a liter of premium gas which costs about P50+ can buy a kilo of rice (with change), 10 medium-sized eggs, two ice cream cones, or two rides in an amusement arcade.

3.    Even visits to the arcade can be a learning opportunity.

If it’s a reward for good grades, you can talk about having a budget and why they should stick to it. Once you load their card, you can advise them to check out all the amusement options and that they have to prioritize because their reward will not cover all the games. It’s good to already tell them at that point that the budget is set, so no running back to you after a few minutes for additional load.

4.    When you’re looking at making bigger purchases like a new television or sofa for your home, you can discuss the importance of saving up for these and why your choice will have to consider everyone’s needs, not just your personal preference.

5.    Bring your child with you when you have to do bank errands.

While waiting in line, explain to her or him the concept of saving and how money kept in the bank earns interest. Show them your passbook or latest statement, and point out how your money is growing every day. You can also talk about the other people in the bank, and how saving is part of their lives too.

But perhaps, one of the most effective ways of teaching your child about the value of money is giving her or him some form of control, say an allowance; their entry into grade school is probably the best time to do this.

Give your child an allowance in small denominations, explaining to him or her what such amounts can buy. Get a piggy bank and encourage them to allot a sum from their allowance for savings. Help them set goals. When they reach a certain amount, for example, advise them to transfer their piggy bank savings into a real bank, so that it can earn interest.

Some parents provide incentive by giving an appropriate cash bonus when their child reaches a target saving amount. At the same time, allow them to make spending decisions. You can offer your wise counsel, but leave it up to them to make the final decision. If your son has set his heart on buying a limited edition comic book, or your daughter will buy a set of novelty pens, let them do so. They will treasure it even more because they know exactly how much they had to scrimp and save just to get it.

The important thing is to keep the conversation going. By being honest and open about money, you demystify the concept, making your children feel more comfortable with the idea of spending, saving, and eventually, investing.

Last but not least, all your lessons will come to naught if you do not practice them yourself. Children learn best through example. They will likely model behavior that they see often in their immediate environment. So if you are not careful about how you spend your money or are not keen about saving any, then your kids may just do exactly the same in the future. Yes, teaching your kids about money means learning a few lessons yourself.

source: www.abs-cbnnews.com

5 Reasons Why You're In Debt Up To Your Eyeballs

We've all seen the LendingTree commercials where the guy sarcastically says: "I'm in debt up to my eyeballs. I can barely pay my finance charges. Somebody help me!"

If that sounds like you, read on. Here are a few reasons why you're swimming in debt and what you can do about it.

No spending plan. Without a plan or financial goals, you're headed down the road to digging yourself deeper into debt. A spending plan establishes goals and principles. If your goal is to save $20,000 for an emergency fund, then you need to avoid more debt along the way. Since debt must be paid back, it would take away from funding the $20,000 goal.

Keeping up with everyone else. Your neighbor just pulled into his driveway with a new Ford Mustang, and you immediately think about buying the new Infiniti luxury sedan. That's what we know as keeping up with the Joneses. But it doesn't stop there. Your sister tells you she just picked up the latest purse in the Louis Vuitton spring line, and you think about that Chloe bag you didn't really want until now. We do this to ourselves because we don't want to feel we're missing out on the finer things in life. But what we miss is the reality of the Jones' financial situation. If they're living on credit, you'd never know because you're so blinded by their bling. Take a step back and assess the real reasons behind your newest impulsive purchase, and then take action.

Lack of discipline. Just as you begin to think about purchasing a new car because your neighbor recently bought one, hopefully you have enough restraint to consider the impact on your spending plan. If your goal is to get out and stay out of debt, then discipline will play a major role in your daily financial life. Financial discipline will help you assess your goals and consequences when faced with a decision that could potentially take you off the plan. Discipline is your friend. Embrace it.

Buying a new car every few years. Remember the car your neighbor bought? Well, let's just say you're about six months from paying off your current vehicle, but you've now convinced yourself that it's time to get a new car because "I deserve it." This is a classic reason why so many people dig in and remain in debt. Most people relish the idea of not having a car payment, and others relish the new car smell and feel every few years. You must decide what's more important to you -- living a debt-free life or cruising in the latest model.

In your world, credit is king. You enjoy a little retail therapy because you've had a hard week.But your bank accounts are overdrawn. Not to worry, you've got good ole MasterCard coming to your rescue. The problem? Your cards are mastering you and not the other way around. You've become so addicted to the plastic that you hardly recognize your spending plan anymore. As with the guy from the LendingTree commercials, your life is largely financed by your debt. But it's driving you crazy and will cause many sleepless nights ahead.

Here's the thing about getting out of debt: It requires a strong but realistic spending plan that you can stick with through the end. This is a "living" plan that will change along the way, but that's the beauty of it all.

Forget keeping up with everyone else, and cut up your credit cards. Spending your time trying to impress people who don't factor into your bottom line is a waste of money and will impede your financial goals. Assess your financial goals, and decide if having a new car is truly worth the money spent. Remember, it's no fun being stressed because your finances are out of control. Take control now, and enjoy the fruits of your efforts along the way.

source: dailyfinance.com

Four Real Folks Who Overcame Their Debt

If you’re one of the millions of people engrossed in debt, it may seem like financial freedom is a distant dream.  The number of individuals living with debt in the UK has grown exponentially. In part, this is because of rising living expenses and unchanging wages. Based on a recent study, one in three Britons is in debt. That equates to £1.424 trillion in outstanding personal debt, this year alone. Although these statistics may sound menacing, it is possible to reduce and even eliminate your debt.  To prove that it’s possible, here are four average people who won their fight with debt.

Carrie Smith

Carrie Smith’s financial wake-up call occurred the instant she acknowledged her situation. At 28, she found herself with a staggering £9,300 in credit card debt. Eager to regain control of her finances and financial future, she managed to pay it all off in a year through hard work and strict budgeting. Carrie’s approach was to start with the cards which carried the highest interest rates. Most people immediately tackle the cards with the highest balance, but it’s wiser to evaluate the interest rate fees on a monthly and annual basis because that’s where you’ll be hit the hardest. To stay on track Carrie even made a timeline of her progress using a payment tool. And of course, she had to cut her frivolous spending– holidays, salon visits, cable, and dining out. The spending cuts were temporary, but the results enduring long past that year, Carrie points out.

Shari Gordon

Armed with a Master’s degree and a mountain of student loans to accompany it, Shari was unsure how she would repay the £20,000 she owed. She admits that at first she was in debt denial. When bills arrived, she barely paid the minimums. She soon realised that this approach was making no real headway so she broke down the balances into more manageable amounts and created a strict budget. In time, she was promoted at work and started looking for side jobs to make some extra money. It wasn’t easy, but Shari paid off her debt and now advises others on how to do the same.

Grayson Bell

Grayson Bell had dreams of owning his own business with his wife Jane. To bring his dreams to fruition, Grayson financed £33,000 with four different credit cards. When the economy took a turn for the worse, Grayson’s business unfortunately went under, leaving him with no substantial cash flow. As the debts piled up, Grayson continued to spend in hopes that the business would eventually recover. Two years later, his finances were still in ruin so he made the conscious decision to seek help. Grayson opted for debt consolidation as a way to fast track his financial recovery.  Consolidated Credit provided him with the tools necessary to create a budget, lower his balances, and pay off his cards. Today he’s proud to be debt free and on the road to building a new business.

Kate Flanders

Maxed out and looking for a way out, Kate was in over her head by age 25. With very little in her bank account and bills pouring in month after month she did what most people dread—moved back in with her parents.  Within a matter of month, she eliminated all the shopping trips, weekend getaways, and drinks with friends. After 6 months, she saved enough money to pay off her cards in full. Kate’s advice to people suffering from debt is to ask for help sooner rather than later.

Whether you have to create a budget, cut your spending habits, or seek debt consolidation it’s important to get a handle on your debt. It won’t resolve itself so it’s your responsibility to do your part in management and elimination.

source: everythingfinanceblog.com

The Real Truth About Debt Consolidation

The truth of the matter is that debt consolidation does not make your debts go away. In fact it doesn’t do a lot to help resolve your debts. It does nothing to improve your spending habits which got you into debt in the first place. The debts are still there and so are the same old bad spending habits.

You can never get out of debt by creating more debt. All you do with most debt consolidation loans is dig a deeper hole. Contrary to popular belief getting out of debt is never quick or easy which is the promise of most debt consolidation companies.

Many people think that their debts are the problem. Wrong! Debts are the symptom of bad spending habits. People with a lot of debt overspend and never save. Most financial coaches will never recommend debt consolidation because it simply does not work.

The Statistics Of Debt Consolidation

Most debt consolidation companies will tell you that approximately 75% of people that have their debts consolidated are back into debt within a year. So why does this happen? Because many people after getting their debts consolidated still have not corrected their spending habits and are still overspending and not saving for the “unexpected events” in life. Nothing has been corrected.

Debt consolidation loans are tempting since they have lower interest rates and lower payments than traditional loans. However research has indicated that the lower payments are not actually lower. The payments appear lower because the term of the loan is extended longer than traditional loans. Obviously if you stay in debt for a longer period of time you pay less, however, what most people don’t realize is that you are also paying the lender more money in the long run.

An Example Of Debt Consolidation

For example, if you are in debt for $30,000 which includes a loan for $10,000 with an interest rate of 12% and a 4-year loan for $20,000 with an interest rate of 10%. The $30,000 loan has a monthly payment of $517 while the $30,000 loan has a monthly payment of $ 583. That’s $1100 a month. You go to a debt consolidation company and they tell you that with them you will only have to pay $640 a month with an interest rate of 9%. How they can do this is by negotiating with your creditors and rolling all of your debts into one. Of course anyone would jump at the chance to pay less every month. What they never tell you is that now it will take about 6 years to pay off the loan. That still doesn’t sound too bad until you take the time to understand how long that actually is and that now this loan will take $46,080 to pay it off instead of $40,392 for the first two loans. In reality you just paid $5,688 more than you would have before. Now you know the truth about debt consolidation that they are in it for the money not to help you out of debt.

The Only True Way To Get Out Of Debt

The answer isn’t in the low interest rates. The answer is a complete makeover of your finances and your spending habits. You need to write down how you are going to spend your money and commit to it. The next step is to get a second job and pay off your debts and live on money much less than what you bring home. It’s not hard to do but it can create a lot of tension and be an emotional rollercoaster. Your best option is to consult a financial advisor that can walk you through the process.

source: 20smoney.com

The cost of beauty: How much is enough?

MANILA, Philippines -- How much should one spend to make one's self beautiful? Is there a way to gauge if the beautifying efforts you make are already excessive?

"There's always a too much [when you] pay too much for beauty [when] there are also other areas we can spend our money for," Charmagne Garcia-Laconico, beauty editor at Metro Magazine, told ANC's On The Money.

Laconico explained that it is important to cover the "basics" first such as cleansing needs or beauty products before moving on to the more expensive surgical operations like liposuction or lip collagen injections.

"The question of 'what is essential' is very tricky. Some may find it (liposuction) very essential as it adds to their confidence level or they feel better themselves," Laconico noted.

Trying to look good or taking time and effort to present one's self helps us create a good impression in front our co-workers, supervisors or clients.

She advised men and women to carry their own "kikay kits" to work which will include basic products such as a cleanser, toner and a moisturizer.

"First and foremost, it's the skincare that is really important. It doesn't have to be really expensive, just use whatever works for you," Laconico said.

A "decent" kit can cost P1,500 or to more than P3,000 for the basic cleansing products, she noted.

Women, however, should also have their make-up products with them and Laconico shared one should have concealer, foundation, eyeliner, mascara, eye shadow, blusher, and lipstick.

These make-up products can amount to P3,000 to more than P10,000, depending on the brands you buy, she said.

"But the good thing about this is you don't buy this every month and you shouldn't," Laconico said.

She stressed the products should address one's concerns such as oily skin or flaking.

"You always want to look good. It's not because you want to be pretty or anything like that, it's because you want people to perceive you as someone who is taking care of herself which translates to how you deal with your work, how you attempt the details," Laconico said.

source: www.abs-cbnnews.com

Drowning in credit card debt? Here's Suze Orman's advice

MANILA, Philippines - Personal finance guru Suze Orman on Wednesday offered some advice for Filipinos who can't control their urge to spend and end up with credit card debt that they can't pay.

Before buying anything, Orman said you should ask yourself this: Is it a need or is it a want?

"If it's a want, walk away. If it's a need, you buy it. If you live below your means... and purchasing only your needs and walking away from your wants, you will find money to save," she said in an interview with Karen Davila on ANC's Headstart.

According to Orman, the first law of money is "to live below your means, but within your needs." The best-selling author and motivational speaker said people should not make the mistake of thinking the goal of life is to buy things.

"The goal of money is for you to buy your needs to feed yourself, feed your children, buy a roof over your head that doesn't blow away... That's the goal, so you can sleep at night, not to buy five watches," she said.

How to get out of credit card debt

The most common "financial sin", Orman says, is credit card debt.

"Debt is bondage. You will never have financial freedom if you have bondage," she emphasized.

On ANC's Headstart, Orman took questions from Filipino callers. A Filipina asked the "money lady", who hosts CNBC's The Suze Orman Show, for advice on how to pay off her credit card debt.

"Before you save money, before you invest, your number one goal is to take whatever extra money you have and pay off that credit card debt because at 36% (interest), you are digging a hole deeper and deeper," she said.

But the more important question is how a person gets into credit card debt.  Orman noted people who spend more than what they can afford are usually insecure.

"When you spend money you don't have, what does that say about you? It says you care about these things that money can buy more than you care about having money in a savings account," she noted.

"It means you care about these things and why do you care? So that other people will look at you, 'she has a lot of money,' 'look at his watch,' 'look at her clothes'. Whenever you see somebody with credit card debt, I already know it's a self-esteem issue. You can't fix a financial problem with money ever. You should first fix why a person spends more than they have. Until you fix that, they'll just get into credit card debt over and over again."

Save, save, save

Since the savings rate here is still quite low, Orman hopes to encourage Filipinos to save more. She noted one should save a minimum of 10% of one's salary, and have an emergency fund in case one gets sick or fired.

"You want to make sure you have a savings account that has at least 8 months of what it would cost you to live for your everyday needs," she said.

Orman said one should also start investing money every month on a mutual fund. "After you've done that, every month set aside a specific amount and invest in that fund... It's peso cost averaging, that way when the fund goes down, your pesos buy more shares. When the fund goes up, your pesos buy less shares but over time you've averaged the cost of the share with your pesos and you won't lose money," she said.

Dollar or peso?

Some Filipinos have a habit of saving their money in dollar accounts, instead of peso accounts. Orman said Filipinos should invest in pesos, especially if the peso continues to strengthen.

"At this point, I would be saving in pesos. If they save in dollars, and the peso continues to go up, they will lose money in the long run. You have to believe in your country. You have to invest in yourself. If you don't beleive in PH, in your own peso here, what does that say? I would be investing right here in this country. Forget the US," she said.

The best-selling author had high praise for the Philippine economy. "This is a country that is starting to grow. The economy is growing. The stock market is booming. So the whole country is doing great but its people are not doing great yet," she said.

Before leaving the show, Orman had this message for Filipinos: "Can you just learn to be safe with your savings? Can you want to be safe? Can you want to be secure? Can you put yourself first once and for all over the things that money can buy?"

source: www.abs-cbnnews.com