Finance and Refinance

The entire world is in debt. Every individual is in debt. Every company works on debt.

The financial teachings say that you must use other people’s money to evolve.

“Cash only” strategy is one that can save you right now. I read nowadays that with this crisis, the old school capitalism is dead, and it will be followed by an era of savings.

I personally think that the image of the crisis is too fresh in our minds, so people will be cautions with their expenses only on short term. An middle term they will be lured to enter again in the marketing/buying spiral. Cash only strategy helps you make a safe heaven around you and your finance. The credit card is a bad invention, that let simple, stupid people (which count for 95% of Earth population) to enslave themselves, buying on expense of their future life.

Actually, is a comparison that you can make with selling your soul to the evil one . You get instant reword on the expense of future life Using cash only can help you detox of this unusefull habit. Try for a week to pay everywhere only with cash. Sensing the hardcore cash, will make you more responsible, will make you more aware of the limits of your financial strength. Try hide your credit cards somewhere in the house and fight the instinct to use them. Also, using only cash, you will make a lot of savings.

You will not pay interest rates and commisions, and you will spend less. Because it will be more difficult for you to VISIBLY spend, versus credit card spendings, which are thin air… USE CASH ONLY for a week. And then use cash as much as possible. And after that, use a debit card, not a credit card, because debit card will not let you spend more then your limit

CASH ONLY strategy is good to survive during a recession, like this one, and make you a happy life.

Nowadays, savings account interest is dropping like a rock. The FED is trying to lower the interest, in order for companies to take loans, so the economy will start rolling again. Of course, together with the interest rate for loans is dropping the savings account interest. Here you have some of the best interest from the market:

- FNBO Direct Online Savings Account decreased to 2.15%

- ING Direct Orange Savings Account decreased to 1.65%

- E*TRADE Bank Max-Rate Savings Account decreased to 1.95%

- HSBC Direct Online Savings Account decreased to 1.85%

The funny part is that in Central – Eastern Europe, the savings account interest are extremly high, on very strong currencies. For example, in Romania, the figures are very high and big US banks are keeping large deposits here:

- Volksbank Romania – 14,5% in RON and 6% at EUR

- BRD Societe Generale - 13,75% RON and 6,75% at EUR

Also, if you invest in state bonds, you will get a guaranteed 20% interest rate, which is also huge. The need for cash in these countries is so big, that are keeping these enormous interest rates for saving accounts.

My suggestion is:

1. if you really want to keep the money somewhere, try to use the overseas accounts that are guaranteed. In Romanian for example the state guarantees 50,000 eur each saving account. Other countries have bigger limits.

2. Try to put the money to work. Invest in future flows of capital. You will never be rich if you keep you money in the bank. Actually, you could loose money due depreciation. Did you know that since 1920 until today US Dollar lost 95% of it’s value?

Today’s savings account interest is not worth to keep the money in the bank, unless you really don’t have anything else better to do with them.

Loan til payday is an easy way to get some money, on really short term. There are hundreds of credit companies that offer this service.

If you ask for a loan til payday, maybe you are in the following categories:
- you need a loan to some stupid stuff
- you need the loan to buy something on short term, that anyway you would have bought it at the next payday
- you need to invest in something

If you move down through thew categories, then you’ve got my respect. I hate to see people that are stupid, they are enslave themselves, making loans for stupid things.  A loan til payday is good ONLY if bring some real added value, in terms of cash. if you take a loan til payday to spend it in mall, on chicks, clothes and vacations, then you deserve your faith.

A loan should ONLY be taken if you will invest it properly, not spend on stupid things. You know, there is a movie with Jim Carrey (Dumb and dumber). They had very few money and Jim Carrey partner said “don’t buy stupid things”. Ofcourse they spent all their money on jokes… This is very similar with a mis-use of a loan til payday. So be careful on what you are spending your debts.

TO refinance or not to refinance? This is a dilemma.

The idea is simple. You must do calculation all the time, if you already have a loan. Because:

- conditions are changing all the time to existing loans (interest rate, commissions, etc)
- conditions are changing all the time to NEW loans

So every month you should check to see where are you standing and if it worth to make a refinancing to the present loans.

Refinancing is a simple operation. You just take a new loan, from another bank (or the existing one) in order to refinance the existing ones. Refinancing can be done together with debt consolidation (if you were a champion in taking too many loans:) )

When it pays to refinance?
- when conditions on the market changes and you end up with credits with higher interests rates
- when you need lower/higher rates to your existing loans, due various terms. Let’s say your incomes dropped due recession, and you want to cut 33% from your rate, in favor of increasing the loan duration, from 10 years to 30 years, let’s say.

At what aspects you should be careful:

- never refinance if you pay more
- calculate all the costs, not only the interest
- check also the refinancing fee. There is a possibility to go for a zero refinancing fee option, but you will pay definitely more month to month

That’s it for now. I hope this several advices will help you

Statistics say that an average employee have money savings to keep him/her alive for an average of three months. Some barely live from one paycheck to another, some succeed in saving more money, so in case of emergency, they could live  for a longer period of time until they look for help.

Paycheck loan is a form of credit that offers an amount of money to the employee until the next paycheck. The cool thing is that credit cards with their ever stretching limits are a good replacement for the paycheck loan. First, the paycheck loan is usually no bigger then the salary itself. And on a credit card you can borrow/use the money for a much bigger limit.

The paycheck loan is designed to help people to have a bigger mobility in times of shortage. However, my suggestion is to use it carefully. Don’t take a paycheck loan just to go on vacation or to spend it on stupid things. After all, it a month from your life thrown away for… what? For a new stereo? Or for spending on some clothes, with absolutely no reselling value?

Try to use the paycheck loan only for smart spending. Basically in investing. And investing in things that brings you FUTURE SOURCES OF INCOME!!!! This way you can evolve from financial point of view. And only if the earnings you get are higher then the interest rate you pay for the paycheck loan

When I will have more time, I will put a list with this kinds of loans and more details about each ones. Until then, good luck.

There is no such thing as a free lunch.

How stupid are most of the people that ask for a credit (especially quick loans) and then cry because the interest rates are too high, the total payment is almost double then the credit itself, etc?

The capitalist bastards that offer quick loans and rip off poor victims. What a cliche, don’t you think?

Quick loans nowadays you can find all over the net. There are tons of providers. Just sign the contract (electronically) and they will send in your account the cash.

Of course, greedy and mostly stupid people that take these loans are not paying attention at all conditions, and event they do, they do not calculate the opportunity of getting one of quick loans. Do they really need? Or is for stupid things? Hell knows…

Always there is a trade off. Do you want quick loans? Then the costs will be higher. Do you want normal (as time) loan? It will be easier to bear the costs. The rule of thumb is: convenience cost. Quick means more expensive. Are you sure you want a quick loan? Maybe 500 USD you can borrow from your parents/friends/coworkers.

What do you think? Still interested in quick loans?