Nextwave Finance http://www.nextwave.org Personal Finance Commentary Sat, 31 Jan 2009 00:00:10 +0000 http://wordpress.org/?v=2.6.2 en Wal-Mart CEO: Recession Has Changed Consumers for the Better http://www.nextwave.org/budgeting/wal-mart-ceo-recession-has-changed-consumers-for-the-better/ http://www.nextwave.org/budgeting/wal-mart-ceo-recession-has-changed-consumers-for-the-better/#comments Fri, 23 Jan 2009 00:44:47 +0000 alexis http://www.nextwave.org/?p=768 Suggesting that retailers “are closer to working men and women… than any other industry,” Wal-Mart CEO H. Lee Scott addressed the public once more in his farewell address after ten years at the helm of the retail megastore.

Scott offered a candid take on the country’s current economy and where it’s going. He’s confident that the first half of 2009 will bring more of the same struggles for both retailers and consumers, and it’s his belief, as well as that of many economic specialists, that the second half will experience only a slight upturn, if any change occurs at all.

But that may not just be a result of where the economy stands currently. This recession has hit millions of people very hard, and Scott is quick to suggest that it may have had a very long lasting effect on the way people handle their spending habits.

“I’m not necessarily convinced that just when all this liquidity and things hit, if you’re going to have the same immediate desire to go back to consumption and debt,” the departing CEO offered. “There are a lot of young people who have learned what it’s like when you are living on the edge and the bad times come.”

It’s a sentiment that’s easy to believe, especially after processing the fact that Wal-Mart’s biggest jump in sales since the recession began has been in frozen dinner meals, a sign of short budgets and shorter free time.

American’s who aren’t used to keeping a close eye on their wallets have been forced to make a significant amount of changes in the past year, and it’s likely that they’ve either gotten used to their shorter-spending lifestyles or they’ll want to save up in order to more comfortably survive another economic breakdown.

With savings at a negative percentage across the country, it will likely take some time before Americans can shore up their bank accounts.  Will you be turning to Wal-Mart for the sake of your wallet?

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]]> http://www.nextwave.org/budgeting/wal-mart-ceo-recession-has-changed-consumers-for-the-better/feed/ Princeton Review: Which Colleges Are the Most Affordable? http://www.nextwave.org/budgeting/princeton-review-which-colleges-are-the-most-affordable/ http://www.nextwave.org/budgeting/princeton-review-which-colleges-are-the-most-affordable/#comments Wed, 21 Jan 2009 22:46:46 +0000 Chase http://www.nextwave.org/?p=760 Just because you’re in a bind financially doesn’t mean that you’ve got to settle your collegiate aspirations. The Princeton Review’s “2009 Best Value Colleges” report suggests that there are a number of extremely reputable colleges and universities, both private and public, working hard to help qualifying students pay for their educations.

The rating system starts with the sticker price of each college’s tuition, a figure that includes required fees and room and board, and then subtracts the average gift aid awarded to students.

Next, it puts that figure into an equation that computes “an algorithm based on the idea that bang for your buck means excellent academics, growing financial aid and/or low tuition. Simply put, it means value.”

The school’s selected in the report either offered a very affordable tuition sticker price from the get-go while still delivering a quality education, or the school made the higher cost of tuition fairly affordable to anyone accepted.

Princeton Review’s Top Five 2009 Best Value Colleges
Public:
1. University of Virginia – Charlottesville, VA
2. New College of Florida – Sarasota, FL
3. College of William & Mary – Williamsburg, VA
4. State University of New York at Binghamton -  Binghamton, NY
5. Florida State University – Tallahassee, FL

Private:
1. Swarthmore College – Swarthmore, PA
2. Harvard College – Cambridge, MA
3. Princeton University – Princeton, NJ
4. Rice University – Houston, TX
5. Yale University - New Haven, CT

Take a look at the complete lists, separated by public and private, here. You may be surprised by some of the schools that you previously thought to be out of your budget.

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]]> http://www.nextwave.org/budgeting/princeton-review-which-colleges-are-the-most-affordable/feed/ 5 Reasons to Buy a Home Now http://www.nextwave.org/budgeting/5-reasons-to-buy-a-home-now/ http://www.nextwave.org/budgeting/5-reasons-to-buy-a-home-now/#comments Tue, 20 Jan 2009 23:24:08 +0000 Chase http://www.nextwave.org/?p=753 There’s a brief exchange I had a few years ago with a friend’s father that I’ll never forget. We were sitting outside a Washington DC lunch spot talking about what I was going to do when I got out of college when I asked Mark, who’s been a real estate developer in Maryland for years, whether or not real estate would forever exist as a lucrative business.

His answer was short, but it explained every inquisition one could have about the real estate business: “God’s making more people, but He’s not gonna make any more land, okay?” Yes, things were looking good for the real estate business.

That verdict’s since changed, and the real estate business’ downfall is an occurrence that can be directly attributed to that one piece of the puzzle that Mark omitted: money. There are too many Americans who simply don’t have enough of it, and with it, there’s a much greater percentage of people now that have significantly less money than they did five years ago.

Currently, the American housing market is in disarray. Last year saw an 81% jump in home foreclosures as 861,664 families were forced to move out, and there are thousands of Americans wondering whether it’s best to buy a home or rent until the situation resolves itself. But misfortune for some can lead to opportunity for others, and those who are in question should consider these five truths that encourage home buying during this time of conservative spending.

Mortgage Rates Are At All-Time Lows

Mortgage rates reached their 2008 apex in July, when the long-term average rate hovered just below 7%. They’ve since plummeted to below 5%, and there’s strong evidence supporting the idea that mortgage rates could dip to an even lower figure before we reach the third quarter. This makes financing your home significantly easier, as the money you spend over a thirty year period paying off your house gets lowered to something you may actually be able to afford.

Less Buyers Means More Negotiating Power for You

Those real estate agents still need to sell their homes, and the fact that there exists less competition on the homes you’re considering could translate into better savings for you. Be smart when talking to agents, and remember that the struggling market has given you the upper hand in determining price.

Desperate Times call for Desperate Measures for the FHA

The Federal Housing Administration is offering 3.5%-down mortgages to qualified buyers despite the fact that the subprime loans these types of buyers would be borrowing from have already dried up. Last year, over 630,000 individuals bought homes in part because of the FHA’s low down mortgage rate, and there are many experts who believe that FHA loans have been the driving force behind real estate sales recently. Applying for an FHA loan is rather easy. Just follow these simple instructions.

Newfound Guidelines put on Fannie and Freddie

According to CNN, one of the major contributors to the rapidly increasing price of homes in the past few years was that home appraisers, pressured by loan officers and mortgage brokers, would inflate home values. As a result, homebuyers would either end up paying more or would be put in a situation in which they couldn’t handle their mortgage payments.

The Federal Housing Financing Agency recently announced the Valuation Code of Conduct, which will take effect this May and serve as an attempt to improve the reliability of appraisals for mortgages sold to Fannie Mae and Freddie Mac. Under the VCC, lenders are now prohibited from influencing home values appraisers may come to.

Home Prices are Dropping

Home foreclosures have a close relation with home prices, and the fact that so many people have been forced to foreclose make it easy to predict that the price of homes across the country have dropped a great deal. Prices have dropped by 30% in such metropolitan cities as Los Angeles, San Francisco and Miami and 40% in Las Vegas and Phoenix.
Nationally, prices have fallen more than 21% in the past year, and the national average has gone down each of the last 27 months.

Experts indicate that we haven’t seen the bottom yet, but planning for that bottom and hitting the housing market at the perfect time may be more difficult than worth your while. Keep a close eye on the national average and the S&P/Case-Shiller 20-city Home Price Index, but don’t rule out diving into the housing market before a talking head on television tells you that home prices have reached rock bottom.

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]]> http://www.nextwave.org/budgeting/5-reasons-to-buy-a-home-now/feed/ Recent Gas Price Hike Could Forecast the Future http://www.nextwave.org/budgeting/recent-gas-price-hike-could-forecast-the-future/ http://www.nextwave.org/budgeting/recent-gas-price-hike-could-forecast-the-future/#comments Tue, 20 Jan 2009 00:58:55 +0000 alexis http://www.nextwave.org/?p=741 Gas prices rose for the sixth consecutive day Monday, putting the national average at $1.842 a gallon. It’s a figure that’s 3 full cents higher than Friday’s figures.

Gas Comparisons Over the Last Year
Despite the temporary jump in prices, gas is still selling for 39% of what it sold for last January and 55% less than this summer when gas prices reached record national highs of $4.114 a gallon on July 17. Only Alaska, Hawaii, California and Washington currently have gas price averages above the $2.00 mark.

Oil by the Barrel
In spite of gallon gas prices that are creeping back upward, the price of oil by the barrel has remained low. Currently the price of oil according to OPEC is at $34 dollars a barrel, two dollars less than it sold for last Friday, and resolutions to various international disputes imply that the cost of an oil barrel may drop a bit more before it starts to go back up.

Still though, Jeffrey Currie, a commodities analyst at Goldman Sachs, foresees the price of a barrel will hit $65 again before the year is over. To keep things in perspective, oil was selling at $147.27 a barrel in mid-July when prices had reached such an apex.

Future Gasoline Figures
The inevitable rise in oil prices will naturally force the price of gasoline back up to a national average of more than $2.50 a gallon in the near future. It’s a prediction that’s further supported by OPEC’s eventual realization of their goal to cut current production of oil by 4.2 million barrels, taking it from 29.2 barrels a day down to 25 million barrels.

Obviously we can’t tell you to buy your year’s share of gasoline now, it’s a pretty difficult thing to store en masse, but these figures should serve as ample notice that the days of cheap, cheap gas may be on their way out. The face of gasoline is changing, and we’re set to start budgeting for the change now.

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]]> http://www.nextwave.org/budgeting/recent-gas-price-hike-could-forecast-the-future/feed/ Quick Exchange Rate Tip for Foreign Travelers http://www.nextwave.org/banking/quick-exchange-rate-tip-for-foreign-travelers/ http://www.nextwave.org/banking/quick-exchange-rate-tip-for-foreign-travelers/#comments Tue, 20 Jan 2009 00:50:37 +0000 DeAndre http://www.nextwave.org/?p=738 If you’re financially stable enough to have trips to foreign countries planned in the coming months you might want to be keeping an eye on the foreign exchange rates. The value of the American dollar has been in steady decline for the past few years, and current figures put the U.S. dollar in a very unfavorable spot.

When stacked against the euro, the dollar was valued at $1.324 on Friday, $1.332 on Wednesday, and $1.318 on Tuesday.  Against the pound, the dollar was valued at $1.483. Ideally, the dollar would have a value of less than one when compared to foreign currencies.

Though the dollar has been losing strength to its European counterparts for the last few years, it’s the falling economy that’s causing the recent drops in value. As Americans unwind their shorter-term investments and take the profits, the confidence of investing in the U.S. and our money goes down.

Many American investors see a liquidated dollar as a safe alternative to more economically sensitive assets such as stocks and high yielding currencies. While that dollar’s value internationally can fluctuate on a small scale independent of your actions, keeping your holdings in the stock market puts your assets entirely in the hands of the public.

That truth doesn’t bode well for your travel plans, but you can still make the most of your trip if you’ve prepared yourself in advance. The internet is filled with great exchange calculators that make your conversions easy to understand and plan around. Find one that’s being offered from a reputable source, and remember that the closer
the American dollar’s value is to zero, the better.

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]]> http://www.nextwave.org/banking/quick-exchange-rate-tip-for-foreign-travelers/feed/ Are Republicans Risking Economic Collapse to Maintain Control? http://www.nextwave.org/economy/are-republicans-risking-economic-collapse-to-maintain-control/ http://www.nextwave.org/economy/are-republicans-risking-economic-collapse-to-maintain-control/#comments Sat, 17 Jan 2009 23:55:10 +0000 alexis http://www.nextwave.org/?p=775

Just months ago McCain was dogging Obama as non-partisan. Just weeks ago Republicans were stressing the need for both parties to work together in order to pull us out of our financial downward spiral. Seems they have short memories.

The first jab came just minutes after the presidential oath was flubbed. The Republican base was quick to latch onto the ridiculous Fox News claim that the flub somehow discredited President Obama’s presidency. First red flag.

Now as our economy struggles, and many still reel from Bloody Monday, Republicans are holding up economic recovery plans that Team Obama started working on long ago so that no time would be wasted. Huge waving bright red flag.

Republicans are Pushing the Same Old Ideas Then Crying Foul

Republicans are new to the idea of not being the party in power, but what are they willing to risk to keep from giving up the ghost?

I understand that Republicans are now a check and balance to the Democratic Party, and that is a good thing. I wish Democrats could have had a better chance at the same from 2000-2006. But when does that check and balance become more of a roadblock that’s built before anything ever gets there?

Case in point, the Stimulus Package that was just passed Wednesday didn’t receive a single Republican vote. Their claim is that they were left out of the process, suggesting that the new administration is being as partisan about politics as the last one. Hmmm, let’s see about that shall we:

· Republican Congressmen were given the same opportunity to submit amendments and a substitute proposal. If they didn’t take that opportunity then it’s their fault for sleeping on the job. Their state’s voters might want to look into that.

· President Obama had a special meeting specifically with Republican House Members so he could hear what they had to say and so that they could give their input. I don’t ever recall Bush extending the same offer to Democrats.

· As Pelosi put it, “I think when you lose the argument on substance, on policy. . . you talk about process and you talk about personality.”

Attention Republicans: It’s a New Administration

Pelosi’s point hit it home. The Republicans were shooting down the Stimulus Package without giving any solid suggestions that would work for our immediate needs. Worse still, they seemed to be completely overlooking those in most need, the poor.

For one thing, Republicans keep bringing out the bullhorn for tax cuts, which is expected because after all they’re Republicans. However, they seemed to have ignored what history has taught us; taxes aren’t going to stimulate the economy enough, at least not under our current circumstances.

Here’s why:

· They reduce government revenue thus increasing the national deficit which we all know is very bad nowadays as it is. Plus, the loss of revenue leaves the government with an inability to keep providing public programs that are up to snuff.

· Though tax cuts have worked to stimulate economies in the past, success stories like Ireland in 1986 were based on the fact that the government had reduced government spending prior to the tax cut. That’s not the case in the U.S. unfortunately.

· Tax cuts are never going to be fair all around. If cuts are made equally across the board then those that pay the most will get the most back, meaning those that need help the most will see the smallest benefit. If tax cuts are based on the vertical system where income is a measure to the amount of taxation, then the rich will pay more so that the poor can see more of a benefit. I don’t think this is horrible, but I’m not filthy rich and sensitive to the needs of the less fortunate.

· Tax cuts, like the one Bush enacted in at the cost of $150 billion, don’t do enough to generate consumption. Lack of consumption is at the heart of basically every recession, as it is now. Because so many Americans are in debt and struggling, the money saved with another tax cut is likely to get saved or used to pay down debt, just like the Bush tax cut stimulus idea.

· Tax cuts won’t create jobs. Even if there’s a tax cut, if people don’t have jobs then tax cuts don’t matter and consumption will definitely not increase.

If Republicans want to see their policies put in place then they need to come up with some new ideas, and make them ideas that are truly going to work for the problems we are presently facing. And as far as partisan mentality, not one of them broke from the pack to vote for this stimulus package. That’s quite telling. The only question left to ask- is their partisan actions risking the collapse of the American economy and at what cost to the rest of us?

]]> http://www.nextwave.org/economy/are-republicans-risking-economic-collapse-to-maintain-control/feed/ Maximize Your Annuity Payouts Before It’s Too Late http://www.nextwave.org/budgeting/maximize-your-annuity-payouts-before-it%e2%80%99s-too-late/ http://www.nextwave.org/budgeting/maximize-your-annuity-payouts-before-it%e2%80%99s-too-late/#comments Fri, 16 Jan 2009 22:34:39 +0000 Chase http://www.nextwave.org/?p=727 If you were planning on holding off on making a charitable donation until after February, it may be time to reconsider. The American Council on Gift Annuities, the organization that operates under an exemption from federal antitrust laws and sets rates on charitable gift annuities, announced recently that they plan on cutting payout rates by as much as 15% for all annuities arranged after February 1.

So how does this affect you?

Every time you make a contribution of cash or stock to a charity a quarter of the amount is considered a charitable donation for which you get an immediate income tax deduction. In addition, the charity agrees to pay you a fixed rate every year for the rest of your life. The older you are when you make the donation, the higher your rate.

Under the current schedule, if a married couple in which both individuals are seventy years old enter into a second to die annuity after donating $100,000 to charity, they would get $5,600 in return every year. If that same couple were to make the same donation after February 1, they would only receive $5,200 per year. The change in figures computes to a payout drop of 7.1%.

Fifty year olds in a marriage would get $4,400 per year for the same donation but after February 1 would only receive $3,800, a 13.6% drop. A married couple of forty year olds would see a 15.4% payout drop.

This all being said, it may be smartest for your future if you make that donation (much) sooner than later to accumulate more over time. Who knows, maybe the charity you benefit may appreciate it a bit more, too.

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]]> http://www.nextwave.org/budgeting/maximize-your-annuity-payouts-before-it%e2%80%99s-too-late/feed/ Struggling Retail Industry Causing Major Slips on Wall St. http://www.nextwave.org/economy/struggling-retail-industry-causing-major-slips-on-wall-st/ http://www.nextwave.org/economy/struggling-retail-industry-causing-major-slips-on-wall-st/#comments Fri, 16 Jan 2009 22:31:07 +0000 DeAndre http://www.nextwave.org/?p=725 That optimistic stock report we brought you a couple weeks ago is now officially old news. The Dow Jones industrial average dropped for the sixth day in a row yesterday, with its 250 point loss pitting the Dow at its lowest point since December 1.

The same can be said about Standard & Poor’s 500 index, which lost 3.4%. The Nasdaq composite dropped to its lowest point since December 4. The New York Times’ Jack Healy attributes the figures to a “gloomy retail sales report” that was published Wednesday morning, indicating that the holiday shopping season was over before it really even began.

Sales at department stores, restaurants, gas stations and a host of other retail businesses fell 2.7 percent last month – nearly double what economist had been expecting – and were 98 percent lower than sales last December, the Commerce Department reported.

Shares of Wal-Mart Stores, the world’s largest retailer, were down 1.2 percent, and Citigroup fell 22 percent, to $4.60 a share, as the beleaguered giant prepared to shear off its prized brokerage unit.

Some experts believe that these retail numbers could serve as the nail in the coffin for what economists and retailers declared to be the worst holiday shopping season in decades. Others, like C. Britt Beemer, chief executive of the America’s Research Group, suggest otherwise:

Consumers are in deep hibernation, and there is no sign that they will wake up this spring or that the retail outlook will pick up any time soon.

But the plummeting numbers weren’t just consumer spending related. News that Apple CEO Steve Jobs is planning on taking a five month medical leave through the end of the second quarter caused after-hours trading to drop Apple shares 10%.

Since January 2’s 258 point rise, the S&P 500 has lost 9.6% and the KBW Bank index has lost nearly 21%.

It leaves us wondering if next week’s presidential inauguration will return consumer confidence and get the market going in the other direction.

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]]> http://www.nextwave.org/economy/struggling-retail-industry-causing-major-slips-on-wall-st/feed/ Giving Obama’s Stimulus Package a Closer Look http://www.nextwave.org/budgeting/giving-obama%e2%80%99s-stimulus-package-a-closer-look/ http://www.nextwave.org/budgeting/giving-obama%e2%80%99s-stimulus-package-a-closer-look/#comments Wed, 14 Jan 2009 23:52:10 +0000 alexis http://www.nextwave.org/?p=712 President-elect Barack Obama’s proposed economic stimulus package has garnered a great deal of hope and optimism from those being directly affected by the recession, but that doesn’t exactly mean our country’s financial tide will turn on January 20 when the Illinois senator is sworn into office.

In fact, Obama’s camp has been quite tentative recently in their willingness to offer up a specific estimate of how many jobs could be created in the next year. And, despite obtaining a full-length laundry list of operatives governors have declared their states in need of, it’s widely expected that such initiatives won’t be put into place until the beginning or middle of 2010.

Part of the reason is based on political reality. Obama hasn’t taken office yet, and this stimulus package, for now, is nothing more than a big idea. Yes, the plan reportedly includes $300 billion in tax cuts intended to attract Republican support in Congress, but there has yet to be any significant signal that the G.O.P supports the package, which could result in massive delays before any headway is made.

In the meantime, many predictions have the economy continuing on its current path, experiencing what Anthony Karydakis calls “additional contraction.”

It’s Karydakis’ prediction, based on our country’s history of fiscally-stimulated packages, that this one will “produce results too late to alleviate the near-term pain and, actually, tend to take effect when the economy is already in the process of recovering on its own and needs such help the least.”

There’s little doubt that in time the economy will begin to right itself. America’s been put in states of economic crises before and consistently seems to find a way out of the situation over time. So the question remains: when this ship is finally righted, will Americans be thanking Barack Obama’s ingenuity or themselves?

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]]> http://www.nextwave.org/budgeting/giving-obama%e2%80%99s-stimulus-package-a-closer-look/feed/ Tax Returns Get User-Friendly This Year http://www.nextwave.org/budgeting/tax-returns-get-user-friendly-this-year/ http://www.nextwave.org/budgeting/tax-returns-get-user-friendly-this-year/#comments Wed, 14 Jan 2009 23:41:32 +0000 Chase http://www.nextwave.org/?p=710 In light of the messy economic situation and the hardships our government is expecting Americans to endure in the coming months, the IRS has loosened its generally tight grip on the way it does business. Taxpayers should expect a little more leeway when it comes to paying their taxes, among other accommodations. Read and rejoice:

 

The IRS will offer added flexibility for those who need to miss payments

If you’ve lost your job or are dealing with another source of financial difficulty, the IRS may allow you to skip a payment or map out a reduced monthly payment plan.

Additional Reviews will be available for Offers in Compromise on home values

Taxpayers are now given the opportunity to reach an agreement with the IRS that would settle their debt for less than the full amount owed.

Steps will be taken to prevent Offer in Compromise defaults

Taxpayers can now contact their IRS office for options to help them avoid default if they’re unable to meet the periodic payment terms of their accepted OIC.

Collection Actions can be Postponed

If a taxpayer has recently encountered job loss or other financial problems, their IRS representative has been given greater authority to suspend collection actions.

Expedited Levy Releases have been made available

The IRS will now speed the delivery of levy releases by easing requirements on taxpayers who request such releases for hardship reasons.

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