Post from: Credit Cards Mojo

Interview with Nassim Nicholas Taleb author of The Black Swan

The harassing and threatening voicemail messages left on Allen Jones’ mobile phone are nothing short of vulgar.

“This shouldn’t be tolerated,” he said. “Nobody should have to experience what I had to experience.”

Debt collectors from Advanced Call Center Technologies, LLC left eight messages for Jones in August 2007 trying to collect what it said he owed on a credit card.

Most messages were laced with profanity and spewed racial slurs:

“This is your mother******* wake-up call you little lazy a** b****,” a collector said on one. “Get your mother******* n****r ass up and go pick some mother******* cotton fields.”

Jones is African-American.

“If we did not have tapes, no one would ever believe that this happened,” Mark Frenkel, one of Jones’ attorneys said.

Read more at: khou.com

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Post from: Credit Cards Mojo

Vulgar voicemails force debt collector to pay $1.5 million

Myth: I should pay off the debt with the highest interest rate first to get out of debt quickly.
Truth: You should pay off the smallest debt first to create the greatest momentum in your debt snowball.

The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20% head knowledge and 80% behavior.You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.

Debt Snowball Plan

The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. List your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.

Read more at: DaveRamsey.com

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{Photography by Oakley Originals}

Post from: Credit Cards Mojo

Get Out of Debt with the Debt Snowball Plan

Here’s a simple MBA lesson: borrow money to buy things that go up in value. Borrow money if it improves your productivity and makes you more money. Leverage multiplies the power of your business because with leverage, every dollar you make in profit is multiplied.

That’s very different from the consumer version of this lesson: borrow money to buy things that go down in value. This is wrongheaded, short-term and irrational.

A few decades ago, mass marketers had a problem: American consumers had bought all they could buy. It was hard to grow because dispensable income was spoken for. The only way to grow was to steal market share, and that’s difficult. Enter consumer debt.

Read more at: Seth’s Blog

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{Photography by Tambako}

Post from: Credit Cards Mojo

Consumer debt is not your friend

Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.

That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent recession.

The shift is sure to come as a shock to consumers whose spending habits were shaped by a historic 30-year decline in the cost of borrowing.

“Americans have assumed the roller coaster goes one way,” said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.”

The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.

Along with the sell-off in bonds, the Federal Reserve has halted its emergency $1.25 trillion program to buy mortgage debt, placing even more upward pressure on rates.

“Mortgage rates are unlikely to go lower than they are now, and if they go higher, we’re likely to see a reversal of the gains in the housing market,” said Christopher J. Mayer, a professor of finance and economics at Columbia Business School. “It’s a really big risk.”

Each increase of 1 percentage point in rates adds as much as 19 percent to the total cost of a home, according to Mr. Mayer.

Read more at: The New York Times

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{Photography by AntwerpenR}

Post from: Credit Cards Mojo

Interest Rates Have Nowhere to Go but Up

Before bailing out offspring, ask yourself whether you’re really helping.

A new poll by CreditCards.com found that 42% of people with adult children have paid a debt for their children at some point. But should they?

The debts most commonly paid off were auto loans (40%) and medical debt (37%). But the survey also found that parents had paid utility debt (31%), credit cards (30%), student loans (29%) and mortgages (11%).

“It used to be that kids would be embarrassed to ask for help. Not anymore,” Michael McAuliffe, president of Family Credit Management, a Chicago nonprofit credit counseling agency, told CreditCards.com’s Connie Prater.

The current generation of parents has always provided more help to their children than their parents’ generation did, helping with everything from homework to science projects to college essays and beyond.

• Bing: Coping with ‘boomerang’ kids

This trend, coupled with changes in the economy, has found many parents continuing to help their children financially long past college.

Read more at: MSN Money

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{Photography by Leonid Mamchenkov}

Post from: Credit Cards Mojo

42% of parents have paid a child’s debt

Personal finance isn’t exactly rocket science. We all pretty much understand the basic concepts of living below our means, budgeting, tracking expenses, etc. But, even as straightforward as these concepts are, there are still plenty of people out there in debt and spending more then they make. So, here are seven lame excuses we hear, or we use ourselves, about why we spend more than we make.

# 1 – I don’t know where my money is going!

This is because you’re not keeping track of where it’s going. It’s amazing to me the number of people who don’t know where their money goes to. Personally, I found I was in this frame of mind when I did the cash budgeting system, which is why it didn’t work for me. I like the ease and convenience of having my expenses easily tracked when I use my debit and/or credit card so I know exactly where my money is going every month. If you’re always wondering where your money goes, it’s almost guaranteed you’re spending more then you make. Cut the excuses and start keeping track of your expenses! (Read more at: MasterYourCard)

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{Photography by Marshall Astor – Food Pornographer}

Post from: Credit Cards Mojo

7 Lame Reasons People Spend More Than They Make

The Nationwide Building Society has introduced a mortgage allowing borrowers to take loans worth 125% of the value of the home they are buying.

It will only be available to existing customers in negative equity who want to move house.

Negative equity means that the value of someone’s home is less than the amount they owe on their mortgage.

Nationwide said the deal was a very “niche offer” and that not everyone in negative equity would qualify.

The Financial Services Authority is considering limiting mortgage loans to 100% of a property’s value.

‘No more risk’

The Nationwide only offers new customers mortgages worth 85% of the value of the home they want to buy. (Read more at: BBC)

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{Photography by radcarper}

Post from: Credit Cards Mojo

Nationwide offers 125% mortgage

The level of people falling behind with consumer loans in the US hit a new high in the first three months of 2009, the American Bankers Association said.

Rising unemployment was behind the missed payments, it suggested.

Delinquencies – payments that were more than 30 days overdue – rose to 3.23% from 3.22%, the highest level since rates began being tracked in the 1970s.

Credit card loan delinquencies also increased, rising to 4.75% from 4.52% in the last quarter of 2008.

The US unemployment rate is now at a 25-year high of 9.4%. (Read more at: BBC)

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{Photography by Andrew Ciscel}

Post from: Credit Cards Mojo

US loan defaults hit record level

Strategy keeps beating S&P 500 as well as popular actively managed funds

Guess what? Actively managed mutual funds are bad news, filching your hard-earned money.

Year after year they continue their dark legacy, proving what former Sen. Peter Fitzgerald said during his reform fight five years ago: “The mutual fund industry is now the world’s largest skimming operation, a $7 trillion trough from which fund managers, brokers and other insiders are steadily siphoning off an excessive slice of the nation’s household, college and retirement savings.”

The fund industry defeated the senator’s efforts. Back then Morningstar’s boss Don Phillips added that funds “lost their moral compass.” Today it’s far worse. Greed drives this industry. The “world’s largest skimming operation” has now lost over 50% of America’s savings in the decade since the peak of 2000. The track record of actively managed funds during the recent subprime-credit meltdown continues to prove that the industry is failing America.

The only way to invest is with index funds, which make up just 14% of the total. As “Kiplinger’s Annual Guide” once said about building index-fund portfolios: “If you’re picking from among the best funds to start with, then all you really need for diversification is three stock funds and one bond fund — and you can forget the other 9,111 funds.” Yes, forget about 99.9% of all mutual funds. (Read more at: MarketWatch)

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{Photography by Daquella Manera}

Post from: Credit Cards Mojo

Lazy Portfolios seven-year winning streak