The last big period of deflation in America (other than the short spurt in 1970’s) was the Great Depression. Citizens of United States are more accustomed to living with inflation and may not be prepared to weather a spell of deflation, mimicking the lost decade of Japan. While Japan has managed to weather the lost decade with somewhat stable personal finances, many Americans are far more indebted than the Japanese and might find that deflation is far worse than their inflationary fears. The differences in household income, household wealth, and debt levels can put some American household over the edge, should deflation take hold.
The Economic Indicators
This was supposed to be “Recovery Summer” but it never quite took hold. Instead, the month of July 2010 had some troubling economic indicators, not the least of which is an increase in the unemployment rate. Some experts are now wondering whether America is facing a double-dip recession and whether it will trigger deflation at this point. The consumer price index for June dropped by .1%. This index is often used to measure inflation and a drop can signify a trend towards deflation instead. In addition, there are price declines registered on the consumer price index, which indicate 53% of the by-weight components have shown price declines.
Aren’t Falling Prices Good?
Falling prices can be good if you have the cash reserves to take advantage of them, however, they can also signal the rise of deflation. When deflation occurs, the money is worth more, but so are the debts you hold. Yet, businesses have to contend with lower profit margins and consumers will see a drop in the value of their homes and other investments. This can lead to more layoffs and a souring economic cycle, which is difficult to kick-start into prosperity again. That’s how the Japanese managed to lose 10 years when their economy went into deflationary trends.
American Debt versus Japanese Debt
The main problem, however, for Americans is their debt levels, which far exceeds the average Japanese. Americans tend to hold their assets in the very things that will deflate, like stocks and real estate. The Japanese are far more conservative and hold much of their wealth in cash. The more even distribution of wealth in Japanese society and their conservative nature has led to only 5% unemployment even after a lost decade of economic growth. If this were to happen right now in the United States, it could be a disaster as unemployment is currently hovering around 10%, twice that of the Japanese even before a lost decade.
Japanese household finances may have struggled during the lost decade, but they didn’t lose much over all. The bad Japanese stock market performance didn’t affect as many households as the average Japanese family doesn’t invest in the stock market as much as Americans. Their assets were not impacted, as much by the fall of the economy in particular their housing values did not fluctuate as badly as they are more evenly distributed. This makes the Japanese household far more resilient to deflation than an American household might be.
It is very important that you are aware of how much money you are spending on food. It is no surprise that those who don’t keep track of the money that they spend on food are more likely to be the ones that have financial instability and that are needing to pay off bank loans and payday loans. After all, being aware of the money you spend translates to good money management. If you are not one to keep track of how much you spend on food, then you are in for a shocking surprise. Your wake up call will come when you sit down and calculate all the purchases made on food such as groceries, fast food, vending machines, etc. Your calculations will show you how much money you are actually spending and how much money you could be saving if you were more cautious.
Begin saving money on your food bill by taking fewer trips to the grocery store. Instead of going to the grocery store twice a week go once. By doing this you will be forced to plan ahead on the things that you actually need. When you do go to the store, make sure you only purchase sufficient amount of food that will sustain you until your next trip to the grocery store. Keep in mind that it is very tempting to purchase foods that you don’t need, such as sweets and snacks. Making fewer trips to the grocery store will decrease the number of unnecessary purchases that you will be tempted to make.
Also, cutting down on restaurant meals will greatly decrease your food bill. If you are someone who has the tendency to consistently eat out then make an initiative to fix more meals at home. Not only will you be saving a lot of money but you will also be a healthier individual. Cut those high calorie, overpriced meals out and you will notice the difference in your wallet and your health.
While we are on the subject of cooking more meals, maybe it is time to consider packing your own lunch to work or school. Fast food, vending machines, and snacks all add up to more than you think. A couple dollars here and there is guaranteed to add up to a great quantity over time.
When grocery shopping, if you buy generic you will save a lot of money. Why buy name-brand products when you can buy practically the same thing for a cheaper price. Store-brand products are the way to go when it comes to saving money. There is virtually no difference between the two, other than the fact that brand-name products are advertised whereas store-brand products are not.
Many of us need to start off our day with our morning coffee. We simply need that extra kick to get us going for the day. Unfortunately, coffee isn’t cheap and buying it regularly adds up. For all you Starbucks drinkers, take into consideration that a tall latte costs approximately $3.50. If you spend that much every day then you will quickly see how much it adds up to. By making your own coffee you are allowing yourself to save money while still getting the morning boost that you need.
It is important to be aware of all of your spending. If you take the time to calculate the amount you spend in a certain time period, then you will be able to better manage and save your money. Food is one thing that many people overlook. Calculating the amount of money you spend on food will show you that little things add up and that you can enable a better financial future if you are more careful with your spending.
NationalPayday.com can improve their website by…
1) When customers put in their payment amount, also show how long it will take to pay off the loan if the customer pay at that amount each time. It will also suggest paying at X amount which will allow the customer to pay it off by X.
2) Offer discounts off of fees for returning customers of different levels – Silver: 4-6 loans, Gold: 7-10 loans, Platinum: 11+ loans a year(i.e. no fees if paid by next pay period, 15% interest instead of 25%)
3) New customers form have an area where you can enter the email address of the referring person. Referring customers get discounts for referring new customers.
Any allowance of fitted pays to people will work, meaning that they go through gracefully account to account. While having it become a factor that the Loan has worked. Instead of pop-ups towards other lenders.
Your website, in my opinion, can be improved in two ways. First of all, your website seems to have misleading information. It states "free loan up to $600". I needed approximately $600 until payday, but when I started to apply, the maximum offer on your drop-down list was only $300. At that point, I considered your website a hoax and logged off. After more thought, I thought I would go ahead and apply for the $300, and to my surprise, the online process went fairly well.
The second way you could improve your website is to inform potential applicants, especially first-time applicants, of exactly what to expect. I was not happy with all of the e-mails and phone calls I received the next day, and with your protocol that you had to speak with me in person to finalize the transaction. If I had known about this process, I would have prepared myself to be available the next day to respond to your requests.
I think overall this is a very good and informative website. I think one thing that would add to the website’s ease would be for there to be a real time chat selection where an applicant or current customer could chat online with a representative. I know your company is accessible by phone and email but if you work in a small office like mine its not easy to make a phone call without everybody hearing your personal business. Also this function would be quicker than simply sending an email and waiting for a response, although this site is good about quickly tending to such matters.
Your future should be important to you. Granted, you cannot say specifically how long that future will be or what might happen over the next several decades, but you can plan for your financial future and if things change you can modify these plans to suit your new needs. A Roth IRA is one way you can invest in your future in order to have financial security as you age. There are other IRA products out there, so it is also important that you understand what a Roth IRA is, how it can help you, and why it might be the better choice for you.
Many of articles can be found in regards to financial advice for Retirees looking to secure their lifestyle once they have finally reached the “golden years”. A lot of these articles however do not relate at all to the average middle class American in today’s struggling and uncertain economy. The advice given in those articles are discussing dollar amounts that are not representative of the average person. Only few can afford to invest $300,000 and refer it as to being “non-essential money”. Way too many high fronted expensive ideas for those who can invest and only a few crumbs here and there for those really in need for solid tips.
Owning a house is an American dream, and lets face it; we all need a place to call home. When choosing how to get a home, should you buy or rent? Buying a house is not just an investment; it’s a personal commitment. With the recent turmoil in the housing market, people are again weighing the pros and cons of owning a home versus renting.
There are many elements to consider when deciding whether to rent or buy a home. Buying a home is a very good long-term investment. While short-term appreciation will be negligible, as mortgage payments usually go towards the interest rather than repaying the loan, long term appreciation is certain.
Homeowners usually tell renters that they are “throwing away their money” or “pouring money down the drain”. While this advice usually encourages people to borrow heavily so they can get on the property ladder, is this advice still sound?
Having and owning your own home is a great feeling. Want to paint your bedroom neon pink? Sure go ahead, it’s your house. Or do you want to put in a sauna after you renovate the master bathroom? No problem. You are at liberty to do anything you want to do. You do not have a landlord to answer to. However, don’t assume that just because you are your own landlord, you won’t have other people to answer to. Loud music, boisterous parties, lack of maintenance or having an eye-sore of a yard can wear out your welcome in your neighborhood.
There are also significant tax incentives when you own your own house. The interest you pay on your mortgage is tax deductible, as it’s considered real estate property tax. You can itemize your tax deductions each year and benefit from this since traditionally the amount of mortgage and property taxes is more than enough to allow this exemption. Also, if you have owned your home for at least two of the last five years and it has been your “primary residence”, you can have $200,000 to $500,000 (depending on your marital status) from the sale of your home excluded from being taxed when you sell your house.
Another thing to consider when you buy instead of renting a home is that mortgage payments are fixed over a period of time. Unlike rent, which often goes up each year and you’ll always have to pay, a mortgage eventually ends.
The cost of living in a metropolitan area is high. Loan rates and property prices are also moving up. With this scenario, is it better to rent or to buy a home?
Homebuyers tend to underestimate costs. Other expenses like insurance, maintenance costs and real property taxes when added to mortgage payments can easily exceed the cost of renting the same property, even after tax breaks.
When something breaks or leaks in your house it will be your responsibility to fix it. There is no landlord who will call the plumber to fix the dripping faucet, or call the electrician to repair the busted fuse box. When something goes wrong, and it will, it will be all your responsibility to fix. All homeowners will tell you that repairs and maintenance are a significant cost. You must either have enough monthly income, savings or a home equity credit line to fix the unanticipated problems that usually come with owning a home. These repairs, maintenance and service are always there but usually unexpected.
Before buying a home, you have to be absolutely sure that you can afford to pay it for the extent of the mortgage. Remember that until you make your last payment, the bank that holds your mortgage owns the house. If you miss payments or encounter financial difficulties, the bank has the legal right to foreclose your property and force you to sell it.
Although there is no investment more certain to appreciate over time than buying a home, always remember that there is no guarantee that your home will increase in value. While real estate prices have shot up over the recent years, they are starting to settle down once again, and in some places are facing a decline. Be realistic. Don’t expect to purchase your home and in two to three years have $50,000 in price appreciation. Short-term fluctuations in the real estate market can sometimes leave you owing more than your house is worth.
You also cannot just sell your house at anytime. Should your situation change, for example having to relocate for a job, and you need to sell your house, it may take several months. Homes have been staying on the market for much longer before being sold. Your house is not a liquid investment that can be changed instantaneously to cash when you need it.
Both these options are open to all. The satisfaction of having your own home, deciding which color scheme you want for your living room, or simply having the option to pack up and move when the next-door neighbor becomes too obnoxious appeals to everyone. The most important thing to remember before deciding to buy or to rent is to do your research. Real estate properties in most areas differ in prices. A market that is hot today may not be so buyer friendly in the future. Figure out your budget, plan ahead of time, estimate future earnings, and consult financial managers for assistance. Buying and renting both present an important financial decision; either way you choose, you must still be financially prepared to meet your new obligations.
You could improve your website by letting it automatically readjust your paydates when applying for a new loan. When I log on to reapply I have to go back in and redo my paydates since the old ones are on there from my prior loan. It would be alot quicker and convenient for your customers to just have to hit reapply and already have all of the info in there. It would also be benficial to you by having the information already stored in your data base. That way if there was a problem you would know without a doubt when the correct paydate was. Other than that I think your service is great. You have helped me out greatly when I was in a pinch for cash!