Personal Finance Ology

I’m going to take a break from my posting today and enjoy reading some great articles that have been submitted to me as I host the Money Hacks Carnival: Bailout Edition.   So feel free to checkout the latest news and articles that these authors have posted to help me bailout my readers

Editor’s Top Picks

FMF presents An Example of What I’ve Been Talking About posted at Free Money Finance.

nickel presents Save Money by Renting Out a Room posted at fivecentnickel.com.

Mr. ToughMoneyLove presents Tracking Our Economic Recovery posted at Tough Money Love.

PFR presents Provident Bank Checking Account $123 Bonus posted at Personal Finance Reviews.

Patrick @ Money Saving Deals presents CoolSavings.com - Free Coupons and Money Saving Deals posted at Money Saving Deals.

The Smarter Wallet presents Charting Stock Movements With Fibonacci Trading Techniques posted at The Smarter Wallet.

Other Blogs - Should they be bailed out? You decide!

Investing
PT presents Tips on Dealing with Credit Rollbacks posted at Prime Time Money.

Brian presents Best CD Rates posted at Monitor Bank Rates.

Ray presents Is buy and hold investment strategy dead? posted at Financial Highway.

Finance Tips 101 presents Why Take The Risk Of Day Trading posted at Finance Tips 101.

Manshu presents Gold Funds - Expense Ratios and Minimum Investments posted at OneMint.

Michael Cohen presents Even If We Are The Next Japan, Stocks Aren?t Necessarily A Short posted at Stock Investment 123.

Buying Stuff
Junior presents What To Do If You Can?t Make Your Car Payments posted at Car Commentary.

mfd presents Optimize your Bank Interest through Automation posted at My Findependence Day.

Adam presents Basics of Prepaid College Tuition 529 Savings Plans posted at Your Money Relationship.

Loans and Credit
kathryn presents Get Your Taxes Done for Free! posted at Out of Debt - Christian Finances and Debt Help.

DebtLite presents What Are the Root Causes of Debt? posted at Debt Advice.

Abigail Perry presents How to deal with debt collectors posted at i pick up pennies.

The Investor presents The recession is not a lifestyle choice posted at Monevator.

Madison presents $8,000 First Time Home Buyer Tax Credit posted at My Dollar Plan.

Patrick @ Military Money presents Looking for a Job? Consider Joining the Military posted at Military Finance Network.

Carson Brackney presents How to Value a Charitable Donation posted at Personal Finance Analyst.

Sun presents Discover Escape Card 25,000 Bonus Miles Promotion posted at The Sun’s Financial Diary.

BankMan presents Limit Six Savings Account Withdrawals Per Month posted at High Yield Savings Accounts.

The Financial Blogger presents IACI actually makes a good move posted at Intelligent Speculator.

Curt presents 7 Reasons Why Banks Should Increase Interest Rates posted at PennyJobs.com.

Todd Johnson presents Search Engine Optimization posted at Richard Lee.

Dividend Tree presents Dividend Investing In All Economic Cycles | Dividend Tree posted at Dividend Tree.

Economy
Barry presents Tug Of War Between Retailers And Frugal Consumers posted at Associate Money.

Tom Tessin presents Secured Credit Cards that Report to Major Bureaus posted at FSC Blog.

Kevin presents How to Pay for the Octuplets posted at The Red Stapler Chronicles.

Pinyo presents Introduction to Peer-to-Peer Lending posted at Moolanomy.

Kathryn presents Freelancer’s Guide to Important Tax Deductions posted at KathrynVercillo on Bukisa.

D4L presents The Best Dividend Stocks In The World posted at Dividends Value.

Frugality & Saving Money
Momma presents Top Recommended Paid Survey Sites: Making Money with Online Surveys posted at Engineer a debt free life.

Beef Up Your Piggy presents Don’t Swear Off Plastic Completely posted at Beef Up Your Piggy.

Ramis presents Some tax savings strategies posted at Financial Highway.

MoneyNing presents Counter Intuitive Way of Lowering Your Spending posted at Personal Finance Blog by Money Ning.

Chris presents House-hunting expenses and how to minimize them (part 2) posted at Home I Own.

Investing School presents Beta and Alpha Returns for Us Sane Investors posted at Investing School.

Alex presents Printable Mothers Day Cards posted at Home Life Weekly.

ChristianPF presents How long does it take to get your tax refund? posted at Christian Personal Finance.

J. Money presents Shredding 700+ receipts: Not fun, but good to do. posted at Budgets are Sexy..

Mara Rogers presents Household Tips To Save You Time And Money posted at Secrets for Money.

LAL presents What did you get from your parents Part I posted at LivingAlmostLarge.

Jeff@Stretchydollar presents Dealing With Financial Frustrations, Part I posted at stretchyDollar» StretchyDollar.com.

Income
Frank Curmudgeon presents House Prices: The Long View posted at Bad Money Advice.

FIRE Finance presents TaxCut - Upto 36% OFF Discount Coupons posted at FIRE Finance.

Jake Stone presents Fake Money Blog » Hopeless sales gamble posted at Fake Money Blog.

FFB presents Economic Credit Crisis Visualized posted at Free From Broke.

Todd presents How To Pay For College posted at HarvestingDollars.

Savings Toolbox presents Finding Yourself unable to Make Your Mortgage Payments? posted at Savings Toolbox.

Destroy Debt presents More Grocery Shopping Saving Tips posted at Destroy Debt.

Scott Crawford presents Understanding Your Credit Report posted at DebtGoal.

Heather Levin presents Want To Live In A Shipping Crate? posted at The Greenest Dollar.

Tushar Mathur presents Zecco: Free stock Trades ? posted at Everything Finance.

Other
Dan presents Deal of a Lifetime in Muni Bond Investments? posted at Darwin’s Finance.

Mr Credit Card presents ThankYou Network Citi Rewards Review posted at Ask Mr Credit Card’s Blog.

Jeff Rose presents 8 Unusual Things to Hold in Your IRA posted at Jeff Rose.

Silicon Valley Blogger presents Zecco vs TradeKing: Which Online Stock Brokerage Account To Choose? posted at The Digerati Life.

Relax presents The happy way to spend money posted at The Wise Curve.

Ryan Suenaga presents Ask the Readers: What are your Best Money Hacks? posted at Uncommon Cents.

Thursday presents What Does the Economic Stimulus Plan Mean For You? posted at Wealth Junkies.

Dawn C presents 7 Little Hacks to Saving a Bucket Full posted at Frugal For Life.

jim presents Highest Short-Term CD (Certificate of Deposit) Rates posted at Blueprint for Financial Prosperity.

The Happy Rock presents Deep Freeze - Freezing Sale Items To Help Stretch Your Grocery Dollars | The Happy Rock posted at The Happy Rock.

TStrump presents 5 Tips to Make Travelling by Air Easier | The Strump posted at The Strump - Financial Blog.

Miss M presents Deliverance from Debt: A.D. – After Debt posted at M is for Money.

Filed under: banking, business, credit card, debt, equity, interest, money by admin - 664 Comments →

Just as with your personal finances, interest rates have a huge effect on the economy and it’s stability. They have a controlling effect on the economy. Whether they are rising or falling, high or low these factors have major impact on the economy.

Consumer spending is accountable for about two thirds of our economy and when rates are low people are more willing to borrow money. This in turn increases spending and boosts the economy. You’ll also see businesses growing and hiring more employees. More jobs mean more money to be spent and put back into the economy. However, if the economy gets going too fast there can be a problem with the demand for goods being higher than the amount of goods available. This will lead to those goods costing more money then before due to the expense of rapidly producing those goods or even the company’s ability to make a higher profit off of a product they know the consumer is going to buy regardless of price. This is called inflation and this can have a negative effect on the economy. (For more information on inflation see the article “The Effects of Inflation on Your Money”)

In response to inflation the government will raise interest rates making it more expensive to borrow and slowing down consumer spending. There is some danger to this as you can see with the economic situation we are currently experiencing. If the government raises the interest too high or too fast it brings the economy into a recession. For a recession to be declared there must be two consecutive quarters of negative growth in the country’s Gross Domestic Product, which is the total market value of goods and services produced by workers and capital.

Filed under: interest, money by admin - 88 Comments →

Compound Interest
Compounding interest can be a great way to increase your finances in shorter time period or beyond your originally desired amount. To understand the advantages of compound interest you must understand how it can work for you or against you.  Compound interest is used in many ways by banks. It is used to calculate the interest rates on your savings account as well as the amount of interest they will charge for a loan. Of course the interest you pay on your loan is going to be higher than the interest you earn on your savings account or CD from the bank. This is the way the banks make money. They pay you a certain amount of interest on your savings that will attract you to put money into your account and then they use the money in your savings account as a loan to another customer and have them pay a higher interest rate than what you are earning therefore making a profit.

*TIP: the current interest rate on loans and the interest rate on CD usually go hand in hand. If the interest rate on a CD goes up the interest rate on loans are sure to follow*

Either way compounding interest can help you to multiply your savings. Here’s how it works. Let’s say you put $10,000 into a savings account that pays a 4 percent interest. At the end of the year you would have a total of $10,400 in your savings account. This can be figured by using:

Future Value = Present Value x (1 + interest rate)^n

Where n is the number of years you are saving it.

However, if you are dealing with compounding interest the answer gets a bit more complicated but a lot higher. Compounding interest factors in the interest rate, the amount invested, the length of the investment and the periodic payments of interest. The basis of compound interest is putting your money to work for you. With compounding not only is your money earning interest but your interest is earning interest as well. When your interest earns interest you can begin to create an abundant financial future.

Starting a savings plan with compound interest early is a good way to increasing your finances. The longer you allow compound interest to work to better it will work for you. If you were unable to start saving at a younger age it is still ok to start now. Just know that you will have to make it a point to invest large sums so that you can get a higher return.

Filed under: interest, money by admin - 114 Comments →

Fixed and Variable Rates

There are two types of interest rates applied to loans. It is important to know which type of interest rate is being applied to your loan. Most banks offer a variety of interest bearing accounts. Most of these accounts have fixed rates, a set rate for the life of the account. An example would be the common savings account that has a set interest rate. These are normally low rates. Another example would be a CD. These are mostly fixed rate investments. You would get a three-year CD with a 7 percent interest rate and that rate will stay the same until the three years are up.  Whatever option you choose you should understand the kind of interest rate you are getting when you open the account.

Alongside knowing the type of interest rate you getting on your investment, you should also be aware of the type of interest rate you will be paying on your loan. This information must be shared with you before you enter into the loan agreement therefore you should definitely ask your bank representative for this information before any commitment. Of course the key for banks to make money is to keep the interest rates as high as they can while still being competitive.

Credit cards, auto loans, personal loans, home equity loans, and mortgages are all usually fixed rate loans, however some credit card lenders, and home loans may have variable rates at which point you should get the details on what causes the rate to fluctuate and how much it will increase.

Lenders can be very slick when it comes to interest rates and their increase because the higher they are the more money for them. One strategy that is commonly used is the low “introductory” offer they use to get your attention. This is where they promise an outrageously low interest rate for the beginning of the loan but then astronomically rising the rate once you enter into the agreement. If you are unsure of all of the details of the loan or feel uncomfortable with the terms don’t sign anything until it has all been explained to you.

I’ll touch a little bit on compounding interest here however for more information on how compounding interest works feel free to take a look at “The Basics of Interest (Part Three)”.  Compound interest can work for you or against you. When investing it is a good thing to have an investment that compounds, adds interest on top of interest, on a regular basis. However, if you choose to use your credit card all the time and are only paying the minimum balance, you are dealing with compound interest and it is working against you. What a lot of people don’t realize is that you may have been able to purchase that product at a sale price with your credit card but the interest you will paying on that one purchase will be double and sometimes triple to the original amount you paid.

That’s why it’s important to take a careful look at the terms of your account and never charge anything on your credit card that you will not be able to pay off in full when the balance becomes due. This way you are not paying a high price later for a cheap price in the present.

Filed under: interest, money by admin - 36 Comments →