Posts Tagged ‘economic downturn’

‘Poverty line is set so low the middle class cannot all be squeezed in; one has to kick one’s nose through dirt to be eligible for the dole.’

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The grasshopper burst out laughing. It saw how the ants sweated. ‘There is no winter coming .You are storing for nothing’.The grasshopper said with a smirk,’ Global warming is a sure fact.’ The grasshopper had all the latest figures. It somersaulted and made fun of the rest. It flung at the ants,’You foot-soldiers toil to no purpose. Work your butts off so much it affects even that ant-size brain!’ The ant asked,’ Don’t you work as a matter of duty to other workers?’ ‘Why should I?’ ‘ I have my wealth spread around so I can cut a figure.’ It checked its pocketbook and said, ‘every minute some where around the world I am accumulating interest on my investments’. Ants by then had worked for the season and they filed into their hideout so they might pass the winter.
As the grasshopper predicted flash-floods occurred, but elsewhere around the world. Mount Merapi in Indonesia erupted but it went past the ants who were well hidden from its ash flow. It so happened the grasshopper received reports how its assets in South America were wiped out by a Junta that was for nationalizing the foreign companies. The law recently passed at home made outsourcing impossible and its industrial plants were brought to standstill owing to calamities abroad. The flow of raw materials dried up and machinery on lease became idle. The banks began to slap penal interest for defaulting. In the face of mounting difficulties the grasshopper felt like Job of old.( to be concluded.)

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6 Financial Moves That Sound Good — but Aren’t
by Erin Joyce
Thursday, October 1, 2009

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For most people, each and every day involves some type of financial decision. So how do you feel about your financial decision-making skills? If you think you are making sound choices, ask yourself this: Have you weighed the consequences of your choices against their apparent benefits? In many cases, the answer is no.

Let’s take a look at six common financial choices that sound like smart moves, but could leave you scratching your head wondering where you went wrong.

1. Applying for a Line of Credit
Advantages: Starting a line of credit will diversify your credit sources, which is good news for your credit score. It also allows you to access funds you may need for large purchases, like buying a car, without having to scramble to arrange the funds when you decide to buy.

Consequences: A line of credit is too often treated like free money. In many cases, such easy access to funds leads borrowers to rack up consumer debt for things they don’t really need. And there’s nothing free about this cash injection: borrowers have to make minimum payments on the line’s outstanding balance. In addition, a balance will limit borrowing power on other loans, such as a mortgage.

2. Withdrawing From Your 401(k) or Retirement Savings to Pay Down Debt
Advantages: If you have a big debt to pay off, you may choose to either put off contributing to a retirement or savings fund, or to withdraw money from an existing fund. The upside to this is that paying down debt is a good thing, and the sooner it is paid off, the greater the savings in interest expenses for the borrower.

Consequences: By withdrawing funds set aside for retirement, you are robbing yourself of the benefits of compounding. Also, pulling the money out of your savings could leave you in a very bad position should something unexpected, like a job loss, happen. The earlier you start saving, the more money you will be able to accumulate for retirement. If properly invested, money saved now is almost always better than more money saved later.
3. Choosing Only the Safest Investing Vehicles
Advantages: If you invest in risk-free or nearly risk-free vehicles, the risk of losing your hard-earned cash is extremely low. This can be a viable option, especially if you are nearing retirement.

Downside: However, you are again missing out on the opportunity to have your money work for you. Take into consideration your age and stage of life when deciding your risk level. Although everyone’s risk tolerance is different, generally speaking, the younger you are, the riskier you can afford to be. This is because you have the time to make up any losses, and also because the higher risk may be warranted because it helps combat the effects of inflation on your portfolio’s gains. The closer you are to retirement (or to whatever goal you are saving for) the more conservative you should be in order to protect your investment.
4. Avoiding Debt Altogether
Advantages: “Debt free”. It sounds good, doesn’t it? And it can be. Living debt-free is a wonderful goal and is more achievable than you might think.

Downside: However, debt can also be a tool. If, in your quest to remain debt free, you are turning down “good debt”, that is, debt that allows you to leverage your investments, you are doing yourself a disservice. Examples of good debt include taking out a mortgage to buy a house. This is because houses and property tend to appreciate over time, and owning your home can lower your living expenses compared to renting. Another example would be taking out a student loan for post-secondary education. While student debt can be a huge responsibility, it is also an investment in yourself that boosts your potential earning power.

5. Cutting Your Variable Spending
Advantages: If you are looking to cut your spending, this suggests that you have a budget to modify. That’s great! Often variable expenses (expenses that are not fixed, such as entertainment, dining out and personal spending) are out of line with the amount we earn. An honest appraisal of where your money is going is a great step to getting your budget in fighting shape.

Downside: This seemingly great idea is only great if you include the second part of it: sticking to your new budget. Unrealistic expectations, or treating your budget goals as “guidelines” rather than rules, could leave you spending more than ever. (For more tips, see Get Emotional Spending Under Control.)

6. Paying Off a Major Loan in One Payment
Advantages: You’ve been working hard and saving – smart! Before your loans start accumulating interest, or even if they have, you decide to pay them off in one payment. That’s a wonderful accomplishment that will save you months’, or years’ worth of interest.

Downside: If you choose this route, make sure you take a look at your interest rate. Some loans have such a low interest rate that you’d be better off putting your money in a savings account that earns you a higher return and paying off your debt monthly. Keep in mind this is only a good idea if 1) your savings interest rate is higher than your debt interest rate and 2) you are disciplined enough to pay the debt off on time, every month, and not to spend your hard-earned cash on luxuries instead. The bonus? Responsibly paying off monthly debt helps you to establish a good credit history. This is especially helpful if you don’t have a credit history (or you are trying to rebuild a bad one).
There’s nothing worse than making a choice you thought was conscientious only to find out it had hidden consequences. Make sure you do your homework and your financial situation will be the best it can be.

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The Way Things Are in America

Barbara, 46, and Kevin Lowe, 52, Grand Rapids, Mich.

The cell phones were canceled; so were all subscriptions and outside entertainment. We didn’t go skiing this winter, and we won’t be golfing over the summer. No more wine. We used our severance and some savings to pay off Kevin’s 2008 Saturn and pay down the house. We debated whether to cancel the local newspaper, but in the end kept it for the Sunday coupons. We now eat every single item in the house until it’s gone. If that means we have curly pasta and penne and spaghetti all mixed up, so be it. I have 101 ways to use half-eaten boxes of pasta. We’re much more careful shopping — no more running in to get one or two things. We wait until we have a big list, and then buy only what’s on that list — and at the local grocery warehouse, not the food boutique.

You’d be amazed at how you don’t even know where your money goes. It took us a couple of months to get a firm handle on our expenses. There are some things you only pay a few times a year and you forget them, and then they crop up and you don’t have $40 for the water bill or veterinarian. I distributed flyers around the neighborhood offering babysitting and elder-care services. I can take care of an infant for a few hours as well as any high school girl. I’m tired of waiting for someone else to offer me a job.

It’s hard to invite people for dinner, so we don’t accept many invitations. We went to the art show on the day tickets were discounted, and told friends we’d brown-bag our lunches. One of them said we could go to a cheap restaurant, but I can’t. I’m not sure they really understand how it is. I know I didn’t until it happened to me”.

Another news item that I came across and it is also disturbing.

“People were picking the bodies up last year,” says Albert Samuels, chief investigator at the medical examiner’s office in Wayne County, Mich., which includes Detroit. “Across the board, I’m finding the numbers are on the rise of either families who are not coming forward to claim bodies or they’re signing releases saying they can’t afford to bury someone, which taxes the county resources because then the county is responsible for burying these people.”

How come manifest destiny of a nation fails both living and the dead?It seems to me someone or groups of people in their positions of trust have been waving the flag and beating the drum too often to think of the nation’s most precious commodity-people.


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The day I turned 18 my father called me to his study and said I was on my own. My parents wanted me to go and find a job. But jobs that came were not what exactly I was after.
So after a long search I became my own boss. I have this sign in front of my seat: the buck stops here.
At the end of the day no bucks stopped but two nickels.  That will do.
You see how one learns to downsize one’s expectations?


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