10 Things Every College Grad Needs to Know About Money

Mary Morrison, who has taught a personal finance class to Stanford University seniors for 13 years, has seen it all. There was the young woman who thought “paid vacation” meant all her travel and leisure(cash advance now) activities would be paid for by the boss, the guy who didn’t know there was such a thing as a water bill, and the student who threatened to call the police on the work study office because it was letting the government withhold money she earned and not give it back.

Some students, who call Morrison “the reality check lady,” have suggested she write a book detailing everything you need to know about money when you get out of college. She hasn’t done that, but she shared with Forbes what she thinks are the most important tips of all.

In Pictures: 10 Things Every College Grad Needs To Know About Money”

Some people come in knowing nothing,” she says. “And I really do fear for them. They really are a deer in the headlights sometimes.” The 200 or so students she gets her hands on each year receive(best cash advance companies) a dose of tough love and honesty. They have called the experience “funny and horrifying at the same time.”

Source : www.news.yahoo.com

Breaking Free From Economic Abuse: How Women are Reclaiming Their Financial Freedom

Financial expert and author, Manisha Thakor, devotes her life to helping women achieve economic empowerment and financial freedom. In her two engaging books, On My Own Two Feet: A Modern Girl’s Guide to Personal Finance and Getting Financially Naked: How To Talk Money With Your Honey, she shows how women can make financial choices that are in alignment with their personal values in order to create greater peace of mind.

Thakor approaches her own financial choices with three core values: small joys, financial independence and simplicity. When I ask her why she is drawn to empowering women through financial literacy, she says, “one of the reasons I am so passionate about this is so women have a choice, the freedom and the power to express themselves and make themselves happy. Women have not been taught to view money in a positive light. Financial literacy equals choice.”

Knowledge Leads to Peace

Thakor suggests that all women pursue some form of financial self-education, since “knowledge leads to peace.” She emphasizes that this is particularly important for women who experience economic abuse as part of domestic violence. In her college years, Thakor volunteered at a domestic violence center and witnessed the connection between economic insecurity, limited choices and partner violence. She saw that women without financial resources experience an even greater sense of helplessness.

“Money gives us a voice, “ she explains.

Most survivors of abuse already feel silenced by their experience. Lack of money intensifies feelings of being trapped, devalued and alone.

Although women living below the poverty line are the most vulnerable to economic abuse, this element of partner violence affects women of all socioeconomic levels.

Financial Literacy as Cure for Domestic Abuse

According to the Task Force to End Sexual and Domestic Violence Against Women, approximately half of all domestic violence victims have lost a job due to domestic violence. This becomes even more threatening during a time of recession when many women struggle to find work. Other forms of economic abuse include:

* Denying the victim access to money or the means of obtaining it, to the point that s/he is entirely dependent on the abuser for food, clothing and shelter

* Forbidding the victim to maintain a personal banking account

* Requiring justification for any money spent and punishing the victim with further abuse

* Stealing from the victim, defrauding their money or assets and/or exploiting the victim’s financial resources or property for personal gain

* Forcing the victim to obtain credit, then ruining the victim’s credit rating or future ability to obtain credit

Financial literacy is a crucial and often overlooked resource in helping survivors break free from the cycle of exploitation and partner violence. For those who are emerging from economic abuse, Thakor advises, “be gentle with yourself.”

Taking inventory is the first step to reclaiming economic power.

“Get a handle on what your household earns, owes, spends, owns, as well as your credit score,” she suggests. Through her books and online financial literacy class, she offers a detailed plan for creating financial freedom based on this initial assessment.

Financial Literacy Allows Women to Reclaim Their Lives

In her book, No Excuses: 9 Ways Women Can Change The Way We Think About Power, former CEO of a nationwide non-profit and feminist activist Gloria Feldt explains how women can reclaim their lives:

For many survivors, feelings of powerlessness, low self-esteem and fear of further abuse, can hinder us from seeking out the knowledge and resources we need to create change. Financial literacy not only prepares the way for economic stability, it provides an avenue of education to help women overcome the devastating effects of economic abuse. It is important to make this kind of resource easily accessible to all women, particularly those who are marginalized by race and class.

Teaching to Girls to Ensure a Better Future

We also need to introduce girls to financial literacy programs at an early age, so they are prepared to have healthy, equitable relationships and feel confident that they can take care of themselves. The Girls Inc. Economic Literacy program teaches girls about money management and financial independence.

Claire Mysko, author of You’re Amazing! A No-Pressure Guide to Being Your Best Self, partners with Girls Inc. to provide guidance for girls’ empowerment. Mysko recognizes the connection between financial freedom, healthy relationships and social justice. She says, Ultimately, economic empowerment saves women’s lives and prepares girls for a future free of violence, a future where their voices are heard.

Source : www.news.yahoo.com

This Is A Relief Rally- Not A Bull Market

Stock markets rallied as a form of relief from possible Armageddon. There will be no default and  at worst a rating reduction to the quite satisfactory AA+. Note that the preachers of doom in the form of interest rate spikes were wrong, dead wrong; The 10 year Treasury yield– the most sensitive measure of the cost of borrowing money remains mired at 2.84%. Mired that is in cheapness. Mortgage rates will adjust reasonably. Banks will continue to coin profits from the steep yield curve.

We have officially entered the Age of Austerity. Less government spending. Cuts in Medicare and Medicaid, a means test for Social Security. But, we were dragged screaming and shouting there by this dreaded Tea Party movement that thinks its perfectly just NOT to tax rich people to pay for the deficit.

As for myself I guess when you look at the numbers- $2.5 trillion cut over 10 years–or $250 billion a year– that’s small potatoes– less than 2% of GDP.  Not desperately unimaginably tough to handle.

Still, we have stained ourselves, again after the 2008 debacle when our excesses in the financial system almost did the world in. Now, we are still facing recuperation, meaning that everyone has to pay a bill for  an extended time– maybe forever. Ain’t no bull market to come of that.

Source : www.news.yahoo.com

How Money-Savvy Women Can Save The Economy

   They say women are better at everything. But women are also our most underutilized economic resource. Here’s why women must put financial empowerment to work in personal finance and business.

In our playground days, we learned girls rule and boys drool. While we’ve all grown up since then, it turns out that girls may, in fact, rule when it comes to business, money management, and more.

A growing body of scientific study suggests women can outperform men in everything from investing to gambling to politics. From Wall Street to the West Bank, women are wired to make a significant difference.

So why is it that women, who make up nearly half of the workforce at 46.7%, only occupy 16% of Fortune 500 board seats and less than 3% of Fortune 500 CEO positions, according to Catalyst?

One New York Times columnist wondered, “Would we have been better off if instead of the Lehman Brothers, it had been the Lehman Brothers and Sisters?” With more female CEOs and board members in the financial industry, perhaps the financial crisis would’ve played out differently.

Armed with financial skills and killer business instincts, money-savvy women can indeed take the economy by storm. Take a look at three ways women have a financial edge that can shatter the glass ceiling.

1)      Women are better investors. It’s been said before; now there’s more proof that confirms women are better investors than men. A recent study found that women’s risk-averse attitude and conservative approach to investing achieves higher returns than men, and is ultimately a more successful investment strategy. This isn’t just behavioral psychology; a 2009 study found that female investors made 1% more than men annually.

2)      Women at the top are better for company culture. A majority of companies are still an Old Boys network at the top, but having women in leadership can fundamentally change companies for the better. As Fortune editor Patricia Sellers sums up, “For women, power is more about influence than control, more horizontal than ladder-like. And when it comes to building businesses, it’s about creating the companies we want to work for.” One Fortune 500 company, Principal Financial Group, is committed to gender diversity. The CEO, Larry Zimpleman, stated clear reasoning for it: “There’s a growing body of research that indicates that women are more balanced and thoughtful in making important decisions. So, if improving a company’s performance is of interest, then having good gender balance in key management positions as well as on your board will help achieve that objective.”

3)      Women in the boardroom are better for the bottom line. In addition to being better for company culture, women are great for company profits. The numbers back it up. A Leeds University study shows having one female director cuts the companies’ risk of bankruptcy up to 20%. Catalyst reports that Fortune 500 companies with three or more women on the board had significant performance advantage—73% return on sales and 112% return on invested capital—over those with fewer women. A Pepperdine University study tracked performance of Fortune 500 companies and found that “correlation between high-level female executives and business success has been consistent and revealing.” The question comes to mind again: what if it had been the Lehman Brothers and Sisters?

European countries are beginning to recognize the potential of businesswomen in leadership. Since 2003, Norway has a law requiring that boards of publicly held companies are at least 40% female, which has led to fewer layoffs and more focus on long-term viability, reports MSNBC. Germany, with Europe’s largest economy, is considering calling for a 30% female representation on executive boards by 2018. With women barely filling one in every five seats in American boardrooms, the U.S. could be placing itself at a tremendous disadvantage in the global business world.

DIY Financial Empowerment

The glass ceiling won’t break itself. But the resources are already at women’s fingertips to empower themselves through financial knowledge and action.

For example, LearnVest, a personal finance site for women, teaches women to be financially savvy through educational, fun “bootcamp” programs. DailyWorth fosters a community of financially-empowered women and sends tips on money matters from financial basics to building net worth. Sites like Forbes MoneyWise Women and SavvySugar feature money-smart content written for and by women. Female financial advisers like Jean Chatzky and Suze Orman are strong role models, and similarly, I write for Credit Karma on the topic of credit health for women everywhere. For more great resources, Forbes just posted their latest top 100 websites for women.

What does managing credit card debt have to do with managing a company’s investment portfolio? Both involve financial know-how, innovative action, and the confidence to just do it. Let’s get started ladies; it’s time to do better for ourselves so we can also do more beyond ourselves. The economy needs some saving.

Source : www.news.yahoo.com

The Myth of a “True” Credit Score

Personal finance experts extol the benefits of periodically reviewing your credit report and score. In fact, credit reports are so important that federal law requires the three major credit reporting agencies to make credit reports available for free (see annualcreditreport.com for more details). While federal law generally does not require credit reporting agencies to give consumers their credit scores, there are many ways to get your score for free. And it’s consumers’ access to their credit score that has created a problem.

[In Pictures: Celebrities with the Biggest Money Problems.]

Consumers can purchase their credit score in several ways. They can get access to their credit score from one of the three major credit reporting agencies when they get their credit reports.

Consumers can also get their credit scores as part of purchasing either credit monitoring or identity theft protection services. And here’s the problem–the credit score consumers receive is not the same credit score lenders receive when evaluating an application for credit.

The Dodd-Frank Wall Street Reform and Consumer Protection Act addressed this discrepancy. The Act requires the newly formed Consumer Protection Financial Bureau to “conduct a study on the nature, range, and size of variations between the credit scores sold to creditors and those sold to consumers by consumer reporting agencies that compile and maintain files on consumers on a nationwide basis? and whether such variations disadvantage consumers.”

Last month, the CPFB released its first report on the differences between credit scores sold to creditors and scores sold to consumers. And the conclusion was eye-opening: “When a consumer purchases a score from a [credit reporting agency], it is likely that the credit score that the consumer receives will not be the same score as that purchased and used by a lender to whom the consumer applies for a loan.”

[In Pictures: 10 Affordable Spots for Summer Vacation]

There are several potential reasons why scores may vary:

1. Educational Scores: The scores consumers purchase are often what the CPFB calls “educational scores.” While these scores may provide consumers with some indication of how potential lenders will view their credit worthiness, educational scores vary from the industry standard FICO score.

2. Industry Scores: Even if a consumer purchases his or her FICO credit score, it may vary from industry specific FICO scores. Not all FICO scores are the same, and certain industries (e.g., auto and home loans) use variations of the FICO scoring formula designed specifically for those industries.

3. Custom Scores: As if educational and industry scores were not confusing enough, some of the larger industries use custom formulas specific to their business. These scores typically start with a FICO score, and then make adjustments to the score based on a proprietary scoring formula known only to that company.

4. Credit Reporting Agency Variations: The three major credit reporting agencies generally have different information on file for each individual in their databases. As a result, even if the same scoring formula were applied to the data on file, the credit reporting agencies would typically generate different credit scores based on the information they have on file. As a result, a consumer purchased credit score would likely vary from what a lender sees if the scores are generated from different credit reporting agencies.

So just how big is the difference in scores? It’s that questions that the CPFB is studying. In conjunction with the credit reporting agencies, the CPFB is conducting a study to determine the scope of the variances between credit scores provided to consumers and those provided to lenders.

[In Pictures: 10 Things You Should Always Buy in Bulk.]

To undertake this study, each of the three national credit reporting agencies will provide data on 200,000 consumers to the CPFB. The data will not include any information that could identify the consumer files selected for the study. According to the CPFB report, the “purpose of the data analysis will be to determine with greater precision and understanding the nature, range, and size of variations between the credit scores most frequently sold to creditors and those most frequently sold to consumers.”

For now, however, consumers will have to accept that there is no “true” credit score. In fact, given educational scores, industry scores, custom scores, and variances in credit history among the three national credit reporting agencies, most consumers likely have many credit scores. And while educational scores can provide insight into the credit worthiness of a consumer, it’s best to take the score with a healthy grain of salt.

Source : www.news.yahoo.com

Wants vs. Needs: A One Day Chronicle

Defining “wants” vs. “needs” is an essential money management skill that many people do not realize they already possess. Personal finance educators often encourage using “wants” vs. “needs” before making a purchase. To show how prevalent this skill is in our daily lives, I thought it would be interesting to chronicle my “wants” vs. “needs” for one day.

6:30 AM – The alarm goes off, and my seven-year old son’s face is about an inch away from mine. He says to me, “Mommy, you need to brush your teeth. I want you to make me chocolate pancakes for breakfast.”

7:30 AM – I need to go to the gym to fit in some exercise, but I want to blow off my workout and go back to bed instead. I am paying a monthly membership fee, so I decide to get on the treadmill and start running.

8:30 AM – My Starbucks, sugar-free, hazelnut coffee ($2.00) is a pure want, but I have convinced myself that this daily coffee run is the morning ritual I need to start my day off on the right foot. Not only do I get my caffeine fix, but it’s an opportunity to glance at the newspaper headlines and create my local “community” feel by chatting up some of the regulars there. My mother reminds me that there is a free cup of coffee waiting for me at home that she wants me to consider.

12:00 PM – My lunchtime Target visit turns into an Olympic-size testament on the need for self-restraint and financial discipline vs. a primal want for more “stuff.” I stride into the store with the sole mission of buying milk that my children need, to grow big and strong. I take a detour through the women’s clothing (there is always some item on clearance that may never again be on sale in the future); the dollar aisle (“These prices are too good to be true and everything’s so darn cute!”); the kids’ toy section (“It never hurts to have an extra gift or two stashed away for an unexpected birthday party!”); the seasonal aisle (“This lawn furniture is to die for, and I need seat cushions for next weekend’s barbeque!”); and finally, the newly anointed grocery section (“We need milk, but the Goldfish crackers are on sale.”) I walk out of the store with a gallon of milk and the Goldfish crackers, bemoaning my other lost clearance opportunities.

3:00 PM – It is time to pay the bills, but I need a quick mental break before delving into such complicated and stressful matters. I want to go to Hawaii for vacation sometime in the future, so I convince myself of the immediate need to check Travelzoo and LivingSocial for any travel specials that could save us lots of money. I finish paying my bills, because I want to stop stressing over them and have peace of mind.

5:30 PM – The car needs gas. It costs almost $4 a gallon. I want to start using my roller blades as a less pricey alternative for transportation.

6:00 PM – Time to pick up the kids from summer camp. They tell me they are ravenous, that they have not eaten for hours (but it feels like days), and we need to run to Sizzler’s or Home Town Buffet so I don’t have to cook since I am tired from working. I tell them how much I appreciate their concern for my mental and physical health and remind them of the leftover meatloaf we need to eat at home or it will go bad. I remind them that we cannot go out to eat every night since that costs money. They remind me that we do not go out to eat every night, and it’s “Kids Eat for Free on Tuesday Night” at Chevys (I tell them it’s Wednesday night). By the time we get home, they delve into the meatloaf, and tell me I’m the best cook ever!

8:00 PM – The kids need to take a bath, and my son wants me to pay him $2 to do so. I appreciate his entrepreneurial spirit, but diminish his hopes of ever making money by trying to negotiate bath time with an over-tired mother. We nip that conversation in the bud.

9:00 PM – Tucking my two kids into bed. My daughter reminds me that I need to put my spare change in the goldfish bowl downstairs, since we all want to make a Coinstar visit in the near future (it’s fun!).

10:00 PM – I want to go to sleep, but I need to write my blog for Forbes. Once that’s done, I settle in for an hour of Food Network, then head to bed.

For one day, consider tracking how often you negotiate “wants” vs “needs” in your own life. In particular, see how you apply this when it comes to deciding whether an item is worth buying. This one act of differentiating between “wants” vs. “needs” could save you a few dollars every day! Good luck!

Source : www.news.yahoo.com

Fixed mortgage rates fall toward 2011 lows

WASHINGTON (AP) — Fixed mortgage rates fell this week, and the rate on the 15-year loan dropped to its lowest point of the year.

The average rate on the 30-year loan decreased to 4.51 percent from 4.60 percent a week ago, Freddie Mac said Thursday. It reached its yearly low a month ago, at 4.49 percent.

The average rate on the 15-year fixed mortgage, popular for refinancing, fell to 3.65 percent from 3.75 percent. Its previous low this year was 3.67 percent, reached three weeks ago.

Rates typically track the yield on the 10-year Treasury note. Yields fell sharply last week after dismal jobs data pushed investors into the safety of government bonds. Yields fall as prices rise.

Low mortgage rates and depressed home values have done little to revive the struggling housing market. Many people can’t take advantage of the low rates because of tighter lending standards and higher downpayment requirements. Lenders are cautious because the weak economy and high unemployment make it more likely that some borrowers will default.

Other potential homebuyers are holding off, concerned that housing prices will continue to fall.

Few economists expect the housing market to rebound before 2013.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage edged down to 3.29 percent from 3.30 percent last week. Two weeks ago, it hit 3.25 percent, its lowest level on records dating back to 2005. The average rate on the one-year adjustable loan fell to 2.95 percent, a record low, from 3.01 percent.

The rates do not include extra fees known as points. One point is equal to 1 percent of the total loan amount.

The average fees for the 30-year loans were unchanged at 0.7, according to Freddie Mac’s survey. Average fees for the 15-year fixed loan and the five-year ARM were 0.6. The average fees for the one-year ARM fell to 0.5.

Source : www.news.yahoo.com

Should you Buy, Sell, or Stay way in this Market Correction?

After a turbulent week that pulled almost every financial assets down to earth, investors wonder whether now is the time to buy, sell, or hold on to financial asets. Some  have been calling in popular financial experts for advise and comfort.

“Should I sell my stocks in my 401K account?” asked recently a financial investor, calling in a financial  expert on a popular TV show.

“How old are you?” asked back the financial expert.

“Forty five years old”

“You don’t have to worry. You don’t need the money for another 15 to 20 years. Markets will come back. They always come back.”

Investors and financial professionals love clichés about the performance of certain asset classes over the long-term. They do offer comfort of the mind, especially when markets move against investor bets, but they can be very costly for investors who stick with them.

Here we unveil and defy three of those Clichés:

Clichés 1: “Gold always goes up. You cannot lose money in gold.” Really? What if you purchased gold around 1982, when the metal was around $800 an ounce and sold it around $260 in the early 1990s? You collected no interest or dividend over ten years, and lost close to 70 percent of your principal! Obviously gold doesn’t always go up. But what if you kept your position until now? You certainly doubled your money, but that took 20 years—a 3.6 percent annual return, hardly beating the return of a money market account.

Cliché 2: “In the long-term, stocks always outperform every other asset category.” This is a well-searched proposition in the finance discipline, and in many cases it is true (provided that dividends are re-invested), but it isn’t always true. The performance of Japanese stocks over the last twenty years is a case in point. The Japanese Nikkei Index is down 70 percent. Yes, 70 percent over twenty years!

Clichés 3: “Real estate always goes up.” This is also a well-researched proposition, and it is generally true, but not always true. US investors who purchased real estate in the early 1980s and sold in the late 1980s fared well, but those who purchased real estate in the late 1980s and sold in the middle of the 1990s did lose money. And, of course, there is the case of the Japanese real estate, where investors lost 40 percent of their money over the last twenty years.

The bottom line: Certain assets outperform other assets most of the time, but all the time; and this can be dangerous to investors financial health, as the they can suffer significant losses.

Source : www.news.yahoo.com

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