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Tuesday, September 29, 2009

What are Interest Rates Up to? Should I Buy a House?

By Robert M. Doscher

Of the many decisions you try to make correctly when you are deciding on a home loan, timing the interest rate may be one of the biggest. Will interest rates increase, in which case you should lock in a fixed rate home loan for as long as you can, or are they headed down, which means you should either put off buying or refinancing, or choose a rate that adjusts frequently?

What determines interest rates depends on many factors, so knowing what they are as well as how they behave can help you make a decision. The price of money is interest rates, so if you understand what will affect the price of money, you will know better what affects interest rates, including your mortgage rate.

The most important precursor of interest rates is inflation. There are two major culprits when it comes to inflation. The PPI (Producer Price Index) and the CPI (the Consumer Price Index).

The Producer Price Index (PPI) measures the changes in the prices producers need to pay to produce items. Increases in the Producer Price Index means higher prices for finished goods, and that translates to inflation.

CPI is the change in prices at the consumer level and is calculated by the overall costs in a basket of items defined by the government statisticians. CPI is more well known to most people because it indicates whether the prices we are paying are rising or falling, and by how much. The so called ?basket of goods? used is consistent so that economists can measure how prices change, but since food and energy are included, they are often eliminated to lower volatility. This leaves what is considered the ?core? inflation rate which is a superior indicator of overall prices and inflation.

GDP or Gross Domestic Product also predicts inflation and consequently interest rates. The Federal Reserve Bank tries to keep the economy on a even level, with neither too much nor too little growth, which respectively result in inflation or recession. The Fed has certain tools to influence interest rates and will use them to increase rates when it wants to slow the economy down and decrease them when it needs to help the economy to pick up.

The unemployment rate is another major part of the economy that affects interest rates. Low unemployment is considered inflationary since employers have to chase after too few candidates, and will raise wages to do this. High unemployment usually leads to lower interest rates eventually since employers can keep wages down since there are so many candidates for each job. In other words, increased wages lead to a wage price spiral and lower wages bring prices down.

If you are thinking about a loan, it is to your advantage to watch these indicators to target the best timing to enter the loan market. In general, a slowing economy, with high unemployment, means that interest rates will be falling, and you should hold off on your loan for a while. On the other hand, higher GDP and decreasing unemployment will mean an increase in interest rates. - 23211

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Importance of Global Economics in Personal Finance

By Adela Thomas

When Understanding Finance, it is very important that you recognize the pros and cons of any system. This not only is limited to your own system of recognizing what is important to you, but also a much more broad category of finance. You should understand as much as possible about the subject of money in order to really know what the best use of your time and money is.

You can learn all about various things such as monetary policy, the history of money, various currency, reserve currencies, the dollars function in global economics, and the possibility of an international currency, and what role a reserve currency globally has on the economy under various monetary systems.

The world currency refers to which the vast majority of international transactions take place and which serves as the world's primary way of receiving money. In March 2009, as a result of the, have pressed for urgent consideration of a global currency and panel has proposed greatly expanded the reasons for having great supplies of money. The countries of the world, all, require money in some form or the other.

It is undeniable and must be received in order for a country to survive. The world's currency has many faces, and denominations. From the US Dollar to the Israeli Shekel, the colors, the shapes, the varieties are as different as the people of the world. The currency that is used the most has to be the US Dollar. Some of the currency that is in the world today is as a piece of art, beautiful, sometimes not the value of the paper printed, but still a work of art.

One of the reasons the dollar is so valuable, is because it has reserve status. The Bretton Woods agreement called for a reserve currency around the world that would be held by all for stability. At the time, the dollar was 100% backed by silver and gold, however as it stands, it has lost that security. Fortunately for the world economy, the US government has shown its ability to produce and deal with periods of instability.

Unfortunately the danger that we are approaching is that the US may lose its status as a superpower as China continues to grow its economy and other nations around the world continue to grow. This should be a concern to your personal finances because if the dollar loses its reserve currency status, that means that the dollar will lose value, while things like gold, oil, precious metals and other commodities will maintain their value, increasing their value when priced in dollars - 23211

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Long Term Insurance Fraud: How To Avoid It

By Terry Stanfield

We do not live in a perfect world and the risk of fraud exists. It may be a fraud through a company offering you products, or it may be fraud through con artists, but the sad truth is it exists. Long-term care insurance is not exempt from the risk of fraud, and there are those out there who will try and benefit off your misfortune and leave you with nothing. One of the important things you can learn from the mistakes of others is how to avoid being a victim of insurance fraud.

Obviously, the first thing anyone should consider when they are thinking of getting long-term care insurance is research. Researching a company is one of the best ways to prevent long-term insurance fraud. When you look at the record of a company, you will be given a clear indication of how they will treat you and your money.

You should look into the financial rating of a company to determine how legit it is, and how stable it is. Standard & Poor determines the strength of insurance companies, as well as giving detailed financial profiles on thousands of insurance companies. You can also look at Fitch Ratings, which give financial strength ratings for many insurance companies.

When you decide on a long-term care insurance policy, make sure you get the policy when you meet with the insurance broker. Do not fall for the line of 'It is all in the brochure.' Usually, it is not. You should be able to get the policy, in writing, when you meet with the broker and before you sign it, make sure you read it very carefully, even if you have to take it home to do so.

When you get a policy, you are asked for a month's premium up front to process the application. If you choose not to accept the policy or you are declined, you should get your money back in full.

You can also talk to friends of yours to find out what insurance company they go through for their own long-term care insurance policies, if they do. However, do not accept their word because they could be victims of long-term insurance fraud and not even know it yet. Just research the company and if you find out something troubling, let them know. Conclusion Long-term care insurance is one of the best things you can do to make sure you are not a financial burden on your family. However, you do not want to give someone your money and find out later that you were a victim of fraud. Then, with all the money you put in, you come up with nothing and that is a horrible situation to be in. Do your research, ask questions, don't sign anything without reading it and always make clear what you expect up front. If you do this, you should be okay and be able to prevent yourself from becoming a victim of long-term care insurance fraud. You should just ask for help from an insurance representative who specializes in long term care insurance to answer any questions. - 23211

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Get An Auto Insurance Comparison And Save 10 Ways

By Vic Shallow

Insurance premiums can vary greatly between companies and agencies.A way to save money is to to get an auto insurance comparison. Using an online service to get insurance price quotes makes it fast and easy.

Here are 10 money-saving tips to help you get the best rates on auto insurance.

1. Insurance companies look at your driving record as one of the biggest factors. Always maintain a good driving record. The more points you have, the more you're going to pay.

2.Get an insurance comparison from different insurance providers. The more you have to compare against the more likely you are to get the best rate. The more informed you are the better.

3. Check to see if the company that you have your homeowners insurance with offers discounts for having multiple policies,life, auto, home, etc.. If so, compare that rate against other quotes.

4. Your auto insurance costs could be reduced by at least fifteen to twenty percent by choosing higher deductibles but higher deductibles could mean more money out of your pocket in the case of an accident. It's your decision how much of a risk you're willing to take.

5.Get an auto insurance comparison before you buy a new vehicle. Different types of vehicles cost more to insure than others. Keep that in mind when choosing your new vehicle.

6. Check group rates through community clubs,corporate organizations, and professional or alumni bodies. Insure all your family's vehicles together,

7. Did you know that many insurers look at your credit score before setting your rates? They do! Keeping a clean credit record will save you money in many ways, including on your auto insurance. So try to keep loans to a minimum and pay bills on time.

8. Many car insurance companies offer a discount if your teenager takes a safe driving class. Although this can be inconvenient, it is something that could save you hundreds of dollars over the course of a year.

9. If you have a good health insurance policy,consider dropping medical payments coverage. Don't duplicate coverage. With medical costs being so high, this could save you up to 40 percent on auto insurance premiums!

10. Compare available discounts by getting an auto insurance comparison. Many car insurance companies will offer a discount for such things as seat belt use, airbags, anti theft alarms and devices, and even for owning multiple vehicles.

All of these ideas can help you save hundreds of dollars or more. Remember that getting an auto insurance comparison is the first step to saving. The more you compare, the greater opportunity to save! - 23211

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How You Can Avoid Bankruptcy And Start Again?

By Ben Davies

The current worldwide recession is making things difficult for everyone. More and more people are facing debts that are very difficult to get out of.

However, what many of these people have no idea about is that there is a good viable alternative to having to declare bankruptcy. The solution is debt relief and has helped many thousands of people to avoid bankruptcy.

A debt relief company will get together with their client and do a full analysis of the debts. From here they are then is a position to put together a revised repayment program, which the client is happy with and most importantly can afford.

From here the specialists on the clients behalf go on and contact all of the different creditors to give them this revised plan of repayments. It may be to get reductions in the levels of debt or it may include some kind of adjustment to the repayment times, it all depends on the individual and the situation.

They use their knowledge of the marketplace and the connections they already have in place with creditors to negotiate the discounts in the plan. Of course they may be some counter offers, but eventually an agreement is reached because it is in everyones best interest. The creditors get no money, if the individual has to declare bankruptcy.

This can cause a hit to an individual's credit score, but if you are facing bankruptcy it is likely your credit score has already taken a hit and the effects on the credit score are far less of a problem than bankruptcy.

An individual can go through this process on their own, however the chances of securing as good levels of debt reduction are very slim, especially as quickly. So the chances of avoiding bankruptcy are much less.

That is why I always stress that anyone who is in a position where they need debt relief needs to make sure that they only ever use the most reputable companies to help them out of their situation. Even if that means doing research. - 23211

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