Albion Finance Blog

The pros and cons of debt reduction

2010-05-06T05:33:00.000-07:00

When you see yourself facing mounting debts, you would want to debt reduction programs to help you pay off your debts in more manageable terms. These programs offer you effective strategies to reduce your overall debts by reducing your monthly payments. While more and more consumers are resorting to these debt reduction programs, it would be useful to know the pros and cons of such programs before getting enrolled.
Pros of debt reduction
The following are the pros of such programs:
Reduction to the principal – If you opt for debt settlement programs, you'll be able to reduce your debt by 40 – 60%. This would further help in shortening your term and reduce your repayments.
Lower repayments – You can reduce your repayment amount considerably through these programs. This would make your payments easier and more affordable.
Management skill – These programs helps you learn money management skills that help you to handle your finances better in future.
Alternative to bankruptcy – These programs help you to avoid filling bankruptcy. Though you still need to make your repayments under these programs, you can avoid having a long term negative impact on your credit score.
Cons of debt reduction
The following are the cons of debt reduction:
Low credit score – Opting for such programs will have a negative impact on your credit score as it would get reported to the credit bureaus.
Extended borrowing term – With reduced repayments, your debt relief plans can actually extend the term of the debt.
No legal binding – These debt relief plans are not legally binding. This means that a creditor can still harass the borrower for repayment of the outstanding balance.
Keep making payments – Debt reduction programs offers debt help that you can acquire with time. Remember that in spite of getting enrolled into these programs, you need to make your repayments.
It is important to find the right debt reduction program for you, if you want to pay off your debts on time. Evaluate both the pros and the cons before you make a decision.

Seed Sales Pick Up As People Grow Their Own Groceries

2009-06-28T22:58:00.000-07:00

Seed Sales Pick Up As People Grow Their Own Groceries

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/14/AR2009061402741.html?wpisrc=newsletter

While the seed business has been around for a while, it really never got too much attention. Only a handful of enthusiasts or people alarmed over the pesticide scare showed any interest in growing their own food in their backyard. But with the recession eating into people’s budgets, more and more people are growing their own vegetables to save money.
Interestingly the sales have increased the most for what is ‘survival’ or staple food further implying that people are using it to cut grocery bills more than anything else. While currently the seed producers are seeing a huge demand, I wonder how long people will continue to find this a viable alternative.

Dollar Loosing Its Shine

2009-06-15T00:19:00.001-07:00

Dollar Loosing Its Shine

http://www.bloomberg.com/apps/news?pid=20601103&sid=aRMZbES7DNFc

The US dollar’s status as the sole reserve currency is likely to deteriorate over time, according to Nouriel Roubini, an economics professor at the New York University. Several complementary reserve currencies are likely to emerge over time, he said. US’s ballooning budget deficit has made it dependant on foreign financing and the leaders of several countries including Russia and China have questioned the dollar’s status besides calling for the identification of a super sovereign reserve currency. However, a change in the status of the dollar is likely to increase the funding costs for the US besides diminishing its pre-eminent place in the global arena. US should not count on a strong economic recovery to boost its financial position, Roubini says. The recovery is expected to be very slow and weak.

Bank Of America Raises $26 billion

2009-06-01T06:12:00.000-07:00

Bank Of America Raises $26 billion
http://money.cnn.com/2009/05/27/news/companies/bank_of_america/
Bank of America has raised a significant portion of the $34 billion required by it to meet the capital requirements norms set by regulators. The US government had conducted stress tests on several US banks and after studying the results of the same had identified around ten banks which needed additional capital to meet future losses or face worsening economic conditions. Bank of America has announced that it has already raised $26 billion including $13.5 billion through a stock sale. Bank of America has also sold its stake in China Construction Bank and the conversion of $5.9 billion of nongovernment preferred shares into common stock. The company is trying hard to raise additional capital and avoid conversion of government holding into common stock.

UAW Opposes GM’s Latest Restructuring Plan

2009-05-17T22:49:00.000-07:00

UAW Opposes GM’s Latest Restructuring Plan

http://www.freep.com/article/20090506/BUSINESS01/905060374

General Motors’ latest restructuring plan is being opposed by its union on grounds that it calls for increased reliance on foreign manufacturing and shut down of many US plants. The two parties are expected to discuss further cost cutting measures and conversion of a proportion of the retiree health care debt into stock later this week. The UAW says that General Motors plans to gradually shift production from the US to Mexico, Korea, Japan and China and import vehicles for sale in the US is flawed as it will result in significant job losses. The Union also called for linking any further financial assistance to the auto major to its ability to maintain jobs in the US. General Motors is trying hard to restructure its debt before June 1 and avoid bankruptcy.

Pharma Sector Expected To Stay Healthy

2009-04-27T23:15:00.000-07:00

Pharma Sector Expected To Stay Healthy

http://www.reuters.com/article/businessNews/idUSTRE53B1AG20090412?feedType=RSS&feedName=businessNews&rpc=35

Expectations are high that pharmaceutical companies will give the economy and the markets something to cheer about when they release their ‘earnings’ numbers this week.
The pharmaceutical industry is typically the last to be affected in bad times, though this time the going has not been very easy for this industry as well. Expensive drugs and life time medication have been facing pressures with people opting out of such medication and trying to make do with either lower cost generic drugs or reduced dosages.
The nature of this industry is such – neither does it show excessively high growth rates when the economy is booming and nor does it go into a slump when things are looking down. However, as with all ‘luxury’ products, whether it is wine, cheese, peanut butter, clothes or medicines – customers are trying to find cheaper alternatives.

Ensuring Medical Health Cover

2009-04-12T23:41:00.000-07:00

Ensuring Medical Health Cover

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/11/AR2009041100083.html?wpisrc=newsletter

Sad but true, troubles somehow always tend to come together. You can have free medical insurance for years as part of your salary and you stay fit and fine never having to use it. But one day you lose your job and the next month you’re incurring heavy medical bills. Not fair. Not fair at all.
President Obama’s economic stimulus plan addresses part of the problem. It includes a federal government subsidy that pays 65% of your premium till 9 months after you lose your job. Before this regulation, you would have been allowed to continue under the ex-employers plan assuming you were in a position to foot the entire premium, which incidentally is huge.
While this is a positive step, it does not cover everybody and all situations and is something that needs to be improved further.

Extension of Tax Deadline

2009-03-29T23:50:00.001-07:00

Extension of Tax Deadline

http://www.sltrib.com/business/ci_12014684

Extension of tax deadlines can be used by those who are short of money and also those who have just been putting it off. April is approaching and taxes have to be filed. There is a provision in IRS by which an extension can be obtained for filing tax returns. It would be foolish not to do any thing if you are not be able to pay your taxes in time.
Get the date extended and try to pay it since not having money is not a good reason to default on your tax filings. Extensions are routine procedures with some small business especially those with simplified employee pension, and only have to pay their tax returns only by October. Pay taxes and be a responsible citizen.

Bernanke Calls For Modification Of Fair Value Rules

2009-03-16T01:00:00.000-07:00

Bernanke Calls For Modification Of Fair Value Rules

http://www.marketwatch.com/news/story/bernanke-we-need-improvements-fair/story.aspx?guid=%7BD596313D-1B4A-4CE7-AEA1-3F4F79DE504D%7D&dist=msr_1

Federal Reserve Chairman Bernanke has called for identification of the weak parts of the controversial mark-to-market accounting rules, which require daily revaluing of assets, to try to make some improvements.

In the current economic scenario, the chances of some numbers being inadequate or misleading are quite high, he said. The mark to market accounting methodology requires banks and other companies to assign a value to a financial product based on the current market price for the product or a similar product.

However, the market for troubled mortgage securities and several other illiquid assets has dried up which makes their valuation difficult. So there is need for some kind of solution to make the correct valuation and improve the balance sheets of these banks.

US Consumer Confidence Plunges to New Lows

2009-03-02T22:43:00.001-08:00

US Consumer Confidence Plunges to New Lows

http://www.marketwatch.com/news/story/february-consumer-confidence-plunges-record/story.aspx?guid=%7B48951A6F-0FCE-49AD-A36C-8D50D6D50C40%7D&dist=msr_19

Growing concerns about jobs, income and economy pushed the consumer confidence to new lows in February, this year. According to the Conference Board’s monthly index, the US consumer confidence fell to 25 from a downwardly revised January level of 37.4. The economists attribute the worsening consumer confidence to the ongoing recession and the growing feeling amongst the consumers that the situation is not to improve in the near future. However, Federal Reserve Chief Ben Bernanke has said that he believes that economic growth is likely to revive once the problems faced by the country’s banking sector are resolved. President Obama has already announced that fixing the country’s economy was his top priority and that he was ready to do whatever was necessary to improve the situation in the housing, banking and automobile segments.

Stimulus Plan Goes Sour For Now

2009-03-02T22:40:00.000-08:00

Stimulus Plan Goes Sour For Now

http://www.nytimes.com/2009/02/04/business/04leonhardt.html?ref=business

The Stimulus Package has been called as ‘ordinary’. Important people out there are saying that it lacks the ‘punch’ needed to hit the recession on its face. While one school of thought says that it is too small and money amounting to trillions and not billions is needed to bail out the country, others are simply calling the plan ‘ineffective’.

These ‘others’ are calling the plan ‘ineffective’ because they feel it does not do enough to get people out to go shopping once more or do other such ‘targeted’ things to lift the market.

Lots of inputs are coming from all quarters. President Obama has a good eight days left to improve the plan. Hope he makes the best use of the well-meant advice!