Personal Finance Corner

Thanks for sharing! It is true that most people are just looking for reassurance. The news of such a bank failure can be unnerving, and it is great of your banker to provide information to his customers.

I talked with my banker today and he said he has spent almost every minute this week meeting with nervous customers (depositors). He held a class on Monday to refresh the entire branch crew on FDIC insurance and is happy he did. Customers just want to be reassured.

Thank you for this rather thorough and in-depth look at stocks.

When All Stocks Are Value Stocks - Think QDI

Value stocks are those that tend to trade at lower prices relative to their fundamental characteristics than their more speculative cousins, the growth stocks; they have higher than usual dividend yields and lower P/E and P/B ratios. So when all stock prices are down significantly, have they all become value stocks? Or, based on the panicky fear that tends to overwhelm media and financial experts alike, haven't they all taken on the speculative characteristics of growth stocks?

Well, to a certain extent they have, because the lower value stock prices go, the more likely it is that they will eventually experience the 15% ROE that typifies the classic growth stock. Interestingly, by definition, growth stocks are expected to be associated with profitable companies, a fact that speculators often lose site of. There are three features that separate value stocks from growth stocks and two that separate Investment Grade Value (IGV) stocks from the average, run-of-the-mill, variety.

Value stocks pay dividends, and have lower ratios than growth stocks. IGV stock companies also have long-term histories of profitability and an S & P rating of B+ or higher. Would you be surprised to learn that neither the DJIA nor the S & P 500 contains particularly high numbers of IGV stocks? Still, since 1982, value stocks have outperformed growth stocks 62% of the time. So when an ugly correction has a makeover, it's likely that all value stocks transform themselves into growth stocks, at least temporarily.

Will Rogers summed up the stock selection quandary nicely with: "Only buy stocks that go up. If they aren't going to go up, don't buy them." Many have misunderstood this tongue-in-cheek observation and joined the buy-anything-high investment club. You need dig no further than the current lists (June '08) of "most advancing issues" to see how investors are buying commodity companies and financial futures at the highest prices in the history of mankind.

This while they are shunning IGVSI (Investment Grade Value Stock Index) companies that have plummeted to their most attractive price levels in three to five years. Many of the very best multinational companies in the world are at historically low prices. Wall Street smiles knowingly (and greedily) as Main Street hucksters tout gold, currencies, and oil futures as retirement plan safety nets. Regulatory agencies look the other way as speculations worm their way into qualified plans of all varieties. Surely those markets will be regulated some day--- after the next Bazooka-pink, gooey mess becomes history.

How much financial bloodshed is necessary before we realize that there is no safe and easy shortcut to investment success? When do we learn that most of our mistakes involve greed, fear, or unrealistic expectations about what we own? Eventually, successful investors begin to allocate assets in a goal directed manner by adopting a more realistic investment strategy--- one with security selection guidelines and realistic performance definitions and expectations.

If you are thinking of trying a strategy for a year to see if it works, you're being too short-term sighted--- the investment markets operate in cycles. If you insist on comparing your performance with indices and averages, you'll rarely be satisfied. A viable investment strategy will be a three-dimensional decision model, and all three decisions are equally important. Few strategies include a targeted profit taking discipline--- dimension two. The first dimension involves the selection of securities. The third?

How should an investor determine what stocks to buy, and when to buy them? We've discussed the features of value and growth stocks and seen how any number of companies can qualify as either dependent upon where we are in terms of the market cycle or where they are in terms of their own industry, sector, or business cycles. Value stocks (and the debt securities of value stock companies) tend to be safer than growth stocks. But IGVSI stocks are super-screened by a unique rating system that is based on company survival statistics--- very important stuff.

In the late 90's, it was rumored that a well-known value fund manager was asked why he wasn't buying dot-coms, IPOs, etc. When he said that they didn't qualify as value stocks, he was told to change his definition--- or else. IGV stocks include a quality element that minimizes the risk of loss and normally smoothes the angles in the market cycle. The market value highs are typically not as high, but the market value lows are most often not as low as they are with either growth or Wall Street definition value stocks. They work best in conjunction with portfolios that have an income allocation of at least 30%--- you need to know why.

How do we create a confidence building IGV stock selection universe without getting bogged down in endless research? Here are five filters you can ...

You're right. We should step back, look at our personal finances, and do what's right for our financial situations -- mostly by cutting back. If we did that, we'd start to move away from the debt based and consumer spending economy we have now and gravitate back toward an economy that is oriented more toward strong individual finances.

I totally agree, there are no quick fixes and the more they try to fix, the worse they make it! I think we've all seen that! It is time to cut back and ride out the storm, I'm just hoping to see the storm let up!! Have a good one!!

You are always so optimistic! I think that economy may be picking up a little as well, but we will have to wait and see whether or not it is sustained.

While these things generally do run in cycles, we have made the whole thing unstable with our constant insistence that everything must be growth, growth, growth. Continuous growth is unsustainable, but since the mid-1990s (especially) our government has been trying to manipulate and stimulate things so that there is constant growth (lest those in power be ousted in the next election).

Unfortunately, that actually increases the level of instability in the overall economy, and will lead to more pronounced swings -- and larger crashes in the future if we stay on this course of trying to "fix" downcycles rather than riding them out with a citizenry that practices good personal financial principles.

I agree with you on the economic stimulus monies that people have received. It makes us all feel a bit better to have cash in our wallets or in the bank. Seeing your bank account balance increase even $600 can boost your morale. But I also think that maybe, just maybe, the economy is starting to boost a bit. Although there are still foreclosures and people are definitely feeling the bite at the gas pumps, it seems to me that the media is not all doom and gloom anymore. I don't know, maybe I have just tuned them out!! And if I have, then maybe others have as well. I sincerely hope that is the case. Since the economy typically runs in a cyclical pattern, maybe we are starting to see the upside, just a bit? I know we're all ready for it!

Thanks! I'm glad you enjoyed the video.

Gotta say you win the award for getting the biggest laugh out of me today!!! I have a couple of friends who run H E D G E F U N D S...gonna send this to them!!

I agree that financing is especially hard to come by. Commercial real estate, industrial real estate and small business financing are all being hit -- just like personal financing. This is a rather severe downcycle. It's certainly worse than recessions of the past 20 or 30 years, but it's not close to being a depression -- yet.

Every day I go to work, it is harder than the day before to secure bank financing for small business owners. I have been in banking for 18 years and we have had some ups and downs, but I have never seen a down cycle like this before.

Blue chips can be good if you are planning on being in for the long haul, and can stomach the risk. And you are right that I-bonds and T-bills are safer. Especially in a volatile market. I like your take on the financial professionals as well! Are they competent? I am not worried about things, either. Although all the Fed rate cuts have me annoyed about my cash investments...

Miranda, I agree with your first two steps: 1. Get out of debt...Yes, and that includes any and all mortgages. 2. Build up an emergency fund...Yes, one year is better. But you're a bit young to have experienced any really bad times, so 3. Consider blue-chip stocks...No, when one has funds available after 1. and 2. above, first invest in I-Bonds and T-Bills. Any stocks at best are speculative and high-risk. 4. Consult a professional...Two questions to ask: - Have the professional show you his or her FICO score. If it's less than 800, walk away, that person is neither qualified nor competent to offer financial advice. - Ask to see their current personal balance sheet. If their net worth is less than yours, walk away. - And if they refuse to do either of the above, don't walk away, run away! Having followed my own advice, I'm not overly concerned about weathering the current economic melt-down.

We have found the opposite. Pest control really isn't an issue for us, I guess. Our garden has always yielded well, without the need for a ton of pest control beyond a few, simple organic methods...But if you can get produce cheaper by buying it, that works too.

Of course, we live in the middle of nowhere, so produce from off costs a ton -- especially with the current gas prices.

Anyway, more proof that personal finances really are personal.

I think having a garden is more expensive in the long run because I have personally spent, in my area, twice as much in pest control verses produce. I would rather buy from other sources.

I agree that bad credit loans are needed, to a certain extent. But the key is "making progress." In order to get a bad credit loan, I feel you should be able to document an extenuating circumstance (such as medical catastrophe, natural disaster), or show how you are improving your financial habits -- since we all mistakes.

But many of the bad credit loans on homes, were given to people with a history of poor credit decisions. Additionally, these loans should adhere to income requirements. Base the loan qualification on whether the person can pay AFTER the reset.

It is refreshing to see someone focus on the excellent credit sector. But honestly, anyone who would give an unsecured loan to someone with bad credit would just be stupid. People with all types of credit should be able to get loans on certain things, i.e. house, car, etc. I say all types, I mean those from excellent credit down to those who may have had a rocky past but you can see by their credit that they are making progress in the right direction. But, these are secured loans. This is a great program for unsecured loans and I would do the same thing. Focus on the excellent credit sector. Payback probability will be much higher.

As I stated, it is a good idea to have a mix of permanent and term. However, I disagree that permanent life insurance should be the "foundation" of personal finances. My "mutual" permanent insurance barely beats the rate of inflation (it's even worse since the Fed rate cuts). But I do like having it as coverage when my term life insurance runs out.

Honestly, it is possible to have too much life insurance. Many people are actually over-insured. While permanent life insurance can make a decent cash investment addition to a portfolio, I would rely on other types of investments and methods for a "foundation." ...

I am so glad to see the discussion of life insurance. Although it saddens me to see the still uninformed comments and "advice" about life insurance. Permanent insurance should be the basis of all financial foundations. I did not understand this until I began in the industry 4 years ago and looked into the eyes of wealthy individuals who NEEDED as much insurance as possile and could not get it due to health issues and budget constrains or annual reneable term insuranc. If you will speak to them, they would definitely advise a mix of term and permanent insurance. Also one of the greatest advantages of permanent insurance is to use its living benefits or cash values. If you are with the right company (Mutual only) you will be surprised how much you can benefit before you die. Do some research and then write informed articals so educated decisions can be made by consumers. Thanks ...

I agree that including metals can be good for a balanced investment portfolio. It is true that many savings accounts are being killed by inflation (especially since the Fed keeps cutting rates), but a savings account is still a good way to build up very liquid assets that are easy to get to if necessary.

Great article! I also recommend buying some gold & silver (both physical & through exchange traded funds), since inflation is killing the value of your savings everyday. Your emergency funds could be wiped out just by inflation. If you're interested in learning more, check out www.surviverecession.com ...

Of course, everything must be taken with a grain of salt. But, honestly, we don't have a lot to go on beyond what candidates tell us, and what they did in the past. In terms of economic plans, I like what Obama and Clinton offer best.

The trick, of course, is making it work in a real-world situation where partisan bickering comes in (don't get me started on the issues I have with our two-party system). The other trick is getting regular, every day citizens energized enough to voice their opinions and hold politicians responsible for their promises. Too many of us sit back and insist that nothing can be done. They do nothing, and then nothing is, in fact, done.

I saw a commercial from Obama's campaign a week or two ago that was basically his running stance. It's time to pull together, it's time for a change, we can do this together, and so on and so forth. It was a great commercial and anyone whether republican, democrat, or liberal would have paid attention to it and thought "wow, this person would be great!" However, then reality sets in and you realize that these commercials and these speeches are all written by people who are paid, and paid well to come up with things Americans want to hear and things that Americans long for. The problem is how you would get there. I don't think the press is even doing a good job this election term on getting the truth out. I think every one loves the thought that we could be one nation, united, to stand together and create a better world. If you tell someone that enough, they may just believe it. Me personally, I like to look at voting records, and the candidate?s life itself and what they have done or said about that. Actions are much louder than words. The simple fact is, this country only unites together when a tragedy occurs. On any other day, a democrat can say the sky is blue and a republican will disagree and vice versa. I wish there was a way to pull Washington and the rest of the politicians together, but people have been promising that for years and it just never happens. If one party wants one thing, the other has to go against it. Isn't that a new law now?? Speeches and commercials are great, but beware of what's behind them, on all candidates.

You are insightful and ask thought-provoking questions :0)

I agree that one of the biggest culprits to an unsuccessful budget is all the small things that add up to large amounts...

Thanks for the compliment on my questions! I totally agree with 2 months as opposed to 1 if at all possible. I think it's imperative to realize how much those little purchases add up to and it's hard to do that in just one month. You are so right on making sure you keep track of even the littlest expenses. Those can throw off your budget calculations and with them being such small amounts; it's hard to think of them being the culprit to your blown budget.

There will always be those who prey on the less fortunate. And in this time of economic uncertainty, people promising "quick" help abound. It is important to double check everything. And rather than going through someone who solicits you, it is best to approach your own lender first as you look for help.

One month minimum. But two is better. Since many impulse habits are just that -- impulse -- it can help to have two, or even three, months of spending considered. And don't forget to remember those bills that fall every six months or so. Look at your insurance policy premiums. If you only pay them once every six months, or only once a year, make sure that you average it out as a monthly expense.

It is indeed true that most mortgage companies are trying to work with their distressed homeowners, but homeowners need to stay diligent. There are so many foreclosure scams out there right now and they are just waiting to swoop down on homeowners who are at their ropes end. A case I know of had a person knock on their door who said they were there to help. They had all the right paperwork, or at least it looked that way. The problem was, although this was a "legitimate" offer, they ended up signing their home away to another company that still foreclosed on them. It was a bad situation which they are still fighting. I think it's horrible that the vultures come out to prey on those that are down, but it happens all the time. So, yes, there is help out there available to those who need it, but please, please, please double check and make sure of whom you are dealing with.

If someone were planning on trying to make a budget, I have suggested for them to begin by writing down all the money they actually spend for a time period of at least one and if possible two months. I feel this gives them the opportunity to learn from where they spend their money and how they may be able to cut corners. We all know that those quick impulse buys and a Coke here and there add up. It's fine if you have the money in your budget for it, but it's best to know from the beginning where your money is going. Sorry to go on here, my question to you is - if you are speaking to someone on beginning a budget, what amount of time do you think is best for them to keep track of their spending?

I like this thought. Sometimes what it's called can help. And if calling it a rebate means that we use it more wisely on an individual basis, I'm all for it. Calling it a bonus will only encourage people to use the money unwisely...

One of the things I like about you, Kim, is your optimism. You're right, in the short-term, these steps will probably help. And who knows, it could prod us to take more long-term steps. Time will tell. I agree that it is nice to see SOMEONE trying to do SOMETHING. Hopefully we'll focus on prevention from here on out.

I do agree that it would be nice to see some true bi-partisanship again.

The NY Times had an interesting op-ed piece the other week about another problem with the rebate that comes with the stimulus package. A behavior scientist from the University of Chicago wrote about the problem with calling the money a "rebate," which implies that it's a return of money already spent. He points to studies that show how differently people view a sum of money when it's called a "bonus" instead. "Rebate," like "refund," doesn't invite spending just because we classify that money differently. (You can see the article here: http://www.nytimes.com/2008/01/31/opinion/31epley.html) ...

I agree with you about all the short term fixes that seem to be going on...the Fed cutting interest rates, the economic stimulus package, etc., but since the government actually seems like they are trying to help, I say it's about time. There are many things they could have done a while back to help offset where we are right now, but trying to get something passed from the House and the Senate seems to be increasingly difficult. All the bi-partisanship talk that you hear about really doesn't occur anywhere but out of the mouths of legislators when they are on a stage. I seem to recall a time when they all stood on the steps of the Capital and sang in unison to give the country a feeling of solidarity. Why does it take a national disaster to pull our legislators together and work for the greater good of our nation? I for one am glad to see them doing SOMETHING together. Even if it is a quick fix. Maybe it could lead to something that really will help??

Best of luck.

My husband and I are struggling with this same type of question. Thanks for sharing the advice with all of us!

Thanks for your input. That's pretty much what I told them, to keep paying their minimum payments and try to save up some money until they can start paying a little more on their debt. I, by no means am a financial advisor, but many clients defer to us to give them proper guidance. It's good to know we are on the same page! Thanks and have a great day!

Some people are already in really bad circumstances. I would suggest taking a hard look at the situation. Are there places to cut back? Most families "waste" 10 to 15 percent of their income each month. In the more desperate circumstances, I would see how long one can keep making minimum payments (icky, I know) and save the money to shore up against the coming recession with savings (especially if the job looks to be in jeopardy).

However, if you have a stable job, it is a good idea to start paying down debt. Having as little debt as possible is important in a recession.

Another thing that can be done now is this: Figure out how much you can cut back each month. Take 15% of that and put it into saving. Put the rest toward debt reduction. If you get a tax rebate, follow the same rule. It may not seem like much, but when you aren't doing any of it right now, any little bit helps. And it will help build good habits.

Miranda, as always, you're right on target! However, what would you suggest for those who don't have the money to pay down their debt and start savings? It's great and easy to say that paying off your debt and saving money is the way to go, but if the recession is coming so fast, do people really have the time to do these things? Would you suggest saving money first as opposed to paying down the debt? If the recession hits at the end of the year, would someone be better off having their debt paid down the little they could have afforded or to have some money saved? Which would you advise?

I appreciate the compliment!

Miranda always gets her point across clearly and efficiently. Great column!

It's really a "confidence" game, and the media is enjoying the story. I've heard (and seen) lots of stories about how the government is going to help people in tight spots. And the media is reporting the fact that Bernanke thinks we won't go into recession. So those stories are out there.

But it is largely a matter of opinion. Some economists say we're there, some say we will be, and others say it won't happen.

You are right about the buyer's market for sure. As long as someone is buying to live in the home or rent it out (not planning to flip it or sell in a year or two). It is an ideal time to buy a home. I bought a home at a good time. But I wish I had waited just two more months, even though it really wasn't feasible in my situation to wait. It would have been even better.

The tough part, of course, is keeping those resolutions.

There are always opportunities for those who look for them. And, honestly, the recession will be beneficial for some...

I have been telling my client's for a while now that it is a buyers market and they should jump to buy right now. Home prices are down, mortgage rates are down, and there is an abundance of homes on the market. Thanks for re-iterating that as well. However, as far as the recession goes, it all depends on who you read as to whether we are going into a recession or not. I have read several articles about the role the media is playing in all this, and it started me thinking; I wonder what the Great Depression would have been like if the media was back then what it is now. How much worse would it have been? The media is all about headlines and over dramatizing everything. What role do you think they are playing in all this? Do you think that we would be in a better situation now without the news coverage on the "impending doom"? If the media started today broadcasting stories about good things like how it is a great time to buy and the market is stabilizing, the government is helping those in tight situations and the mortgage business will recover over the next 12 months, don?t you think that it would make a huge impact?

I enjoyed the irony of your post. Considering the perspective an individual chooses upon reading your post, they could perceive this expected recession as a good thing, and, on that same note, they could consider it a bad thing? Ironic, huh.

I am double checking the forum. I guess I was curious about the type of resolutions people are making. I've concluded that if we each kept to our resolutions, so to speak, we will all have contributed to the making of quite a beauty stress free world. Best of luck to all.

is always good. I think that making a long list of abstract and difficult resolutions in asking for failure. Which is my list is short, and consists of resolutions that I can accomplish with some planning. Your resolution of self-discovery is a good one. And it's doable. Set aside one or two hours a week to devote to your resolution. It doesn't have to be all at once. Your resolution is one that can be done in 15 minute meditative blocks each day.

is to buy only what you can pay off each month. But, failing that, it is good to limit large purchases to items that you can pay off in a short amount of time.

Thanks for reading!

This is a great new year's resolution. You're never too young to prepare for the future! Especially with the economy as it is now...

I didn't give this much though till I read this post. I guess it's because I hear everybody start off each new year reciting their resolution for the new year. Only, shortly after, they have broken each one and lost their resolve to keep trying to keep their new year's resolutions. So, this is why I don't bother to have or make new years resolutions. However, since you asked so nicely, I guess if I had too...I would resolve to getting to know if I have some deep dark desire or want. I believe I am too busy to take the time necessary to find out the answer to this question. Hence, my resolution is to make the time necessary to discover what it is I truly want.

My New Year's resolutions include starting to prepare for my retirement years. I am still young; but I think now is the time we should do that. From what I hear and read about the future economic outlooks, it seems the obvious thing to do. Anyway, that's my New Year Resolution.

Great article! I would also like to add that, in my opinion, many credit card owners look at the minimum payment for an article as the payment option of choice. I think it should be pointed out that it is the payment option of choice that the credit card company would like you, the consumer, to take. However, I suggest that when committing to making a purchase with your credit card, you establish a period of pay of say 1 to 2 months and divide the total cost of your purchase by either or. This approach ensures that you are paying more than the minimum balance and actually making significant financial strides to reducing your credit debt.

I think this site has the potential to have the same kind of substantial impact wikipedia has made on the global online world. I, particularly, will be consulting wikinvest constantly because it is exactly what I need to help digest information I am getting from other investment resources I have invested in. Thanks for posting such priceless informational resources.

It's all about raising awareness of what's out there.

Whenever an economy struggles, fear of investing is visible. And if stagflation does really take hold, bringing us into a recession, businesses will have problems. For the intrepid, and those willing to do good research, though, a recession is the time to buy quality stocks that will recover.

The idea behind environmentally friendly investing is just that -- to reward those who make a true effort to improve the planet. What you with your money CAN make a difference.

Congrats on recognizing this as desirable goal. Just remember -- all of you who make it a goal to get out of debt -- that a plan needs to be made. Be sure to sit down and work out a doable plan to reduce your debt this year.

Congrats and good luck on your resolution!

Great read! It would be nice if this is the trend that is the priority for all investors in the future. I can see how that type of priority can make a substantial impact on the world. It's a great post.

I wanted to join the thread with my New Year's goals. I prefer to say goals as resolutions now have the reputation of promises. They appear to be meant to be broken. Anyway, my goals for this new year include like the others getting out of debt and staying out of debt. Once, I achieve this; I believe all other things associated with my business will fall into its proper space.

Thanks for yet another interesting article. You started off with a statement that most of us have probable heard of stagflation. In fact, I felt a bit abashed at not really knowing what this word meant. Boy, was I relieved to read your definition in the paragraph immediately following. Thanks for the lesson. I look forward to some more educational reads from you. One question, is this stagflation a sign that things are about to get really bad for businesses, considering that investors might choose to refrain from investing due to stagflation?

I appreciate you taking the time to clarify this issue. I had an idea of it, but I never really got into the matter. The one aspect I find appealing is that an investor now has the opportunity to make a significant change. By this, I mean...should all investors take this approach...many established companies who rely heavily on investors may have to choice but to get with it and become environmentally friendly in an attempt to keep current investors and gain new ones.

In this new year, I commit to paying off my debts and establish a financial secure environment for myself.

My husband and I are resolving together this year to 1.begin a personal retirement savings plan and 2.to create a sound debt reduction plan and stick to it!

Thanks for your comment! I'm glad you enjoyed the post. I am interested in ethical investing, and have been trying to align my portfolio with my beliefs.

It's good to see Miranda commenting on ethical investing! I've been following ethical investing for forty years. For readers interested in the latest relevant global news on green and ethical investing they might find my site quite helpful. It's at www.investingforthesoul.com Best wishes, Ron Robins ...

Becoming debt-free is a great New Year's Resolution! Just remember that a plan is needed in order to achieve any resolution. Best of luck to you in the coming year.

My New Year's Resolutions include becoming debt-free and maintain and ensure my financial stability.

It is important to create a plan to get out of debt so that you can concentrate your resources more effectively. Good luck in your efforts!

It's awful when you realize how much money you pay in interest charges. I know it's there, but I don't even like to think about it, I just keep paying it. One day I will have it all paid off and my money will go to better things than padding the pockets of the already rich companies. I have a card that has a smaller balance than Ms. Hard's, but when I looked at it last month, I realized that I had only paid about $195 of the actual balance in the past 18 months. I will be heeding your advice on the aggressive debt reduction and get it paid off. An informed consumer should stay on top of their interest rates and what they are paying in charges. Its money that most of us could use and we are just throwing it away.

Unfortunately, though, in the current climate, credit is becoming more and more important, especially in terms of getting a mortgage. Some lenders, though, still allow you to write a letter explaining extenuating circumstances.

It's too bad that the business world is so consumed by numbers, but risk doesn't really look at individual situation, and risk analysis is being fine-tuned all the time so that it is less subjective.

You are correct in all the areas that are now possibly looking at your credit to determine your "worthiness" of their product. Unfortunately, a credit report can be deceiving. Not all of them are, but there are many people that have just had some financial trauma in their life and ended up losing some of their credit lines. There are many single parents out there who had some issues raising their children and ended up nearly ruining their credit. These people had full intention of repaying their debts on time but life got in their way. That sometimes happens to the best of us. Although it is true that many businesses are now looking at your credit, let's just hope that we don't start getting judged by just a number.

I real life situation from a loan officer! Thank you for sharing your story!

Being in the mortgage business, I have seen this many times, even with my own clients. One of the first things I tell my buyers is to not let ANYONE pull their credit until after they close on their home. Most times they listen, but there have been a few that did not heed the message and got caught up in a mess trying to close on their property. One of the loan officers I have worked with in the past had a client that went out and purchased $10,000 worth of furniture for their new home. Their credit was pulled the actual day of closing, and the loan was pulled back. They had to scramble and return all their furniture, get the furniture company to close their account and get the credit bureaus to update their reports. It was a mess. I have gone so far as to ask the Realtors I work with on a regular basis to listen for signs of ?mad? shopping sprees from buyers. I had one call today telling me a client we are working with was out looking for a new car. I immediately called and reminded them to not do anything until they closed on their home. Car dealers and lenders are probably not going to do what the aforementioned furniture company did. It is rare that you can actually undo the damage. So, please be aware of this possibility and just don't take the chance. It?s not worth the risk.

Ralph, Miranda is correct. In the traditional lending environment loans are probably out as an option for you. However, there are non-traditional sources you may want to consider. Sustaining your business by using your personal credit cards is a fatal mistake. Take it from me. It is one of the easiest ways to commit business suicide. Like me, many business owners put a lot of focus and attention on income that is not guaranteed and, when things don?t work out as planned, they are forced to use their personal credit cards to save their necks. I know! I was just about to draw my last breath when I found my saving grace. For those business owners, like me, who have already found out how easy it is to make this financial mistake and how hard it is to try to fix it, it will be a relief to know that there is an online resource that is ideal for resolving this very stressful financial situation. At www.snaploans.com a business owner can apply for a loan for up to $500,000. I didn?t need that much, but I was very surprised to know that I could get up to that much. The part I liked best the approval process, besides getting back a response from the company so fast, was that they did not restrict me in any way as far as how I could spend my approved funds. I was able to pay of my credit cards and successfully separate my personal credit from my business credit. This sure did make my yearly tax return routine a whole lot easier. Besides, with my approved loan, I was able to offer my business and personal credit history another chance at survival.

if your name isn't completely consistent. It's not one of those really important factors. But it can affect your credit score in a minor way. If you are on a cusp between good and great or good and fair, etc. it might tip the scales against you.

Start now, moving forward, to be more consistent with your name.

Miranda, thanks for a very clear, concise set of tips. You mention the importance of consistency in the name one uses for credit accounts -- at what level of detail does this matter? If I sometimes use a middle initial and don't use it on other accounts, does this create a level of inconsistency that could affect my credit score? I even have a few accounts (for some of my utility bills, for example) in which my name is misspelled. Is this a problem for my credit score? I had never before considered that it could be anything more than a nuisance!

Your post about which is best cash, credit, or debit cards really hit home for me and confirmed a hunch I keep getting that my approach is not the right one for my business. My situation is that I am a frustrated established business owner trying desperately to keep pace with a competitive market. I'm currently sustaining my business expenses with my personal credit cards, and I have been doing so for quite some time. I have successfully maxed out each of my personal credit cards. Because of this situation, I am trying to get a small business loan in an effort to pay off all my personal credit cards and then, hopefully, establish a revolving business line of credit. However, I find that most banks view me as a considerable risk because of my maxed out credit cards, and each attempt I make to acquire a loan is denied. I am not quite ready to give up on my business. It is all I have. I believe that by paying off my personal credit card balances I will take the noose of the neck of my business. With a business line of credit, I will be able to allow my business an opportunity to stand on its own two feet. But as I continue to hold the faith, I wonder if there are realistic options available out there.

Rob, a loan market does exist for start up businesses. It is just not as easy to access certain funds as the marketing advertisements for this industry make it out to be. In my personal experience, I, too, became extremely frustrated with the constant turning down of my loan applications. I truly can sympathize with you. When I was beating pavement trying to get my own personal home-based business off the ground and establish it into a professional physical location, I almost lost hope. I kept hearing the same thing over and over again at every bank I tried. One of the biggest hurdles I faced as I tried to make my business a reality was how to convince a lending institution that my business would make enough money to repay the requested loan amount. The bottom line is that I found out, in each attempt I made to acquire a small business loan, that collateral is one of the biggest setbacks most entrepreneurs and small business owner have to face and overcome. I found it very difficult to convince any bank that my home-based business could be a tremendous success, if I could acquire the resources I so desperately needed to get things on stream. The fact remained that my efforts were fruitless. However, I did come across an online lending resource, www.thesnaploan.com. Based on my experience with this site, I was able to successfully acquire a start up loan for $100,000. What?s even better is that I was able to apply online, and I got my approval pretty fast, about two weeks. It sounds like this website could be right up your alley. However, this lending organization only caters to US residents.

I cannot tell you how many times I have met couples who are ready to buy and had no idea of what was on their spouse's credit report. When they realized that they couldn't buy immediately and they would have to work on their credit, it caused some problems in their relationship. When you don't work in a business that deals with credit, it's easy to have blinders on and think that everyone's credit is just like your own. I have also seen a wife or a husband that has helped someone out in their own family by co-signing a home loan and still doesn't want their spouse to know about it. Well, that pretty much spells disaster when the spouse finds out. Eventually, they always do. But you are right, once you are married, it becomes a "us" report instead of an individual report even if you try to keep things separated. One person can buy a home without putting the other on the loan, but the non-purchasing spouse's credit is always pulled to confirm the debt. Any debt that either party has must be disclosed and considered into the debt-ratio of the buying party. I have seen many couples break up over these issues, so the best advice you can give is be honest from the beginning. That way there are no surprises.

Thank you for the information. I certainly did not realize that the National Do Not Call Registry had a time limit for registration. Not to mention, I appreciated the link. It made things a lot easier.

Matthew, Miranda gave you some excellent advice. Although www.thesnaploan.com may be an option for you, you must insist on separating your business finances from your personal finances. This should avoid you having to end up in the same situation again, once you do get it resolved.

Matthew, I couldn't help but notice in your post that you are interested in expanding your business, and you need financing in order to do so. My experiences with banks and various lending institutions taught me that the business? bottom line is a fundamental issue considered by today?s financial organizations as part of their loan approving process. They need to be assured that you make enough money after your expenses to cover their loan payments. I found this to defeat my objective. I used what I thought at the time to be an unconventional method of financing. I started researching resources online and ended up using www.thesnaploan.com. I suggest you give this site a try.

There are resources out there, and it is vitally important that you start now to separate business from personal.

Check your local small business association or development committee...there are usually resources that you didn't know about...

Ralph:

As you point out, loans are probably out, especially in the current climate. Have you tried a reputable debt counseling or non-loan consolidation option? Have you tried aggressive debt reduction: http://hubpages.com/hub/Steps_to_Aggressive_Debt_Reduction

Once you get rid of the personal credit card debt, though, you have to be able to avoid it in the future. And you will have to avoid getting into MORE debt while you are digging out of the whole.

Walking away is an interesting option, but it is harder to do now, with new bankruptcy laws. You will have to consider how long your business has been causing you problems, as well as how close it is to turning a profit.

I, too, with the other comments on this article that it is indeed informative and practical. I will also consider, like Robert, how I can utilize the suggestions in this article to help me create an effective budget for a business expansion I have in mind. As usual, this business expansion will require financial resources I do not have. So every budgeting tip is being considered. Thanks agains for the suggestion, great article!

Ralph, your current credit card situation reminds me of my own past experience. Fortunately, for you, there are resources available that cater to people in your type of financial crisis. Sustaining your business by using your personal credit cards is a fatal mistake. Take it from me. It is one of the easiest ways to commit business suicide and destroy your credit. Like me, many business owners put a lot of focus and attention on income that is not guaranteed; and, when things don?t work out as planned, they are forced to use their personal credit cards to save their necks. Believe me, I know! I was just about to draw my last breath, when I found my saving grace. Business owners, who have already found out how easy it is to make this financial mistake and how hard it is to try to fix it, will be a relieved to know that there are online resources that are ideal for resolving this very stressful financial situation. In my case, I was able to use www.snaploans.com, as a not so ideal business owner and apply for a loan. The part I liked best about the approval process, besides getting back a response from the company so fast, was that they did not restrict me in any way as far as how I could spend my approved funds, even with my questionable credit standing. I was able to pay off my personal credit cards and successfully separate my personal credit from my business credit. In addition, I was able to establish a revolving line of business credit, which allowed my business to stand on its own two feet. This sure did make my yearly tax return routine a whole lot easier. Besides, with my approved loan, I am now able to offer my business and personal credit history another chance at survival. Perhaps, you should consider looking into the options they can offer you.

Once bitten, twice shy, that is a saying that would apply to me. Unfortunately for me, your suggested budgeting tips can't quite impact my financial mess. When it comes to budgeting, I have allowed myself to fall into credit card shambles. You see, my situation is that I am a frustrated established business owner trying desperately to keep pace with a competitive market. I'm currently sustaining my business expenses with my personal credit cards, and I have been doing so for quite some time. I have successfully maxed out each of my personal credit cards. Because of this situation, I am trying to get a loan in an effort to pay off all my personal credit cards and then, hopefully, be able to establish a business line of credit. However, I find that most banks view me as a considerable risk because of my maxed out credit cards, and each attempt I make to acquire a loan is denied. In fact, as I continue my search for a viable solution to my financial business dilemma, I get more suggestions to walk away instead of sticking with it. I am not quite ready to give up on my business. It is all I have. I believe that by paying off my personal credit card balances I will take the noose of the neck of my business. With a business line of credit, I will be able to allow my business an opportunity to stand on its own two feet. What options are available to me to help resolve my business situation?

I apologize for calling you Ralph, Robert.

Ralph, I am genuinely impressed by the way you took the suggestion from the post and identified how you could use it in your situation. You mentioned in your post that you were biding time while you sought a small business loan. Perhaps, you may be willing to consider www.thesnaploan.com. It's the one I was successful with when I opened my business.

Your article is not only informative but practical in many ways. In fact, I intend to apply the suggestions to buy my situation in order to buy myself some time to better pursue my goals. Let me explain. I would like to change my home-based business, because I have outgrown the space. Right now, I need to locate a physical location for my business and acquire the proper equipment and safety gear, to conduct my classes. My problem is that I do not have enough cash to pursue my business venture. What I am looking for is a small business start up loan, preferably an unsecured business loan, and I?ve been having problems getting a loan, because I don?t have enough collateral. So, in the meantime, I will apply your article?s suggestion and take a good look around my house, as well as my home based business, and see if it is worth keeping around. If it isn?t; then, I intend to sell it. This will allow me to add to my financial resources, while I contain to apply for an unsecured small business loan. I would appreciate any guidance, advice, or even a reliable resource that will cater to a person in my situation? Once again, I extend my 'kudos' to an excellent suggestion.

As a blogger unless someone attacks you personal.

I did mention (however briefly) that tax deductions can help offset the cost. But while I am glad I purchased my home, I still don't consider it an investment. Just something I enjoy, and that will save me money over renting.

I bought one lottery ticket once, just to see. It wasn't very thrilling, and I just considered it a waste. I could have bou