Financial Information

Economic downturns are never much fun, but as Adam Smith observed centuries ago, these cycles of paucity and plenty are a fact of life. Though no one can say for sure when this most recent slump will reverse, there are at least sure ways of saving your money in the meantime. Here are some penny-preserving ideas tailored to our 21st-century lives:

1. Plenty of people are in the habit of cutting out paper coupons, but even though many of us do some of our shopping online now, not as many of us seem to have learned to coupon-hunt on the Internet. Sites such as CouponCabin.com, CouponMountain.com, and DealofDay.com list thousands of current offers at merchants all across the Web.

2. Use price-comparison websites like Pricegrabber.com, Shopping.com, Google Product Search, and mySimon.com to find the best deals online.

3. When you’re out at a store, send a text message to 46645 (Google’s text number) and enter the letter “f” and then the name of the item you’re looking at. Google will reply with a text message quoting its online prices. To compare prices at stores near you, go to ShopLocal.com.

4. If you don’t already belong to one, consider joining a warehouse club such as Costco or Sam’s Club and buying in bulk. This can be especially helpful if you have a large family.

5. Buy generic instead of brand-name products. A lot of the difference is often in the marketing hype and not the products, anyway.

6. Withdraw your money from surcharge-free ATMs, which can be located on AllpointNetwork.com and MoneyPass.com.

7. Buy locally-raised food at farmer’s markets or stores that sell local produce. Prices there are often lower since the food doesn’t have to be transported far.

8. Shop at dollar stores. You shouldn’t have a hard time finding them since they’ve been popping up all over the place in the recent past.

9. Purchase discount prescription drugs from online pharmacies. You’ll often end up paying well under half as much for the generic pills stocked by these discount prescription drug stores than you would for the same brand-name medicines at brick-and-mortar pharmacies.

10. If your car is seven years old or older and/or worth less than $2,500, consider dropping comprehensive and collision from your insurance.  Your deductible may be closing in on the value of your vehicle anyway, in which case a major collision would send your car to the junk yard and you to the dealership.

11. Keep cell-phone expenses under control. Kids today love to send text messages, so save yourself from unexpectedly high bills by paying the flat monthly fee for unlimited text messaging.

12. Use online classifieds to buy used items. Sites like CraigsList.org and Kijiji.com are excellent resources for finding everything you need, from pre-owned furniture to baby gear. By buying from locals, you can save on shipping costs too.

13. Go to matinees. The matinee showing is frequently more reasonably-priced than peak-time showings.

14. Install Power Planners (see www.energycsi.com/energysmart) to lower the energy consumption of your electrical appliances.

15. For your next date, plan a romantic picnic instead of going to a pricey restaurant. Pack a blanket and a cooler full of your favorite foods and you’ve got yourself a low-cost rendezvous. Add some color with a bottle of wine.

16. Instead of paying for software, look for (legal) free software from websites like Download.com and SourceForge.net. Depending on how you use a given type of software, the free alternatives will often be just as good as the commercial versions.

17. If anyone in your house is a student, get the Student Price Card from SPCLive.com. It’s only $8.50 and it will get the holder 10% to 15% off in scores of participating stores.

18. Control your thermostat. Using a programmable thermostat to adjust the temperature will save energy when you’re sleeping and away. Prices range from $30 to $120, but you’ll reduce your bill by 10% to 20%.

19. Consider leaving your health club. More economical options may include a gym at your work, in your building or community, or at a nearby parks and rec. center.

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The recession hasn’t exactly been a keen investor’s best friend. 

With the Fed introducing legislation based on quantitative easing (which means that interest rates will plummet to historic lows) and the markets performing shaky at best, many of the savviest investors are opting to pull out their money before incurring any more losses.  However, it’s important to note that even in the current economic climate, smart investments can still be made with less risk involved.  The key to protecting your hard-earned money while earning a tidy profit is not how much you invest; rather, it’s where you put your money in the first place.  Consider these alternative investment options to keep your money right where it belongs – in your pocket!

Indexed CDs have become increasingly attractive to savvy investors over the years, and it’s not because it offers protection against principal loss; indexed CDs are one of the most effective investment options in the face of inflation, which the Fed predicts will drastically increase over the next decade.  Lock in your interest rate now and ensure that your CD lasts for no longer than five years, as the recovering economy will do a long-term locked-in CD more harm than good.  Financial experts typically recommend locking your money in an indexed CD for no longer than eighteen months.  Before investing, be sure to research which CDs offer the best rates over an eighteen-month period; a great resource can be found at www.bargaineering.com. 

If an indexed CD isn’t your cup of tea, then try the indexed annuity out for size.  Once the bane of investment advisors everywhere, indexed annuities are quickly becoming one of the preferred investment options for baby boomers reaching retirement.  An indexed annuity is simply a contract with an insurance company that guarantees a minimum interest payment; an additional benefit is that your indexed annuity (which is linked to the stock market) can generate even more cash flow if your stocks do well.  Indexed annuities offer a great investment opportunity for those looking to protect their money while dabbling in the unstable world of Wall Street.

Like with many investment schemes, however, make sure you understand the minute details before leaping into indexed annuities.  Don’t lock your money in one for more than ten years, as you run the risk of making little more than the interest rate, even with inflation.  Be sure that your insurer will honor the promoted interest rate for the entire length of the annuity, as many insurance companies fail to advertise which interest rates are permanent and which are merely promotional.  Be sure to involve your investment advisor in any considerations regarding indexed annuities, as he or she can point out esoteric details that may have first escaped your notice.

Not all investments retain an all-or-nothing mentality; in fact, you’ll find that many investments are tried-and-true methods for generating a tidy sum of money that can go towards retirement.  These alternative investments will go a long way towards protecting your money while still generating a surprising amount of cash flow straight into your savings.

Authored by Kenneth Himmler, Sr.

I remember at college reading the New Anatomy of Britain by Anthony Sampson.  In the present climate, how he would have smirked.   And that weird background noise you can hear is the rumbling as those old, unreconstructed, communists and command economy enthusiasts spin in their graves.
This current global economic crisis is far more significant than just being a “structural correction”, “re-adjustment” or a “bigger blip than usual” in the normal economic cycle of boom and bust.  It’s far more important than that.  Far more significant even than the “so called” collapse of communism.  It’s the death of casino style capitalism and not before time.
The truth is  we’ve been borrowing too much in the developed world and the processes of paying it back  is creating falling living standards and shaking the foundations of world capitalism.  Households have borrowed too much.  Big companies borrowed too much. In fact the only companies who didn’t fall into that trap are SMEs.  The total savings of smaller companies still exceeds their aggregated debt, yet it’s apparently for the benefit of small companies that the government is pushing the banks to extend or maintain lines of credit - a target audience that generally speaking doesn’t want or need it.
The sheer complexity of half the financial services products wasn’t understood by the public – and it’s now clear that those in the financial services industry selling the stuff didn’t really have much of clue either!  The massive and unsustainable growth in the City of London may have maintained its reputation as one of the world’s premier markets, but at what cost?  The City is shrinking with massive job losses and a permanent loss of Exchequer income of around £40 billion. 
The gross foreign liabilities of  the high street banks is about £4,400 billion – roughly three times the size of the UK’s annual economic output.  All that debt is basically the regurgitated savings of other, usually Asian, economies.  For the past ten years, millions of Chinese have slaved away on near subsistence wages yet they still managed to save at a prodigious rate.  They’ve worked hard making the consumer goods that we westerners wanted to buy, and the bankers took those Chinese workers’ savings and effectively lent it to us so we could buy all that consumer stuff they were making in the first place.  At some point, it was inevitable that those Chinese and Indians and Japanese and Koreans would decide that they might like some of that same “standard of living stuff” they were making, so we’ll have to do with a bit less. 
Our illusion of prosperity was based on their labour (and their thrift) and was handled in a cavalier fashion by so-called “experts” who actually didn’t know what they were talking about.  And in the irrational, emotional, illogical, short-termist, rumour fuelled melee that is free enterprise capitalism, no one can ever “know” what they’re talking about – just as no-one can “know” what the lottery numbers are going to be.  So it’s evident that global economic (and shortly thereafter political and military) power has shifted more of less permanently East.

And the most telling example of just how this economic power balance has shifted? Zhou Xiaochuan, governor of the Chinese Central Bank, telling US Treasury Secretary Hank Paluson where he went wrong.   How overconsumption and high reliance on credit was the cause of the US financial crisis.  Why they should get their act together to raise savings ratios and reduce trade and fiscal deficits. Significant advice when it’s the nation that has fuelled your excesses giving it! 
So the nature of the capitalism is bound to change because arguably the most important player in the global economy now is China – more important even than the USA.  And China has a completely different take on how capitalism should work, underpinned by the founding philosophy of the communist party and a centralised government.  And that’s increasingly true all over the world.  The survival of several financial institutions now entirely depends on the goodwill of governments and taxpayers – worldwide they are now being propped up to the tune of £9,000 billion – equivalent to almost a quarter of global GDP.

Reconciling political traditions with the imperative of making a globalised economy secure will be difficult, but I suspect the most influential political tradition in that task will be the loose command economy/ regulated and controlled free market model that the Chinese have adopted.  And compared with what we’ve seen of the alternative, I can’t see too much wrong with that.