Law School Discussion

Home Ownership and Wealth Building

pikey

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Re: Home Ownership and Wealth Building
« Reply #600 on: June 20, 2007, 10:52:01 AM »
OSA: definitely the Vangurad fund (imo)

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Re: Home Ownership and Wealth Building
« Reply #601 on: June 20, 2007, 12:17:50 PM »
OSA: definitely the Vangurad fund (imo)

thats what I was thinking, but why?

Re: Home Ownership and Wealth Building
« Reply #602 on: June 21, 2007, 08:02:03 AM »
Money Sense: Boost Your Credit Score
Here are 5 simple ways


By Alfred Edmond, Jr., Black Enterprise Editor-in-Chief

Several Doug Banks Morning Show listeners e-mailed me last week after our discussion on the benefits of great credit, wanting to know what they could do to significantly boost their credit scores in less than a year. If you remember, I said the median credit score for all Americans is 723, with a perfect score being 850. Your goal should be scores at least equal to the median.

Some people are looking for some magic, secret trick to boosting their scores by 100 points or more. Sorry, I'm a magazine editor, not a miracle worker. If you have maxed out all of your credit cards, have several charge-offs, a reposession and a bankrutpcy filing, it will probably take more time and effort to get your score to 723 than a person who just has a few late payments on their credit report. That said, the most important things we can do to boost our credit scores are pretty much the same for everyone.

1. Pay your bills on time every time. Again, this is the single largest factor, 35%, effecting your credit score. We're talking rent or mortgage, utilities, car note, and phone, as well as your credit card bills—everything. If you won't commit to doing this, almost everything else you try to lift your score will be less effective, so stop looking for a way around this one.

2. Pay down your balances to no more than 50% of your available credit. Better yet, bring it down to 30%. In other words, if you have a $15,000 limit on one credit card, you want to get that balance down to between $5,000 and $7,500 owed as quickly as possible—and keep it there. That guideline should apply to all of your consumer debt.

3.Always pay more than the minimum due. This will help you to get your balance down more quickly, and save you money on interest payments over time.

4. Stop creating new debt. You have two choices: 1. lock up your credit cards so that you can't use them (some recommend freezing in a block of ice in the freezer) or, 2. pay off all charges made during the month IN FULL or pay the minimum payment plus all new charges each month. This means if you plan to charge $60 for dinner at a restaurant and $150 for a new outfit this month, and your minimum payment due is $120 on your next bill, then you need to be prepared to pay $330 toward your next bill. Check yourself before you wreck yourself: It's probably a better idea to just lock away the credit cards.

5. Guard your identity as if your life depends on it—because it does. Review your credit reports at least twice a year, in addition to any time you plan to apply for new credit. If you find descrepancies deal with them immediately.Get a shredder, and use it to destroy all documents, including junk mail, containing your personal information. The last thing you want to happen is for someone to steal your identity and create bad credit in your name.

If you need help, admit you have a problem and get it right away. Here's a hint: if you can't consistently do steps 1–4, then you are probably in deeper trouble than you think. You don't have to wait until you are forced to consider bankruptcy before you seek credit counseling (now a legal requirement for all people who want to file for personal bankruptcy protection). Contact the National Foundation for Credit Counseling (1-800-388-2227) to find a reputable, non-profit credit counseling agency in your area.

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Re: Home Ownership and Wealth Building
« Reply #603 on: June 21, 2007, 08:53:18 AM »
from the April 02, 2007 edition - http://www.csmonitor.com/2007/0402/p13s02-wmgn.html
Step cautiously into an online bank
Interest rates and convenience are high, but so are security concerns. And customers have to be especially vigilant.
By G. Jeffrey MacDonald | Correspondent
For savers looking to get the highest possible interest rates on their cash holdings, the call of the Internet keeps getting louder.

In March, ING Direct launched nationwide the first completely electronic checking account. Depositors receive 4 percent interest on balances up to $50,000 and have no minimum requirements. This month, HSBC plans to roll out its own high-yield electronic checking account with an interest rate that's soon to be announced.

High-yield checking accounts mark the latest enticing offer from a universe of about 60 domestically registered virtual banks, which conduct business online rather than in brick-and-mortar operations. Virtual savings accounts now routinely pay 5 percent or more. Deal hunters are also finding mortgages with reduced fees and higher than average rates on certificates of deposit.

Taking advantage of virtual bank products, however, involves more than just a few clicks of the mouse. Vigilant maintenance of computer security systems is a must for anyone with a virtual account, say bankers and security experts. And even then, experts differ about what's the best way to manage accounts in order to maximize returns while minimizing risks.

Some financial advisers urge clients to follow the money. A person who isn't carrying high-interest debt and wants to keep cash on hand for a rainy day should consider putting most of the cash in virtual accounts, according to Bill Driscoll, a financial planner in Plymouth, Mass. The reason: high returns and low risk.

"There's absolutely no commitment. Why wouldn't you take advantage of it?" Mr. Driscoll asks. On the matter of security, he says, "You have just as much risk in a regular bank as you do with an Internet bank [because] they're all using the Internet for electronic information and for transmitting data."

But others disagree. Security consultant Andrew Colarik, who has written three books on cyberterrorism, says anyone with a virtual account should use it solely to pay one month's bills and keep the rest in accounts that aren't accessible online. That way a depositor limits risk of loss, he says, since "we keep taking for granted that all of this technology has been perfected, and it hasn't been."

"A higher interest rate means a higher risk, and somehow we have disconnected this" from current thinking about virtual banks, Mr. Colarik says. "If there is a breach, if there is a violation, what is your recourse?" In most cases, he says, chances are "you lose your money."

To date, the largest Internet banks report solid safety records. HSBC and ING Direct, for instance, both say they've never had a customer lose any funds due to a security breach. And even when Emigrant Direct's website was down for days last summer, customers didn't lose their money, although some complained of difficulty accessing funds.

What's more, in an age of concerns about identity theft, some advisers believe clients are actually more secure using virtual banks. The absence of a paper trail, which follows traditional banking transactions, reduces the likelihood that a thief will find valuable account numbers or passcodes in garbage bins, according to Justin Pritchard, a financial planner in Denver. And even paper checks have their downsides.

"It's worse to hand someone your paper check than it is to hand someone your user name and password of your online account," says Jim Bruene, editor of Online Banking Report, an industry newsletter. "That paper check not only has all your [contact] information on it, it has your checking account number on it. Your bank account number is right there, printed on the check," which could enable a counterfeiter to manufacture checks and drain an account of funds.

Virtual checking accounts are similar to regular checking accounts that are also accessible online, except the virtual accounts have a few distinguishing features. With ING Direct's checking account, holders can transfer funds to pay bills online or instruct the bank to cut and mail a paper check to a named recipient. The system is intended "for people who don't need hand-holding" and whose online banking habits have created little need in their lives for paper checks or branch access, says Todd Sandler, ING Direct's head of deposit services.

Online banking: the early years

Virtual banking got its start in October 1995 with the launch of First Security Network Bank. Even now, only 3 to 4 percent of American households have virtual accounts, but the number of households that use them has surged with the rise in interest rates. From 2004 through 2006, while the Federal Reserve was steadily raising interest rates, the number of virtual-banking households jumped 61 percent, from 2.3 million to 3.7 million, according to Online Banking Report. Now Americans keep between $80 billion and $90 billion in virtual accounts, compared with about $3 trillion in retail accounts with balances under $100,000.

Safeguards a must

Despite growing acceptance of virtual accounts, safeguards remain crucial for reducing risk. The challenge for consumers is to recognize what the risks are and how to block them.

"In the online banking world, the risks are a little bit different" than in bricks-and-mortar banking, says Ron Teixeira, executive director of the National Cyber Security Alliance, a nonprofit cosponsored by federal agencies and private donors, including computer security companies. "Unfortunately, the risks are a little bit closer to home [in virtual banking] because they exist on your computer."

Example: a computer virus or spyware attack could result in the transmission of account information or passwords to a would-be thief anywhere in the world. Mr. Teixeira points to what happened to one man's online trading account during the summer of 2005. A fraudster, he says, used a virus to infect his computer (which didn't have up-to-date antivirus software), monitor his keystrokes, sell the man's stocks, and move funds to the fraudster's bank. When the man logged on to check his portfolio, his life's savings of $174,000 was gone. He had no legal recourse, but the online brokerage opted to reimburse his account, Mr. Teixeira says. He suggests that a similar problem could happen to someone's Internet bank account. The lesson is to maintain up-to-date antivirus and antispyware software. Consumers also need to download free updates for their operating systems, such as those for Windows, to plug holes that violators may try to exploit.

Even with these defenses, vulnerabilities may persist. Both Teixeira and Colarik warn of so-called "man in the middle" attacks in which a perpetrator intercepts communication between a customer and an online bank and steals enough information to redirect funds. Teixeira says these violations are most likely to happen when a person accesses an account through an unsecured wireless platform, such as one offered at a cafe or hotel, where a thief might monitor a transaction surreptitiously.

Proper safeguards are necessary in part because the Federal Deposit Insurance Corp. (FDIC) doesn't insure against theft. Meanwhile, financial advisers say even Internet-savvy clients shouldn't close up their bricks-and-mortar accounts altogether.

"There are always things coming up where you want to go talk to your banker" in person, says Peter Cacioppo, a financial planner in Moraga, Calif. Example: a person who sells a car may want a trusted banker to verify whether a check is valid. And a virtual bank will probably take longer than a traditional bank to cash that check. The usual protocol at virtual banks is to endorse the check and drop it in the mail for depositing.

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Re: Home Ownership and Wealth Building
« Reply #604 on: June 23, 2007, 10:57:56 AM »
Young strivers find slacker friends costly
Successful twentysomethings find 'Entourage' lifestyle can get expensive
By Gayle B. Ronan
Updated: 1:47 p.m. ET April 20, 2007
"Every time the check arrives when I am out with my friend, he looks at me like it is not his problem," says Mike K., a 26-year-old bond trader in Chicago who asked not to be fully identified.  Mike admits he is doing well financially, but not so well he can pick up tabs whenever he is with someone making less. "It is to the point where I feel I have to choose between friendship and money." 

There is an inherent dilemma in moving from the collegial phase of social life, where sharing the wealth prevails over bar tabs and entertainment, to assuming the mantle of financial maturity. 

"It puts a serious strain on relationships, from both sides," says Stephen Hunsaker, a Texas Tech University student who provides peer-to-peer financial counseling.  "No one, regardless of their age, wants to break social connections over finances."

Yet that is what James Raysbrook, a 28-year-old Realtor in Seattle felt compelled to do. "I went through a bit of a grieving process," he admits.  Raysbrook began his career at 19, moving into a very adult tax bracket while his friends were still attending frat parties.

"These were folks who supported me emotionally and cheered me toward my goal.  But once I achieved it, they felt they were owed a piece of it.  There was so much pressure to prop them up." He adds, "There still is. I went through a period of denial. I wanted to believe I was the same person, but I was not. I moved on." 

And while many successful young people may feel they can afford to subsidize their less-affluent friends like Vince, the young Hollywood star at the center of the HBO series "Entourage," they often are surprised when the add up the costs, financial consultants say.

"The other day I asked a client if anything had changed," says Phil Traa, president of Traa Wealth Management in Lake Oswego, Ore. "She said, ‘Yes, I’m getting rid of my friends.’ "

His client, a woman in her 30s who won a generous settlement in a recent divorce, realized she was spending more money on everyone else than she was on herself. "An extra zero’s worth," says Traa.  Putting an end to years of peer-pressured spending, she is learning who in her life was just hanging around for her handouts.  "She is feeling used right now," says Traa.


"Sudden money, whether through inheritance or early success, creates a huge transition," he adds. "Not only is there pressure from friends and family members to be resisted, they also have to deal with what I call ‘the sharks.’ Sharks see a name in the newspaper, and start to circle in hopes of fast [money]."

But the most financially damaging source of pressure may just come from expectations. 

"Young adults feel pressure from what they and their friends think success is supposed to look like—how they should act and where they should live. It is not so much keeping up with the Joneses. It is a matter of keeping up with 'MTV Cribs,'" says Traa.

Traa, having counseled both newly professional athletes and software millionaires, has seen peer-pressured spending turn infectious.  "During the dot-com era — and more recently with young mortgage brokers — they all hung out together, reinforcing one another’s extravagant spending habits.  But what the former dot-com millionaires learned is once money is wasted, you can’t get it back," says Traa.


"For every hour of TV you watch, you seem to see three credit card commercials and an overwhelming number of images of the life you could be living," says Raysbrook, the Seattle Realtor. He confesses to learning the hard way, early on, that buying into the need to appear as successful as he felt was not getting him where he wanted to go.

"My financially immature friends all want to be that guy — whether that guy treats everyone at dinner or covers the bar bill or drives the hot car," he adds.


"But I’m the guy who scrimped and saved to put myself through college and have been working really hard to get where I want to go," says bond trader Mike. Which is why he is struggling not to let money come between him and his friends, nor his friends between him and a financially secure future.

That twentysomethings are even thinking about nest eggs and retirement accounts may be somewhat surprising.  But Mike is far from alone. Scottrade’s recent 2007 American Retirement Study found an astonishing level of financial maturity for its youngest adult respondents.

"While 59 percent of 18-24 year-olds said they saved for retirement in 2006, that number jumped to 89 percent for those who said they planned to save in 2007. Of 25-to-34-year olds, 70 percent saved in 2006 while 85 percent indicated they will save in 2007," says Chris Moloney, chief marketing officer for the St. Louis-based broker. "Previously, people waited for assets to accumulate before they began thinking about their financial futures and retirement.  With the Internet and the wealth of information available to them, many are starting younger," he adds.   

Still, there is a deepening gap between young haves and their have-not friends even though more of the "nots" possess college educations, according to Tamara Draut, author of "Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead," which examines why many young Americans lag financially while others spurt ahead.


"When a teacher and a stockbroker are old college friends, for instance, you find their dramatically different financial resources often create tension," says Draut.  "The stockbroker may resent the teacher expecting her to treat her to dinner, but the teacher may be equally resentful her friend chose such an expensive restaurant."   

Such inequities create social awkwardness, yet little conversation, observes Draut.   "It is hard to be the friend who says, 'I can’t come along because the restaurant is too expensive for me.' But we need to make it OK to start having these conversations; to start saying, ‘I cannot afford it.’ " 

And conversely: "I cannot keep floating you."

Financial maturity does not come with a job offer. But like the line one crosses into adulthood, emerging into financial maturity may come earlier for some than for others. It may also come at a cost — the loss of friends or of hard-earned money.


© 2007 MSNBC Interactive
URL: http://www.msnbc.msn.com/id/18179204/

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Re: Home Ownership and Wealth Building
« Reply #605 on: June 23, 2007, 12:29:32 PM »
People seriously do that?  SMH.

do what?

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Re: Home Ownership and Wealth Building
« Reply #606 on: June 23, 2007, 12:37:50 PM »
People seriously do that?  SMH.

do what?

Scam meals off their rich friends, or conversely, Entourage it up.

hmm I've definitely heard of the credit card "game" at HBS (everyone goes out for a super fancy meal and they draw one credit card to pay for it).   

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Re: Home Ownership and Wealth Building
« Reply #607 on: June 23, 2007, 01:05:08 PM »
That is not a game I would play. :D

I'd play with a Mall card capped at $30  ;D

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Re: Home Ownership and Wealth Building
« Reply #608 on: June 23, 2007, 01:23:50 PM »
That is not a game I would play. :D

I'd play with a Mall card capped at $30  ;D

SMH.  I'm never going to dinner with you. :D

we can do dinner- just don't come expecting me to pay for everyone else's shennaigans!

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Re: Home Ownership and Wealth Building
« Reply #609 on: June 23, 2007, 01:31:29 PM »
People seriously do that?  SMH.

do what?

Scam meals off their rich friends, or conversely, Entourage it up.

hmm I've definitely heard of the credit card "game" at HBS (everyone goes out for a super fancy meal and they draw one credit card to pay for it).   

That's different, though.  Presumably, you will go out enough so that everyone ends up paying once.  And you have to be able to afford to pay in case you are chosen.  The article is talking about mooching friends and family, which definitely exist.