Though it might have made some sense to them, this sentence is utter crap. No, I think it makes a bit of sense, but they are missing the main part.

After doing endless research, I realized few factors are affecting the growth of our economy. We are facing such a crisis due to similar reasons. But how could savings be a problem. It was spending, actually overspending, that led us into this crisis situation. Though spending boosts the economy, we were wasting too much of borrowed money.

I still remember a the economic situation of the US in 2005-06 when saving rate fell considerably, in fact, it was below 0%. This was the first time such an event took place after the Great Depression. Most people used their savings to buy cars, houses, and other big-ticket things.

So, they weren’t saving in the first place. Moreover, they were borrowing enormous credit to spend on frivolous things. Yes, it did boost the economy. Everything seemed to perform remarkably. In the financial year 2006-07, stock market augmented, home prices rose, etc. But we were busy inflating the bubble that finally did burst.

Due to the economic crisis, people are gaining back their senses and have started saving. This too, however, is a threat to the economy. The less they spend, the less the country earns. So, it will take longer for us to recover.

But I would say, it’s a good sign. A good economy needs people to spend wisely instead of spending without a second thought. Even better would be a situation where people save and keep investing in various financial instruments. This would help them to earn more money, and spend more of it in the future.

In conclusion, the recent crisis was a tough lesson for every one of us including the government and the economy. What we do with it will create the future of our country.

Excited? Very Good. You must be. But this excitement causes most hazardous mistakes that are generally overlooked by new home buyers. Below are few blunders generally made by buyers transforming from renters to owners.

1. Deciding based on worthless perquisites

   If you are a buying a new house for the first time, the top three homes that you liked got to have a swimming pool. Isn’t it? And why not? It just looks perfect. What you don’t bother thinking is that a pool is very not as cheap to maintain as you are considering it to be. Moreover, you will get very few customers that are interested in buying a house with pool, when you try to resell your house.

   It’s not just the pool I am talking about. You can entrap yourself with any of the perks attached with the house. You could love a house just because it’s located besides the interstate and it has some cool bar which you can stare from the window. These benefits don’t worth much, but you end up paying double of what you would have paid without them.

   Remember; don’t get lured by worthless benefits while buying a home. You can always add those later on.

2. Not calculating repairing expenses

   When you are living in a rented house, repairs are quickly done by your landlord. However, the problem arises when you are the landlord. You are responsible for the payment of repairs that needs to be done in your house. Fixing the leaking pipe is now your headache. The exhaust of your air condition is faulty; spend from your own pocket. Get a grass cutter, find a snow digger, change broken equipments and what not. Individually, each doesn’t cost you much. When these are added up, it’s huge and it’s recurring.

   This is a common mistake made by first time buyers. They buy a large house, the monthly mortgage payment of which is more than their income. How do you think they could manage these expenses? They sell their houses, learn from their mistakes and buy a smaller and better house.

   So, what do you learn from their mistakes? Try to get a house that costs somewhat less than what you can pay for. Keep aside some money for unanticipated expenses and for future renovations.

3. Reliability on Tax deductions

   Some areas enjoy more benefit than others when it comes to income tax. The vicinity of Monaco levies no income tax for its residents whereas people in England have to pay enormous amount of funds as income tax. Many countries also offer tax deductions on the interest charged on mortgage amount. Hence, people tend to relocate to such places because they think they are saving money.

   However, they aren’t really saving big money. If your income for the year is less than hundred thousand dollars and you have two kids living with you, I don’t really think you have to pay much of money as income tax. And if you don’t have to pay much of tax, then why relocate to some other place just to save what you are not going to pay.

   So get rid of this income tax delusion and select a home depending on comfort rather than tax-free-area.

4. Lack of knowledge about the Neighborhood

   Very few people try to acquire some information about the locality and neighboring people, even after buying the house. And fewer people decide on home locality after considering this information.

   Remember, you are buying a house, not staying as a renter. A renter can pack his luggage and move to another city quickly, if he or she doesn’t like the locality. But you cannot. You are spending more than half of your monthly income to repay the mortgage amount and probably will continue paying for years.

   So, prior to selecting a locality for you house, see if there are any schools, hospitals or parks nearby. These are indicators that the area is decent and will provide better resale worth. Ask local people about the demographics and attitude of the population here. However, one thing about the locality cannot be known till you reside in the house for some years – the unbearable eccentricities of your neighbors.

   Here, if they are really painful, renters can move immediately to some other locality, state, r even country. But you are trapped.

   So, better be informed than trapped. Ask the storekeeper, the gatekeeper, or any other men whom you think you can extract info from.

5. You think you love renovations

   Many people believe its fun renovating things, after they buy a new home. The walls of your bedroom are covered with posters because the wallpaper is ragged. The flooring in some part of your house is missing because 20 years ago, a kid used his father’s baseball bat not as it is supposed to be.

   The realtor’s views about this house are what attracted you. She says the house is yet to be decorated by you elegant touch. The walls are waiting to be painted by your favorite magenta color. You can modernize the lavatory and the kitchen in your own way. And yes, you can also build your lovely veranda.

   True. But this redesigning and remodeling can comes with a cost. Include these items when you plan a budget for you new house. And get ready to run along with the handyman for many sleepless nights and strenuous days. This renovation would be your full time job without income until you get your house ‘designed’ your way. If this is what you call fun, then buy that house today. If no, then look for a house that’s been erected in the last few years necessitating little renewals.

Think again

No, I am not asking you to be scared if you are a new buyer. Just try to do it considering the above points and chances are high that you will get the best deal. A home is like a parent for an individual. Would you choose a dreadful parent? No one would.

The reason why our economy is suffering today is due to few bad choices of houses by few new home buyers. So decide with utmost care.

Well, the concept is not as frivolous as it appears to be. Have you heard of corporate rebranding? Some struggling organizations would revamp their looks to present a fresh face to the world. Many times this would work as we humans have a tendency to readily accept old wine in a new bottle! Playing with branding has been a clever strategy of marketing psychologists to make a slumping company or product bounce back into the market. How many times haven’t you seen companies changing their names, color and logos to win attention? Smith feels that rebranding the dollar to make them connect better with it is going to play on the emotion of the people. The psychological perspective opines that depressing facts about the bad economy, such as negative media news and discouraging economic indicators are not the only reason for the development of negative feelings towards the dollar, but emotional factors like the face value  and the feel can also play an important part in determining the way people connect to it. According to Smith then, rebranding is going to work by igniting our passion for our dear old dollar.

To a certain extent I do agree with Smith because I think when something bad happens, we generally detach ourselves from that. Maybe when you look at the dollar you remember the economical catastrophe the country has seen and you don’t feel like using it. Now a rebranding is going to liven up your spirit. You should take a look at the new design of the dollar. It’s really stunning! At least the looks and feel might draw you closer to the dollar and you feel more like owning it and using it.

It’s not only Smith who’s talking about rebranding the dollar. Michael Bierut, according to a New York Times report, feels that the rebranded dollar can work wonders for the American Economy. So of all measures that we are taking to bring the dollar to its initial glory, will rebranding work more than anything else? Raising dollar value, then is only about changing its face value?

Statistics show that revolving credit (a credit card debt is plummeting in recent times more than non-revolving debt (ex. a car loan). The Department of Commerce finds that the percentage of savings in the recent months has shown an increasing trend in comparison to that about two or three months ago. But is this saving really helpful? Unemployment remains as high as ever at 10.2 percent. Unless entrepreneurs stop hoarding money and start resuming taking services from people (which requires spending) how will people get employed? With such a high rate of unemployment will you be able to say that recovery is occurring in the true sense of the word?

SmartMoney has taken the opinion of five economists on whether people should save or spend now to recuperate the economy.

Trueman Bewley, Prof. Economics, Yale University says “In a time like now, when we don’t have enough spending, it’s better for the economy that people spend.” But this advice does not seem to be very effective on the American people. On an individual level saving is more beneficial than spending after tasting the bitterness of the recession. Why should they spend at the mall to improve the country’s economy? Bewley opines further “The consumer spends money for their own reasons, they’re not going to do it because they’re helping or hurting the economy”.

According to Dan Sevier, Prof. Finance, San Diego State University, opines “From a short-run perspective, having consumers hitting the malls again is good for the economy, but we have had for many years this problem of consumption spending being too high a percentage of GDP. Americans have been spending borrowed dollars, and a return to an economy that’s less dependent on the consumer is a painful but necessary process” Very true! The consumers have been running the show till recent times but now when the consumers are hard pressed for money they cannot be extravagant with the their spending which effects the entire business world very much.

According to John Canally, LPL Financial economist “There’s dangers in doing too much of both. Japan saved too much and they got in trouble, and we spent too much and got into trouble.” His view of balanced spending seems to be a very appropriate suggestion under the current economically stressful times. He feels people should now first clear off their debts and then think about spending. That’s very true. Spending irresponsibly even before settling your debts can put you in serious trouble.

For a lot of  other views on weather you should spend on save during this economically lean period, you can visit SmartMoney.com.

Of all the major flaws; predatory savings, credit and investment practices by financially aiding companies seem be a major factor of concern in the new economy. The government has mentioned penalties against companies that harass their customers on these grounds. Apart from that even consumers are observed to have been suffering more in these ruined economic times because of their sloppy money management ways. One of the major contributory factors to the creation of the economic crises was economic policies that had loopholes in them. These were exploited by opportunistic marketers who escaped with all kinds of money mismanagement and inefficient handling. Now the government has come up with rules to control such irresponsible and selfish behavior which has resulted in the creation of this economic crisis.

According to the Obama administration’s new economic reforms, most of the financial processes you’ll be a part of will be transparent to you, but that does not mean that it will guarantee you a hundred percent risk free environment. After all, you are a mature individual. If you carelessly make mistakes with your finances and management of resources, you stand a fair chance of losing all your wealth. The reforms will only eliminate any unfair predatory practices that are existent in the financial systems.

The reforms are majorly focusing on three areas:

• There are a lot of financial processes that have managed to not come under the government scanner or the financial regulatory authorities. Subprime mortgages were one of them. Only about thirty percent of subprime mortgaging was being done by regulated deposit while the rest seventy percent was being done by unregulated bodies.
• Those activities that differ in pace from the laws governing them are the ones that have contributed to faulty economical practices. Every day new activities would come up which would take advantage of some loopholes in the old laws. This has lead to corrupt practices that resulted in the diseased economy of the country. Now the reforms have new laws for checking the corrupt practices. An example of such corrupt practices is the default swaps of your credit, such as swapping insurance for debt etc. This was the major reason why Lehman brothers, AIG and Dominos crashed.
• New financial institutions are rapidly mushrooming and making progress, but they don’t have proper ways of allowing government to take control in the case of any crises.

With all these reforms I do think there is hope of building up a new and strong economy which will prevent another depression from happening in the near future. But being realistic, I’ll not say that these reforms are going to develop a perfect economy because every reform comes up with a new loophole which gives rise to malpractices again. But that’s how evolution takes place!

Though our logic might say that a bettered economy should create more employment, the fact may be that employers are first trying to rebuild their finances before making any attempts to hire new employees which will add to their costs. Also during the recession they might have noticed that they are able to manage well without extra human resources and they don’t want to hire people at present. According to Economic Policy Institute economist, Heidi Sheirholz , every month about half million people need to be employed till 2011. Now that’s a big figure so how should the government achieve this?

At least for the next one year it doesn’t look as though hiring can be done on a full blown basis. What do you think is going to create those much awaited vacancies?

A Fresh Money Stimulus Program from Government

The government has already come up with a lot of programs to stimulate the circulation of money in the economy. The February stimulus of $ 787 was enough to control further deterioration of the economy, but was not enough to create job vacancies. Well, one thing that the government can do now is to extend the unemployment monetary perks and the COBRA subsidies so that the unemployed have a way to sustain themselves. Also, the unemployed, who are having difficulty in purchasing things for their livelihood, will immediately spend money to buy their required commodities and this will again put the cash back in circulation. When manufacturing companies and retailers get back their investments they’ll not fire more people immediately. This will prevent further job slashes.

Likely Industries for Hiring

According to Sophia Koropeckyj, director of Moody’s Economy.com industries that are engaged in improving the national infrastructure, school weatherization, building retrofication, and medical records implementation are the ones where a lot of hiring activity will take place; but the government can spend on these industries only in the coming year. So hiring does not seem to be significant till then.

Improving Manufacture

As the dollar seems to be falling in value in recent times, you can get to see that manufacturing has come down to an all time low. With the increase in domestic demand and export, the manufacturing sector might see revival in which case you can expect jobs to be created in this area.

According to the OECD and ITIF rankings from BillShrink, if I were a lucky Japanese I’d be busily socializing with my online buddies at the rate of just USD 0.27/ mbps per month at a remarkably high speed of 61 mbps. At the other extreme, if I were from Greece I’d be spending more than USD 20/ mbps per month for a speed of about 1-2 mbps. Icelanders are enjoying good broadband facilities as they have the highest penetration percentage of 80 %. Mexico has the lowest broadband penetration percentage of only 20 %. Even though a technologically very well developed country, surprisingly the US ranks 15th on the list of internet costs and speeds infographics with a recorded average expenditure of $3.3/ mbps at a speed of 4.8 mbps. Japan is followed by Korea, Finland, Sweden and France in the internet costs and speeds usage list. See the graph and assess which country you belong.

Anyways, here are some tips that internet addicts like me can use to reduce their broadband charges regardless of the country they belong to:

• Do some researches on the best offers- Internet service providers are available in plenty and the service charges depend on the area in which you are located. Confused, Simplify Digital, Broadband Choices are some of the websites that can give you a list of internet providers and their offers.
• Go for a bundle offer – most mobile phone companies and providing internet broadband services. Go for the internet service from the provider from whom you’ve taken your mobile or telephone connection. Many providers offer discounts to customers who opt for two or more services from them.
• Assess your surfing requirements –Is it for only checking emails? Is it for downloading movies or is it for simply visiting websites for collecting information without downloading much. If you need internet for email communication, there’s no point in going for a 20 MB -60 mbps connection that will cost you an enormous amount. Go for a 2 MB – 10 mbps connection and your purpose will be served without you having to pay an extra am0ount on facilities that you allow to rust on your system.

Be prudent in your connectivity choices and do stay connected via this wonderful electronic communication medium.

Change Your Perceptions

Most often money mismanagement happens due to faulty perceptions. Just change your attitude towards managing your money and you’ll be securing your financial future. Be enterprising. Think of ways in which you can improve your finances and make it grow and you’ll be financially more secure. Previously I used to think that as I earned a handsome salary, I’d be earning forever and I don’t need to save up for the future. But today, I don’t have a job because of the recession. I realize that my perception about money was wrong. Money is transient; you cannot take it for granted. After learning things the hard way, I have now taken up job as a stores accountant and improving my finances.

Well, that was just an example. Many times even though we take measures to save money, it does not work because of faulty procedures. Analyze your methods of budgeting. Set a target of savings every month. Are you achieving the targets? Are you comfortable by achieving your targets, or is it very painful?   If not, try to find out the lacunae in your budgeting and reformulate it.

Many of us have started saving in the face of a crisis. But what guarantee is there that it is permanent? After conditions improve all our bad habits of excessive spending will return. Saving and putting our money to good use requires development of the habit with perseverance and dedication. It’s very difficult to lose out on bad habits.

Stop Availing Consumer Credit

An  infographic from Billshrink, shows that personal savings have reached an all time low and consumer debt is at an all time high. In the pre 80’s period when consumer credit was not well known the level of consumer debt was very low.  People depended on their personal savings for their monetary requirements. But now money is available in abundance. A lot of banks and financial institutions are vying with each other to provide you loans at the best possible interest rates. As a result consumer debt has been encouraged and we are in big debts now.

Family Consultation Is Always Important

I was a communication officer at a restaurant and my job would get over at 6 P.M. I got a very good offer from a leading health care corporate for the post of a help line professional that necessitated me to take up night shifts for attending calls. Being the mother of a two year old, I could not take up the job because there had to be somebody at home to take care of the kid. My husband comes home late in the evening too tired and cannot stay up to take care of the kid. I couldn’t probably pursue my career without the consent of my family.

Set Clear Cut Goals

When you are going for a career change, visualize what your actual target is. Do you want more wealth, recognition, comfort, excitement? Jot down what you’d want from the new job. Analyze the current market situation for the career and try to predict how it will shape up in future. Consider your age too when you make estimations because quite often a career change requires you to join as a fresher with a lesser salary. My brother works as a top officer in a leading oil company of the nation. Computer programming being his passion he wanted to switch over to the software industry. I was surprised when industry professionals said that even though he had over 15 years of work experience in the oil company, it will not be taken into account. His managerial skills were also not considered. He had to start afresh in the new career.

If a career is going to be really beneficial for you, then only opt for it. Otherwise don’t waste your time and energy on it.

Don’t Be Lured By Hyped Up Careers

You might find a lot of careers lucrative because of the hype. People generally think that media jobs are very glamorous and high paying. They are, but you’ve got to put in a lot of hard work. Media jobs are not all that glamorous and they involve a lot of hard work. You’ll see that when you experience the job it might be quite different from your expectations. This is where you might risk losing out on a stable career for a new one that you are not suitable for.

Don’t Make Hasty Decisions

Many of us fancy new pastures when suddenly a demand for them is created in the markets. The boom for software professionals has motivated a lot of people of different professions to opt for it. But not everyone who made a career shift saw big success.

The bottom line is, think right and take a mature decision.

So how do these offshore accounts help you in evading taxes? They help in a couple of ways. First, tax on income that is not mentioned on your tax returns will not be taxed as the IRS will not be able to locate it. Secondly, you don’t have to pay taxes on the money that grows in these accounts because as it is, these accounts are hidden from the IRS scanner.

Well, you want to save money as much as I do like all those ‘clever’ people who’ve managed to keep their accounts a secret. But you should know that you’ve got to be very smart to see that you’re not caught. Otherwise you’ll face serious consequences. The federal government is even smarter than you think. They’ve already made an agreement with the Swiss Banking Giant UBS to inform them about all the suspicious accounts existing in that bank. So watch out if you have account in UBS. Do you know that if you are caught, you’ll be charged with criminal offences, will be monetarily penalized heavily and also jailed probably in a non-bailable mode?

Now, if I’ve driven the message into you and by chance if you happen to be one of those who’s been maintaining unreported accounts, you can always lessen the severity of your punishment by confessing to the tax authorities that you’ve got hidden accounts and by clearing up any of the previous taxes that you’ve avoided. At least you can work out your tax payment mode with the authorities. They’ll spare you the jail term. The government- approved last date for this is originally the 23rd September, but now its extended to the 15th of October. IRS has extended this Offshore Settlement Program not because its feeling kinder towards the cheaters, but because they’re getting huge response for this program. So, they seem to have succeeded in driving some sense into those evaders.

The Offshore Settlement Program necessitates you to report all your income in the hidden accounts for the last 6 years, i.e. from 2003-2008. Though the penalty will not be as severe as when you don’t own up and get caught later, you still do have to face penalties. You’ll also have to pay up 20% of your biggest amount that went unreported. Though some people feel that with all these penalties you cannot really call this an ‘amnesty program’ as the government calls it, I feel this is amnesty to a great extent. If you’ve done an offence how do you expect to escape unscathed totally? A punishment, though a less severe one, is required to teach all the offenders a lesson and not do such mistakes again.

Keep checking the IRS website for more information and confess to your attorney and to no one else to save yourself complications in the process.