bigstockphoto_mortgage_key__162982.jpgIn today’s world, no one can afford to buy a home without applying for some kind of loan in the form of a mortgage. Mortgages are controlled by various lending companies which can include banks, credit unions, and even individuals. These parties make their money by charging interest on the loan.

A mortgage is the pledging of a property as a security for a mortgage loan. While a mortgage in itself is not a debt, it is evidence of a debt. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed.

Because a mortgage revolves around the lending and repayment of money in order for lenders to make a profit, it is important that they loan to individuals who are as secure as possible; the general rule is that the more secure the individual as far as past and present money matters, the more money he or she will be lent. After all, the lender is taking a risk with his or her own funds, and will want them paid back.

The main way in which lenders will establish your security is by looking at your income and your past when it comes to credit. Most of the time this is all right, but what if you have filed for bankruptcy somewhere in the past? Will you still qualify for a mortgage?

How much time has passed?

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01020115105200.jpgThe combination of Delta Air Lines and Northwest Airlines creates the world’s largest airline and will quickly test the theory that a bigger carrier can effectively confront record fuel prices.

US carriers Delta Air Lines and Northwest Airlines are combining to form the world’s largest airline if regulators and stockholders approve the deal.

In short, the combination strategy is focused on squeezing enough operating efficiencies out of a huge global network — and likely from culling weak-performing domestic flights — to make a mammoth enterprise strong enough to survive the current fuel crunch.The third and fifth largest airlines will marry under the name Delta with a combined value of $17.7 billion, the two announced after their boards approved the merger yesterday.

The merger boasts the creation of the world’s largest airline in terms of fleet, destinations and total passengers.

“Combining Delta and Northwest will create a global flag carrier strongly positioned to compete with foreign airlines that are continuing to increase service to the country-region,” a joint statement said.

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neveh111.gif“Self-Made in America” a book by John McCormack, suggests that if you are investing less than 25% of your income then you aren’t serious about becoming wealthy. But how do you afford to do this without suffering? The answer is here.

You can do this by eliminating waste and impulse spending from your spending habits. Studies have shown that the average person blows around 25% of their income in these two totally unnecessary areas; waste spend and impulse spending. Let’s see what these two types of unnecessary spending are and how to eliminate them.

First I will define waste spending. There are two main types of waste. Firstly waste is when you spend more money than you need to in order to get the result that you want. Secondly waste is when you buy more than you need in order to get the result that you want.

Here are two examples around food.

An example of Type 1 Waste would be buying a sandwich for lunch for $5 when you could have made the same sandwich at home, and brought it with you, for only 50 cents. You are paying ten times the true value of that sandwich by buying it ready made. You probably also spent more time standing in line to be served than the time you would have required to make the sandwich at home.

An example of Type 2 Waste is when you buy more food than you need and then have to throw it away. Because you couldn’t be bothered taking the time to calculate the amount that you really needed you overspent on your food bill.

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f_bribery.gifThe U.S. Justice Department has begun a criminal investigation into whether aluminum maker Alcoa Inc. participated in bribery in the Persian Gulf state of Bahrain.

In documents filed Thursday in U.S. District Court, federal prosecutors asked a judge to halt a federal civil lawsuit that accused Pittsburgh-based Alcoa of bribing officials through overseas shell companies to secure hundreds of millions of dollars in overpayments.

The United States has a direct and substantial interest in this case, as the subject matter giving rise to this case is also the subject of an ongoing federal criminal investigation,” prosecutors in the Justice Department’s fraud section said in court filings.Aluminum Bahrain B.S.C., also known as Alba, in which the Bahrain government holds a 77 percent stake, is seeking more than $1 billion in damages from Alcoa and other affiliated defendants, according to a federal lawsuit filed last month.

“The Alba complaint alleges numerous facts which, if true, could be relevant to the government’s criminal investigation and a potential criminal trial,” prosecutors said in court filings.

“As the criminal investigation arises out of the same facts and circumstances on which the claims in this civil action are based, the determination of potential liability against possible subjects of the investigation, particularly if they are charged with crimes as a result of the investigation, will turn on the same essential factual questions at issue in this civil action,” the government said.

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wall-street.jpgYesterday the Fed cut US interest rates by 0.75%,on top of the 2.25%of cuts since last summer and hot on the heels of last week’s measures to stimulate liquidity and address funding problems through a new USD 200 billion lending facility for the banking system.

These measures have been particularly aimed at helping the increasingly distressed mortgage market. But despite the Fed’s efforts, credit markets remain blocked and investors are still looking for an answer to the ongoing and seemingly unquenchable market volatility.

However, perhaps investors and the Fed alike have been seeking the answer to the wrong, or at least different, questions.

Let’s look first at the average investor “on the street”. They cannot help but feel bombarded at the moment by a constant flow of bad news regarding the economy (the majority of financial analysts and journalists are now apparently in agreement that the US economy is actually in recession), and regarding the subprime crisis, where rumours andannouncements of financial company writedowns continue to undermine confidence.

Perhaps then the Fed’s willingness to act, while warmly receivedat first, is on reflection being perceived as confirmation of the darkest rumours and predictionsabout the US housing and mortgage markets currently doing the rounds. Why else would the Fed so deliberately seek to promote the orderly functioning of the mortgage market?
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divorce_070628_ms.jpgAsk most people to guess what the biggest risk they need to asset protect themselves against and they will usually guess either being sued or paying too much tax.

Asset protection is a crucial part of wealth building. There are many different aspects of asset protection and they often involve complex trust structures. Yet most people ignore the number one cause of financial loss, even though it is easy to protect them.

Both of these are important and every wise business person structures their business with the aim of minimizing these two risks, but there is a bigger risk than those two put together.

The risk of losing big time financially in a divorce can be minimized by having a sound prenuptial agreement yet many otherwise canny business owners fail to take this sensible step and end up losing far more money that they needed to.

Much of the money lost in a divorce isn’t just going to your ex-spouse; it is going into the pockets of lawyers. There is no financial incentive for lawyers on either side to come to a quick settlement. They are getting paid while the parties are fighting.

A lot of this financial and emotional loss could be avoided if couples took an example from business.

A golden rule in business is to never enter into a joint venture unless you have a formally documented and signed exit strategy. There are two reasons for this.

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bye1.gifI said goodbye to an old friend a few weeks ago. We’ve known each other almost thirty years, ever since I started high school really.

We were together on my first date, first kiss, and first trip overseas. We were hand in hand when I left home to go to university.

My friend was there when I started my first real grown-up job, has seen girlfriends come and go, and has been my solace when I had nobody to turn to.

We briefly parted ways from time to time but always managed to find each other. We laughed, we danced, we stressed and we wept together.

We shared our ups and downs. Some times we exercised together and every now and then we even bathed together. That’s a lot of togetherness.

In the past few months I have slowly wakened up to the fact that this friend of mine, who I thought had always been there for me, has slowly been poisoning me from the inside out.

My friend has been digging into my pocketbook on a daily basis for the past 30 years, and stealing my money at the same time as he’s been stealing minutes from my life. My friend has not really been my friend at all.

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When the market climate is uncertain, investors often become nervous and lose sight of their long-term investment goals. They are often tempted to postpone new investment, and even to sell their current holdingswith the aim of reinvesting when the stock market stabilises.

However, if investors are able to take a long term view, it is often best to holdd onto investments through periods of volatility.

The pitfalls of market timing:

Of course all investors would like to be able to predict the movements of the market, buying at the bottom and selling at the top. This is called market timing.

Unfortunately, it is very difficult to time movements in and out of the market, particularly in a period of extreme volatility. And getting it wrong can significantly affect the performance of investments.

Selling at the first signof a downturn can prove particularly bad. Sharp falls in the maket are followed by sharp gains. While it may be tempting for for investors fearing further losses to sell their investments, they risk locking in losses and missing out on gains.

In for the long haul:

The long term performance of equities demonstrates that there is no need to time the markets; its good enough just to be in the markets. Research shows that investments made when the markets had already begun to recover, and those made when it is falling, have still paid dividends.

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lmi300.jpgIn periods of volatility, it is natural for investors to be concerned about the value of their investments. However it is important to remember that equity investing is for the long term.

Over the past 25 years, equity markets have weathered fluctuating conditions to deliver strong returns.

Equities do carry a higher level of risk than bonds and cash, and investors can expect greater levels of volatility. But as a part of a well diversified portfolio, they have historically proved the best way to grow capital.

Significant events:

  • Black Monday Crash – Oct 1987 Worst single-day market crash in history as the Dow Jones loses nearly a quarter of its value.
  • Gulf War (Desert Storm) – Jan 1991 US- led forces repel Iraqi invasion of Kuwait. Global markets largely take the conflict in their stride.
  • Black Wednesday (Sterling leaves ERM) – Economic imbalances and currency speculation force sterling out of the ERM. A large devaluation in Sterling prompts speedy recovery.
  • Russian default/LTCM Crisis – Aug 1998 – Russia defaults on loan repayments, causing contagion across many assets. Hedge fund LTCM loses billions of dollars, but concerted efforts of global central banks stabilise markets.
  • Height of Tech Bubble – March 2000 – NASDAQ peaks in March 2000, driven by speculative demand for technology stocks. Prices reach unsustainable levels, triggering a dramatic crash and a three year bear market.
  • Terorist attacks on America – Sept 2001 – Investor nervousness grows in the wake ofterrorist destruction of the World Trade Centre. Interest rate cuts by global central banks helps to restore confidence.
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The other day I read an amazing statistic? It said that as many as half the people who end up divorced had a strong feeling before the wedding that they were doing the wrong thing but they were too embarrassed to pull out at the last minute. The fear of embarrassment is a powerful influence in the lives of most people.

Imagine that you slipped over in a public street, what would your first reaction be? If you are like most people you would look around to see who saw you.

Another, well known, statistic is that fear of public speaking is the number one fear that people have, but is it true? I suggest that their fear of public speaking is really a fear of being embarrassed publicly if they mess up.

So what’s all this got to do with being broke?

In order to become wealthy you need to set a goal to become wealthy. Since having lots of money is a lot more fun than being broke why doesn’t everyone set a serious goal to be rich? The reason is that they are afraid of the embarrassment if they tell everyone that they are going to be rich and then they fail.

It seems crazy to let your life be controlled by the fear of what other people may think of you, yet that is exactly what most people are doing. What about you? Are you letting the fear of embarrassment keep you from reaching your full potential, financially or otherwise?

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