Personal Finance


Just before Christmas scores of people feel compelled to write lengthy articles, present lectures, compile videos for YouTube and in general create hot air about the topic of excessive Christmas gift buying.

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Some pontificate about this subject throwing clever economic theories about and others tug at emotional strings while further proponents try to reason that Christmas gifts are a waste of money because most people hate the ones they get.

They certainly have a point. The shopping malls hum at their busiest just after Christmas when people come in to exchange their unwanted gifts.

So why do it?

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Easy answer really. It’s all about guilt. Parents showering their children with gifts do this because they feel guilty that they don’t show their love and caring enough. Adult children give gifts to parents because they feel guilty that they don’t show their love and caring enough. Husbands give their wives gifts because… You get the drift of the argument here.

If this is the reason for the excessive gift season, how did it get so out of hand? Enter the advertising industry whose reason for existence is to ensure their clients sell more and more products.

Holidays based on emotional reasons such as Christmas, Valentine’s Day, Father and Mother’s Day, Teacher’s Day and most other man made public holidays are an advertising executive’s wet dream.
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Emotions and message. They work so well together. If you love your kids, parents, friends, auntie and any other folk you can think of then you have to buy that latest game, just launched designer label perfume, bit of jewelery or that cute little Ferrari.

The bigger the purchase the more perfect is your love. Not always of course. Sometimes   it’s the latest toy that causes the most obsessive gift purchasing quest. Many parents have felt compelled to shred their nerves chasing around the shopping malls to find that last Nintendo game, most recent Bratz doll or zebra striped iPod.

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For many businesses this period of gift feeding frenzy is the main income generating quarter. This is what keeps them going. Sure there are other times during the 12 month trading period where the flat-lining turnover figures show a blip of life, but it’s the Christmas trading period that provides the bulk of their trade.

Florists have a similar love relationship with Valentine’s Day. And chocolate manufacturers have jumped on the bandwagon of Easter for their rush of income. So why should shopping malls not similarly pursue the Xmas dollar.

That’s exactly what shopping malls are doing with great gusto. How else would it be possible for you to find the biggest decorated Christmas tree in an Arab country? And have you noticed how early in the year those Christmas decorations are put up and the cheesy jingles are played? October already.christmasshop-main_Full

In the end it’s truly a win-win situation. Business makes its money. Human beings get to calm their guilt feelings about how the stress and busyness of their lives forces them to neglect their friends and family during the year.  It’s a season of goodwill to all folk all round.

What is your take on this seasonal topic?

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Here are a few money management pointers for women. Are there any aha moments for you when you read this list? Post your comment!

Tip 1: Balancing your cheque book is not rocket science
Contrary to what women believe or in many cases are lead to believe by the male influences in their lives, it is not difficult to work out personal finances. The basic principle is not unbelievably complex. What is paid into your account should cover what you pay out.

Spend what you have. In fact preferably not all you have, put some away. But start with balancing the incoming and outgoing as your first baby step towards financial intelligence.

And if that means cutting up the credit cards, then do so right now. If you cannot afford to pay the full amount due on your credit card at the end of the month, then you have a problem. You are trying to eat more than you have.

2) Take care of your own money
In line with balancing your own cheque book, let’s also understand then that you do not need to abdicate the money management function to anybody else. Regardless of what your father, uncle, partner et al says, guess what – you can do it yourself.

Just because you are a woman does not mean you are incapacitated, even handicapped, when it comes to working with your money. This you might have heard your father say often. Mother doesn’t know how to manage money; I can’t leave it to her.

Do not believe this. You can do the money sums. Trust yourself on this score. And in case you might not be able to add up to ten, go and do a course and learn.

3) Treat your money with respect
Where does it say in the handbook on life that you should throw your money at rubbish? You don’t need that expensive hair cut, the designer jeans, the brand spanking new car.
Because guess what. Nobody cares.
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Can lawmakers who don’t have the courage or intelligence to outlaw texting while driving really be expected to create a saner tax structure? Hmmm.

Developing a fairer tax environment is much less an economics problem than it is a political dilemma and, as many of you observed, it is unlikely that anything “tax” will be improved upon until there is some serious facial (and cultural) change in Washington.

Politicians focus on one issue at a time, and pretend to have problems dealing with inter-related programs. Tenured politicians have a vested interest in resisting any change that involves their spheres of influence. Both parties are embarrassingly mired in twentieth century class warfare that stifles all forms of productive debate.

Tax cuts don’t just benefit the rich. In fact, they provide the opportunity for everyone to attain greater wealth. Demand directs resources far better than punitive taxation. Money in consumer hands will fuel social and environmentally friendly change.

“You cannot eliminate revenue from one program without replacing it from another, equally complicated, one”, career politicians will say philosophically.

They have little to gain from simplifying the tax collection system — yet it is obvious that a whole new approach would solve most of the economic woes plaguing us today, domestic and international.
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The mantra of the times is cost cutting. The axe of cost cutting invariably falls on the employees. It is either through wage reduction, reduced bonuses, reduction of other benefits, reduced work hours or in a worst case scenario in the form job losses.

In most countries unemployment rates are hitting close to double digits, the worst case scenario might soon become a reality for anybody including you. In such a situation, it is imperative that you should have a plan B ready.

Instead of waiting for a surprise and acting re actively, it is important for you do a realistic assessment of your current situation.

Each and every one of you must have an understanding of your employer’s financial situation and strategy, your own function/department current state and whether there is any danger of retrenchment at your level. Once you access the macro and micro level picture, you need to play your next steps accordingly.

You may not have a choice but to look out for alternate employment if you feel that you may be in the firing line. It may not be easy in the current situation. However the current economic situation gives you an excellent opportunity to do what you always wanted to do.

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beckyquickwarrenbuffettA couple of days ago, I watched a short interview with the legendary investor Warren Buffett on an investment news channel. The interview was conducted shortly after the annual general meeting (AGM) of Buffett’s company Berkshire Hathaway. Buffet said many interesting things—as he always does—but the really educational part of the interview was the contrast between the world that Buffett inhabits and the world that his interviewer seemed to come from.

It was like listening to members of two different species talk. If a fly (which lives for perhaps a few hours) and a tortoise (who can survive for a hundred years or more) had a conversation, it would probably sound like Buffett and that interviewer.

At one point, the interviewer asked Buffett to comment on how his companies would cope with the downturn. Buffett replied that things were certainly down at the moment but he expected them to be OK in three to five years. I could see that the mere mention of a time scale like three to five years had derailed the interviewer’s thought process. Coming as she did from a world where three to five hours or at most three to five days is the standard unit of time, the idea of an investor talking in years seemed to have thrown a spanner in her works.

Next, she pulled out the day’s newspaper and drew the old man’s attention to a news item that US unemployment was up to 700,000. She wanted to know what he thought of the news. Buffett said that he was sure that five years from now, the employment situation would be much better than it was today. Again, this epic timescale put an end to that line of questioning.
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Everyone I know is sick of this recession, and sick of hearing about this recession. For one, the media’s attention to the global financial situation is depressing. But as many have pointed out, we are in this situation because of our own devices. On the individual level, poor financial and debt management, have exacerbated outside factors such as the housing market collapse and high rates of unemployment. For others, indiscriminate consumer debt has led to a number of individual crises. But in such a climate, there is a lot that can be learned. While it would have benefited everyone to know this several years ago, here are twelve personal financial lessons that can and should be learned during this recession.

Learn How to Plan Ahead
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It’s no secret that poor planning contributed to why so many people are currently in untenable financial situations. Don’t Panic. Figure out where you are at, where you want to be and put in place a realistic plan for getting there. The majority of businesses without plans in place before they start operations do not succeed. So if you are serious about creating a way to get ahead, or even just caught up, this step could not be more necessary. Unique circumstances will come up and cause you to stray from your plans temporarily, but structure is necessary in order to monitor your progress, and stay focused.

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11795149013dpolwWell the stimulus package is finally finished. A tough new bank-rescue plan to boost lending and limit outrageous pay are part of President Obama.. Even troubled homeowners may even get some relief. All said and done, the government could spend more than $3 trillion to help end the recession.

All we have to do now is sit back and watch the economy grow, am I correct?

One risk of the unprecedented government intervention is that it won’t do all that much to speed up the end of the recession. Another risk is that consumers, expecting a magic fix, could fail to prepare for tough times that still lie ahead. Obama himself said at his first press conference. “This is going to be a difficult year, If we get things right, then starting next year we can start seeing some significant improvement.”

Next year? I’m afraid not. A large number of economists agree that it will take that long, at least, before the biggest problems – mounting layoffs, the housing bust, the banking crisis, and plunging confidence – start to turn around. Whether the stimulus package is actually working, and when the economy might start to mend, here are a few things to watch.

Improvement In The Unemployment Rate. Of all the economic indicators, this is probably the single most important. But you might want to avert your eyes for awhile.

If the stimulus plan works it might come close to creating 3 to 4 million jobs which Obama has talked about.. And that – over several years, combined. But it’s almost certain that through this summer and into the fall, there will be a net job loss, not a gain. Most economists expect the unemployment rate, now 7.6 percent, to hit at least 9 percent by the end of this year. That represents up to 2 million more lost jobs.But the pink slips haven’t all gone out yet, so the layoffs haven’t shows up in the official numbers.
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scamsWith Bernie Madoff’s Ponzi scheme foremost in many investors’ minds, how can you tell whether an investment pitch is a scam? Keeping Bernie Madoff’s Ponzi scheme in your mind minds. “It pays to remember that if an investment opportunity sounds too good to be true, it usually is.” Here are 10 tell-all questions to consider:


1. Does it promise “low risk and high gain?”

“There is no such thing as a free lunch.” It’s a fundamental fact or basic of investing that the higher the potential return, the greater the risk and that you may never see that return. Do not fall for investments that promise spectacular profits or “guaranteed” returns.

2. If you don’t act now will it be too late?

Why will it be too late? Any legitimate investment will be there tomorrow, and next week, and next year. Never be pressured into investing in something because tomorrow might be too late. Even if it turns out that the stock doubles tomorrow, you should feel better knowing that you were cautious and responsible with your money.

3. Does the investment tip claim to predict the future?

“It will double in three months.” Oh, yeah? And where did your broker buy his or her crystal ball? Not only is this a ridiculous promise for a broker to make, it’s illegal. Go aheaed and report this infraction to his or her sales manager. And if the matter doesn’t get satisfactory attention from a supervisor, contact the Financial Industry Regulatory Agency (FINRA).

4. Do you know the background of the salesperson and his/her employer?
Any individual selling securities to the public must pass a background check, a series of examinations, and be registered with FINRA. Likewise, their employers must also be known to FINRA and the SEC. If you would like to check up on the background of your broker or brokerage firm, use FINRA’s BrokerCheck page. But remember, even if they don’t have any complaints against them, it doesn’t necessarily mean they can be trusted. You could be “Scamee No. 1.”

5. Does it “guarantee” anything?
It is impossible to guarantee the performance of any investment, but if your broker is doing so he could get tossed out of the industry.
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wreck_logo227Presumably yo are pretty uncomfortable about the current state of financial markets you can be reassured that you’re not alone. Almost all investors are experiencing some discomfort from the recent falls in asset values, yet some handle it better than others.

A big influence on your investment outcome over the long term depends largely on how you manage your emotions in relation to the market’s volatility can have. Here we explore the influence of our emotions on financial decisions and look at what we can do in times like these.

Our emotions are fundamental in the decision making process and influence our behaviour, thoughts and actions. Understanding our emotions and learning to manage them can improve our overall investment experience.

Our feelings make us focus on information that matches our mood, according to studies by behavioural scientists. So, for example, if the market is trending upwards, and your mood is positive, you would tend to focus on information that confirms these emotions, (as was probably the case throughout the first half of last year). Conversely, we are more likely to be influenced (unconsciously) by information that is negative in the current climate.

Our feelings also influence what information we retrieve from our memories. For example, if you are in a positive frame of mind, you are more likely to focus on positive possibilities. Given the current sentiment, we can assume that most people are currently focusing on negative possibilities.

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Oil fell toward $37 a barrel on Wednesday, tracking global equity losses and ahead of U.S. data expected to show an increase in crude stocks.

Stock markets are again in a bearish trend after the Dow Jones industrial average closed down 1.2 percent Tuesday. Oil prices could continue to fall on the coat tails of equity markets and the trend suggests this might into the New Year.

Oil prices have fallen about 60 percent since the start of this year and more than 70 percent since their record peak above $147 in July as demand from the United States, China, Japan and other industrialized nations has fallen.

The Organization of the Petroleum Exporting Countries (OPEC) has already announced cuts of around 5 percent in global oil supplies and may call an emergency meeting before March if prices extend their near $110-per-barrel slide since summer, OPEC’s President Chakib Khelil said Tuesday.

Oil was buoyed Wednesday by a dip in the dollar, which edged down against the yen, pressured by light selling from Japanese exporters after dismal U.S. growth and housing data suggested a prolonged recession ahead.

Data for release later Wednesday was also expected to show distillate stocks rose 200,000 barrels last week, while gasoline was seen up 500,000 barrels, a Reuters poll showed.

The pace of global oil demand growth should increase next year as rising consumption in emerging markets outweighs declines in developed nations hard hit by the high fuel costs and mounting economic problems.
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