I also want to expound on this point. Think if everyone in the US suddenly became fiscally responsible and the banks never collected another overdraft or returned check fee, how about credit cards never getting late fees? IMO banks would damn near go under without these fees. Anyone in the banking industry who can give us an idea about how much of a bank's profits are dependent on consumer's mistakes (fees)? I work in the CC processing industry and let me tell you we make our money on mistakes. If you as a merchant run a transaction in such a way that could be considered risky you get charged more. Without this I don't know how financially viable we would be. If Americans did go along with what all the experts say and saved 10% of their yearly salary or whatever is recommended these days, how badly would basic auto, retail, and home sales decrease?
Allow me to ask a simple question then (before I solicit advice from my personal adviser).... What should a person do? Assuming you are reasonably young, up to date on your house payment, healthy 401k balance.... What is the prudent thing to do?
All these banks offering free checking accounts, that's how they absolutely make their money, at least a large portion. fee income has become huge in the last ten years.
The good new is, it sounds like you're on the right track. You ask "What should a person do?" Well there may be two intents in that question: survival or prosperity How do I survive this crisis? Here are some tips off the top of my head. These tips alone will probably stop you from being one of those people who loses their house and has to move to an apartment. Wisely acquire "good" debt and do so only when it's appropriate. If you're going to buy a house, buy a car, or improve your house, the loan that will allow you to do so will probably do well for your credit record if you're a responsible debtor. Fully understand what you're committing to when you acquire a debt. Be a repsonsible debtor Pay off your debts. And not just the minimum required payment. In your mortgage, pre-pay next month's principle in addition to your normal monthly payment (you'll save yourself from paying a LOT of interest that way). Use, but pay off your credit cards. Don't let large balanaces carry over from month-to-month. Pay those suckers off regularly and don't let them control you. Budget your money Plan ahead for how much money you will be earning, how much of that will be dedicated to saving/investing, how much of that will be dedicated to bill-paying, and how much of that will be for your lifestyle. Stay within those boundaries. Live below your means If you've built that budget, stick to it. Just because tinman can go out and buy a new HDTV doesn't mean you can or should. Only buy things that you know you can afford reasonably without going into a lot of debt and within your budget limitations. Purchase wisely Hey - if you buy something on sale (to save money) with your credit card, and then let it float on your card for months, you end paying a ton of interest on that product and that offsets any savings you may have had from buying it on sale. Know the different types of loans, including what an ARM loan is and why it is a dangerously bad idea for some, but a very good idea for others. Pay yourself first When you get your paycheck, you put your budgeted savings into your savings accounts and investments BEFORE you pay your bills. Build your investment/savings Putting money in a savings account isn't enough. You must invest wisely in long-term low-risk solutions. This secures your future. If your company offers you a 401k, contribute THE MAXIMUM ALLOWED to that plan. How do I get prosper/get rich from this crisis? I have no idea. If anyone here does, please post.
largest drop in home prices in twenty years NEW YORK — U.S. home prices fell 3.2 percent in the second quarter, the steepest rate of decline since Standard & Poor's began its nationwide housing index in 1987, the research group said today. The decline in home prices around the nation shows no evidence of a market recovery anytime soon, one of the architects of the index said. MacroMarkets LLC Chief Economist Robert Shiller said the declining residential real estate market "shows no signs of slowing down." While Houston is not one of the metro areas covered by report, the study did suggest Texas may not be feeling the worst of it.The index for Dallas showed single-family home prices there rose by 1.6 percent for the 12 month period that ran through the end of June. It was one of five markets of the 22 studied that rose. The report came a day after the National Association of Realtors said sales of existing homes dropped for a fifth straight month in July while the number of unsold homes shot up to a record level. The S&P/Case-Schiller quarterly index tracks price trends among existing single-family homes across the nation compared with a year earlier . A separate index that covers 20 U.S. cities fell 3.5 percent in June from a year earlier. A 10-city index fell 4.1 percent from a year earlier. Housing is among the economic indicators closely watched by Federal Reserve policymakers. After five years of rapidly rising home prices, the market stalled last year, with prices holding steady or falling as sales slowed. Since then, lenders have made it more difficult for some people to get mortgages by tightening standards just as foreclosures rise and some who borrowed at adjustable rates facing higher payments they can't meet. Problems have spread from those with poor credit repayment histories to more creditworthy borrowers. The Fed has taken a number of steps aimed at stabilizing the situation, and market watchers look further for a possible cut in the federal funds rate, which is the rate commercial banks charge each other for short-term loans. That rate has been kept steady at 5.25 percent for more than a year. The Fed has its next regularly scheduled meeting on Sept. 18. Fifteen of the cities surveyed for S&P's 20-city index showed a year-over-year decline in prices in June. Prices in Boston dropped in June at a slower rate than they did in May, continuing a trend that started at the beginning of the year. In April 2006, Boston was the first metropolitan area to show a year-over-year decline, so any turnaround there could be an early sign of recovery. S&P said it needed more data to determine whether Boston would be the first area to improve. Detroit led the cities with the biggest price declines, with an 11 percent drop from June of last year. Other cities with falling prices included Tampa, Fla., San Diego and Washington, D.C., which all recorded drops of at least 7 percent. Seattle and Charlotte, N.C., were on the small list of cities that saw prices rise in the same period. Seattle prices rose 8 percent in June while Charlotte saw a 6.8 percent increase. In Monday's report, the National Association of Realtors said sales of existing homes dipped by 0.2 percent in July from June to a seasonally adjusted annual rate of 5.75 million units. The median price of a home sold last month slid to $230,200, down by 0.6 percent from the median price a year ago. It marked the 12th consecutive month that home prices have declined, a record stretch. if you're trying to sell your house now, I feel sorry for you.
Yeah, I am planning on putting mine on the market within the next 6 to 8 months after the wedding. Not looking forward to it. Hell, there are already 4 or 5 other homes on the market in my small subdivision. One right across the street. Only good news is that my mortgage payment isn't that high and neither are my property taxes, so if we have to pay 2 mortgages for a while, it isn't going to kill us. But we can't buy a new house until we sell my fiance's house and we can't do that until we sell mine. Even if I lose money on this house, maybe we'll make money on a house in the future. Even if the future is 20 years down the line. I'd like to think it all evens out in the (very) long run.
this is a big deal right now, in all those developments in places like katy, you'll see 20 homes built in some new division with five sold. that's not taking into acct the situations like yours, the used home market. its just like in the eighties when these real estate developers built all these strip centers around town that were never rented.
sadly the manhattan/nyc real estate market chugs along with low vacancies despite ever increasing, ungodly overpriced supply.
I'm watching this new show on AMC, "MadMen", couple buying a nice apartment in Manhattan for $30K. of course it was 1960
NY has tons and tons of people coming each year (new immigrants, people from other areas) I have no idea what is so great about that place that people will want to all crawl up there.
I have an aunt in San Fran who bought her house in the 50s or was that 60s? for like 5000 dollars, now it is worth something like 500-600 K. that's 100000% appreciation in 40-50 years!
