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Pay Day Loans – Legislating Rates

The payday loan industry is enormous at over 85 billion dollars. In 2008 the state of Ohio passed legislation limiting the interest rate to 28% for businesses offering payday advance loans. This puts the interest rate at close to the same rate as a credit card. The state supported this bill by 64%. Proponents of the bill noted that payday loans cause the poor to get caught in a vicious cycle of debt that they cannot escape.

The interest rates on these types of loans ranges from 300% -600%. It is also important to understand the amount of risk involved with this type of transaction for the person lending the money. Given the size of the industry it would seem that there is plenty of profit motive to enter the market and that someone would lend at a lower percentage to pick up more business. However, the only thing to factor in must be the size of risk involved. More innovative online pay day lenders such as those that offer no fax payday loan have actually decided to stop lending in Ohio due to the new legislation.

This limits choice for Ohioans and others in States that limit pay day interest rates. Some have suggested that state level assistance programs may be necessary in the absence of this form of credit.

I’m interested to hear your thoughts on the subject. Leave a comment and let me know what you think. Does the new legislation protect those who would otherwise be taken advantage of or is this a necessary service that people depend on that will no longer be an option?

How old are you in credit years?

I came across this fun credit quiz that will tell you your credit age. It takes about 2 minutes to take the quiz. At the end you will get your credit age and a description of your credit self.

I’m interested to hear how many of you are credit newbies versus connoisseurs. You can leave a comment and let everyone know how you did. I would be interested to hear if any of you seemed to struggle on a particular section of the quiz or were troubled. I know personally, I pay off my credit card every month but the amount of credit on the card I use is high relative to my credit limit. I didn’t realize, but this can actually be viewed as a negative.

Oh, and by the way my credit age was also 47. In this case I am assuming that older is better, but I’m not really sure. I had my cousin take the quiz and she failed miserably. I think that explains a lot. This is the same woman who collects tons of longaberger baskets and complains about not having any money. Hmm, I don’t know what could be the problem.

Anyway, here is the link to the quiz Credit Quiz. Don’t forget to tell everyone how you did.

Balanced Score Card for Managing

Whether you are a big time CEO, departmental manager or someone just trying to get your family to organize their finances a balanced score card methodology is one way to think deeper about your finances. Oftentimes people just look at the financial number at the end and don’t necessarily focus on managing the inputs leading up to that number. If you think of someone on a diet they will often measure their weight but some of the more important metrics objectives are things like how many calories they consume or how much time they spend exercising. While intended primarily for business the balanced scorecard approach seeks to focus on managing the inputs that lead to that final number at the end.

The traditional balanced score card buckets are

  • Financial
  • Customer
  • Learning and Growth
  • Internal Processes

Financial metrics are typically things like how much cash is in the bank, how many people owe me money, how many people do I owe money and what am I doing to manage this process. With customer you can focus on metrics like how many customers are late to pay, how many new customers do I have, where are they coming from and what activities am I doing to retain them. You can even apply these concepts to your personal life. It may sound strange, but thinking about how much time I spend with my family etc. Some of the concepts related to the balanced scorecard can be difficult to understand one of the best ways to get a grasp is through the use of a bsc case study. The are many examples online that can be very useful in helping to get a better grasp on the subject.

When it comes to measuring each of these items they are referred to as KPI’s or Key Performance Indicators. These are specific measurable items you can use to define your progress. Using our diet example from above you can think of calories consumed or time spent exercising as KPI’s for a diet. There are also many metrics case study examples available to help you think through as well.

Recently, I started working on a KPI dashboard for a company where we used some of these measure to alert managers of some of the key inputs before they turned into problems. Previously the data was difficult to get to and the managers were not following their KPI’s closely. Now they can see from a quick glance if any of their KPI inputs are in danger by highlighting red. Using the right software can make the balanced scorecard much easier to implement. It allows you to measure the right behavior and act on it appropriately.

Revisiting Lows

After enjoying a nice twenty percent rebound from November 20th through the first week of this year, the markets are pulling back aggressively once again and threaten to test their prior lows. The reasons are always difficult to pinpoint, but the fact that we are headed into earnings season probably has as much to do with it as anything else. Many would be buyers are likely on strike, preferring to wait for the news than guess on what has already been discounted. With a scarcity of buyers, prices get marked down to ensure some semblance of liquidity for those who need it.

This back and forth, trading range based action will likely become commonplace for most of 2009. We will likely see one or more nice bear market rallies and then aggressive sell-offs as potential catalysts for uncertainty approach. Our best advice for dealing in this environment is to be realistic with regards to personal, short term needs, tactical and incremental with regards to near term portfolio change, and long term with regards to investment trends and horizons.

So what does this mean?

As we stated in late summer when the bear market rally started to become ugly, every investor’s first responsibility is to themselves and their family. To this end, in an uncertain employment environment, make sure you have access to a year’s worth of liquid savings. If you do not have it now, do not make radical changes all at once, but incrementally over a period of months to build your cash cushion, from whatever sources exist. The ruth of the matter is that if you do not survive the short run, the long run will be hard to reach.

Tactically speaking, we repeat our view that the market will likely remain range bound between its prior lows of 740 on the downside and 1100 on the upside, until the economic fundamentals visibly improve. We seem to be in a down phase towards 740 as we write today’s entry. Of course, we have no idea if this low will actually hold – still about ten percent lower from current levels – but we take some comfort that it marked the low for 2008, a year that had a ton of very bad fundamental news, including several high profile bankruptcies, high stakes corruption, and severe liquidity squeezes.

Our plan of action calls for positioning the portfolio for an eventual long term recovery in the economy, within the constraints of a likely trading range. This means we will likely trim positions more aggressively as we approach the higher end of the range while hopefully maintaining the courage and fortitude to add back to or increase our positions at the lower end of the range. Of course, all of this is much easier said than done, but it remains our intent.

Over the long term, however, we remain primarily interested in investing in companies that are leveraged to longer term, defensible trends. While almost all companies are showing some signs of cyclicality in their business given the dual nature of the credit driven recession, the fact remains that over the long term, innovation will absolutely thrive in this environment as pain makes clearer our most pressing needs as a society.
Times are tough. But as we said in our year end commentary, do not allow the headlines to get you down. Many perfectly happy people around the globe do not even know that the stock market exists.

This is an article from our friends at Broadleaf Partners

Below is a description of their firm.

Broadleaf Partners is a Hudson, Ohio-based asset management firm focused on achieving superior investment returns and providing outstanding client service. We employ a concentrated growth style of investing, holding approximately thirty equity positions from a cross section of industries.

Our sector exposures typically reflect the outcome of our bottoms-up stock selection process, which is influenced by our assessment of the economy and other long-term trends. Innovative new ideas and themes are of particular interest and our all-cap approach provides our clients with the flexibility to invest where those opportunities abound.

At Broadleaf, our clients’ interests always come first. We are passionate about helping our clients achieve their investment goals and welcome the opportunity to help you achieve yours.

Ultimatum game – How to trade effectively

In life we are constantly making deals in ways we might not even think of. It doesn’t have to be as big as buying a house, paying off debt or some other major life event. We make deals as simple as splitting a piece of gum with someone. Traditionally, I’ve used the 50/50 split rule. It seems intuitive and fair. Growing up when I used to split a piece of gum my mom used to tell me, “you split, I pick.” This method ensured that we both had a common interest in making sure the split was as fair as possible. However, you may be able to get a little more if you don’t get to greedy.

Enter the science of what economists call the ultimatum game. In this scenario, there are two participants. One participant is given a sum of money. He or she is told that they must make an offer to the second participant. If the 2nd participant accepts the offer they can both keep the money. Remember, the 2nd participant will always be better off by accepting some offer. For example, a single penny is better than nothing. As you can imagine, the 2nd participant declines the offer at some level. What numerous studies have shown is that regardless of income level or size of offer that the 2nd participant usually declines when their share drops below 30%.

This has numerous implications for deal making and sharing of resources. As long as you can position yourself to let the other person think they are getting more than 30% of the benefit in a deal there is a good chance they will accept.

If they have the gum in the future you may want to opt for a more even split 🙂

How to Manage Finance, Work-Life Balance, and Sales-Marketing Activities of Your Home Business

Work-life BalanceMany, if not all, home businesses are Sole Proprietor – They handle everything themselves or with the help of family members.

With many responsibilities in running such business, home business owners need to keep control in their home intact.

Three of the controls that home business owners’ often having troubles are:

  1. Separating business from personal finance (and vice versa.)
  2. Managing work-life balance.
  3. Managing sales and marketing activities to grow the business.

Mastering the three controls is essential in mastering in other controls – You can say that those three are prerequisites. The following are some tips and ideas on maintaining control on all three.

How to separate business from personal finance – and vice versa

Separating personal and business finance is important. Not only the business’ revenue to grow itself, you also need to control your personal finance so that it will not get carried away and infusing every penny you have into your home business.

You can basically start with separating bank account, so that your business and personal finance each has an account on itself. In book keeping, you need to localise your income-expense: Your business account only deals with any income and expense related to your business, and your personal account only deals with any income and expense related to your daily activities.

How to manage work-life balance

This is the trickiest of all – You more often than not, got carried away with your business venture, in such a way that your personal life is sliding away from you. All of a sudden, you feel that your entire day is devoted to your business.

Having a good work ethic is important, but over-do work will only leave negative results – You might be stressed out, you could be anti-social, you could damage your relationship with your spouse, kids or other people important to you.

The surest way to maintain (or regain) control in your work-life balance is to have a written schedule to be placed in prominent places, as well as setting up reminders and to do lists for day-to-day business activities.

The critical part in maintaining control in your work-life balance: Stick to your schedule, no matter what!

How to manage sales and marketing activities to grow the business

This is often neglected, simply due to the nature of Sole Proprietorship itself – You handle everything yourself, and this means you will prioritize things. From experience, prioritisation is done the wrong way.

Usually, you first priority is to finish projects on time, before deadline. And, unfortunately, one of the neglected ones are your sales activities, including managing leads.

Your decision to outsource some of your business functions, in this case, sales and marketing functions can make or break your home business.

You can use CRM software for your sales and lead management.

In fact, sales management software not only can help you to control your sales and marketing activities, but also can help you increase close rate.

The key: having the right mindset

Your mindset rules your decision in everything, logical or not. In this case, no matter how much you know about gaining control in your business and personal life (especially finance), your mindset determine your success.

So, first, regain control of your mindset and learn to apply the principle of kaizen or continuous improvement for the benefit of your money and mind.

image by eyeliam.

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How Living Cheap, Looking Rich Can Help Your Personal Finance and Career in Recession

Live Cheap, Look RichLiving below your means doesn’t seem a desirable decision to survive today’s recession.

There are better ways, and although living below your means are the next logical step when you are in financial strain, your sense of achievement must be maintained.

Why is that?

In order to keep yourself on track in navigating through the economic storm, you need to stay focus. Staying focus can be achieved through the fulfillment of your need for achievement – and living below your mean is not the way to fulfill yours.

Live cheap, look rich

Living cheap is not living below your means. Living cheap means living within a closely controlled budget to achieve the living standard that anybody else has on a higher budget.

The main idea of living cheap, looking rich is to aim to get the best deal in every way, including clothing, entertainment, etc. in such a way that nobody would know that you spend less for the look you have right now.

‘Look’ here is not only clothing, accessories, or any other apparel and fashion related products – ‘look’ is your lifestyle, in a standard that can’t be achieved by living below your means.

‘Look’ is going to Starbucks occasionally, and socialise with your friends and colleagues. ‘Look’ is how people perceive of you, no matter you achieve ‘it’ by bootstrapping. You shouldn’t overdo them, though.

The key in living cheap is total control of your budget.

Why living cheap, looking rich is smart

We live in a society that value physical appearance, lifestyle and charisma. Enhancing yours will actually help you land better job, secure more business, or socialise with more people (which can present you with more opportunities) – all in all will affect your bottom line: your personal finance, in a positive way.

You deal with people, and most of them don’t really care how much you make – what they care is what they see, and how they preceive of you. For example, in a meeting with business prospect, you need a professional look that commands confidence, charisma, and trustworthy. You don’t want to meet your future client in your t-shirt, don’t you.

How to live cheap, look rich

There are ways you can consider to live cheap but look rich:

  • If you are into fashion and business as well, purchase your clothing needs with a wholesaler. While hard to find, wholesale clothes can save you a lot of money. The problem is, they usually only allow you to buy in bulk (usually in half-dozen or dozen).
  • Alternatively, you can shop in consignment and/or discount stores.
  • Shop for everything on the web – groceries, clothing, accessories, electronics, travel deals, etc. You can always receive a lower price for the same item you want.
  • Attend charity events and/or be volunteer. Charity events – the large one – are where socialites and celebrities. Attending the events, as an attendee or a volunteer will help you raise your profile.
  • Purchase used car – no body is really care how much you pay for the car, as long as its condition is top-notch.

Remember, don’t live below your means – Live cheap, look rich. That is good for your economics and, in effect, your personal finance endeavour.

Image by net_efekt.

The Power of Money, Endorsement and Identity Theft: Jeremy Schoemaker vs. Google Money Tree Case

IdentityJeremy Schoemaker, known for his is one of the authoritative bloggers on the Net today. His company and personal branding is so powerful, that every marketer wants to capitalise on them – even doing it illegally.

This is a classic case of identity theft for the purpose of making more money through the power of endorsement.

The case study

One of Jeremy Schoemaker’s favourite photos is him holding a cheque of a large sum – thanks to his successful make money online business ventures.

Unfortunately for him, this photo is allegedly used by an advertiser to promote Google Money Tree, a ‘system’ to make money online through Google, which later found to be a scam.

Stolen identity to promote a scam program

That’s where the problem lies: Unauthorised use of images to endorse a product without any permissions is already considered illegal and unethical. In this case, the image is used to scam people.

The impact toward Jeremy’s brand images is devastating: People assume he endorses the Google Money Tree, so that many people join the program simply due to the fact that Jeremy, the Shoemoney, ‘endorses’ the system. When the system is deemed to be a scam, so does Jeremy!

He is, of course, not happy with the stolen identity and false endorsement.

Endorsement and mind game: Why advertisers pay big bucks (some steal endorsees’ property as freebies) to get ‘celebrities’ to endorse their products.

Although Jeremy Schoemaker is not your typical celebrities – he is one of the blogging celebrities that is made famous for his financial achievement through blogging and building businesses surrounding it.

The main reason advertisers splash a large sum of money on endorsers that always are public figure is this: to get into prospects’ mind.

Jeremy is a public figure – he build his business and personal branding relentlessly. In blogging world, Jeremy Schoemaker means make money online, blogging celebrity, and branding powerhouse.

Many advertisers want to touch the corner of Jeremy’s robe so that Jeremy’s positive attributes, such as charisma, authority, mindset, and knowledge, are transferred to their products, or at least related to their products.

This way, advertisers get into prospects mind, by saying “Jeremy uses this system to make money,” “Jeremy believe this product is excellent,” and any other assumption.

Obviously, the more authoritative your endorsees are, the stronger visual and emotional bait your product has.

How would this affect the endorsee? He/she could be related to the product, and as the product is successful, his/her image and personal branding will be enhanced, too. Of course, this also applies to the contrary.

Stolen identity that is used to scam: a devastating negative ripple effect

In his blog, Jeremy wrote a clarification post that clearly stated that he has nothing to do with the Google Money Tree scam, and indicated that he will pursue a lawsuit against the owner of Google Money Tree system.

Jeremy did the clarification to stop the negative ripple effect that could bring his businesses down altoghether. Clearing his name will take a lot of resources, including money and time.

I respect Jeremy Schoemaker and would like to look forward for a positive outcome of this.

Image by fotologic.

Tools to Increase Your Sense of Financial Security: Financial Products Review Sites

Finance Product ReviewIn my previous post I talked about improving your sense of security by exposing yourself more toward facts and less toward assumptions.

This article is about a tool that can help you gain more facts: financial products review site.

The pros and cons of financial products review sites

Review sites are those websites that offer you comparisons among a selection in a certain category. In financial products, for instance, there are review sites that compare credit cards – their plans, benefits for cardholders, and such.

With plenty of sites doing reviews on various financial products, you are faced with a multitude of things to ponder before deciding one financial product to take.

Like everything in life, there are pros and cons of financial review sites.


  • Reviews help you decide which financial products are the most beneficial for your need.
  • You can access plenty of key information on products highlighted – all in one place.
  • You can learn as much as you can about a financial product, without the fear of being chased around by financial product salesperson.


  • Reviews could be non-genuine ones, or even fake, to drive you to a limited choice that bring the review sites the most revenue for recommending you.
  • The review sites themselves could be scammers – Their aim is to lure you to provide private information for them to take advantage of.
  • Non user-generated review sites can be subjective in their recommendations.

The key is to find reputable financial products review sites that offer you legitimate reviews and unbiased recommendations on multiple financial products, such as the Australia-based Good With Money.

How to make the most of financial product review sites for your benefit

First of all, you should seek a reputable review sites that can offer you more details in user’s review, not only a star rating system. This is important, because it is imperative that taking loans will need more effort from you to minimise risks.

Secondly, you should visit the recommended third party sites to learn whether the financial products reviewed are claiming the same features and benefits. This is also useful to see whether the information found in the review sites still relevant with the information found in the provider or issuer sites.

Good luck on your endeavour in increasing your sense of financial security.

How to Improve Your Sense of Security in Uncertain Economy

Sense of Financial SecurityPeople are often being overly reactive when it goes to bad situations.

The recession itself is happening largely due to global public reaction toward financial crisis, that is more often than not, doesn’t actually affect them directly whatsoever.

Negative outlook on financial issues cost the community lost productivity, thus worsening the effect of the financial crisis.

As a major part of your community, you, in whatever way possible, need to feel secure about your financial stature.

Why? Because if you feel secure about your financials and your life in general, you will be able to affect the community surrounding you.

Sense of security

Improving personal sense of security has never been this important in the past decades.

Sense of security is driven by facts and assumptions. The more you assume, the more insecure you will be. The more you identify facts, the more secure you will be.

Sense of security = know more facts and less assumptions.

Assumptions can be ‘altered’ into and identified as facts – no matter they are right or wrong – if you increase your knowledge through learning from reliable sources.

Facts also related to control. If you want to feel secure, you need to gain (and regain) more control on your life based on a set or series of facts.

Financial sense of security

In term of finance, assumptions leave you unguarded.

For example, consider these statements: “Stock A will go up in 10 minutes.” “Real estate B will increase in value.” etc.

The problem in the above example, is due to the fact that nobody can guarantee the above statement. Any guarantees on such would be classified as misleading, even illegal.

On the other hands, facts can secure your personal finance and help you see things from the right perspective.

For example, consider these statements: “I’m getting a 10% rate of return on my investment.” “The foreclosure houses I bought make me $150 positive cashflow per month.”

Warren Buffet, the maestro of investment, do all of his investment based on intrinsic value – the facts – not based on the floating stock value on stock exchanges – the assumptions.

Again, it is all about control. “Sure things” improve control, hence reducing investment risks.

How to improve your financial sense of security these days

You need to get more facts about personal finance. You will eventually find out that there is a certain consensus between personal finance experts about some of the best practices in managing your finances.

Such knowledge you acquire should be enhanced with tools that can help you with a more exact (and measurable) facts. For example, the use of Savings Calculator to learn how much you would receive within a period of time can provide you with a measurable fact that allow you to decide what’s best for your personal finance – finding savings account that yield you more, finding new investment that can increase the speed of your money, and so on.

Nevertheless, your diligence in increasing your financial knowledge will determine how secure you feel about your personal finance, and how well you cope (and thrive) in today’s economic crisis.

Image by bragadocchio.

Faxless Payday Loan: Helping Hand or Quick Sand?

Helping HandWhen we talk about loans in any forms, they are always related to debts.

Taking loans can offer you two things: good debts and bad debts – good debts put money in your pocket, bad debts lose money from your pocket.

Your financial needs, situation and knowledge play important roles in making the loan bad debt or good debt.

Loans come in many flavours – One of the most talk about, in my opinion, is payday loans. Why is that?

Faxless payday loan – offering you financial solution, fast – a bit too fast to handle

Payday loan is a small amount, short-term loan that is intended to cover borrower’s financial need until his/her next paycheck received.

With the advent of the Internet, payday loans are becoming more and more accessible. The term “faxless payday loan” refers to payday loan which application is processed online, thanks to the Internet.

While in essence payday loan aims to help people regardless of their credit score, many accuse payday loan as the culprit that drown many people deeper in debt.

Not quite.

In my opinion, people inherit a common weakness. They want more for less, and they want it fast.

People are always looking for fast and instant remedies for their problems, including financial problems. Just like everything in life, such as fast food, instant means immediate gratification first and quality second.

Payday loan offers fast solution. Faxless payday loan even does things faster, due to online application processing and instant approval. The drawback, as always, is the sky-high interest rate.

Those bring interesting relationship: No matter how negative the reputation of payday loan is, it seems that more and more people need payday loan these days, and payday loan providers are thriving these days. Some sort of love-hate relationship between lenders and borrowers.

Reality check: Stop blaming payday loans – have you ever look things from the eye of payday loan providers?

I am appalled to know people are blaming payday loan. Although I’m not offering any payday loans or similar things and not involving in one either, I think there are too much bad apples thrown at lenders, accusing them as scammers.

Have you ever thought that it is borrower’s responsibility to keep him/her-self well-informed regarding what type of loans he/she is about to take? It is borrower’s responsibility to know what question to ask and when to take payday loans.

Many payday loan providers I know are trying hard to offer a solution. They bear huge risks – they lend to borrowers with no regard of their credit scores. That is why payday loans charge huge interest rate: to supplement the high risks of lending to borrowers with bad credit ratings.

The right borrowers do regard payday loans as the life-savers. do help people – the right one and the well-informed one, that is – getting out of debt.

How to use payday loan to your benefit

First thing first – learn everything you can about payday loan. It is your responsibility to learn about payday loan, about the providers, and about what to expect and when.

Always plan everything – You need to know how much will you get from the lenders, the amount of the interest you owe to the lenders, and most importantly, how the short-term loans can help you getting out of debt, and for how long. You can actually ask the payday loan providers to provide you with a calculation on how much would you pay in the end of the loan period.

If the plan looks positive, go for it. If not, run away from it.

One, last advice: Never, ever take any form of loans without the right knowledge about the loans. That only makes payday loan quick sand, not helping hands.

Image by toolfan.hess.

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