Archive for 2009:
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A HELOC, or a home equity line of credit, is set up to have a maximum draw limit rather than just a set dollar amount in the form of a lump sum like a home equity loan. Similar to a home equity loan, a home equity line uses your home as security.
This line of credit is set up to a certain amount decided between you and your lender (generally 80% of the market value on the home in question minus any fees currently owed upon it) that can be drawn out in a set amount of time. A HELOC, in simple terms, is a recommended alternative to a home equity loan for those with ongoing projects.
So, you are in desperate need of cash, got projects to fund, mouths to feed, bills to pay, and so you decide to drop by the bank and get a loan. First option you are presented with when offering your home as collateral is whether to go with a home equity loan or a HELOC, or simply a home equity line.
As soon as word got out, it didn’t take long for lawmakers to seize upon the highest credit card rate around — an offer being tested by First Premier Bank, a subprime card issuer, with a mind-boggling APR of 79.99 percent.
Moreover, much to the disdain of House Democrats pushing for a rate cap, the action by First Premier takes advantage of an apparently unforeseen loophole in credit card reform laws set to take full effect in February.
The First Premier card normally offers a minimum of $256 in fees for the first year for a credit line of $250. When the Credit CARD Act of 2009 becomes enforceable Feb. 22, the cap on such fees will be 25 percent of a card’s credit line. In recently mailed notices for its pre-approved card, First Premier offers a fee matching that same limit – $75 in the first year for a credit line of $300.
NEW YORK — It’s no mistake. This credit card’s interest rate is 79.9 percent.
The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It’s a strategy other subprime card issuers could start adopting to get around the new rules.
Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card’s credit line.
In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn’t set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.
“It’s the highest on the market. It’s the highest we’ve ever seen,” said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.
I am sure most of you don’t watch AlJazeera especially those who are in the States. So if you have missed, here is an interview with Robert Kiyosaki on AlJazeera with Riz Khan. Robert Kiyosaki is well known for his book “Rich Dad, Poor Dad”, his latest book is “Rich Dad’s Conspiracy of the Rich”.
What’s your opinion on the education system of your country? Does it prepare you to be successful businessman or good employee? I think in almost all countries in the world, it’s the latter. Please share your thoughts on this in the comments section.
By Louis Lim, Business Correspondent
In view of the current economic difficulties facing many, people ought to be more ware of what’s happening in the world and how what’s happening can adversely affect their financial securities and lives; if it has not done so already!
It is not a well known secret that one can avoid being a financial casualty by simply acquiring a set of skills different from what we are usually programmed from young to have. The latter has to do with being enslaved to a job or business controlled by others; the other being about having skills to generate an income independent of any circumstance or other people.
Anyone depending solely on a job for a living would be almost completely lost if he loses his job. The unfortunate fact is that since the Multi-Nationals Companies began institutionalizing the treatment of employees as just another business resource, albeit commodity, the age of life-long employment seizes.
Financial results associated with satisfying shareholders’ expectations became the main reason for a business enterprise. Coupled with the practice of achieving short term objectives and the need to maintain share prices, retrenching workers became a normal business practice. Words like ‘downsizing’ and ‘business rationalizing’ became common business parlance.
This dehumanizing of business enterprises, prevalent throughout 18th and 19th century industrializing Britain was revived and practice by American businesses. The new reality in a capitalist environment anywhere means a worker is subject to his job being taken away any day. More importantly, this means also that the individual worker must realize quickly the insecurity of a job.
What then is a worker to do to secure himself? Off course there are skills like being a doctor or dentist and others which are not down sizable. However, most workers are dispensable!
Men are, however, born with an innate creativity which can be described as entrepreneurial but this has historically been replaced by skills which are intended for us to work for someone else. The result is that only the top five per cent or so of employees can acquire financially independence (with high salaries) while the rest remained dependent and vulnerable all their lives.
To acquire these forgotten skills would require a change in mindset from one of being a worker (a worker’s mindset) to that of being a boss (an entrepreneurial mindset). The latter entails having a ‘Possibilities Mindset” which would enable one to know how to garner resources and knowledge and, to apply them to secure one’s own financial objectives.
Henry Ford, the car genius, once said that ‘money is not a man’s security; he is his own security’. What he meant was that a man’s security lies in his knowledge and skills. However, if your skill and knowledge is tied to working for someone then those skills and knowledge can be replaced any time.
However, Henry Ford is not wrong; if a man’s skills and knowledge is in the area of creating a money making enterprise. Robert Kiyosaki, a very successful entrepreneur, said that ‘every man must mind his own business’. He didn’t express it too well but what he meant is that ‘to have financial security a person must learn to develop his own money making business’. Is this possible? Every man? In my opinion, in today’ new reality, any worker who wants financial security has no other option!
Off course, whenever an uninitiated thinks of starting a business he thinks of big capital, connections, special knowledge and skills. For a man who has little money and has just lost his job, it’s even more unrealistic to think of starting his own business. However, many have done it, albeit, at great odds.
But what if you are not retrenched yet? And you have some time to learn. Could you invest in a money-making skill that can provide an alternative income? Could you learn to be an entrepreneur with little resources and connections?
The answer is yes but you have to adopt an entrepreneur mind-set; which really means that you to start believing in possibilities! Remember that when Bill Gates and Steve Jobs started their little enterprises in garages all they had mainly were their belief in possibilities. The amazing fact is that because of them the possibilities have increased exponentially with the advent of the internet.
Besides a strong belief in possibilities, an entrepreneur is one who learns to gather resources, knowledge and skills and organize them into money making processes. In most conventional businesses, this is usually a huge ask for any newcomer. Fortunately,, there are now other avenues where starting a business is made more possible for any one with little money and is prepared to spend time learning.
For example, the internet has made it easier to start your own business. The main thing you would need is a good PC, some affordable money, a willingness to learn and a lot of belief in yourself. What is to be learned is seldom difficult; a man’s limitation to success is often his own lack of self-belief!
If your motivation is create a secure financial situation for you and your loved ones, you need to be an entrepreneur. The days of secure employment is long over and moreover, personal wealth is seldom acquired by working for others.