negative-equity-a-national-disease

Negative Equity - A National Disease

Writen by Donald Ladew

Capitalism has many benefits in a free society. It has inherent benefits to those who are creative and willing to work hard. Nowhere else can such a variety of people from many diverse backgrounds and countries succeed by their own efforts.

However, sometimes our creative efforts cause serious problems. As a people, we have become enamored of things, possessions, and goods. We want to own the biggest house, the biggest automobile and other possessions without number. And for all the things we say we want, there are manufacturers ready and willing to provide them. In order to be competitive these same manufacturers are always seeking better ways to convince us that it is possible to own that Cadillac El Mundo Gordo Magnifico SUV when realistically we can only afford the Ford Sub-Midsized ordinary Sedan. Desire for things, plus superb salesmanship overcomes common sense and basic math. The result can be what the subject of this article is all about.

Let’s clear up a couple definitions.

Equity: The market value of a property (house or car or whatever) minus any mortgage or money owing on the property.

Example # 1 Positive Equity: You have owned a house for thirteen years. Its market value is $400,000. You owe the bank $225,000 over the next seventeen years. Your equity in the house is $175,000. This is positive equity.

Example # 2 Negative Equity: You buy a house for $300,000. The housing market changes and the market value drops to $200,000. You owe the bank $225,000. Your equity in the house is $25,000. This is negative equity and sometimes referred to as being “upside down”. This is a very bad thing.

Negative Equity occurs frequently with automobile purchases. What do you do if you’ve had the car two years and want to trade it in? The “upside down” buyer frequently adds the amount on the trade-in onto the loan for the new car. They also stretch out the loan to keep the payments low. This is a losing proposition as the longer the loan, the longer it takes to reach a point where they owe less than the vehicle’s depreciating value. It is a financial Catch-22.

How does this happen?

It is a combination of things. In order to sell more cars, manufacturers offer deep discounts on new cars. This has the effect of depressing the value of cars, which coupled with five and six-year loans means it’s going to take much longer for car owners to achieve a position of positive equity. (two to three years is not unusual)

It is a fact that the moment you drive your car away from the lot it is a used car. If you are paying $45,000, the Kelly Blue Book value may be $40,000. If you still owe $43,000, there’s a $3000 difference. How do you protect yourself if you have an accident? Now the vehicle owner has more problems.

Gap Insurance

Why is an auto gap insurance policy so important? Because standard comprehensive and collision auto policies only cover your new car’s “fair market value”. And that can be as little as 80% of what you paid for your car, starting the minute you drive it off the lot. This condition of negative equity may exist for the first two or three years of ownership.

This means that if you’re involved in an auto accident that leaves your new car “totaled”, you could end up paying off a loan on a car that you can’t drive. This is where gap insurance comes in. A gap car insurance policy insures you for the difference between what you owe on your car and what your insurance company says it’s worth. In some cases this insurance will be required as part of purchase or lease.

Gap insurance coverage would also become critical if your car is stolen. Thieves prefer new cars and they seek out specific models, which usually happen to be the most popular models of cars sold. (Honda Accord, Ford Taurus - etc. etc.)

If your car is stolen, the insurance situation is the same as in the case of an at-fault accident on your part: comprehensive insurance will cover the value of the vehicle, but not necessarily the value of the loan that you owe to the bank. You could be stuck paying thousands for a car that’s long gone. Add that to the truly disheartening feeling of having your car stolen, and that makes for a really rough time.

As a Lemon Law firm, we see many situations of negative equity when a case is being settled with an auto manufacturer. Often it is the first time the owner discovers the reality of being upside down on their loan or lease. It is always painful. We certainly could offer scads of advice about this situation. The first piece of advice would be, never buy something that is beyond your means. This advice will surely be ignored over and over. The other thought, which isn’t really advice is, if you get caught in a situation where your negative equity is going to be expensive, bite your lip and promise yourself you will never get in that sort of situation again. It’s bad for you and accepting these kinds of deals only encourages manufacturers and their financial organizations to offer these “good deals”.

free-grant-money

Free Grant Money

Writen by Tony Newton

Every year, Congress allocates billions of dollars in the form of free grant money to aid major projects that would ultimately benefit communities. Allotment for education grants alone reached an estimated $67 billion annually.

Free grant money can be availed of from various government agencies. But this free grant money does not come without a price tag. This may sound ironic but free grant money is not exactly for free in the truest sense of the word. With free grant money come obligations, responsibilities and consequences. These are legally binding too because the use of free grant money entails use of public funds which must be properly accounted for. Free grant money is actually your compensation for accomplishing certain obligations. Free grant money is something you have to work for to attain. Free grant money does not just fall on your lap with a minimum effort. In short, free grant money does NOT come for free.

There are various resources to be able to acquire free grant money from the government. President George Bush recently launched GovBenefits.com website which contains information on where can avail of free grant money. GovBenefits.com can give you valuable info the free grant money to avail.

If you are an entrepreneur and would like to open a new business or improve an existing one, the government has free grant money program for you too. Economic development agencies that extend free grant money exist in the different states. Free grant money information can be found in Kansas, Nebraska, New Hampshire, New Mexico and Utah websites. The rest of the states do not have free small business grants but do offer financing and technical training services to individuals who want to go into small business through the U.S. government’s Small Business Administration (SBA) program.

The Catalog of Federal Domestic Assistance (CFDA) also offers info on how to avail of free grant money. Their website http://www.cfda.gov/ gives valuable info on how to avail of free grant money from the Congress’ approved funds. But CFDA is useful only to people who have insight into the grant application processes. Otherwise, it would be hard for you to understand the CFDA entries on each program. And you’re grant application might be rejected because of that.

For students, free grant money information could also be found on Free Application for Federal Student Aid (FAFSA) website http://www.fafsa.ed.gov/. The FAFSA is a seven-step guide that inquires about your personal details, financial status, school plans and many others. In 2002 alone, 6 million students have availed of free grant money through the FAFSA.

Free grant money under the discretionary programs by the government such as those listed in CFDA requires going through a lengthy often grueling process. A formal application must be prepared and submitted. After that the concerned agency will consider and approve or disapprove the application. Then the implementation will be subjected to a lot of further requirements like accounting, disclosure and auditing of expenses to the last cent.

Some organizations would even hire full-time staffs just to take care of the application and implementation processes. “Grantsmanship” is the term used to refer to the art and science of applying for grants. The government can be pretty meticulous on how it spends its money. The Grantsmanship to apply for free grant money takes a lot skills indeed!

family-finance

Family Finance

Writen by Joseph Kenny

One of the hardest things that young couples report during their first year of marriage is getting to grips with joint finances. While most are willing to share what they have with their partner, they are not sure on the best way to bring this sharing into effect so that they can share with their new partner, but at the same time maintain financial security and a degree of independence. Some couples resolve this by resorting to separate finances and others find a way to keep things together, but it is generally reported as one of the biggest strains on newly married couples.

As well as this, there is also the problem that many people find it difficult to budget and control their finances. It is one thing to fail to keep track of expenditures when you are single, but when you are married you have more to answer to than just yourself. This is especially true once you have children. If one partner fails to keep control of their spending while the other is forced to worry about finances, it can create an enormous strain on the relationship.

Family Budget

One of the best answers to this dilemma is to create a family budget. This should outline what is allowed for the various expenses, which is to be responsible for what expenses and how much each partner can spend on discretionary expenses. While this may seem like a drastic response that takes away all the responsibility and financial independence from both partners, all it is really doing is getting both parties to sit down together beforehand and work out how much they can afford to spend on what, and then sticking to this. It is about being in control of your expenses rather than letting them have control over you.

Other ways of taking care of difficulties between married couples is to divide out the family expenses depending on how much each partner earns. This way both will feel responsible for the security of the family and will feel like they are an important contributor to the family finances.

Financial Matters

While each partner should have a degree of financial freedom, and also privacy, finances should be discussed openly and with without shame. Past debts or mistakes that one party has made should be put in the past and should be forgotten. At the same time, if one partner shows that they are unable stick to the budgets they have agreed, their financial freedom will have to be taken from them and they should be given a tight leash in financial matters.

the-importance-of-money

The Importance of Money

Writen by Chang Jia Hao

I have always wanted to be rich. I want to live a life filled with luxuries. I want to be the envy of others. In my opinion, wealth is something that could buy a lot of things. Money can bring you happiness. However, I do not deny that there are many things that money cannot buy. In fact, I believe that there are other more important things in life than money.

I am born into a middle class family. My family is neither poor nor rich. We are able to afford basic necessities and some luxuries. Also, I am blessed with parents who care a lot for me. They work hard to provide for me and my brother. My brother and I are able to lead a carefree life. I am thankful for all that I have. However, I do not deny that I want more. I want to be truly rich. I want to be able to afford everything that I want.

Being rich can make my life more comfortable. I will be able to buy a big house with servants. I will be able to afford luxurious cars with chauffeurs. I will be able to dine in expensive restaurants. I will be able to afford a private jet in which I can visit all the beautiful countries. Pretty girls will flock to me. I will be able to enjoy relaxing spas. People will look up to me. I believe that money will make me a happier person. I may sound superficial. But these are things that truly only the rich can afford and I to be the rich. If you were given a billion dollars right now, I am sure that you will be a happier person.

I believe that money can buy many luxuries. However, I feel that health is still the most important. I would rather be healthy than wealthy. If you are rich but do not have the health to enjoy spending your money, then money is truly useless. This is common sense. Thus, in order to be happy, a person has to be healthy and wealthy.

Although it is important to be rich, I feel that we should not work too hard to be rich. A person can be wealthy if he works long hours every singe day. However, he will not have the time to enjoy spending his money. Furthermore, he will be less happy working so hard. Hence, I feel that we should try to find ways that allow us to be rich without working too hard. People might feel that there is no way a person could get rich without working hard. However, I feel that by utilizing our powerful minds, we will be able to get rich without working too hard. There are many real life examples. I hope to be able to achieve this.

Thus, I do not deny that I am greedy. I want to be rich and healthy without working too hard.

By: Jia Hao

even-higher-uranium-prices-ahead-this-summer

Even Higher Uranium Prices Ahead This Summer

Writen by James Finch

Will we see a dramatic spike in uranium prices this summer? Some industry insiders have forecast spikes that could send uranium soaring to between $55 and $100/pound. Most were not expecting this to occur during 2006. However, there are several reasons we believe something could crack wide open in the uranium market over the next 100 days.

RUSSIA

Let’s take the Russian situation. U.S. utilities have been somewhat lackadaisical about uranium pricing because they’ve been getting Russian uranium on the cheap. Russia’s Rosatom head Sergei Kiriyenko has reportedly told U.S. utilities there will be no HEU-2 deal. Whether this is a ploy to extract a better deal for Russia, or Russia’s announcement it will feed other nuclear-ambitious countries with its uranium is not known.

U.S. utilities are now lobbying the U.S. Commerce Department to end the restrictions on importing enriched Russian uranium. They like the pricing, and are now arguing that higher uranium prices are jeopardizing the nuclear renaissance in the United States.

Because of rising uranium prices, 85 percent of the utilities, which operate nuclear facilities, have formed AHUG (Ad Hoc Utility Group) to terminate the import restriction. If AHUG accomplished its goal, the loser would be USEC, which is now arguing on America’s “overdependence” of nuclear fuel. USEC depends upon the Russian uranium to fund its future enrichment facility program. In a way, this amounts to corporate welfare. USEC is arguing against unlimited Russian uranium.

U.S. utilities are now being fed about 50 percent of their nuclear fuel from decommissioned Russian warheads. Russia is more than a tad upset because the deal they made does not reflect the current spot or long-term price of uranium. Something will likely occur at the G8 Summit in St. Petersburg, Russia on July 14-17. Russia will chair this summit for the first time.

Expect fireworks. On the official G8 website, Russian President Putin announced, “Russia, as the presiding country, regards it as its duty to give a fresh impetus to efforts to find solutions to key international problems in energy, education and healthcare.” It should be noted that Russia is now the world’s second largest oil exporter behind Saudi Arabia. Russia is also hoping to reach a deal in joining the World Trade Organization before the summit opens.

We believe Russia may exacerbate the current tight supply situation in the uranium markets and cause prices to rise after the summit. On June 9th, Russia’s news service Novosti reported the country would start constructing two nuclear power units per year inside Russia beginning in 2007. Kiriyenko also announced Russia would ramp up to four or five nuclear reactors for 2009-2010. President Putin plans to build an international full-service nuclear fuel center in Russia to provide enriched uranium for the growing number of countries wanting nuclear energy programs. It would be hardly likely Russia would provide additional uranium to U.S. utilities in that context.

TRADE TECH LLC

What about going into Russia’s G8 Summit? It appears uranium trading through June could continue to show a very tight supply situation, where sellers continue to set pricing. A recent posting on the Trade Tech LLC website announced the following:

A number of buyers concluded transactions during May, which significantly reduced outstanding demand. The impasse between buyers and sellers ended this past month, with buyers apparently reconciling their expectations with recent price increases and current offers. Sellers moved increasingly toward market-related pricing terms for spot delivery, and buyers showed a renewed willingness to accept these offers. Exceptionally strong long-term demand continues to exert upward pressure on the spot uranium price as each pound held by sellers is considered more valuable with every new buyer that enters the market. At least one, and possibly two, uranium auctions are expected in June. Buyers are expected to compete aggressively for this material and TradeTech expects uranium prices to continue their upward climb in June.

Aggressively competing for tight uranium supplies lends credence to a possible rise through the $50/pound level before the G8 Summit ends.

ANOTHER BAD HURRICANE SEASON

Unusually bad weather drives up energy prices. This summer’s hurricane season may be the equivalent to this past winter’s European gas shortages, which came courtesy of the Ukraine/Russian squabbling and a bad European winter. Many countries began expressing interest in a nuclear energy program after that episode. Another climate event might compel more to head for more nuclear.

Over the past two decades, hurricane watchers have learned to pay attention to Dr. William Gray of Colorado State University’s Department of Atmospheric Science. While based in hurricane-absent Fort Collins, Colorado, his atmospheric studies have proven Nostradamus-like prescient over the past 22 years. Why are we talking about hurricanes? Hurricane announcements tend to drive up energy futures. The number of hurricane days adds pressure to an already tight energy market. Hurricanes start to show up on an investor’s radar during August and remain there through September.

Because of anticipated tight uranium supplies for June utility buying and the anticipation of Russian fireworks in mid July, a fitting climax for a strong surge in uranium pricing might come along with a major hurricane hitting the Gulf Coast. Last year’s Katrina can serve as a reminder that climate changes can impact energy prices, uranium included. Based upon the weather forecasts, we believe in the high probability of an encore to last year’s energy shortages.

While this year’s hurricane season is not expected to match the devastation of 2005, it still highly rates at 195 percent for a Net Tropical Cyclone Activity rating. Last year’s first tropical storm, Arlene, formed on June 9th. This year’s Tropical Storm Alberto formed a year and a day later. Exclude the busiest hurricane season in 154 years of storm-tracking, and this year is expected to rate well above the average hurricane season. The National Oceanic and Atmospheric Administration (NOAA) estimated up to a total of 16 storms, as many as ten hurricanes and up to six Category 3 or higher hurricanes. Dr. Gray’s team estimates similar numbers, but places the brunt of the storms’ impact on the eastern United States.

Storms mainly cause panic. It is the landfall which causes death and destruction. Using Steering Current Predictors, sea surface temperatures, a 52-year statistical hindcast, North Atlantic and Arctic Oscillations and other parameters, Dr. Gray forecast in his recent report, “The odds of a major hurricane making landfall along the East Coast are more than twice the climatological average value this year.” He forecast a 38-percent probability of a major hurricane hitting land along the Gulf Coast this year.

The most chilling comparisons made in the “Extended Range Forecast of Hurricane Activity for 2006″ were those which went unremarked by the media. Dr. Gray compared Hurricane Season 2006 to hurricane seasons in 1961 and 2004. Hurricane Carla in 1961 was ranked 3rd worst by barometric pressure at landfall of all hurricanes entering the Gulf Coast. The 2004 hurricane season brought Charley, Frances, Ivan and Jeanne, which were some of the most devastating U.S. hurricanes recorded. Such scenarios would wreak havoc with already strained energy prices, but would be good for the uranium mining bulls. Gray concluded, “We believe that 2006 will be a very active season in the Atlantic basin.” The more active, the more likely a dramatic spike in uranium pricing.

NUCLEAR EXPANSION: A WORLDWIDE PHENOMENON

Yuri Sokolov, Department Head of Nuclear Energy for the United Nation’s International Atomic Energy Agency (IAEA), told reporters this past week, “There is plenty of uranium assuming the industry keeps moving ahead with exploration and new mines.” Sokolov is confident the “identified resources” of 4.7 million metric tons can be mined for less than $60/pound. That’s about 26 percent higher than the current spot price. There was also a warning buried in his speech. He cautioned the major risk to uranium supplies would come from possible delays in moving from discovery to production. Industry insiders understand it can take between 12 and 20 years after a discovery to reach the production stage. U.S. utilities may get more aggressive to secure supplies as this year and next pass by. Their supply deficit for 2008 through 2012 requires a near miracle to match demand requirements.

Sokolov also set targets in the IAEA’s annual Red Book. Depending upon how quickly the nuclear industry expands, more uranium will be required. By 2025, if global nuclear capacity increases to 22 percent, utilities will need 80,000 metric tons per year. An increase to 43 percent would require 100,000 metric tons annually. The Red Book forecast new mines, over the next five years, would add about 30,000 metric tons to the supply inventories. This new capacity would fill the current uranium supply shortage, unless of course the industry is hit with delays. More new mines would also need to come online to keep pace with the heralded nuclear renaissance. Only the most cynical industry insiders would disagree the uranium mining sector desperately needs a dramatic surge in production between 2010 and 2020 to match the explosive growth ahead for this sector.

SUMMARY

Nuclear energy “hot talk” should also get a boost in August and September, after the North American release of James Lovelock’s “The Revenge of Gaia” (Basic Books). The 86-year old scientist has led the charge among the world’s environmentalists to get the greens to go nuclear. The international media has sought out Dr. Lovelock’s opinions. Figure we’ll see the same boost in “pro nuclear” media appearances going into the autumn. As the author appears on numerous talk shows, the polls should swing more heavily into building more nuclear plants. That could add further pressure on utilities to quickly secure inventory.

Russia’s desire for a uranium/nuclear monopoly, hurricanes, tight supplies through the summer and the likelihood of yet another energy crisis before Labor Day could spell a significant boost in spot uranium pricing. It would not surprise us should spot uranium trade closer to $60/pound over the next 100 days. Any “shock event” could spike the spot uranium price above that level, and possibly make a run for $100/pound uranium.

Such a level would be unsustainable, of course, but it would be an eye-opener and attract renewed interest in the domestic uranium mining sector. The key domestic contenders for adding new mining capacity in the United States appear to be Strathmore Minerals (TSX: STM; Other OTC: STHJF), Uranium Resources (OTC BB: URRE), Energy Metals (TSX: EMC), UR-Energy (TSX: URE.TO), and Uranerz Energy (OTC BB: URNZ). There are others, but we have not followed their developments as closely.

Should the Russians absolutely confirm there will be no HEU-2 deal, U.S. utilities will be driven to closely investigate working relationships with domestic uranium development companies for reliable nuclear fuel supplies. Itochu has established a relationship with Uranium Resources (UOTC BB: URRE), and we expect more of these joint ventures to materialize. As for market capitalizations versus pounds-in-the-ground, during the last uranium bull market (in the 1970s), utility companies were buying uranium companies for about $5-6/pound of uranium. Some of our favorite companies, which host historically reliable and NI 43-101 compliant uranium resources over 100 million pounds, would be severely undervalued under a parallel scenario.

StockInterview’s “Investing in the Great Uranium Bull Market: A Practical Investor’s Guide to Uranium Stocks” debuts its e-Book edition this coming weekend. The number of investors now following developments in the uranium sector has grown exponentially over the past two years. The mad rush for data about uranium companies and industry developments has catapulted this website’s traffic into the top ten percent of all Internet websites. When the print edition arrives in bookstores and libraries, and is offered through book clubs and other allied groups, the demand for uranium and interest in the nuclear fuel cycle should make another leap forward.

what-is-cash-flow

What Is Cash Flow?

Writen by Afra AmirSanjari

Cash flow simply means the money that comes into and leaves a business or household. Money flows into a business in the form of revenues and out through the form of expenses. Money flows into a household in many forms. Are you receiving money from a structured settlement or lottery? Those are incoming cash flows. Do you owe money to anyone? Those are outgoing cash flows.

While owner financing can trace its roots much further back into history, it was the 1980s that really saw a new beginning in the Cash Flow Industry. Today there are more than 60 income streams that can be bought and sold. An income stream is a future series of payments. More technically, an income stream is a financial obligation or debt that one party owes to another party.

How Can You Benefit from Cash Flow?

Individuals and businesses sell income streams for three basic reasons:

Access it may be a need to pay debt, settle a divorce, purchase a home, take a vacation, finance a wedding, start a new business, etc. Whatever income stream you currently have that you may need cash for immediately.

Interest or Yield as interest or yield opportunities arise that allow you to make more money than your current investments, you may want to reallocate money from existing income streams to new better-producing ones.

Inflation this eats away at the future earning power of your money. You can sell your income stream to avoid the drop in real value over time.

Individuals and businesses buy income streams as a form of investing that often produce better returns than they can obtain from more traditional sources.

If you would like more information on how we can help you buy or sell income streams, or for more information, contact us today.