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Buy More Gifts By Saving Late Fees

Christmas won't be Christmas without any presents. (LOUISA MAY ALCOTT, Little Women)





Christmas and New Year comes at the end of the year. In a way you can start saving for the big festive season, from the starting of the year. You can buy presents just by saving your late fees on credit cards.

So be disciplined while making payments on your multiple credit cards and avoid late fees. By saving those late fees of $25, $30, $35 or more can get you lot of gifts. Become thrifty for couple of months and pay much more on your credit cards to clear of the debts. Remember, the faster you pay down your balances, the more money you'll be able to keep in your own pocket by not having to give it to the credit card company as an interest payment. The sooner you pay your old bills and debts you can start saving for the rainy day.

Secondly, it's wiser to use cash while going for bigger shoppings, like Christmas Shopping or New Year Shopping. People tend to buy more while using credit cards because they can't see how much cash is flowing out. Out of craze they even buy things which aren't in their priority list.

To avoid overspending you should stick to your priority list and buy those things first. You can go for fancy items only when you have extra cash left in your wallet.



Once you know how to spend less and have a savings account, it becomes your habit and you won't overspend during Christmas as well. This way you can enjoy the Christmas much more, than just thinking how to get rid of your debts.

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Avoid Christmas Debt

"Christmas is a season of such infinite labour, as well as expense in the shopping and present-making line, that almost every woman I know is good for nothing in purse and person for a month afterwards, done up physically, and broken down financially". (FANNY KEMBLE, Further Records, Dec. 31, 1874)


From last year's Christmas only, all the families plan what gifts they want for next year's Christmas. Specially kids, round the year they plan what toys or gifts they want for the coming Christmas. Right from thanksgiving the shopping fever grips the people and lasts till Valentine's Day of the next year. People go on shopping spree and spend much more than they can afford.

The high bill spendings include home renovation, buying new home, buying 2nd car, sending gifts to relatives, lavish gettogethers, buying fancy items, romantic cruises, family vacations and so on. People spend more than they can afford, which pushes them to the brink of debt, and they go on paying off their debt for years. If the situation is not handled properly, it can lead to utter bankruptcy and badly hitting the credit scores.

You can follow certain things during this festive season to avoid debt:

1) Stop Spending On Impulse ---> Check out whether you really need the product or service. Just because your neighbor is having it or it's the current craze you needn't buy it.

2) Use Multiple Credit Cards ---> Use the credit cards which can earn you various gifts, discount schemes, gift vouchers and even airlmiles. But you need to keep a track of your cards and need to be disciplined while making payments.

3) Plan Your Budget ---> You just can't afford everything during Christmas. Prioritize your requirements and spend accordingly.


4) Avoid Last Minute ---> By shopping early you won't be forced to overspend. This will also give you time to shop around and find better bargains. Don't buy the first thing you see. Do some price research. Saving a buck or two can really mean a lot. Check online, see if you can find a better bargain online. Plan ahead and purchase gifts throughout the year when they are on sale rather than trying to do all your Christmas shopping at the last minute.

5) Black Friday Sales ---> Don’t just buy items for the sake of "saving money." Be prepared, have a list of what you need to get as Christmas presents or whatever, find those things on sale, and stick to your list!

6) Use Of Cash ---> Try to use cash to buy Christmas gifts this year. While spending through cards you never know how much you spent, but while using cash you know when your wallet is empty.

7) Admit It ---> Your family should know your financial situation. Admit that you are low on funds and can't afford all the things at a time.

8) Re gifting ---> Consider re gifting items to save money and avoid debt. Just because you can't use the item doesn't mean someone else can't.

9) Special Gifts ---> Consider giving gifts that are homemade or are a donation of your services rather than giving expensive store bought gifts.

10) Free Counseling ---> If in debt like situation, do go for free debt counseling and avoid Debt.

Yes, Press Releases Are Now Part of Social Media and VERY Viral

About a week ago, after issuing a press release about my company's use of social media, I saw a tweet come up from someone questioning the use of a press release to promote Web 2.0. What I got from the tweet's 140 characters was essentially doubt about the use of press releases (traditional old school technique) in promoting use of Web 2.0. The tweet said something along the lines of "Why would a company that is rolling out social media use a press release. Social media is about being viral. Press releases are not viral."

This post has been created to make you aware that, yes, press releases ARE social media and ARE definitely viral. I'm not a publicist by schooling but I have had years of experience using press releases in the pre- and post-Web 2.0 world. Something I noticed about a year ago was how the press release outlets, including the majors such as BusinessWire, started Web 2.0-enabling their releases. The following is an example of the social media functionality added to press releases to enable their VIRAL distribution.

As you can see under the "Sharing" section on the left side of the page, the press release outlet (in this case BusinessWire) added a series of common social media platforms with which this press release could very easily be shared. This is only one outlet, but I've seen most outlets incorporate this "viral accelerator" to their pages.

As a result of a recent press release, I achieved immediate and broad distribution on Twitter illustrated by the sampling below:



As you can see, just on Twitter alone there were nearly 100 retweets of the press release. Multiply that number by the number of followers that read each retweet and you can see how a traditional press release can achieve viral distribution.

Now consider how these traditional press releases are distributed to hundreds of online media outlets by the wire services, resulting in greater viral potential. Below is a snapshot of a small number of the media outlets that received the press release from the wire service and began serving up copies of the press release - again, each with a similar "sharing" feature.



Now, keep in mind that simply having a "viral accelerator" does not mean a press relaese will achieve viral results. The material has to possess certain qualities. Press releases in of themselves are not great for creating viral buzz. But press releases tied to good viral content will do the job. I recommend reading the chapter of Viral Marketing in The Community Banker's Guide to Social Network Marketing for more details.

In any case, to answer the question posed by the tweet mentioned above, the fact that press releases have Web 2.0 funtionality means that, YES, press releases ARE about viral distribution.

Social Media-Related Regulatory Examinations On The Horizon?

Early last week I received a phone call from a consultant working for a boutique financial services consulting firm who was conducting research on a social media best practices document for a bank client. The fellow seemed bright and well informed. I was actually surprised that the firm he was working for was getting involved in the social media space. I'm surprised not so much because of their involvement in social media but more so because they tend to focus on the traditional banking/finance stuff. I'm not sure what this means for the early wave of social media consultants...but that's a story for a different day.



Anyway, one of the questions this consultant posed had to do with the regulatory risk associated with social media. My response was that I felt that regulators would likely give a social media implementation little more than lip service and so long as an appropriate risk assessment and policy was in place, the examiners would look no further. I told this consultant that given the current focus of the regulatory agencies, I would be surprised if they considered social media at all. But better safe than sorry.



I followed that up by stating to the consultant that the regulatory risk was the least of a bank's worries. While there may be some regulatory implications related to the use of social media, it is insignificant compared to the larger reputational risk posed by social media.



Earlier today I picked up the November/December issue of Western Banking Magazine. In the Consider This section of the magazine was an article that I wish I had read prior to speaking with this consultant because I think it would have laid it out very neatly for him. I've quoted this section of the magazine below.

"One out of eight respondents to the Travelers Global Technology business unit survey indicated that they post work-related information on social media websites. In fact, 30 percent feel it is acceptable to post information online about their employers as long as they believe it is true. Survey results also showed that more than 75 percent of those who post anything personal online said they were 'not at all' or 'not very concerned' about information posted online causing professional damage.

The growth of social media and the lack of awareness among employees and employers on how social media are changing the corporate landscape could increase a company's risk exposure. The Travelers survey results also indicate that two-thirds of respondents say their companies do not have a policy in place for social media usage, or they are not aware that one exists."

If you have followed this blog you know that I am a stickler for risk assessments and policies. My recommendation is to get the bank's internal auditor or product manager to prepare and present a social media risk assessment to executive management and the board of directors. This should be treated just like any other new product/service implementation.



My next recommendation is to enhance the bank's Acceptable Use Policy to include the social media policy - rather than create an entirely new policy. The bank's information security policy can also be used in lieu of the AUP.

If you have no idea where to begin with a social media policy, begin with my earlier post (Pain Free Social Media Policy). You will be able to get a customized policy up and running in no time.

As I stated above, regulatory risk is the least of your worries. What you want to do is make sure your employees know the rules of engagement - because, whether or not your bank has a social media strategy of its own, chances are your employees are out there potentially putting your good name at risk.

Life Insurance

Life Insurance is the insured amount which comes for help at an unknown time and benefits you loved one, your family. Life Insurance comes to your beneficiary's rescue when you are not around. Whether you die young or very, very old the insurance company will pay that death benefit income tax free to your beneficiary.

Who needs life insurance?

Anyone in dangerous jobs and those with large and/or young families, gain more from being insured than anyone else. Young, single folk with no obligations or dependants may not require as much cover, and therefore may decide to wait until they have a family or commitments such as a mortgage.

Types of life insurance

Life insurance may be divided into two basic classes:

1) Temporary
2) Permanent, which can be subdivided into term, universal, whole life and endowment life insurance.


Temporary Term Insurance ---> Temporary life insurance allows the beneficiary death benefits for a specific period or 'term', for a specified premium. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.

Permanent Life Insurance ---> Permanent life insurance is life insurance that remains in force (in-line) until the policy matures (pays out), unless the owner fails to pay the premium when due (the policy expires OR policies lapse). The policy cannot be canceled by the insurer for any reason except fraud in the application, and that cancellation must occur within a period of time defined by law (usually two years).

Whole Life Insurance ---> A whole life insurance covers a policy holder for his entire life. There is no date of expiry like in a term life insurance and the death benefits will be received by the beneficiary mentioned in the policy only in the event of the death of the policy holder.

Universal life Insurance ---> Universal life insurance provides security for you and your family, with greater flexibility in premium payment and the potential for a higher internal rate of return.

Endowments ---> Endowments are policies in which the cash value built up inside the policy, equals the death benefit (face amount) at a certain age. The age this commences is known as the endowment age. Endowments are considerably more expensive (in terms of annual premiums) than either whole life or universal life because the premium paying period is shortened and the endowment date is earlier.

It’s been said that you buy insurance because you ‘owe’ somebody or you ‘love’ somebody.



There are really other reasons as well. In some cases, lots of cash buildup can later be used to supplement retirement needs and by borrowing your own money from your policy, you won’t incur income taxation as long as you keep the contract in force.

Disability Insurance

If diabetes is left uncontrolled, the person can manifest eye, kidney, nerve and foot problems and are at higher risk of stroke and heart attack. Renee Wood of Carson City, Nevada is working as a Financial Analyst, is mother of two school going kids. She's also Type 1 diabetic and understands that this gives her a higher-than-average chance of becoming disabled and unable to work. After meeting with her insurance agent, she decided to supplement her employer's disability coverage with an additional long-term Disability Insurance policy, to make sure if there is an incident then she can have enough financial support for her family and herself.

What is Disability Insurance?

Disability Insurance pays a portion of the insured‘s income during a disability because of an illness or accident. Disability Insurance gives you the scope to safeguard your income when you are not able to earn.

Income Protection Choices

1) Short-Term Disability (STD) - waiting period of an average of 0 to 30 days; maximum benefit period generally lasts 24 months.
2) Long-Term Disability (LTD) - waiting period varies depending on policy, it can be 30 days to more than 180 days;benefits that range from a few years to the rest of your life.

Types of Disability Insurance Policies:

1) Conditionally Renewable Policies - Insurance rates can increase or your disability coverage can be canceled anytime by the insurer. Avoid these policies.

2) Non cancelable Policies - Policy which can’t be canceled by your insurance company, excluding nonpayment of premiums. It is an annually renewable policy without loss of benefits or increase in premiums. Best option.

3) Guaranteed Renewable - Policy stays in force as long as the premiums are paid, re-insurability is guaranteed. But, your premiums can increase in future based on any filing of a Disability Insurance claim for injury or illness.

You may opt from the 3 basic types of Disability Insurance coverage:

1) Social Security Disability Insurance (SSDI) ---> His federal government provided insurance is for workers with a disability that is diagnosed to last at least 12 months and does not allow them to earn fruitfully. SSDI needs the policy holder (you) to provide medical evidence for the disability. In addition, you are also required to match the medical listing set by Social Security Administration (SSA). Otherwise your residual working capacity will be taken into consideration. Benefits from Social Security include:

* Monthly wage
* Medicare
* Vocational Rehabilitation (if the policy permits)
* Other employment support programs

2) Group Disability Insurance ---> There are several companies that offer Disability Insurance policies as part of the employee benefit plan. Benefits of such plans are:

* Take advantage of any disability protection offered to you at work, sign-up for short-term and long-term disabilities, if offered.
* Short term disability is a stop gap measure until long-term disability starts. From the day you report a disability, it may take several days to weeks for the disability claim paperwork to process until you receive your first check. Remember, you don’t receive a check the day you file your claim.
* Generally, an insurance company only pays 60% to 65% of your income during a disability. Most importantly, after being taxed on your income, you may only end up getting only 50% -55% of your income. Can your standard of living be maintained on half your income?

3) Individual Disability Insurance ---> Self-employed individuals seeking Disability Insurance may find policies with the private health insurance companies.
Purchase an independent long-term disability policy. You will never get 100% of your income but maybe up to 70% to 80%. Income from an independent disability policy is tax-free.

If you have a family that depends on your income you surely must have Disability Insurance policy to protect your earning capability.

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Health Insurance

Health Insurance provides the coverage for all unseen medical expenses. More broadly Health Insurance covers disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected health care expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government.

There are various kinds of Health Insurance available in the market. You can opt for a Health Insurance as per your requirement. The various Health Insurance policies available in the market are:

1) Individual Health Insurance
2) Short Term Health Insurance
3) Family Health Insurance
4) Alternative Health Insurance
5) Student Health Insurance
6) Life Insurance & Accidental Death & Dismemberment AD&D
7) Guaranteed Health Insurance

Tips to buy affordable Health Insurance:

1) Be aware of your state rules: Know the rules that your state follows. This way you can make rational and mature decisions about your Health Insurance.

2) Type of coverage: Know your requirements as well as the kind of coverages before applying for it. You don't want unpleasant surprises when you're sick or in the hospital. Many contracts have subtle limitations, exclusions and out of pocket costs that will bury you going forward.

3) Affordability: Prepare a budget for yourself. Buying Health Insurance doesn't just mean paying premiums. There are co-payments, deductibles and also sometimes co-insurance. Keep all of these in mind when planning for your insurance.

4) Better Options: Contact different insurance companies, or ask your agent to show you policies from several insurers so you can compare them. Make sure the policy protects you from large medical costs. Compare the on-line sites for fast turn around on affordable Health Insurance.

5) Free Look: Most companies give you at least 10 days to look over your policy after you receive it. If you decide it is not for you, you can return it and have your premium refunded. Get all promises and pledges in writing!

6) Coverage: Prescriptions are one of the most used benefits of health plans. Review the coverage of any health plan to determine if your current prescriptions are covered and at what level. X-rays are a routine part of some treatments, so it's wise to make sure X-rays are covered in each plan you consider.

7) Avoid Single Disease Insurance Policies: There are some polices that offer protection for only one disease, such as cancer. If you already have Health Insurance, your regular plan probably already provides all the coverage you need. Check to see what protection you have before buying any more insurance.

In summary, by researching the internet, talking with your family and friends, taking advice from insurance agents, you will select the absolute best affordable Health Insurance available for your family.

Home Insurance

After food and clothes, home is the third priority of human beings. After filling their stomach and covering themselves up, a man needed a Home where he can protect himself from natural calamities, wild animals, outsiders as well as start his own family. The way home protects a man from various unwanted circumstances, he has to protect his home from various perils, or he needs to have enough funds to rebuild a new house or repair the damaged portions.

Here comes the thing called Home Insurance. Home Insurance is a good way to keep your home protected and also covering you from various unwanted losses.

The coverages provided under Home Insurance Policy are as follows:



1) Structural Coverage ---> If due to any natural calamity (like, fire, earthquake, hail, hurricane, lightning, flood, etc.) your house is destroyed or damaged partially, this policy pays for it. You should buy enough coverage that would pay for rebuilding your home if needed. Covers the value of the dwelling itself (not including the land). As long as the dwelling is insured to 80% of actual value, it will be replaced. This is in place to give a buffer against inflation.

You may be anywhere in the world, but this policy will provide coverage for any damage caused anywhere. This means that you get protection off-premises, but some companies have limitations. They may provide only up to 10% coverage of the total insurance value for your possessions.



2) Personal Property Coverage ---> This cover the loss to your personal property, due to theft or destroyed due to natural calamity. Since most companies provide 50% to 70% coverage of the total value, the best way to determine the right amount of insurance to buy would be to create a home inventory.



3) Liability Coverage ---> If you or any of your family members including your pet causes any damage to your neighbor or other people, this policy provides coverage. The cost of defending you in court is also covered under this policy up to the limit provided here. The coverage is available not just in your home but also anywhere else in the world.



4) Loss of Use/Additional Living Expenses ---> If your house is damaged and you have to stay elsewhere, then this covers expenses associated with additional living expenses (i.e. rental expenses) and fair rental value, if part of the residence was rented.

Usually the companies offering homeowner insurance provides 20% coverage of the total value of the insurance on your house under this policy. Some companies may allow you to increase this coverage for an added premium.

Home Insurance is a invisible roof on your head when your actual roof is damaged. At least people leaving near disaster prone areas should insure their houses and be at safer side.

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Investment Banking Resumes Guidelines

My blog is approaching three years. I receive one question recently: The world is changing, will your resume guidelines be changed? Good question. I quickly browsed through my older posts and review them. Yes the world is changing, but there are things that never change, such as the sun won't rise from the west. Likewise for investment banking. 100-year old shop Lehman Brothers shut down, but the

Types Of Auto Insurance

The main function of insurance is to provide protection to insured things against uncertainties. Insurance cover can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss. Insurance comes under risk management, to foresee the future and the risk involved and take steps to prevent mass damage. Any property or precious holding can be insured.

One such is Auto Insurance also known as vehicle insurance, car insurance, or motor insurance, in which you can insure your vehicle against any losses incurred as a result of traffic accidents and against liability that could be incurred in an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

In many jurisdictions it is compulsory to have vehicle insurance before using or keeping a motor vehicle on public roads. Most jurisdictions relate insurance to both the car and the driver, however the degree of each varies greatly.

An auto insurance policy comprises six kinds of coverage. Most countries require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year.

Six kinds of coverages that falls under an auto insurance policy are:

1) Bodily Injury Liability ---> Covers other people's bodily injuries or death for which you are responsible. It also provides for a legal defense if another party in the accident files a lawsuit against you.

2) Personal Injury Protection (PIP) --> If the passengers and driver of the policy holder's car happen to be injured, this policy covers the cost of treatment and may also cover lost wages, cost of replacing services and funeral costs.

3) Liability for Property Damage --> If you or someone driving your car with your permission damages another person's property, this policy provides coverage. It also covers damage to lamp posts, telephone poles or any other structure hit by your car.



4) Collision coverage --> This policy provides coverage for damage to your (policy holder) car as a result of collision with another automobile or any other object. There is generally a deductible. Even if you are at fault in an accident, this policy will cover the repairing cost of your car minus the deductible. If you are not at fault, then your insurance provider will try to recover the cost from the faulty driver's insurance company. To keep your premiums low, select as large a deductible as you feel comfortable paying out of pocket. For older cars, consider dropping this coverage, since coverage is normally limited to the cash value of your car.

5) Comprehensive Coverage --> Covers your vehicle, and other vehicles (in limited scenarios) you may be driving for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire, or animals. It pays to fix your vehicle less the deductible you choose. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket. This policy is also available with a certain amount of deductible.

6) Uninsured/Under-insured Motorist Coverage --> If an uninsured or under insured or a hit-and-run driver hits you or your family member, this policy will reimburse the cost of damage. This usually happens when people go for cheap motor insurance. You will also be protected if you are hit as a pedestrian.

You may think that since you don't own a car you do not need insurance. In many cases this may be true. If you rent a car and it meets with an accident, who will provide coverage? This is when you need non-owners car insurance. This insurance is ideal for those who drive occasionally and don't own a car.

Adjustable Rate Mortgage

Adjustable Rate Mortgage or ARM is also known as adjustable rate loan, variable rate loan, variable rate mortgage and floating rate mortgage. Adjustable Rate Mortgages became more popular in 2004, when the Federal Reserve began raising the Fed Funds rate. This made adjustable-rate mortgages more profitable compared to fixed rate mortgages, whose rates are tied to the 10-year Treasury Bond.

I simple language ARM, is a kind of mortgage whose interest rate changes or varies as per specific criteria. The initial interest rate is normally fixed for a period of time, after which it is changed periodically, often every month. ARM is associated with figures such as 1/10, 1/7, 2/28/, 3/27, etc.



The first figure in each set refers to the initial period of the loan, during which your interest rate will stay the same as it was on the day you signed your loan papers.
The second number is the adjustment period, showing how often adjustments can be made to the rate after the initial period has ended. The interest rate paid by the borrower will be based on a benchmark plus an additional spread, called an ARM margin.
Like in 2/28 mortgage's initial interest rate is fixed for 2 years and then changes to a floating rate for the remaining 28 years of the mortgage. Whereas, in 3/27 mortgage, the interest rate is fixed for 3 years and then floats for the remaining 27 years of the mortgage.

Examples:

1. The initial interest rate is 4.5%, the index is 7%, and the margin is 3%,
then the new interest rate = 7% + 3% = 10%.
If the lifetime cap is 5% then
the actual new interest rate will be 4.5% + 5% = 9.5%.

2. The initial interest rate is 6%, the index is 5%, and the margin is 3%,
then the new interest rate = 5% + 3% = 8%.
If the periodic cap is 1% then
the actual new interest rate will be 6% + 1% = 7%.


Types of ARMs

1 Year ARM with 2/6 Caps

The annual percentage rate for this loan is fixed for the initial term of 1 year. After that time, the annual percentage rate may change once a year. The annual percentage rate adjustment cap is plus or minus 2%. The lifetime annual percentage rate cap cannot go up or down more than 6% from the original rate.

3 to 1 ARM

This loan has a fixed rate for the initial term of 3 years. Followed by, the annual percentage rate change of only once a year. The annual percentage rate adjustment cap is plus or minus 2%. The lifetime annual percentage rate cap cannot go up or down more than 6% from the original rate.

5 to 1 ARM

The annual percentage rate for this loan is fixed for a period of five years. After this time, the annual percentage rate may change each year, but is limited to a 2% increase or decrease. The cap for the life of the loan is limited to 5%, plus or minus, of the original rate.



7 to 1 ARM

With a fixed rate for the first seven years, this loan's annual percentage rate may change once a year. The annual percentage rate may adjust no more than 5% at the end of the first adjustment period of seven years. Thereafter, the annual percentage rate adjustment cap is plus or minus 2%. The lifetime annual percentage rate cap cannot adjust up or down more than 5% from the original rate.

10 to 1 ARM

The annual percentage rate of this loan is fixed for a period of ten years. After this time, the annual percentage rate may change each year. The first rate adjustment is limited to 5% of the original interest rate with subsequent rate adjustments limited to 2%, plus or minus. The lifetime cap of the loan is 5% of the original interest rate.

With most ARMs, the interest rate can adjust every month, every three or six months, once a year, every three years, or every five years. The interest rate on negatively amortized loans can adjust monthly. A loan with an adjustment period of 6 months is called a 6-month ARM, with an adjustment period of 1 year is called a 1-year ARM, and so on.

ARMs offer an initial lower interest rate than the fully indexed rate (index plus margin) during the initial period of the loan, which could be one month or a year or more. It is also known as teaser rate.

Advantages of ARM Loan:

1) The biggest advantages that the ARM loan offers are the lower initial interest rate. This lower interest rate will also give you a much lower monthly payment that can either save you money or allow you to buy a bigger house then you could with a fixed rate mortgage.

2) It provides a stability in the sense that you always know what your payment will be.

3) You can choose from 15-year mortgages, and then at various intervals, all the way now up to 50 year mortgages.

4) The fixed rate portion of the loan allows you to enjoy a fixed rate for that period of time that you choose. This can be really good if the economy is doing well and the rates are low.

5) Depending on your contract, your adjustments are made on either a monthly or yearly basis, giving you maximum flexibility.

Disadvantages Of ARM Loan:

1) That dark side is in the form of an interest rate that can sky rocket quickly leaving you with a mortgage payment that can be hard to pay every month.

2) Due to high interest rate your credit score or property values may decrease and you may stuck in a mortgage that’s hard to pay and impossible to refinance out of.


In either case, there are pros and cons - all depending on the economy. The good thing is that there is always the possibility of refinancing - if need be. Be sure to compare any offers you receive in order to determine the best buy for your situation. Get several offers from different companies in order to see the possibilities, and you may want to get some advice from outside sources as to whether a fixed rate or adjustable rate is the best for you.

Why Willie Sutton Would Not Survive Long With Web 2.0

A couple weeks ago I wrote a piece called What Bankers and Willie Sutton Have in Common. If you recall that post you'll remember who Willie Sutton was...a famous bank robber whose career spanned decades.



The point of that post was not to discuss bank robbery. The point was to make the reader aware of the obvious...people are using social media at an increasing rate and banks should consider whether it makes sense for them.

Like I said, the point of THAT post was not to talk about bank robbery. But that was then and this is now. So today, let's talk about bank robbery.

On October 18, 2009, Seth Liss of the Sun Sentinel newspaper wrote an article called "Social Media the New Crime-Fighter." This article discussed how social media is currently being used by private citizens as well as law enforcement to track down criminals. Through YouTube, Facebook and Twitter, people are creating their own version of America's Most Wanted, the popular syndicated television program.

This got me to thinking...again. If law enforcement can post photos and videos on Twitpic, YouTube, etc., shouldn't banks use the same technology in the event of a robbery? While some thought needs to be given to how it is publicized and where it is published, social media can be an effective way to speed up the discovery process in the case of a bank robbery...or any crime, for that matter.

Now, I say some thought needs to be given to the manner of disclosure because no banker would want to general public to get the impression that the bank is Robbery Central and subsequently, unsafe. However, handled properly social media can be an effective tool to closing bank robbery cases and simultaneously act as a preventive tool since no one wants their friends to spot them with women's hosiery over their head (not that there's anything wrong with that!).

I must admit that I haven't given this too much thought and I would probably want to consult a security expert (any out there?) to provide some pros and cons in terms of disclosure. But at a very basic level it seems like something that could work and become incorporated into a bank's overall social media strategy as well as its risk management strategy. Tie a decent bounty to tips leading to an arrest and in this economy you'll have some pretty good success.

How Non Profit Organizations Can Help You To Consolidate Your Debt?

Hey have you ever seen those ads for Non-Profit Organizations?

Who all are offering to assist you to get out of the vicious circle of Debt?

And you feel like trusting them don’t you?



After all, everybody in the ad and on their website looks so pleased and happy with their reliable services, and to be very honest they are, after all a non profit organization – so normally they should or must be completely altruistic and selfless, right? Well, some are, but don't just assume that this is the case everywhere, by default.

Firstly, how does this term or concept of Debt Consolidation work? Actually, when you have multiple huge debts - such as your student loans, your medical bills, and continuous revolving lines of credit or credit cards - it can be really nice and useful to strategically combine or financially unite all of those into one payment scheme. This is what we called Debt Consolidation.

You as the debtor need to take out a new loan at a much lower interest rate to repay that huge payment. Services that are provided by the Debt Consolidation agencies or organization often incorporate brokering negotiations with credit card companies to achieve lower rates and a cut down in the net amount owed, or expert credit counseling. Because they say non profit Debt Consolidation organizations and firms get most of their operating capital through generous grants and donations, they can offer these holy services at little to no charges. Isn’t that a holy service?
Sounds magically wonderful, doesn't it? .But there’s no fast cure for annihilating your huge debt immediately and painlessly. Even Debt Consolidation has its drawbacks. For example, even at lower interest rates and lower payments, it may still take years before the debt is entirely and successfully paid off.



Secondly, the excessive use of a Debt Consolidation service can sometimes have a bad impact on you credit ratings, also known as FICO score. So before you take any steps you need to weigh the pros and cons.

Social Media, User Generated Content and Liability

Social media platforms and applications are dependent upon communal participation. Members of the community share everything from names, professions and scholastic and corporate affiliations to names and photos of family and friends as well as up-to-the-minute updates on current events. Little is too personal on social media, and the greater the extent of the sharing the greater the personal reward for all involved.

As in the non-Internet world, people often do and say things that are not always appropriate - whether intentional or not. Examples include a personal opinion, a piece of confidential information about oneself, one's company or an acquaintance. Through social media, such communication can take the form of a written comment, photos, videos or other form of communication. The result of these communications can result in claims of defamation, incorrect statements of fact, harassment, etc.

Unfortunately for social media operators such as banks that decides to host their own social media sites (e.g., Bank of America, American Express, etc.) and not utilize a commercially available site such as Facebook, there can be a potential legal risk. Fortunately for social media operators operating in the U.S., there exists some form of protection to the extent that certain procedures are maintained.

COMMUNICATIONS DECENCY ACT

Section 230 of the Communications Decency Act of 1996 is a landmark piece of Internet legislation. Section 230(c)(1) of the CDA provides immunity from liability to providers and users of an "interactive computer service" that publishes information provided by others (e.g., user-generated content). Courts generally apply the following three-prong test to determine whether a defendant is subject to the protections afforded by Section 230.

1. The defendant must be a "provider or user" of an "interactive computer service;"

2. The cause of action asserted by the plaintiff must treat the defendant as a "publisher or speaker" of the harmful information at issue; and,

3. The information must be "provided by another information content provider," (i.e., the defendant must not be the information content provider of the harmful information at issue).

This section of the CDA was enacted to enhance free speech by making it unnecessary for Internet service providers and other service providers to unduly restrict customers' actions for fear of being found legally liable for customers' conduct. This law effectively protects social media operators since it covers computer services that involve user-generated content

As a result of its effective protections, Section 230 is considered quite controversial because courts have interpreted Section 230 as providing complete immunity to Internet service providers and other service providers with regard to torts committed by their users. Critics of Section 230 are primarily concerned with its effectiveness at leaving victims with no hope of relief in instances where the true tortfeasors cannot be identified or are judgment proof.

Courts have upheld Section 230 in a variety of factual contexts and on numerous legal theories, including posting of:

• Defamatory information;
• Opinions;
• Private information;
• False information;
• Pornographic information;
• Harassing commentary; and,
• Discriminatory and/or illegal advertising.

Section 230, however, is not absolute protection. For example, plaintiffs have successfully argued in a handful of cases that an "interactive computer service" was not entitled to Section 230 immunity because the person or entity in question was an "information content provider" with respect to the information at issue, thereby failing the third test noted above. Notwithstanding certain plaintiff successes, generally the social media operator is protected against liability for postings made by others so long as the operator does not contribute in whole or in part, in the creation or development of the content and provides a mechanism for detecting objectionable content.

As such, in order for social media operators to obtain the maximum protection under Section 230 of the CDA, the operator should strictly adhere to the following:

• Do not alter any contribution of user-generated content. To the extent that user-generated content is repackaged - no matter how insignificantly, the social media operator potentially voids one of the three tests and risks exposure. Competent legal counsel should opine on the risk to the social media operator to the extent that any user-generated content is repackaged or reformatted.

• Maintain the ability for users to alert the operator of questionable content. Users should at all times be provided with the ability to report user-generated content that violates the terms of use or is generally considered offensive or specifically offensive. Additionally, users should be provided with the ability to promptly delete user-generated content that is directly posted to their profiles or personal space within the social media platform.

• Maintain formal policies and procedures for addressing complaints of questionable content. The policies should include both external terms of use policies and internal policies and procedures for the timely management of complaints. Periodic audits and compliance with recommended corrective actions should be performed and well documented to serve as support in the event of legal action.

• The Terms of Use should explicitly state that the user is fully responsible and liable for any legal action attributed to their user generated content and the TOU should include indemnification language that contractually indemnifies the social media operator as a result of user-generated content. Any subsequent changes to the TOU should require the user to accept the changes prior to permitting the user access to the social media platform.

I am not an attorney and this information should not be taken as legal advice. However, it should be something to think about and explore further to the extent that your bank will host its own site.

Today it is very possible for community banks to launch their own social networks. If that decision makes sense, an appropriate risk assessment should be conducted that includes within it questions related to legal liability. Legal counsel should be well versed in these emerging risks in order to provide strong advice.

As I state over and over in this blog, these risks should not deter the use of social media. However, the risks should be considered and appropriate internal controls, policies and procedures put into place to allow everyone to sleep at night.

Libel, Schmibel...I'll Call You What I Want

I have lived in L.A. my whole life. I attended a college that bordered Sunset Blvd and I have a wife and daughter that are "in the business," as well as countless friends who have made a sick living behind the scenes of many of your favorite TV shows. But I've never really followed "the trade." I just never thought there was much to learn from it - from a banking point of view.

Well, I was wrong.

On October 11, 2009, Amar Toor wrote a piece at Switched.com that got me thinking. Amar was describing the danger that social media poses when tweets and other social media conversations erupt into character defamation lawsuits. Amar gave several examples involving Courtney Love, Demi Moore, Perez Hilton and others. The point Amar was making was that the widespread and viral nature of the unregulated social media industry can result in a battle between free speech and defamation that could create legal headaches.

That's the part that got me thinking. As banks continue to adopt social media as a communication channel, bankers need to ensure that their employees are well versed in terms of what can, cannot and should not be said. To further complicate matters, many banks have a social media presence without knowing it in the form of employee blogs, Facebook and MySpace pages, etc. In these cases, the employees may not understand the potential risks associated with their activities and that statements made by them may be attributed as comments of the company they work for.

But even "officially" sanctioned community managers may create legal firestorms. For example, take a tweet that asks a banker at Bank Y what he thinks about Bank X. If the Bank Y employee is not factual, Bank X may take a negative comment as derogatory and detrimental to Bank X's brand. The result could be wasted dollars and energy over a simple statement.

Does this mean banks should not encourage the use of social media. Absolutely not! Even if a Bank forbid it, chances are it would still occur at some level. Instead, every bank, whether active or not in social media, should develop a social media policy.

The policy should address not only the regulatory requirements but should also address how employees can characterize their competition. For example, an employee may receive a tweet regarding Bank Y's assessment of the financial condition/capital adequacy of Bank X. The banker should refer out the question to the FDIC site for that bank's financial condition rather that provide an opinion - particularly if the opinion is not positive.

It's too easy to think of social media as merely a marketing/outreach tool and forget its regulatory/legal implications. Good policy and training are the keys to protecting a bank from legal troubles. Also, be sure to read my post on Pain Free Social Media Policy Development.

Annual Percentage Rate

APR or Annual Percentage Rate should be known to everyone, at least by those who are having loan, mortgage, credit card etc., which deals with interest rate. In order to avoid bugger lenders or different credit card companies and compare the percentage rates on different loans or credit cards.

What is APR?

APR is the Annual Percentage Rate is the interest rate calculated for a whole year, rather than just a monthly fee/rate, as applied on a loan, mortgage, credit card, etc. APR tells you how much you are going to pay annually for the amount borrowed, so it is the cost of loan in terms of percentage. If your loan has a 10% rate, you’ll pay $10 per $100 you borrow annually. All other things being equal, you simply want the loan with the lowest APR.

Why it is necessary to know APR?

The fees included within the APR vary from one lender to another. The fees included within the APR involve charges related to the making of the loan and other fees such as title fee, escrow fee, attorney fee, tax service fee, home inspection fee, recording fee and credit report fee. The fees for the preparation of loans include loan processing fee, underwriting fee, document preparation fee, private mortgage insurance, loan application fee, credit life insurance and appraisal fee. Lenders often mislead borrowers by charging hidden fees. In order to reduce the confusion, US Government made the provision that the lenders have to quote APR to potential borrower, as per the Truth in Lending Act.

For example if the APR is 36%, the percentage is 3% per month, but the interest rate or cost of funds for the entire year may be greater than 36% due to the effects of compounding. By law, a credit card company or other lender must inform the customer of the APR before any agreement is signed. The APR provides the customer with a convenient number against which to compare the cost of funds for other loans or investments.

So you have to do some research work before applying for any loan, mortgage or credit card and find out which is having lowest APR.

How is APR Calculated?

APR is the equivalent interest rate considering all the added costs to a given loan. Naturally, it is a function of the loan amount, the interest rate, the total added cost, and the terms. The APR would equal the interest rate if there is no additional costs to a given loan.



1) For example, consider a $100 loan which must be repaid after one month, at 5% interest, plus a $10 fee. If the fee is neglected, this loan has a (year-long) effective APR of approximately 79% (1.05^12 =~1.7958). If the $10 fee were considered, the interest increases by 10% ($10/$100) for the month, with the effective APR being approximately 435% (1.15^12 =~5.3502, as 535%-100%=435%). Hence there are at least two possible "effective APRs": 79% and 435%.

2) For example, a credit card company might charge 1% a month, but the APR is 1% x 12 months = 12%. This differs from annual percentage yield, which also takes compound interest into account.


What are APR Limitations?

Unfortunately, all other things are not equal. APR can include more than just the interest cost of a loan. On a mortgage, APR might include Private Mortgage Insurance, processing fees, and discount points. There are other fees and charges that may or may not be included in a given APR quote. Therefore, you need to look closely at each and every APR.

You can’t simply rely on an APR quote to evaluate a loan. You need to look at each and every charge and expense related to your prospective loan in order to judge whether or not you’re getting a good deal. In addition, look at the bigger picture – you need to know how long you’ll be using a loan to make the best decision. For example, one-time charges up front may drive up your actual cost on a loan – even though an APR calculation might assume those charges are spread out over a longer lifetime (and therefore the APR would look lower).

APR Calculator:

1) Loan Amount (C):----------- 2) Extra Cost (E):---------- (The Extra Cost (E) is the lump sum of all extra costs involved in the loan, which include points, application fee, closing cost, processing fee, title fee, and so on. In short, it's the money you borrowed that you never saw.)
3) Interest Rate % (R):------- 3) No. of Months (N):-------
4) APR (A):------------------- 6) APR (A):----------------- Calculator

The calculator first calculates the monthly payment using C+E and the original interest rate r = R/1200:

P = (C+E)r(1+r)N/(1+r)N-1

The APR (a = A/1200) is then calculated iteratively by solving the following equation using the Newton-Raphson method:

{a(1+a)N)/(1+a)N-1) – P/C = 0

What Bankers and Willie Sutton Have in Common in 2009

If you've been a banker for any extent of time chances are you've heard his name - or at least his quote. Willie Sutton was a career bank robber who held up over 100 banks from the 1920s to the 1950s (final arrest in 1952). As the story goes, after being arrested Willie was asked why he did it..."because that's where the money is."



So what does Willie Sutton have to do with social media?

On September 21, 2009, comScore Media Matrix released its rankings of the top 50 U.S. Web properties for August 2009. According to comScore, Facebook came in at 5th place with 92.2 million unique visitors - a five percent increase from July 2009. Twitter came in at 46th place with 20.8 million unique visitors.

So, let me ask it again...what does Willie Sutton have to do with social media? If Willie were alive today, he'd probably say, "because that's where the money is."

That's right. The money. Banks, and businesses in general, need to consider how to best utilize social media to develop their businesses - from customer service to reputation risk management to sales and marketing. And by doing all these things well, banks will find a route to new found treasure.

But, of course, social media is NOT the same as Web or email marketing. Social media is much more complicated and brings with it a whole new set of nuances that set it apart from traditional online marketing. In a nutshell, the nuances involve honest, transparent and ongoing conversations with the "community." This post does not cover those nuances in detail but is intended to get bankers thinking about the potential for the use of social media; to get bankers to think about where to find the money (without having to hold up a competitor!). I recommend the ebook Community Banker's Guide to Social Network Marketing for a detailed description of the nuances.

I recently read a post by Richard Pentin where he stated that the honeymoon over social media is over. While I respect Mr. Pentin's view, from the banking industries point of view, he could not be further from the truth. As a banker it hurts me to say that we tend to be far behind the innovation curve. So while the rest of the world has been neck deep in social media over the past two years, bankers are just now starting to get their arms around it. As such, from a banker's perspective, the honeymoon is just beginning. And with bankers' current and potential customers increasing jumping onto Facebook and Twitter and other social platforms at increasing rates, bankers need to figure out how to continue to meet the demands of the evolving consumer as well as how to use those evolving technologies to secure additional business.

What is another reason bankers consider social media? Well, to quote another controversial historical figure, former President Bill Clinton, "It's The Economy Stupid." As the economy continues to struggle, consumers have become more critical of the banking industry. With TARP, AIG, Lehman Bros., et al, bankers have taken a hit from a reputational perspective. Social media can assist in healing those wounds through the honest and transparent approach required by social media.

I could go on and on but I really think that the next step requires a thorough reading of the Community Banker's Guide to Social Network Marketing. Then we can come back and fill in the gaps.

A GREAT Job Interview Follow-up Letter Secret

I received this article from Jimmy Sweeny. He is not an investment banking guru, but he is a generalist career guru, one of my most respected figures in the field. This article is very innovative and I’m sure you will benefit from it. Enjoy reading.A GREAT Job Interview Follow-up Letter SecretYou've just finished the interview you hoped to get and it went pretty well as far as you can tell. Now

Good Debt!

Can a DEBT be GOOD? Yes it is!

For Creditors all secured debts are Good Debts and for Debtors Good Debts are those which builds wealth over the long run.

Question: Can Debts build wealth?

Not all debts are bad. If used precisely Debts can be huge source in wealth building. Good Debts can be considered as a sort of investment, which generates
income at a later stage.

Good Debts is secured with a valuable asset, like a home mortgage or, perhaps, a car loan, and so considered an investment.
Home loans are good because over time a home’s value increases. Student loans are also considered Good Debt because they are also like an investment. Students who graduate with a college degree earn, on average, higher incomes than those that don’t.
Home loans and college loans are good for another reason: they usually have very agreeable terms. Both types of loans come with very low interest rates, and borrowers repay the debt over a long period. The typical home loan, for instance, carries a 30-year term. The interest on college loans is so affordable that the graduate can repay their loans slowly over a long period as they gradually earn more money and build their personal wealth.

"Mortgage debt is Good Debt. You're borrowing money, but you're getting a tax advantage and can write off interest on an asset that's appreciating over time. Plus, you get to live there."

One of the secrets, therefore, to being smart with your money is to differentiate between Good Debt and Bad Debt.

1) Good Debt: Having a mortgage, getting a home equity loan or line of credit to fund a home renovation or remodeling job.
Bad Debt: Borrowing money to trick out your car to impress your friends, or just yourself.

2) Good Debt: Getting student loans to attend college.
Bad Debt: Using your credit cards while at school to buy groceries, throw parties or accumulate stuff. Many students are saddled with insane amounts of debt after they graduate. Average credit card debt after graduating from college: $3,000.


3) Good Debt: Leverage in real estate or using the bank’s money to invest in real estate. You can use leverage by borrowing funds to get into real estate investing with the expectation of turning in a profit.
Bad Debt: Leverage in Wall Street or borrowing money to buy stocks. In my opinion, buying stocks on margin is a bad idea. This is a subjective opinion because I’m sure there are a lot of successful margin players out there. As an average investor, I’d avoid trading on margin like the plague. There’s a difference between using a loan to invest in real estate versus investing in the stock market: if the real estate market drops, you are not forced to pay off a mortgage in short notice. With a drop in stock prices, you’ll be subject to margin calls that will force you to raise more money to hold on to your position or else force you to redeem at poor market prices. Using leverage takes a good amount of risk, the question here is if the risk is reasonable and if you’re fairly comfortable taking it.


4) Good Debt: Applying for a business loan and borrowing for business. Many ventures need cash flow that they don’t have at the moment to run their operations or expand their facilities. Using loans to grow a business is a sensible approach to take.
Bad Debt: Using your credit card to go on vacation, travel or to just have a good time; borrowing for pleasure. Once the vacation is over, you’re left with fun memories and a financial obligation to pay up.

While the differences often seem logical, it is a logic that is apparently missed by many people.

Therefore, Good Debt helps borrowers by increasing their wealth and by building a healthy credit history. Borrowers who repay their debt diligently earn a good credit score and become eligible to borrow more good debt in the future. Good Debt is investment debt that creates value.