You may have seen the discussion about the general low level of "financial literacy" in the recent past.
In the long term - and its two opposing evil, "financial illiteracy" - used to describe the extent to which people understand the practical issues of their economic life.
In a broader sense, in terms of "account" and innumeracy "is used to describe the extent to which people understand the numbers in general, including probability and statistics matter.
Well, it turns out that many people in public places such as Canada, the United States and United Kingdom believe that they should do something to help his people to stand and counters.
It is difficult to argue with the need to improve education in mathematics and finance, where the population has a savings rate near zero, and debt to disposable income to 140 percent, was a house with the help of the shares at the current fuel consumption, but also currently spends more money on lottery tickets than on reading materials.
I know what you think. Just cotton-pickin 'minute! Is not the government, which are Decrying our weak understanding of the very same people that run the lottery?
Um, yes, it is them. It is clear that your Government would like to improve the financial literacy, while enjoying a piece of your gaming action. Ah, public policy! It is just so darn difficult to get all this in philosophical alignment.
Lotteries, often used as examples of financial illiteracy, innumeracy, or because he realized for the general probabilities, which are based on the game.
Take the venerable crowd favorite, in Lotto 6-49. The rules are very simple and accessible. Each ticket is divided into six figures. If your ticket numbers match the six numbers, which are collected in a draw, you will receive or share the main prize, and you could be financially set for life.
Chances of winning are clearly published, the process is very transparent, and everybody understands that this is a long shot. So to understand?
The problem is numbers. Most of us, as it turns out, is rather inept at intuitive understanding of very large quantities. Small numbers of a piece of cake, because we can conceptualize them against our ten fingers. The numbers in the hundreds or thousands of works because we can see and understand, say, two hundred pennies in a coin bank, 18000, or people in the NHL scene. But tens of millions? Fuhgeddaboudit.
For the most part, we conceptualize the meaning of a large number do not think about the number of individual units, but with the help of comparative costs. So, perhaps we could think of a million dollars in a very reasonable price for the house, because the majority of homes costing more than (Vancouver).
Or perhaps we think of the millions of dollars as a ridiculous price for a house, because the same amount to buy two very NICE house for $ 500,000 each (everywhere).
Perhaps we try to determine the size of hedge-fund manager George Soros' personal income in 2008 (1.1 billion U.S. dollars), noting that it is not even half the income hedge-fund manager James Simons ($ 2.5 billion ) - or that it was more handily than the GDP British Virgin Islands ($ 840 million). In other words, we try and meaning of large numbers by weighing them on a relative scale.
We can digest a large number of participating in the probability of winning the Lotto 6-49 in the same way. The nice people at the lottery to assure us that the probability that any given number will be drawn is one of the 13983816. To state that the same statistics in a different way, any number can be expected to win the 0.000007 percent of the time.
Therefore, the next time you buy a lottery ticket 6-49, you can be 99.999993 percent sure that you do not win the big jackpot. Now, go ahead and compare that to your belief, well, almost nothing. (For example, on the basis of the latest Transport Canada statistics, on average, you are more than four times more likely than dying in a car ... and now.)
Talk about buying with confidence! There may be another product, which you can be so certain. You are almost guaranteed not to win. In fact, you can also just break your lottery ticket right before the nose of a clerk who sold it to you, and cavalierly wagers on the note in the shopping cart. Why? Perhaps because, as your government, you certainly take it - but you love the invisible discretionary tax!
Tuesday, March 31, 2009
Monday, March 9, 2009
Can the housing bailout help you?
What President Barack Obama, the housing plan of salvation for you?
Perhaps, the lower house payments and not just for those already in default.
"All we are paying the price for the home mortgage crisis," Obama said on Wednesday announced the program during a ceremony at the Phoenix-area schools.
Housing construction had devastated the nation into recession. Construction of houses and applications for future projects, as loaded on a record low in January, as all parts of the country, showed a large decline in construction. Analysts strengthens the hope that out of state programs, including measures to curb the foreclosure, help stop the slide.
Headlining Obama effort is a $ 75 billion a homeowner affordability and sustainability of the plan, which will provide a set of incentives for creditors to reduce monthly payments for mortgage sustainable levels.
Another key component: a new program aimed at helping homeowners who are "underwater" - who owe more on their mortgages than their house is worth. Such mortgages are traditionally almost impossible to refinance. But the White House said its plan would help 4 million to 5 million families to do just that.
Here are the changes likely to affect you.
Refinance even if you are 'underwater'
Mortgage rates to nearly record lows to make payments more manageable for homeowners were falling in price. Although many of the owners of their current payments, a sharp fall in the price of holding them under water. Homeowners whose mortgages were purchased or guaranteed by Fannie Mae and Freddie Mac, as a rule, must be fair, at least 20% for refinancing. Obama's program, which will lead to changes in requirements, which allows even those who owe up to 105% of the value of the house to refinance.
Payments may be reduced, not merely postponed
Current mortgage plan training, as a rule, allow more flexibility with payments, but rarely reduce the amount of debt that is a factor, most experts refer to these measures can not stop the foreclosure crisis. Obama, the program focuses on affordable monthly payments from taxpayers and lenders to reduce the cost of interest rate and principal amount on which borrowers can actually repay.
Pay for borrowers and lenders for success
Mortgage Company will receive upfront fees $ 1000 for the right of each modification. They will also receive a fee for the success fees - awarded each month until the borrower is current on the loan - up to $ 1000 per year for three years.
Remove the uncertainty around the continued decline in prices
To encourage lenders to modify more mortgages and allow more families keep their homes, the Administration and the Federal Deposit Insurance Corp. have developed an insurance fund (of up to $ 10 billion) that would pay the mortgage holders for each modified loan, if the house price index decreases.
Institute a consistent, clear guidelines to modify loans
Treasury will develop uniform guidelines for loan modifications mortgage industry. All financial institutions receive money from the crisis in the future it will be necessary to implement the loan modification plan in accordance with the guidelines. Fannie Mae and Freddie Mac will use these guidelines for their own loans or guarantees, and the Obama administration will work with regulatory authorities and other federal and state authorities to implement these guidelines throughout the mortgage market.
Perhaps, the lower house payments and not just for those already in default.
"All we are paying the price for the home mortgage crisis," Obama said on Wednesday announced the program during a ceremony at the Phoenix-area schools.
Housing construction had devastated the nation into recession. Construction of houses and applications for future projects, as loaded on a record low in January, as all parts of the country, showed a large decline in construction. Analysts strengthens the hope that out of state programs, including measures to curb the foreclosure, help stop the slide.
Headlining Obama effort is a $ 75 billion a homeowner affordability and sustainability of the plan, which will provide a set of incentives for creditors to reduce monthly payments for mortgage sustainable levels.
Another key component: a new program aimed at helping homeowners who are "underwater" - who owe more on their mortgages than their house is worth. Such mortgages are traditionally almost impossible to refinance. But the White House said its plan would help 4 million to 5 million families to do just that.
Here are the changes likely to affect you.
Refinance even if you are 'underwater'
Mortgage rates to nearly record lows to make payments more manageable for homeowners were falling in price. Although many of the owners of their current payments, a sharp fall in the price of holding them under water. Homeowners whose mortgages were purchased or guaranteed by Fannie Mae and Freddie Mac, as a rule, must be fair, at least 20% for refinancing. Obama's program, which will lead to changes in requirements, which allows even those who owe up to 105% of the value of the house to refinance.
Payments may be reduced, not merely postponed
Current mortgage plan training, as a rule, allow more flexibility with payments, but rarely reduce the amount of debt that is a factor, most experts refer to these measures can not stop the foreclosure crisis. Obama, the program focuses on affordable monthly payments from taxpayers and lenders to reduce the cost of interest rate and principal amount on which borrowers can actually repay.
Pay for borrowers and lenders for success
Mortgage Company will receive upfront fees $ 1000 for the right of each modification. They will also receive a fee for the success fees - awarded each month until the borrower is current on the loan - up to $ 1000 per year for three years.
Remove the uncertainty around the continued decline in prices
To encourage lenders to modify more mortgages and allow more families keep their homes, the Administration and the Federal Deposit Insurance Corp. have developed an insurance fund (of up to $ 10 billion) that would pay the mortgage holders for each modified loan, if the house price index decreases.
Institute a consistent, clear guidelines to modify loans
Treasury will develop uniform guidelines for loan modifications mortgage industry. All financial institutions receive money from the crisis in the future it will be necessary to implement the loan modification plan in accordance with the guidelines. Fannie Mae and Freddie Mac will use these guidelines for their own loans or guarantees, and the Obama administration will work with regulatory authorities and other federal and state authorities to implement these guidelines throughout the mortgage market.
Wednesday, March 4, 2009
Top financial milestones before 30
1. Scale back the credit cards. "So many people credit chesalnye it up," says Sarah Young Fisher, 53, president of financial-planning firm Kuntz Lesher Capital in Lancaster, Pa.: "I am an old lady. When I started, then T could get credit cards without work. Now they are just send it to you, and people do not realize how much time will be required to pay for him to leave at 20% interest. "
The average credit card debt among 25 - 34 year olds was $ 5,200 in 2004, according to credit card research firm CardWeb.com. That is at the top of an average of $ 19,200 in student loan debt carried recent students.
Young Fisher said 30-year-old should be a living on wages "- without taking credit card debt - and save at least 10% of the total wages in the future. "If not," she said: "You will not be able to retire."
She recommends investing in Microsoft Money or Quicken - a convenient software that allow you to track income, expenses and investment, and can be programmed to help with taxes and objectives.
2. Own home - or plan. Young Fisher argues that the housing must be a priority for those who rent. "Start saving for a down payment," she said. "If you find that you like, or change the life comes together (for example, a child or a move), but you do not have money, you're going to take or receive interest only mortgage - which is ridiculous."
When you buy, she said: "buy what you can afford, not what you love." And do not forget the new costs that come with the house - a lawn mower repair furnaces and snow shovel.
3. They have skills. Even for those who do not consider themselves as entrepreneurs, the majority of workers should expect changes in some employers and job titles throughout their careers. "By the time you're 30, you should develop a set of marketable skills," said Greg Fisher, 35, founder Gershtein Fisher, New York financial planning company. "Try to bring something new to the table."
The model works in the same company for 30 years and retired with a gold watch is now two generations obsolete, said Fisher, who founded his company - which serves customers mainly in the age of 45 - at the age of 21.
Today's workers need to differentiate themselves in order to survive and thrive, said Fischer. "It's for hire. If you work for a company, you have only one client," he said. "If they fire you, you're offside."
4. Give money. No, not the credit card company in the form of 24.99% interest rate payments. Instead of establishing regular charitable giving plan, said Scott Hanson, founder of financial planning firm Hanson McLean.
"I think it is financially healthy to give," said Hanson, who also hosts a financial show of Call-Sacramento, CA Speaking of customers and subscribers, it has come to believe that we are emotionally deprived state, which spends feel good. When we feel down, we head to the mall.
Hanson believes that the good Vibes considered one of the reason for making that can also create a feel-good factor - one more important than a new CD or a 80% discounted cashmere sweater. "Giving money to put it in perspective," he said.
5. Know thyself. Introspection is not just for middle-aged guys with ponytails living on a rock in Japan. Having a firm grasp on your priorities and values is a critical component of financial life.
For example: There are impressive to your friends and a stranger one of your core values? No? Then why is that expensive leased SUV sitting in your driveway? "Start with yourself to know and build your life in such settings, and the money line with those parameters," said Hanson.
"People have proved that their goal is even to zero before they go. Once we have a roof over our head and food on the table that none of the
Other things really going to bring that much joy, "said Hanson." Money is not important. You will never have with pleasure, if it exists. "
6. Know smart people. It is very important to have strong advisers in your life, Young said Fisher. Knowing well the tax preparation, financial adviser, lawyer and insurance agent can save you untold amounts of money and stress. "If you need someone to get a good comrade," she said.
The average credit card debt among 25 - 34 year olds was $ 5,200 in 2004, according to credit card research firm CardWeb.com. That is at the top of an average of $ 19,200 in student loan debt carried recent students.
Young Fisher said 30-year-old should be a living on wages "- without taking credit card debt - and save at least 10% of the total wages in the future. "If not," she said: "You will not be able to retire."
She recommends investing in Microsoft Money or Quicken - a convenient software that allow you to track income, expenses and investment, and can be programmed to help with taxes and objectives.
2. Own home - or plan. Young Fisher argues that the housing must be a priority for those who rent. "Start saving for a down payment," she said. "If you find that you like, or change the life comes together (for example, a child or a move), but you do not have money, you're going to take or receive interest only mortgage - which is ridiculous."
When you buy, she said: "buy what you can afford, not what you love." And do not forget the new costs that come with the house - a lawn mower repair furnaces and snow shovel.
3. They have skills. Even for those who do not consider themselves as entrepreneurs, the majority of workers should expect changes in some employers and job titles throughout their careers. "By the time you're 30, you should develop a set of marketable skills," said Greg Fisher, 35, founder Gershtein Fisher, New York financial planning company. "Try to bring something new to the table."
The model works in the same company for 30 years and retired with a gold watch is now two generations obsolete, said Fisher, who founded his company - which serves customers mainly in the age of 45 - at the age of 21.
Today's workers need to differentiate themselves in order to survive and thrive, said Fischer. "It's for hire. If you work for a company, you have only one client," he said. "If they fire you, you're offside."
4. Give money. No, not the credit card company in the form of 24.99% interest rate payments. Instead of establishing regular charitable giving plan, said Scott Hanson, founder of financial planning firm Hanson McLean.
"I think it is financially healthy to give," said Hanson, who also hosts a financial show of Call-Sacramento, CA Speaking of customers and subscribers, it has come to believe that we are emotionally deprived state, which spends feel good. When we feel down, we head to the mall.
Hanson believes that the good Vibes considered one of the reason for making that can also create a feel-good factor - one more important than a new CD or a 80% discounted cashmere sweater. "Giving money to put it in perspective," he said.
5. Know thyself. Introspection is not just for middle-aged guys with ponytails living on a rock in Japan. Having a firm grasp on your priorities and values is a critical component of financial life.
For example: There are impressive to your friends and a stranger one of your core values? No? Then why is that expensive leased SUV sitting in your driveway? "Start with yourself to know and build your life in such settings, and the money line with those parameters," said Hanson.
"People have proved that their goal is even to zero before they go. Once we have a roof over our head and food on the table that none of the
Other things really going to bring that much joy, "said Hanson." Money is not important. You will never have with pleasure, if it exists. "
6. Know smart people. It is very important to have strong advisers in your life, Young said Fisher. Knowing well the tax preparation, financial adviser, lawyer and insurance agent can save you untold amounts of money and stress. "If you need someone to get a good comrade," she said.
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