Repossession is when a creditor takes back whatever it is you bought with their loaned money because you didn’t make payments (defaulted) on your loan. If you get a loan to buy a car and don’t make the payments, the financing company can take your car without going to court or even telling you – at least until you pay your bill. And if you default on mortgage payments, the bank can repossess your house!
Archive for the ‘Spend Page’ Category
Repossession is…
Tuesday, October 20th, 2009Pay More For Peace Of Mind?
Monday, October 19th, 2009Seems like you can buy an extended warranty on anything these days, but is it really worth the investment?
- Extended warranties are a big source of profit for both the retailers selling the product, but also for third party warranty dealers that operate outside of the retailers’ awareness.
- Car dealers in particular try to sell extended warranties to increase their bottom line because the average car purchase today results in a net loss for the dealer.
- In most cases, springing for the extended warranty probably isn’t worth it. But if you’re famous for breaking your cell phone, or the item you’re buying is known to break down a lot, it may save you a lot of repair and replacement money in the end.
Facts & Figures
- 34.4% of new car buyers bought extended warranties in the first half of 2009.
- 65% of Consumer Reports survey respondents reported that they spent more on their car warranties than they recouped in repair savings.
- To extend the coverage on a Toyota Highlander to 8 years or 100,000 miles, an extended warranty will cost between $1,325 and $1,600.
Best Quote
“It’s insurance. It depends on the customer’s views about risk.” – Paul Taylor, Chief Economist for the National Automobile Dealers Association
A Sin Tax is…
Sunday, October 18th, 2009A “sin” tax is a tax put on items that are considered bad for you or dangerous, like alcohol or tobacco. There is a sin tax on cigarettes because the negative health effects of cigarette smoke impose a burden on society; the idea is that by making them more expensive, people will buy fewer of them. The tax also provides the government with additional revenue to pay for programs to help people stop smoking, among other things.
Winter Forecast: Fewer Flights And Higher Fares
Thursday, October 15th, 2009American airlines are taking a hint from European discount airlines: pack ‘em in and charge extra for everything.
- Though the economy is picking up elsewhere, the airline industry is still struggling. And that means higher fares and more annoying fees for you, the traveler.
- To save money, many airlines are paring back their schedules, which will decease the total number of flights available. At the same time, business travel is expected to increase, which will limit supply even more.
- Many airlines have already added a holiday travel surcharge, and are also considering additional fees for online booking, advance boarding, and infants.
Facts & Figures
- According to Tom Parsons of BestFares.com, the cost of domestic flights has increased recently by more than 50%.
- Delta, American, United, and US Airways will be charging an extra $10 per ticket on certain holiday travel dates this winter.
Best Quote
“Even with the new fees, airlines are losing billions. So it’s either fees, higher fares, or we’ll see some more airlines fall into the aviation ash heap along with TWA, Pan Am, Skybus and Independence Air.” – George Hobica, Founder of AirfareWatchdog
Why is it good to have a credit history?
Wednesday, October 14th, 2009When you’re hiring someone for a job, the best choice is probably a person who has a reputation for doing similar jobs well in the past. Although someone without any established reputation is better than someone with a bad reputation, he’s still something of a gamble – you have no special reason to think he won’t perform the job well, but no reason to believe he will, either.
Credit history follows the same principle. It’s basically a record of how you’ve used credit in the past. How much do you owe right now? Have you made your credit payments on time? Have you had any financial problems? In credit as in anything else, a long history of good behavior is a great asset because it inspires trust. For example, a bank may be more inclined to let you take out a loan if you have an excellent credit history; if you’ve repaid your debts in a timely manner in the past, odds are you’ll deal with their loan in the same way.
A Different Kind Of Credit Crunch
Friday, October 9th, 2009Pay now or pay later? In a bad economy, more consumers are choosing to feel the effects of their spending right away.
- In a significant shift in credit-happy American spending habits, people are beginning to use their debit cards more than their credit cards to pay for purchases.
- The recession has most consumers trying to curb their spending, which the immediate monetary loss of a debit card transaction can make easier. People are also shopping less for the big-ticket items that are usually paid for with credit, but they continue to use debit for everyday purchases such as groceries.
- The drop in credit card transactions may also have something to do with recent legislation, which had the effect of credit card companies lowering limits and raising fees – and making themselves less attractive to the struggling shopper.
Facts & Figures
- According to the Federal Reserve, total revolving credit went down $6.1 billion in July.
- Both Visa and Mastercard saw debit card transactions increase and credit transactions decrease in the first part of 2009.
- In the past 15 years, debit card transactions have grown to represent more than 50% of all non-cash transactions.
Best Quote
“People are managing their money in a different way. You clearly have a situation where those people who have jobs are exhibiting recession anxiety and they are making more debit transactions.” – David Robertson, the Nilson Report (which tracks credit card industry)
A Debit Card is…
Thursday, October 8th, 2009A debit card (a.k.a. bank card) is a plastic substitute for cash. It’s linked to your bank account and when you use it to buy something, the money is immediately taken out of that account.
Is it worth it to buy a gift for Mom at the airport duty-free shop?
Thursday, October 8th, 2009The quick answer is that it depends, but probably yes. As the name implies, a duty free shop has no ‘duty’ — or local import tax — on the goods that it sells. By buying something at Heathrow Airport in London, for instance, you don’t have to pay the import tax that the UK slaps on foreign goods (such as Russian vodka) and that a local store in London would include in its price for the same goods.
Because of this, goods at duty-free stores are generally cheaper than if you were to purchase them with the import tax inside the country. However, there are two reasons to be a little cautious: The first is that according to U.S. law, if you buy more than $800 worth of items purchased abroad (duty-free or not), then you will have to pay the import tax. The second is that sometimes, depending on geography and exchange rates, an item may just be more expensive at duty free stores.
Basically, if you know the price of your mom’s favorite perfume at Macy’s and see it cheaper at the duty-free shop (and you dont plan on buying more than $800 of it), chances are it’s a good deal.
Baseball’s Wealthiest Team Shares Profit With NYC
Wednesday, October 7th, 2009When you get taken out to the ballgame in New York City, the local economy gets a serious boost…
- In the first playoff season to visit the new Yankee Stadium in the Bronx, the New York City Economic Development Corporation estimates that each home game played in the 2009 postseason will bring $6.7 million in income to New York businesses.
- The estimate takes into account money spent by visitors to the city who patronize hotels, restaurants, and transportation services. In addition, employees in and around Yankee Stadium will take home a total of about $900,000 after every game.
- Does the economic benefit of these games outweigh the enormous costs of building a new stadium and all its related transportation and infrastructure changes? Not everyone is so sure. One Westchester State Assemblyman says the economic and employment benefits are not enough to justify the low-cost financing that was made available to the team for stadium construction.
Facts & Figures
- The NYC Economic Development Corporation estimate assumes each postseason game will bring in 16,850 NYC residents, 27,500 residents of the NY/NJ/CT metropolitan area, 6,000 visitors from outside this area, 300 media from outside the area, and 200 players and affiliates.
- Counting $5.2 million in “indirect economic impact” brings the total benefit to New York City to $11.9 million.
- The new Yankee Stadium cost $1.5 billion and was largely financed by tax-exempt bonds that will eventually be repaid by the team.
Best Quote
“There is a modicum of economic advantage. The visiting teams travel with their press corps and entourage, some people will travel to New York, stay overnight and spend money on hotels and restaurants.’’ – Andrew Zimbalist, Professor of Economics at Smith College
What and where is the black market?
Wednesday, October 7th, 2009Drugs, guns, stolen goods, oh my! The buying and selling of these types of illegal products is the most infamous type of black market. In a more general sense, the black market is any marketplace that operates outside the law, or disregards trade or taxation regulations. It gets its name from the idea that business is done “in the dark,” out of sight.
As a trend, black markets tend to sprout up most in places with the least economic freedom. This means the countries with the most economic freedom tend to have the smallest black markets (proportionally). But countries with more corruption, regulation, and monopolies have fewer legitimate economic opportunities. For instance, North Korea has a robust black market for basic supplies like food.
In developed countries, black markets form in response to legal, regulatory, and taxation restrictions. One of the most famous examples comes from the 1920s. When prohibition made alcohol illegal in the U.S., it spawned an enormous black market where alcohol was smuggled into the country and sold at speakeasies and private bars. Spearheaded by the mafia, the black market sustained an era of organized crime and cost the U.S. an estimated $500 million in lost tax revenues every year. Economics teaches us about the laws of supply and demand; just because something becomes illegal, for instance, doesn’t mean everyone suddenly stops wanting it. Boom. Black market.