Archive for the ‘Spend Page’ Category

How does a bank make money?

Friday, June 12th, 2009

Once you deposit your money in a bank, it doesn’t just sit in a big vault until you decide to hit the ATM. Your bank uses those funds to offer financial products (such as loans and mortgages) to their customers, for a profit to the bank. Although banks often pay you interest for depositing your money with them, they find ways to earn more with your money than they are paying you. An example of this would be mortgages, where they lend money to a consumer for a relatively higher interest rate.

Banks also make a lot of money on the fees they charge their customers. Examples of these would be: late fees, overdraft fees, ATM fees, interest rates on credit cards, or checking account fees.

The combination of interest rates and fees allows a bank to run profitable businesses while also offering services to its clients.

Does The Financial Crisis Mean The End Of Bollywood?!

Friday, June 12th, 2009

The financial crisis is reaching into industries across the globe – even ones which have experienced recent surges in popularity.

  • In recent years, studios, media companies, and financial institutions began to invest heavily in Bollywood films, as India’s growing middle class could more easily afford such leisurely activities.
  • Now, this $2 billion a year industry must adjust to the global financial downturn by curbing production and budget costs, and ultimately the amount of films that will be made.
  • Producers are negotiating for lower rates from actors, choreographers, and the film crew in an effort to keep costs down.

Facts & Figures

  • Bollywood received $140 million in 2007 and $700 million in 2008 but so far only $25 million in 2009 from foreign aid through mergers and acquisitions.
  • In 2008, Bollywood produced 1,000 films but in 2009, only 700 films are projected to be completed.
  • The average budget for a Bollywood film is $2 million and only 14 films Bollywood films have ever made more than $20 million at the box office.

Best Quote

“Everybody is going to bleed a little bit. Anything with a big star associated with it will find a way but a lot of smaller films are going to have trouble.” – Siddharth Roy Kapur, CEO of UTV Motion Pictures (one of India’s biggest film production companies)

Actually, I’d Rather You Send Me A Facebook Gift Than A Real One…

Friday, June 12th, 2009

Ever sent or received a gift on Facebook–and enjoyed doing so? Experts say virtual goods and money are all the rage.

  • Virtual currencies and gifts are becoming more and more popular, especially in the gaming community.
  • Some experts say there may be a future where virtual currencies are traded in the same markets as real-world currencies. Right now, there’s even a black market for certain virtual currencies.
  • Joe Seller, a virtual world expert, believes the popularity of virtual goods stems from people wanting to take their online identities more seriously.

Facts & Figures

  • People transfer at least $1 billion into the virtual currencies each year, most of that going into online games.
  • WoW Gold, the World of Warcraft currency, is so popular that some low-wage workers in China play the game for a living and then sell their earnings to determined gamers in the West.

Best Quote

“They can’t eat the cake. It’s an image–the thing that it represents. You can send the feeling of that [cake] that you want to send.” – Santiago Martinez, virtual currency user

How can spending money save you money?

Wednesday, June 10th, 2009

No one likes having to pay bills, but some things that cost you money have a silver lining. When tax season rolls around, some of your expenses from the past year can actually help lower your taxes.

Everyone who makes money has to pay income taxes, which are generally higher the more money you make. But when the government figures out how much to charge you in income taxes, they use a measure called the adjusted gross income, which is an attempt to better represent the portion of the money you make that you actually get to use. For example, you may make $1,000 a month at your job, but that doesn’t mean you can actually put $1,000 in the bank at the end of every month: you’re spending at least some of that money on various things that the government views as tax deductible (or the amount you “adjust” your income by).

Tax deductible items are things like donations to certified charities, work expenses, and certain educational expenses. On the other hand, if you spend money on, say, an iPod or a pair of jeans, that’s money you could technically save, and you’re spending it for your own enjoyment, so it doesn’t lower your adjusted gross income. While tax deductible expenses usually don’t come from things you’d enjoy spending your money on, there is a consolation prize: those items you’re paying for now mean more money that’s yours to keep later on.

Demand is…

Wednesday, June 10th, 2009

Demand refers to how much of an item or service people are willing to buy for any given price. Basically, the demand for any particular thing is a measure of how much people want it.

Credit History is…

Tuesday, June 9th, 2009

Credit history (also known as a credit report) is a detailed record of someone’s previous borrowing and the repayment of that debt. It basically just shows how likely or able you are to pay back a new loan or credit card.

Overdraft is…

Tuesday, June 9th, 2009

Overdraft is the amount of money withdrawn from a bank account that is greater than the amount deposited. So if you deposit $4,500, but you withdraw $5,000, you have an overdraft of $500.

Inflation is…

Tuesday, June 9th, 2009

Inflation is a rise in general price levels that causes the value of your money to decrease.  In other words, if you can buy a bag of groceries for $25, inflation is when that same bag now costs $35.

Why do customer service calls connect you to India?

Friday, June 5th, 2009

Chances are if you’ve called a large company to ask them to help you with your phone, computer, or pretty much anything, you have talked to someone in India. Not just anyone, but a trained professional who can help you through your problem.

Companies from all over the world outsource their call centers to India and other countries because a strong portion of the educated class there speaks English and the workers do not require as much in wages as call center operators in America. The economic theory behind the difference in wages is called comparative advantage, which is when one provider can produce something more efficiently than another provider. In this example, Indian call centers have a comparative advantage because they can pay their workers less than American call centers can.

So what’s the easy answer? Companies contract with Indian call centers simply because it’s cheaper. And if they can lower their operational expenses without lowering their income, it adds up to more profit for company shareholders.

A Markdown (Price Markdown) is…

Friday, June 5th, 2009

A price markdown is the reduction, or lowering, of the original selling price of a product.  A price markdown is a lot like a retail sale – “50% off all Ferraris this month only!”