In the Headlines

Home prices in metro Atlanta have decreased during the past couple of years but the decrease is not nearly as severe as in some other parts of the country. Atlanta prices have never fluctuated wildly and consequently are not likely to do so in the future.
 
Assume a property is selling for $220,000 today. If you purchase it today with a 30-year, fixed rate 80/20 mortgage, your down payment is $44,000 and your monthly payments on the $176,000 mortgage are $1009.15 at the current (approximate) interest rate of 5.5%.  For the sake of illustration, let’s assume a worst case scenario:  Assume that same house depreciates 10% in value over the next year. That means it would sell for $198,000 ($220,000 minus $22,000).
 
While no one knows for sure what is going to happen to mortgage rates in the future, the general consensus is they will increase. Again for the sake of illustration, let’s assume they will increase from the current 5.5% to 6.5% one year from now. If you still want to buy that house with a 30-year, fixed rate 80/20 mortgage, your down payment would be $39,600, your loan amount would be $158,400 and your monthly payment with a 6.5% mortgage rate would be $1010.82…almost exactly the same as your monthly payment for that house today. (Of course, your required down payment will be $4400 less, but your monthly payment will be essentially the same – and the annual tax savings you will get during the year will offset most of that amount.)
 
Nobody can guarantee anything about future home prices or mortgages rates. However, most professionals in the business today would agree that the chances of mortgage rates going up at least a point in the next twelve months are greater than the chances home prices in Atlanta declining by as much as 10%. That means buying a home today – instead of waiting for prices to start going up – is the smarter option.
 
Three final reasons:  FHA loans may be available up with as little as 3.5% down. If you are a first-time homeowner (have not owned a home in the last three years) you are entitled to a federal tax credit up to $8,000 if you purchase and close by December 1, 2009.  There may also be additional tax credits if you buy a qualifying bank-owned home. I can provide additional details of these programs if you like.
 
Please let me know if you know of anyone in Atlanta who may be waiting for a better time to buy. The time is now.  
 
Burt Cloud
Associate Broker
Coldwell Banker Residential Brokerage
404-626-3114

This is a new program scheduled to roll out around July 24 designed to make leasing or purchasing a new car more affordable for those with an older model car.

Here are the requirements:

·         Your vehicle must be less than 25 years old on the trade-in date and have a dealer trade in value of less than $4,500.  

·         Only purchase or lease of new vehicles qualify

·         Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)

·         Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in

·         You don’t need a voucher, dealers will apply a credit at purchase

·         Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first.

·         The program requires the scrapping of your eligible trade-in vehicle, and that the dealer disclose to you an estimate of the scrap value of your trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate.

·         You may trade in a domestic or foreign vehicle.

If you qualify to participate in the cars program, you need to go to a participating dealer where the following will be verified:

·         The trade-in car is in drivable condition

·         You are the registered owner, and have been for at least the last year (you will need proof of registration which the DMV can provide)

·         The car has been continuously insured for the last year (you will need proof your car has been insured)

·         The car is titled in your name and has been for the last year (you can not have a loan on the vehicle)

·         You have not previously participated in the CARS program

You get $3,500 if you qualify for the above stipulations and $4,500 if you qualify for the above stipulations AND your new car gets 10 MPG better mileage than your clunker.

Frequently Asked Questions

 To see if your car qualifies check the NADA website.

Source: www.cars.gov

In the hard economic time that American’s are facing today the game of haggling may be back. You can negotiate prices on a anything from bus charters to a new car and a washing machine to tomatoes at a fruit stand.

Consumer Reports gives some great tips to haggling:

Be patient and be nice
Demanding a discount rarely works. Savvy negotiators know that a smile is more difficult to resist than tough talk.

Time your haggling                                                                                                                                                                                              Late in the month, when salespeople are trying to meet their quotas, can be a good time to bargain for big-ticket items. Evening or early morning hours are usually less busy, so clerks will have time to talk.

Know before you go
Research prices and store policies. Bring Web printouts, flyers, and newspaper ads with you. Mention if a local competitor is selling the item for less. The store might be willing to match your best quote. If you can’t get a price discount, ask for free shipping, delivery, or installation.

Learn to read the ticket
Price or inventory tags often contain date stamps that tell you how long an item has been in the store, though you might need to ask a salesperson to help you locate and decipher the code. Retailers are often more willing to cut the price on merchandise that has been on the sales floor a longer time.

Avoid an audience
Haggle out of earshot of other customers. Sales clerks don’t want everyone else in the store asking for a deal, too. Keep in mind that at chain stores, salespeople often don’t have the power to offer discounts. Try a manager or supervisor instead.

Inquire about sales
Salespeople often know when an item will be going on sale. Ask if they will hold something for you until then—or let you have it now at the lower price.

Find fixable flaws
Look for minor imperfections you can live with or easily repair. You might get a discount.

Offer to pay cash
Merchants don’t like to pay transaction fees to a credit-card company. Such fees are about 2 percent for large retailers and as much as 8 percent for small ones.

Be prepared to walk
The most persuasive weapon you have in your haggling arsenal is your ability to walk away and spend your money someplace else.

These days you can purchase a gift card at almost any establishment and Americans have caught onto the idea. Each year Americans spend about $65 billion to purchase gift cards, and perhaps even more shocking is $6.8 billion in gift cards go unused yearly!
 
Many retailers simply count unused gift cards as income after the expiration date or after a certain amount of time of inactivity. This is particularly attractive since no merchandise is lost and no service is performed- it is free money. According to a WSJ article, many States who are in budget deficit are now trying to pass legislation to consider unused gift cards abandoned property. This would allow States to confiscate the funds and use them to balance their budget.
 
Make sure to keep track and use your gift cards because you still lose out no matter if the governemnt or retail store takes your money.
 
Source: http://online.wsj.com/article/SB124605742408663533.html

If you are considering purchasing a new car soon low prices may not be the only thing to influence your decision. Passenger vehicle purchase made after February 16, 2009 and before January 1, 2010 are most likely able to deduct the state and local sales and excise tax paid on the purchase.
 
The deduction will be available on the 2009 tax return, filed in 2010. This credit is available to any filer and not just someone who participates in itemized deductions. However, at the modified adjusted gross income level of $125,000 for individuals and $250,000 for joint filers the credit begins to phase out.
 
Source: IRS Press Release

As available credit is shrinking due to tighter lending standards and an increase in credit requests from those looking for jobs, legislation has been passed to aide consumers. With the new credit card law going to effect in February 2010 consumers can expect transparent disclosures, the banning of some fees such as retroactive interest charges, and an added section on their statement detailing how long it will take to pay off their current balance if only the minimum amount is paid. Additionally, credit card companies will have to apply payments larger than the minimum to the balance with the highest interest rate and operate on a standardized payment schedule.

What the New Credit Card Law Means For You

Getting Smart About Annuities
by Anne Tergesen and Leslie Scism

Jeff Immelt, chief executive officer of General Electric Co., spoke at the annual Business for Social Responsibility conference last November. The association comprises about 250 companies that are looking for more sustainable ways to do business. Immelt was quoted as saying, “we are in an emotional, social and economic reset.”

The term “reset” resonated with me as it applies to our community and the world at large. Rather than a reset, we really have come full circle. Hitting the reset button is like starting over, but haven’t we learned from our experiences in the recent past? Shouldn’t we take what we have learned and apply a modern approach to tried and true methods of the past? The mere existence of a conference geared toward social responsibility is evidence that our global community can apply what has been learned and move forward in a positive direction.

An everyday example of this movement clearly is demonstrated at the grocery store. Despite the added expense and the challenges of arguably one of the toughest economic climates, consumers still are buying organic products. On a local level, the demand for organic products is so prevalent that Athens Locally Grown emerged and answered the call.

Athens Locally Grown is a group of nearly a hundred small farms and gardeners located in and around Athens. Each grower farms his or her land using strict standards to ensure that everything produced is chemical-free. While not a true cooperative, Athens Locally Grown uses cooperative efforts to achieve steady and dependable means of supplying the highest quality produce and other products. Athens Locally Grown works to find new and innovative methods to preserve greenspace, protect our natural resources, support our local economy, provide meaningful work and return to a more self-sufficient community life.

Being socially responsible, though slightly more expensive on the front end, is an investment that pays strong dividends over the long term. As we come full circle, we will purchase goods and services with a modern approach. If we apply the wisdom of experience to protect our Earth, we ultimately will protect our health and our wealth as a nation and as individuals.

• Laurel S. Alberty, CFP, is president of Alberty Financial Planning Services Inc. in Watkinsville.

Originally published in the Athens Banner-Herald on Sunday, April 19, 2009

Wikipedia gives the following definition of a Credit Default Swap:
A credit default swap (CDS) is a credit derivative contract between two counterparties. The buyer makes periodic payments to the seller, and in return receives a payoff if an underlying financial instrument defaults
AIG sold a TON of Credit Default Swaps without posting any collateral. In other words, they agreed to make the buyer of the credit default swap whole if the underlying credit instrument (usually some form of bond) fails, but AIG did not have any assets- pledged or otherwise- to back up their side of the contract. Whoops.
It all makes sense to me now. Click on the PDF AIG Counterparties , go to the 3rd page, and you’ll see who had the other side of the contracts (and had the most to lose) if AIG went south. One of the things I find interesting is that 14 of the top 20 counterparties were foreign banks.