Business advice

Pay more attention to the banking industry
April 30, 2008, 1:11 am
Filed under: Uncategorized | Tags: , ,

Unless you have been living under a rock or on another planet, you know that banks have trouble. Mortgage lending has landed many in hot water.

Most commercial banks offer mortgages. Thankfully, they usually don’t keep them in their portfolio for long. Citigroup, however, parent of Citi bank, is so troubled; it isn’t yet known whether or not the group may be split up. I have a feeling there are banks who have been holding their troubles closer to their chest. We haven’t heard the end of this mess yet.

Most folks probably don’t realize that until the 80s, banks weren’t in the mortgage business. That was the business of the savings and loans. In fact, savings and loans were organized to offer mortgages and to encourage consumers to have savings accounts. It wasn’t until the mid 80s, they were allowed to offer checking accounts.

In the 80s, mutual funds became the investment of the day. Even the little guy got into the action. The incentive for the shift from savings and loans to mutual funds was the soaring interest rates. At its highest, prime rate was at 22 per cent. This meant that the S&Ls couldn’t offer an interest that had a chance at keeping their depositors. Mutual funds offered much better rates and S&L customers ran in hoards. This was probably the pivotal reason the banking industry changed forever. There was a massive deregulation bill that passed in the early 80s. S&L’s got to offer checking accounts and banks got to offer mortgages. They also got to offer checking accounts which paid interest rates. But it turned out to be a little too late and a dollar short. The S&L CEOs looked for easy answers to their financial dilemmas and ended up in big trouble because of scandals and financial fall out. The industry dissolved before our eyes.

You have all heard the quote that, “..if one doesn’t pay attention to history, it will repeat itself.”

Banks begin making loans to people who couldn’t really afford the loan to begin with. It all boiled down to an introductory brand of advertising. (Prices increase after the introductory offer expires.) Cell phone companies and satellite television offer similar deals. This type of deal making worked with consumer goods and someone got the crazy idea to use the same tactics for mortgages. We see what happened. Everybody has to take some blame. Consumers were getting what they couldn’t get before and the deal makers were making out like bandits.

The point is that we need to pay attention to our banking institutions. We are at the point in our country’s history that we can no longer take their business practices for granted. This is even more important if you happen to have over $100 k on deposit. Hopefully, you are aware the maximum you could recover in a bank’s meltdown is that amount.

Do you do business with a bank that has been named as a participant in this mortgage mess? Who holds your mortgage? Are they on the list of institutions whose future is uncertain? You need to know.

Banks are no longer simply a safe place for your money. Financial institutions make deals with our money in hopes of earning profits and keeping their shareholders happy. During economic trying times, they tend to make foolish decisions.

Keep an eye on the financial institutions you do business with. Watch the news for more upsets and realize that the health of the banking industry is directly tied to what’s happens to the economy.

Taking the banking world for granted is what got us into this mess to begin with.

For more examples of my work:

Laura Bell



We better learn to live with less
April 20, 2008, 7:50 pm
Filed under: Business Advice | Tags: , , ,

The fact that we are living in hard times has been the discussion on a mystery writers’ list I belong to. Writing, publishing and how to publish is their usual conversation. Hard times’ issues have crept into people’s lives so much that they are chatting about it everywhere.

We are all aware of the hard times. The question is what are we going to do about it. I have written about investment and mortgage decisions. We need to get down to consumer issues.

Americans are spoiled, wasting money every week when they don’t have to. Oprah did a show recently, challenging two families to change their wasteful habits. They threw food out instead of eating leftovers. They left soda liters in the frig opened and after three days dumped it. If snacks were still opened a week later before the food shopping day, they were trashed. Apparently, they never heard of plastic containers.

Both of the families were only allowed one hour a day of tv and computers only for homework. The thermostat had to stay at 70 degrees. Both families struggled to keep the rules.

I recently ran into a woman at the bus trip on my way to the 99 cents store. While we were waiting, she commented that she could live out of the 99 cents store. She did admit to buying some commodities elsewhere. I got to wondering could I? I would have to give up fresh meat that I like along with some prepackaged salads. Hmm, things could be worse. We are used to the best and to hell with the cost.

She pointed that she didn’t shop at the more expensive grocery stores unless it was their sales days. You don’t have to wait on the newspaper or sales papers, all major grocery stores show you what they have to offer online.

We all complain about gas prices. Do any families take a look at how they could actually decrease their driving weekly? Buses can be taken to do errands. Carpooling can work for grocery shopping with a couple of Moms. I did it. A friend recently decided to park his car and opt for a bus pass to work. It helped, of course, that he moved down the street from a bus that would take him pretty close. His compact car was costing him $48 a week. Most, I realize, pay more. However, do we have to? Most neighborhoods have corner convenience stores within walking distances. Every time you are out of something, it doesn’t mandate getting in the car.

Los Angeles County has maintained a countywide carpooling database for over a decade. Call and you can find someone to hook up with for your daily trip. Have your company dedicate a weekly carpooling day. Look towards ways to have more employees telecommute. Try to find new hires who either take the bus or carpool. Offer to pay for employees’ bus passes.

We, as a nation, can stop buying into the urge to upgrade. No one needs the latest version of software, tvs, ipods and the ‘latest’ fashions. Stop keeping up with the Jones should be on the presidential candidates’ campaign agendas.

It’s better to learn to live with less before the loss of a job or the collapse of the economy mandates it. We don’t know what’s coming around the corner. There will be predictions for quite awhile. We can, however, do what we can as individuals and spread the word.

Recycle, cut down on driving, shop only when there are sales and talk about your drive towards a more efficient life to anyone willing to listen.

For more examples of my work:

Laura Bell


Business Law basics
April 15, 2008, 1:37 am
Filed under: Uncategorized

Promises and commitments are made every day over the Net. It is very common for those involved in alleged deals not to have a clue about contract essentials. Many feel that small business owners have no recourse if they don’t want to pay. A friend, a graphics designer, had a contract broken once with a man who felt he didn’t have to pay. Her retort, “I’ll see you in court.” And, she did.

Just in the past month, I had two different vendors breach a contract. One, I am letting go for the time being. The other has been informed that I expect payment on the rest of the contract. Whether or not, I have to take it further is yet to be seen.

A friend who consults, on asking for a contract recently was told, “…could you provide me with one?.” The women giving her the work didn’t even have a template to offer. We are working in a world of constant legal slip-ups. Small business vendors who do this without thinking twice are just hoping that the person slighted wouldn’t go to small – claims court. It is a whole lot of trouble to collect a relatively small mount of money. The Better Business Bureau is an alternative route to voice one’s complaint.

Our educational system is lacking in their failure to teach the basics of business law to students before they enter the real world. It is one of those situations where people don’t know and don’t know what they don’t know.

Knowing the elements of a valid contract will give you an edge. Besides the five basic elements of a valid contract, you also need to consider a cancellation clause. Something I am embarrassed to admit just cost me some money in a contract dispute. Give both parties a bowing-out clause so neither feels as if they have the right to say ‘stop’ at any arbitrary time without consequences.

There is also the issue of written versus oral. There are different state laws. Minimally contracts must be in writing for anything dealing with real estate or an agreement that can’t be finished in a year.

Moving on, the five elements necessary for a contract are very simple. The first element is a meeting of the minds. Of course, there is no way to absolute ensure that two parties are thinking exactly the same when they enter into a contract. However, there better be enough evidence, if taken to court, to convince a judge there was. It means, you both have to be on the same page. Then comes the offer. You offer to sell your services or buy some one’s goods. If it came down it, the offer and acceptance are supposed to be delivered and received in the same way. But no one is splitting those types of hairs these days. Someone accepts your offer and then? There has to be consideration. That means money for most of us. There can be, however, a valid contract where barter is the compensation.

Parties involved have to be adults or it isn’t a valid contract. Age differs by state. The contract can’t be for something illegal. Sounds, like common sense, but there isn’t much of that around these days.

Through email, keep copies of all documents exchanged. It would also be a good idea to print and fax copies to the other party if the option is available

There are numerous links to be found for templates.(Go to Don’t be too timid to demand a contract for a business deal, over the Net especially.

Anybody frightened about the idea of putting a contract together needs further education before starting their own business.

For more examples of my work:

Laura Bell


It’s not the economy stupid
April 4, 2008, 1:05 am
Filed under: Business Advice | Tags: , , ,

…it’s each and every one of us

We hear that all the changes and problems are to be blamed on this universal omnipresent entity better known as the economy.

Individuals and small business owners live in denial, telling themselves none that effects them. Nothing could be farther from the truth.

We, each and every individual in this country, compose what it is known as the aggregate market (the whole) in America. Every thing we do or don’t do eventually has effect on what is going on in the ‘economy.’ We are the economy. We buy, sell, market, produce, hire, fire employees, invest and plan for the future. These are all the components of the private side of the economy. There, of course, is the government that puts its messy fingers in the pie from time to time. These actions are called fiscal and monetary policy. Fiscal policy is controlled by elected officials and monetary policy by the Federal Reserve.

Neither make decisions to get the economy to expand or contract on a whim. Their choices are made to try and keep the economy on track The government can increase budgets for aerospace and the military knowing that it will mean more hiring and expansion for the future if they see a slow down in potential jobs. This is called fiscal policy. (According a citation I read, it is an effort by the government to stimulate the economy by spending money.) When they spend more money, they create a situation where more people go to work so the projects they launched have manpower. This started in FDR’s time when he wanted the roads cleaned up and damns built and a way to give those out of work a job. Projects were built and more people came home at night with a paycheck.

All of the above along with the Fed’s actions, monetary policy, are the government’s ways of trying to keep the economy on track. What’s happening now is both governmental arms reaching out to intervene in the mortgage mess, a fluke. This only happens occasionally during times of pending crisis.

Now, let’s get back to the individuals that make up this aggregate market. In the late 70s and early 80s the credit card companies pushed customers to expand credit lines and sent out pre-approved cards by the bushel. The idea behind the push was that inflation rates were eating up the power of the dollars in your pocket. So, the theory went by putting off purchases, you are only going to end up paying more. So, buy today or you will live to regret it. To make it even more enticing, in those days, credit card interest was an income tax deduction.

America has never been able to pull themselves off credit card binging. When they couldn’t get rid of that debt, they turned to home equity loans for help, which just happened to pop up on the scene at the same time. What it did was put homes in jeopardy in the long run to deal with the short term purchasing. It wasn’t a good idea then and it is even worse now.

Early in the millennium came the push to put a different market niche of folks into homes. Encouraging home buying is a good thing on the surface; but not if, as a family you can’t afford to stay in the home. Also, all sense of down payments and a correctly proportioned income to mortgage payment went out the window. The folks pushing the contracts were making big bucks and didn’t want to stop. Well, the economy is now saying stop.

The result is people are claiming the turmoil is fueled by the government and the media. No, it is fueled by individuals that make up the economy/aggregate market. Take responsibility for your financial decisions. Change anything that isn’t good planning. Teach anyone who is willing to listen. Look out for money making opportunities during this time. Bargains are always going to pop up when demand threatens to decrease. Change your economic life one step at a time and open up your life to better times down the road.

For more examples of my work:

Laura Bell