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Mixed Signals Speak to State of Economy: January 2012

February 2nd, 2012 · Economy

New reports reveal some mixed results that speak to the state of the economy. On the one hand, manufacturing and construction show signs of improvement; on the other hand, sales and layoffs don’t look good. Translation: There is clearly hope that the economy is improving, but evidence speaks to the contrary.

Let’s start with manufacturing. In January, it grew at its fastest pace in over six months. This is mostly fueled by consumers’ evident interest in buying more cars and trucks, and the business industry’s evident interest in buying more machinery and equipment. Then there’s construction. In December, spending on construction increased in the residential, non-residential and government sectors.

However, any gains in manufacturing and construction are tempered by the sobering results reported for January sales and planned layoffs.

While about half of retailers reporting numbers for January logged increases in sales results, the other half fell short of expectations. Though holiday hangover is always a factor, this year has proven especially sluggish. The deep discounts that normally draw consumers in at the beginning of the year failed to produce little more than lackluster results. Then there’s planned layoffs, which rose in January, not surprisingly in the retail and financial sectors.

All of this seems to point to a disconnect between wishful thinking and reality.

Consumers are clearly skeptical about the economy, cautiously spending their money in the New Year. Planned layoffs, not to mention unemployment that continues to hover over 8 percent, doesn’t do much to boost consumer confidence in the other direction. And all the good intentions of hopeful builders and manufacturers cannot change the fact that U.S. consumers not only lack the means to spend more, but also the inclination.

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Obama Proposes Mandatory Refinancing for Underwater Home Loans

February 1st, 2012 · Mortgages

With so many homeowners continuing to struggle in this lackluster economy, President Obama is proposing a new plan to bolster the financial situations of as many as 3.5 million of them. Those who are underwater in their loans have the most to gain (i.e., those who owe more than their homes are worth).

Obama’s new home refinancing plan would be an extension of the Home Affordable Refnancing Program. When implemented, it was expected that this program would benefit 4 to 5 million homeowners. However, only 1 million homeowners have taken advantage of this refinancing option. Of course, it doesn’t help matters that this program does not currently cover homeowners who are underwater in their homes – a shortcoming the expanded program would address.

Outlined in this new program is a requirement that home loans must be refinanced if the homeowners owe more than 140 percent of the value of their home.

The cost of this program is estimated to be $5 to $10 billion. However, it is not the federal government that would be responsible for this cost (i.e., you and me). That responsibility would shift to big banks that would be charged a fee to cover the cost of refinancing. However, the loans would be backed by the Federal Housing Administration.

If approved, this new home refinancing program stands to save the average homeowner $3,000, not to mention the priceless savings of worry and stress over the possibility of losing their homes to foreclosure.

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Book 6 Weeks In Advance, and Other Cheap Flight Tips

January 30th, 2012 · Budgeting

Once again, someone has taken a stab at unrooting one of the most elusive of universal truths – when is the best time to buy an airline ticket? Even I gave it a shot a couple of years ago. Now comes news of yet another set of data claiming to hold the magic formula for booking a flight that doesn’t break your budget.

According to a study conducted by the Airlines Reporting Corp., you have the best chance of getting the best deal on an airline ticket if you buy it 6 weeks in advance. This is based on data collected from millions of airfare transactions over 4 years time. In all, the average savings for purchasing tickets 6 weeks prior to your departure date is 6 percent.

This same study also shows the worst times to buy airline tickets. No big surprise there. Try to avoid buying your ticket a week or less before you leave. And, by all means, avoid at all cost buying your ticket the same day of departure, as you can expect the price to go up as much as 40 percent over the regular airfare cost.

Beyond the 6-week magic number, I defer to my own Top 5 Ways to Book Cheap Flights, summarized in brief below:

  • Purchase tickets on Tuesdays; fly on Wednesdays. After announcing new ticket sales Monday night, airlines are competing with each other Tuesday morning (i.e., giving you the best deals). As for Wednesdays, it’s the least-traveled day (i.e., the cheapest).
  • Use fare comparison websites like Kayak, Orbitz, Expedia and Priceline. Kayak is my personal fave.
  • Be flexible with your flight dates and times. Sometimes the difference of just a couple of days, or even a couple of hours, can mean a big price jump.
  • Be flexible about destinations. Take advantage of killer deals when you focus on the getaway as opposed to the destination.
  • Do not hesitate. After doing your homework comparison shopping, you’ll know a good deal when you see it. Book it! Waiting a few days, or even a few hours, could mean missing out.

What’s your best tip for booking cheap flights?

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