Kivisild.net

World crisis
Even the World has problems

The economic world is very unstable now. Biggest problems are coming from USA. Yesterday biggest USA bank Lehman Brothers was declared bankrupt. AIG - biggest USA insurance company is near collapse. And I need not to mention, how many world companies depend on those organizations. And at the moment the market continues to fall…

Everything started with mortgage lending in USA. People had no money to pay for their real estate. Banks started to sell property, but nobody was able to buy. Here started the vicious circle. People can not pay, banks have no money, because nobody pays back loans and real estate is standing without owners. So the real estate value started to fall. People are not able to pay back loans. In the beginning billions of dollars were write off (around 400$ billion). But unfortunately, this was not enough. World was reacting on that situation, investors were selling the shares, bank loan percents started to grow. Now USA has a lot of economical problems, other bankrupt will be declared. This will continue until the real estate market will stop to fall. Government and banks are trying to stop the crisis, by investing more money, but it is already to late. And USA can not stop the problem for themselves, because of the depts.

Now let us look for the Europe and Russia. Europe can only react on world news and activities, because the biggest players are still USA, Russia, Asia. Europe can not do anything by itself, almost.

Russia. Few days also having big problems, and mainly, emotional. Russian share market was already forced to be closed two times, and the new opening time is not defined yet. Fall main reasons are: withdrawal of investments because of the war with Georgia, world crisis, oil price lowering, emotions. War in Georgia- this was a mark for investors that Russia is politically unstable, what is important point for investment(war influence is the worst one). World crisis- Russian funds, banks are connected with world banks also. Oil price- Russia last years economical grow was succeeded with high oil price, because it is exporting it. Emotions- mainly, there are not so much reasons why Russia market should fall. Major part of stock prices are undervalued, what can be proven by biggest banks target prices for shares . Of course, the world crisis is playing the biggest role.

World crisis has good name- it proves that World will suffer.

Sms- credit trouble in Estonia
This is a bad idea- pay one dept with another, bigger one…
Sms- credit is a fast money loan service, via the popular sms service in cell phones. The plan is simple. At first you register at the service webpage. After the registration you can send sms to your sms- loan service company, and few moments later you have the money on your bank account.

This is very fast way to get money. No paper job, no bank loans, etc. Sms, click- and here is the money. Now here is the main problem. The faster the money you get, the bigger problems you have. The bank loan percent is around 15% (simple money loan, no real estate), but the sms- service has 200% -300%! Imagine. It is very easy to get 50 000.- dept, when receiving a loan for 5 000.-

Unfortunately, many people do not care so much about their month budget, waiting for the next salary already in the middle of a month. Somehow the financial life should be helped, so the sms- credits are taken, what makes the situation worse. People start to paying for they flat loan by taking sms- credit, just not to loose the flat. But everything is understandable.

Survey what one of the sms- credit provider has taken had interesting results. Around one third of people, taking sms- credits own higher education. This means the problem is in financial education. Not everything is so bad, of course. The biggest part of ’sms- loaners’ are paying back loans, but why to take it at all?

Even the government started to pay attention to this problem. If in the beginning the loan interest rate was around 1000% and was only ‘one sms away’ ( you did not have to register, just sent account number, the sum, and here you go), now there is registration, and loan interest has fallen.

Never try to pay one dept with another one, never! Find another job, spend less, but never take a loan if you are not sure you can pay it back. Think about the future, and always look around the corner. The money does not just appear and disappear. When somebody is loosing money, the other one receives it.

Desire to keep your expenses low, very often will not make you ‘own’ more money.

One of the biggest delusion when reorganizing financial life is thinking about ’spending less money’. Of course, all unnecessary purchasing should be canceled, but not important ones. Spending money on necessary, or what will definitely pay for itself is ‘life important’. For example you wanted to save some money- you did not go to service when strange noise started to come under the hood of your car. Few weeks or even days later it can become so awful, that the whole engine should be repaired and that will be expensive.

Here are 5 advices to keep your money up and running:

1. Do not buy anything on sales.
   Cheap stuff rarely offers good quality. On the sales often you do not think about so simple things, like ‘do I really need that stuff?’. If you have really found something you think is very needed, do not buy it, until you have checked all other possibilities (perhaps the same price but higher quality?). Buy only when there is really no other possibility.
2. Do not buy cheap things.
   ‘Cheap’ does not mean ‘good’. To receive in full, think not about the price, but about the value. Cheap car will be more expensive in running or service. This type of car has lover value than more expensive car, which running costs are lower. This type of ‘used to’ can be used anywhere, what means - you are buying things that are a little bit expensive, but will fully pay for itself.
3. Do not loose your time.
   Sitting at home in front of the TV. Of course, it is much ‘cheaper’ to sit at home than going out, for example, to pub. Instead of being home and complaining that you can not afford yourself some entertainment, you could attend professional developing courses. So you could find better job or improve personal financial skills. The next year you wont complain anymore.
4. Do not spend to much time on analyzing the stock.
   In the beginning, it would be better to put your capital into fund. You would not worry so much about the money, and it will be growing (should be at least). With this you have the ‘money - making - more - money’ stuff and do not need to spend time on analyzes (you should be working that time). In time, when you are more financially independent and with a little more resources on bank account- go on, enter the big world of investment!
5. Do not trust all investments to experts.
   ‘Never have all the eggs in one basket’- this is the best description. You have your own head on the shoulders, and it should be thinking. You should use experts skills and knowledge, but the last decision is your one. The job salary can not be the main motivation in job seeking. The biggest mistake to choose a job what pays good, but you do not like it (I think even hate sometimes). In long- term investment you should be doing the thing you like. Even if it is not paying back at first, it will definitely later do. Man gives much more of himself for what he likes to do. Psychology.