Economies rely on a degree of overconfidence. There is a gap between present realities and future expectations without which there would be no enterprise, no investment, no credit, no commerce, and no currency.

However, at a certain point, the disconnection between reality and expectation becomes too great, and there is a need for a readjustment.

Recession is that readjustment.

There are two types of recession. Most recessions are “cyclical”. They come around regularly, as reactions to periods when growing confidence gets out of control. Confidence, like fear, breeds on itself - the fact that one is confident makes one more confident - until one becomes detached from all sense of proportion. Sooner or later, there must be a reality check.

Politicians may pretend they can break the “cycle of boom and bust”, but when they try, they postpone the inevitable and make things worse.

It is the same principle as paying for everything on credit. At the time, one feels prosperous. Yet the day will come when one has to repay the debts. The longer one postpones that day, the worse the debts will be and the harder they will be to repay.

A cyclical recession occurs when a whole economy effectively looks at its credit card statement and decides it needs to reduce its outstanding balances a bit.

The more serious class of recessions are “structural”. A structural recession is more than a crisis of confidence. It occurs when a deep, underlying problem in an economy can no longer be denied.
For example, for many years, British industry tolerated lax management and labour practices, in denial about the fact that the British Empire was gone, and its captive markets with it. Sooner or later, British business had to come to terms with the new reality. That realisation was the recession of the early 1980s.

Those who went through that recession remember it as a painful experience. Inefficient industries contracted or were wiped out altogether. Yet, without that wholesale demolition, the foundations could not have been laid for the viable modern economy that developed in Britain in the 1990s.

So both types of recession are sometimes inevitable, often necessary, and usually beneficial, at least in some respects.

That is, however, scant consolation to the individuals and businesses who may be suffering at the time. They do not want to hear that it might be for their own good, and that, just as the economy is overextended, so they, as individuals and as businesses, need to take in their own belts a little.
Recession may in fact be the wake-up call that forces them to take necessary measures that not only preserve them but may turn out to be the making of their fortunes.

Yet for some it comes too late, and no amount of overdue realism can save them from personal or corporate bankruptcy.

Business is Darwinian. Survival of the fittest is cruel, but ultimately it is the best way to allocate limited resources. If a business is terminally inefficient, or operating in a market of decreasing viability, it is better that the money of the investors, the labour of the employees, and the enterprise of the management be deployed elsewhere, where they can do more good.

The “redeployment” process can take years and some may be left behind by it, but, where it is unavoidable, it is best done quickly.

The problem with recession as an agent of that “redeployment” is that is it is a blunt instrument, destroying not only the terminally inefficient but also many businesses that might be viable under other circumstances.

Yet even that gives all who go under the consoling thought that they might be in the minority whose downfall was caused by recession rather than the majority whose weaknesses the recession only exposed.

Guy Kingston produces and presents the Mind Your Own Business podcast, offering free business advice to entrepreneurs and business owners. As well as audio podcasts there are more articles like this, compelling videos and a must-read blog. All at http://www.myobpod.com or you can network and join in discussions on the MYOB Facebook group.

Many homeowners on Long Island are pondering whether or not they should sell their homes now or “wait it out”. I want to discuss a few factors that may aid in this decision. These factors may also shed some light into why it’s so important to choose a competent real estate agent.

During the years between 1999 and 2004/2005, the real estate market, especially on Long Island, realized a tremendous upsurge in appreciative values, as the prices of homes could see as much as 30% appreciation in 12 months. In this article I want to feature the “real estate roller coaster”. This is a graphic that some pretty smart people put together in order to trace the trends of real estate for the past 110 years. You can view the coaster at google.com - http://video.google.com/videoplay?docid=-2757699799528285056.

Now you have to try and stay with me on this. Toward the end of the roller coaster, you’ll notice an incredible incline that never seems to end. It is the steepest incline and the longest of the entire roller coaster. Unfortunately, we’re at the end of the incline and now face the decline. The good news is we’re well on our way slowly down. The simple question to ask a homeowner who is considering selling right now is, “How far down do you want to go?”

However, that’s not what I want to focus on. I don’t want to focus on the downward forecast of the real estate market. Rather, I want to focus on that steep incline and compare it to the other inclines. Throughout recorded history, the real estate market has generally produced a steady 4% to 6% appreciation per annum. Now applying that standard to today’s market is what I want to point out.

Many homeowners are currently in a situation where they are hemming and hawing about whether or not to sell their home. They are also losing valuable time (and money) not putting their home on the market with a top team of agents. However, some are also in a position where they do not have to sell and they’re saying to themselves, “We’ll just wait it out.”

“Waiting it out” is a relative term that I want to build this entire article around. House prices have dropped on Long Island. So let’s just take one homeowner as an example. We’ll call him Joe. Joe owns a home in Smithtown and bought it for $245,000 in 2000. He put it on the market in January of this year for $689,000 (wow, that’s over 150% appreciation in less than 10 years). In 2005, had he chose to put it on the market then, he probably could have sold it for a reasonable price of $589,000 given the appreciation values (remember the roller coaster).

The only problem is, Joe didn’t put it on the market in 2005. He put it on the market in 2007 but assumed the same upward appreciation. Joe thought the roller coaster was still going up when in fact, just before fall of 2005, that roller coaster started to level off and by winter of 2006, began to dip down slightly. Since that time, Joe’s home, like many other Long Island homeowners, has lost “value” in his home. That “value” we call equity (the difference between what is owed on the property and the true market value).

So now assuming that by this time in 2007 (December), Joe has taken his lumps (and so has his realtor who overpriced his home in January) and he has realized that his home actually lost value since 2005, what do you think Joe is going to do? What do you think he should do?

Aside from hiring me to sell his home, we can’t answer this question. We need more details. Okay, Joe and his family want to move to North Carolina. In fact, they “have to” because they’ve already purchased a new construction home in Lake Norman (not physically in the lake, but the area - wink). Here’s where it’s very important we all pay attention.

It’s not the market that causes our troubles; It’s the circumstances we create in our own lives that create most of our troubles. Joe has created his own trouble, not the market. His previous agent didn’t help him by over pricing the home in January when he put it on the market for $689,000, but that’s life (lesson: choose your agent wisely). So Joe “needs” to sell.

For those of you homeowners who don’t “need” to sell, don’t. Unless of course you want to and in that case, call me (631)587-1700, ext. 51. Okay, so Joe has to sell. Here’s what he must consider. His home was worth $589,000 in 2005 (that’s what the buying public would have actually paid for his house - market value). All the houses are on the market right now in his area are “listed” for around $549,000. The homeowners who are actually “selling” their properties are accepting somewhere around $519,000 and less. These sold houses on the market for about 195 days (over 6 months) and all started around $569,000 asking price originally.

Pause. Okay, we went from $689,000 to $519,0000. Is this a loss of $170,000 in market value for Joe’s home? Of course not. And here’s the kicker. Joe’s home was never worth $689,000. It was worth, at it’s best day, $590,000 in 2005. After 2005, the 30% appreciation stopped. It vanished. And we were left with about a 10% loss in value from January 2006 to March 2007. And here’s where it gets really bad for Joe…poor Joe.

Since March of 2007, Joe has lost another 3% to 5% in “value”. So, his home was actually worth, at the height of the market, in his given area in Smithtown, $590,000. We’re going to assume a 14% reduction in value, again what the buying public will pay for homes in his area NOW. This leaves Joe at around $508,000. So Joe, in reality has lost $82,000 in value since 2005.

Let’s leave Joe alone for a moment (he needs a break). If you own a home right now and you’re reading this, take what you think your home was worth in 2005 and subtract 14%. Now for all homeowners who don’t “need” to sell their home and are planning on “waiting it out”, let’s look at that roller coaster again. You’ll see that the average incline is steady. Since we just saw the most significant incline in the history of real estate, do you think the roller coaster is going to go right back up?

The answer is no. It will eventually start to go back up and we’ll assume the normal ride on the roller coaster. So assuming 5% appreciation, it will take about 3 years to recoup the lost 14% market value of homes throughout Long Island. But wait. And here’s where it gets bad (sorry for the doom ‘n’ gloom)…the market is not leveling off just yet. Long Island homeowners are still losing market values in their homes because buyers are not buying. Not only are they not buying but many can’t buy due to the mortgage difficulties and overall lack of liquidity in the market place (banks just don’t have the money to lend at the same rate they did in 2005 due to investors pulling out large (gigantic) sums of money from the mortgage lending business).

So on top of what has already been lost, where do we go from here. Let’s go back to Joe. Right now he could put his home on the market for $520,000 and be $29,000 less than his competition (remember the “listed” homes in the area are on the market now for $549,000). Most realtors, including myself, might think that’s an acceptable asking price to start at with room to come down. In reality, Joe’s optimal price is exactly $508,000 and not a penny more. This price would grab market attention.

Homes are sitting on the market now (as of December, 2007) and have been sitting for quite some time. The average listing period for a home in Suffolk County is over 6 months. Does Joe want to sit on the market? No, he wants to sell and be out of his home in 3 months. This is where a good agent comes in and gives Joe nothing but the facts. Joe thought his home was worth $689,000 in January of 2007, only to find out in June of 2007, that his home wasn’t worth anywhere near that amount. And while he spent the last 6 months (July through December) trying to get 2005 prices (he had a $590,000 list price on some for sale by owner website), he has finally realized that he needs two things; A good price and a good agent to market his property.

So now for the people who are going to hold on until the market “picks back up”. Five years. That’s it. You’ll have to wait 5 years before you will be able to get a 2005 price for your home. Let me repeat that: 5 years to get 2005 prices. Why? Here’s my personal speculative view: Assuming 12 more months of current declining market conditions, most homeowners will realize another 5% to 8% loss of market values in their homes (a conservative outlook). Again, market value is what the buying public is willing to spend on something - anything, whether it’s a hamburger, a shirt, a purse or a house. Everything that’s for sale has a “market value” (and I’m not even talking about the factors of supply and demand in this article as it pertains to the real estate market conditions).

So now remember that 14%. Add…let’s say 6.5% (the blended rate of declining market value - I added 5 + 8 and divided by 2 = 6.5).

So 20.5% is the projected total loss of market values for homes on Long Island. Again this is just my personal speculative view. It could be much worse, or it could be much better. That’s why it’s called speculation. But I will prove my point right now.

Is it safe to say that a home, where ever it is located, that was selling for $480,000 in January of 2006, is now (December 2007) selling for around $420,000?

The answer is yes.

So, now minus 6.5% from $420,000. We’re at $390,000. That’s a loss of $90,000 or 19.5%. So I’m one percent off. My point is that this is the reality of home values on Long Island. So in December 2008, we can safely say that all homes throughout Long Island will be about 20% less in price.

Assuming a 5% appreciation beginning in winter of 2009, in winter of 2010, homes will be at a 15% loss in market value in comparison to 2005 home values. In winter of 2011, homes will be at a 10% loss in market value in comparison to 2005 home values. In winter 2012, homes will be at a 5% loss in market value in comparison to 2005 home values. And in 2013, homes will be at breakeven from where they were valued at in 2005.

This is of course, all speculative. But let’s look at some quotes and statistics that are going to back it up:

• “So far, prices have dropped only slightly. But it was enough to cause alarm around the world,” he said. “Prices are going to fall much lower yet.” Alan Greenspan
• “What we see in our residential brokerage business is a slowdown everyplace, most dramatically in the formerly hottest markets…We’ve had a real bubble to some degree. I would be surprised if there aren’t some significant downward adjustments, especially in the higher end of the housing market.” Warren Buffet
• 201 - The number of mortgage lenders that have closed since the mortgage crisis began. Foreclosure Trends: Nationally, the number of foreclosure filings has risen from 323,101 in the first quarter of 2006 to 345,554 in the fourth quarter of 2006, to a total of 437,498 filings reported in the first quarter of 2007.* - source: Yahoo! Real Estate
• Report by realtytrac, the leading online marketplace for foreclosure properties, shows a foreclosure rate of 1 foreclosure filing for every 134 U.S. households for the first half of 2007.
• Check this graph at http://www.erealtyonline.net/graphs/eastend_2q07.gif showing the average selling price of homes in eastern suffolk. The graph only covers up to the second quarter (up to June 07). Notice the downward trend for almost every town.

So where does all this leave you, the seller? This depends a great deal on your circumstances. In the world of business, financial transactions are engaged in for expected profits, based on market research and numbers. The residential real estate market is based on people making decisions for their families more so than the almighty dollar. So my suggestion to you is to contact me in order to discuss your options as they pertain to the real estate market. With this information you can decide what is best for your financial situation and more importantly, your family’s future. I can be reached at (631)587-1700, ext. 51.

If you take anything from this article, please note that the real estate market has trends. In order to “wait out the market”, you’re looking at a long-term waiting period of at least four years. Please understand this and if you have any questions at all, call me. And please remember that no matter what the circumstances may be, you always have options. Consult a good attorney if you are in financial trouble and please do not make decisions based largely on emotions. Remain calm, call professionals in, get second and third opinions and after getting as much information as possible, then and only then make the most rational decision you can based on information.

(c) copyright 2007 http://www.tommcgiveron.com

Written by Thomas McGiveron

Visit tommcgiveron.com

There are several sources available in the market and on the Internet that offer bad credit repair help. This help is available in various forms such as blogs, question answer sessions, guide on credit repair and tips. To get a professional bad credit repair help, you will have to pay some fee.

Self-help guide is also available in a downloadable version on the Internet. People can start with self-guide, which acquaints them with all the aspects of the bad credit, and the things needed to improve it to an acceptable level. Blogs are helpful too in terms of credit repair. Hence, you may even follow blogs regularly to stay updated regarding any possible help on credit repair.

Credit repair programs that claim instant credit repair are always a fraud. There are instant helps available on the Internet, but individuals need to remember that credit score cannot be improved in a single day.

Many financial experts say that, if people wish to improve their credit scores, they need to mention different types of checking accounts they have, to a reliable credit bureau for rectification purposes.

Credit Repair Sources:

There are also several free online guides for credit repair. People need to enroll to this guide by providing their e-mail addresses. The websites send the username and password so that individuals can access the online e-book to read and learn the helpful tips mentioned in these guides. Some provide the help guide such as offering newsletters in e-mails with each lesson every day.

Some non-profit organizations operate online to help people with credit repair. These organizations work on donations. They provide legitimate information about credit repair. Some of these credit-counseling bodies offer live-chat services to provide instant solutions to repair a bad credit.

They also have toll free numbers. You may contact on any of these numbers to ask any of your debt or credit related queries. The counselor then offers free debt and credit evaluation.

Frauds on Credit Repair Help:

Recently, there are reports of online frauds on credit repair. Many of these advertisements appear in local newspapers, TV, Internet or radio. Sometimes individuals even receive calls from telemarketers, who claim to offer help on credit repair.

People need to ignore all such exaggerated statements and claims made by these kinds of fraudulent companies. Only time, a conscious effort, and a personal debt plan can improve the credit report.

According to the Fair Credit Reporting Act, a person is entitled to get a free copy of the credit report, if he or she is denied, insurance, or employment. However, a person needs to apply for the free copy within 60 days, after the denial. In such case, a person can submit a dispute in writing to the credit-reporting agency for any mistakes. The dispute form is available free of cost.

Thus, if you want to repair your credit score, obtain reliable and legitimate information from any of these credit repair help sources such as credit repair guides or books.

Rebuild your credit with a secured credit card and find more of Tom’s work at FINDsecuredcards.com.

It is my contention that certain Massachusetts laws regulating foreclosure of homes do not meet the standard set by the due process clause of the 14th and 5th Amendment of the Untied States Constitution. More specifically, M.G.L. 244 § 2 is so narrowly tailored that a bank conducting a foreclosure by entry is not required to even provide actual or personal notice to the owners of the property. As a matter of fact, the law is written in such a way as to state all a foreclosing bank needs to do is draft a certificate and file it in the local registry of deeds. The bank never has to so much as send a letter or even place a phone call to the homeowner or any junior lien holders letting them know that the bank intends to foreclose on the home.

By this logic, a home owner or junior lien holder has no way to reasonably know of its right of redemption with out proper notice. The law would seem to create the duty for a junior lien holder to constantly monitor all of its debtors filings at each and every registry of deed where the creditor holds liens.  As such, to hold that no personal notice is required to be provided to a holder of a right of redemption is be not only prejudicial, but also unjust and unfair with in the meaning of the Due Process Clause of the United States Constitution.

It would appear that the Massachusetts foreclosure by entry law allows a senior lien holders to withhold notice in an attempt to limit a junior lien holders ability to effectuate its legal rights.

The forgoing article was written by Michael Goldstein for the Law Office of Goldstein and Clegg, a Massachusetts Bankruptcy law firm.

We’ve all been sold on the fact that a Roth IRA is better for us than a Traditional IRA. Since the creation of the Roth in 1998, financial professional after financial professional has touted the great Roth benefit of tax free withdrawals (including growth) at retirement. Every Advisor knows that growth over time will make up the lion’s share of any retirement plan. So, it makes sense that paying zero tax on withdrawals at retirement is better than paying income tax on withdrawals, right? Theoretically, that is true. Realistically…not so much!

Let’s compare. Let’s assume you have $200 per month to invest for retirement from age 35 to age 65. Growing at an average of 10% per year in a Roth IRA your account would be worth roughly $456,000. If you invest in a Traditional IRA, you also get a tax break on your contributions that you don’t receive in the Roth. So, $200 per month in a Roth is comparable to $256 per month in a Traditional IRA (assuming a 28% tax bracket). Investing $256 per month in a Traditional IRA gives you an account balance worth roughly $583,000 at age 65. But, since you got the tax break up front, you now have to pay income tax on that entire balance when you pull it out. So, paying 28% in taxes leaves you with an account balance of only $419,000. A Roth IRA is better, right? In this example, a Roth wins by $37,000!

It is for this reason that conventional thinking says saving in a Roth IRA is better. But, is it really better to give up the tax deduction up front for the tax break you WILL get in retirement?!

Let’s look past the end of our nose and examine this conventional thinking more closely. Is tax free growth at retirement worth giving up the tax advantage now? It is for Uncle Sam, but not for you! A Traditional IRA prevents the government from getting their share of your money NOW so they came up with a plan to change that. Your rich Uncle Sam wants his money today and he devised a plan to get it, and he even made it look like he is doing you a favor…The Roth IRA! Keep more of your money later if you give Uncle Sam his share now. That’s in his best interest, not yours!

Using our numbers from above, at age 65 you’d have a Roth IRA account balance of $456,000 with no tax due or a Traditional IRA account balance of $583,000 with income tax due. While on the surface, it appears that the Roth is better after factoring in taxes, this scenario requires a little more thought. When it comes to money, most people seem to have a mental block that only allows them to see to retirement age as the finish line. If this was the end, a Roth would win after factoring in taxes. But it’s not the end! Your money will keep working long after you retire. What are you going to do with your IRA IN retirement, not AT retirement?

Having worked with hundreds of financial situations, I can tell you from experience that IRA money is generally used last in retirement. This is usually a safety net that if not used, will then be passed on to heirs. If that is the case, then you will never receive the great benefit of tax free withdrawals from a Roth!
If you will spend down your IRA money in retirement, it is not in one big lump sum causing that big tax hit at age 65. You will most likely take a systematic withdrawal for the amount that you need to supplement your other retirement income each month.

For example, let’s assume you need $500 per month from your IRA to supplement your retirement income. To net $500 per month out of your Roth, you take $500 per month. Remember, there are no taxes on Roth withdrawals so what you pull out is what you net. However, to net $500 out of your Traditional IRA, you would need to pull $640 per month to allow for taxes if you are still in the 28% tax bracket.

Since your money continues to grow after you retire, your Roth balance of $456,000 at age 65 would grow to just over $1.82 million 15 years later…even after pulling out $500 per month to supplement your income the entire time! However, your Traditional IRA balance of $583,000 will grow to just over $2.33 million over that same time…even after pulling out $640 per month for income the entire time! The Traditional IRA is over half a million dollars better than the Roth!

Clearly, a Roth IRA only benefits your rich Uncle Sam over your lifetime! And, he scammed you into believing it was better for you! Nice guy!

As always you should consult a Financial Advisor before making any changes to your current financial situation.

For additional questions or to find out what to do if you have a Roth IRA, you can contact Christopher Ordway and San Tan Financial at 480-776-1699.