Parchayi.com – Personal Finance Simplified

The stock market is showing no signs of falling. From the looks of it the recession, at least as far as stocks go seems to be over.  Take into account that the S&P 500 is still at late 90s levels, it has a long way to go before reaching it’s 2007 highs. However looking at the S&P 500 historical P/E ratios, it seems that every time the 20 P/E ratio is crossed, trouble starts. Mostly the trouble starts soon with the exception of the mid 90s to the tech bubble burst where the P/E grew leaps and bounds for several years.

The chart puts the current PE at 19.35 which is dangerously close to 20. Maybe next quarter results will see company earnings rise causing P/E to stay below 20 in spite of a rising market. But that remains to be seen. I’m cautiously optimistic. Many of my investments are back in the black and I’m adding to some investments slowly.

Also even though the recession may seem over in stocks, it doesn’t seem over in other aspects of people’s lives. Companies are still trying to cut benefits, skip raises and are still recruiting slowly as unemployment remains near all time highs.

The real estate market is still depressed. Home sales may be picking up but home prices are not. People are still stuck in underwater mortgages. Obama’s refinance plan did not work out as well as expected. Hopefully his healthcare plan will work out better?

Overall I’d say the recession is far from over and if you are saving money it might not be a bad time to start getting back into the stock market slowly.

In my last post I warned about how bad payday loans are and said you need to check out personal loans before you try payday loans. But I didn’t get into how to find them. It turns out that finding personal loans (online) is harder than I thought because most lender websites are overly informative but the most basic information is missing, which is the rates.

Recently I was contacted to review a personal loan company – Choice Personal Loans – one of the few where I could find some information about rates. However they only mention National averages of rates. Ideally it would be nice if you could put in your credit score and state and it would give you a real rate.

Often companies disguise some kind of credit consolidation as a personal loan as is done on http://www.directlendingsolutions.com/personalloans.htm and http://www.creditloan.com/personal-loans/.

All the above sites offer loads of advice on getting loans etc. but they key piece = the rate is missing until you fill out forms. I’m not sure what happens once you fill the information out but if you do have experience with online loan vendors comments are welcome.

Oh, and I can’t not ( ) mention prosper.com – which is like the ebay of personal loans.

Payday Loans were once reserved almost exclusively for small arguably shady outfits. Some of these often contact me to make (sometimes buy) guest posts on this blog about the payday loan industry. So far I have refused all of them and generally avoided the topic at all. But recently I read that the big banks are getting into the business.

So, what makes payday loans bad? For one they have ridiculous interest rates over 100%, sometimes even over 600%. Also the people who make use of payday loans are exactly those who can’t afford them. If you don’t have money, a 300% loan is not exactly your cup of tea.  Here are some sample (over 500% based on a rough calculation) rates. I picked rates from different states to show you that no matter where you are, a payday loan should always be your last resort.

Payday loans are so bad that 12 states have laws against them. Big banks getting into the business means that even people in those states will have access to payday loans. For example Wells Fargo disguises it’s payday loan as “Direct Deposti Advance” and has an APR of 120%. Better than the small lenders but still disturbing. Wells Fargo has been at this practice for many years and even stirred a controversy over ten years ago with this product. US Bank started offering payday loans in 2006. Fifth Third Bank recently started their own program too.

I’m not entirely sure why big banks need to scam their customers this way. The people who are eligible for the loans with the big banks already are direct depositing their paychecks, have jobs and they must have some better options?If you are someone who does use payday loans, you might want to check out personal loan options first.

Finally Parchayi.com is entering the modern age. With this new theme, I’m hoping things are easier to read, even though they are not as colorful Also now that this theme supports tags (yes the previous one didn’t!!), I’ll be using Tags a lot more often.