According to a recent report on the legendary investor, Warren Buffet, it’s time to purchase stock in American companies. The method behind what might seem like a bout of madness for the aging investor is that when the total market value of US stocks drops to a level between 70%-80% of American Gross National Product, it’s time to buy. 

Buffet’s fantastic success as an investor is based, in part, on his practice of seeking out undervalued companies to invest in. He soon moved from turning over a profit through stocks in a company to purchasing undervalued companies and bringing the most-successful ones together into the Berkshire-Hathaway brand. But purchasing a struggling company is well out of the average investor’s financial reach. The only remaining option is to purchase a portion of that company as stock. 

It could well be said that nearly every company in the US that has the resources to continue operations is currently undervalued. With the total value of the stock market reaching the 76% mark at best, perhaps Buffet is right and its time to pull some money from under that mattress and invest it. 

Perhaps it comes down to a matter of faith. Once you decide whether or not you believe the economy will recover, the question of investing gains simplicity. If you cannot afford to lose a dime, then just like always, you should keep your money in a safe place and not worry about the stock market. However, if you have some cash on hand and want to research the possibility of creating genuine long-term wealth, it’s a great time to check out the stock market.  photo credit: ArtemFinland

photo credit: Here in Van Nuys

A recent study based on unpublished Internal Revenue Service (IRS) statists shows that the rich ($200,000+ annual income) cheat more on their taxes than any other income group. How do they do it? Simple: they understate their adjusted gross incomes by an average 21 percent, 13 percent more than those with incomes between $50,000 and $100,000 annually.

The study, which has not yet been officially endorsed by the IRS, was written by Joel Slemrod, an economy professor at the University of Michigan, and Andrew Johns, an IRS economist. The study reviewed 45,000 individual 2001 tax returns, and was the first such IRS study since 1988.

The study also found that the rich cheat more because a higher percentage of their income comes from sources easier to hide. Among these, self-employment, rental income, S corporations and capital gains. In fact, the IRS estimated that individuals underreported incomes by a whopping 43 percent in 2001, which adds up to a significant loss in federal tax income.

Of course, this doesn’t mean that the rich get away with cheating. The IRS has collected billions in back taxes over the years, and the biggest offenders are often slapped with extra fines and even jail time. If you ask me, that’s a hefty risk to run.

Unlike many countries, America’s higher education system almost requires students to go into debt… deep debt. And today, more than any time in the past, students are feeling the burden of huge student loans - fewer jobs and lower pay are tough to handle when student loan payments don’t get any smaller. In fact, recent studies show that two to four percent of student loan owners have left the country, and many see that as the only option to escape their debts.

Students are often first time borrowers, and may not know what they’re getting into. It’s easy to miscalculate or simply wishfully think it into a smaller number, but when graduation day is over, huge monthly payments may be staring you in the face. Right now, there is about $60 billion in defaulted student loan debt, and searching for debtors abroad is an expensive process that cuts into loan company’s profits.

If you or someone you know is having trouble paying off a student loan, there are several steps to take. Filing for economic hardship deferment or forbearance can either defer or eliminate your monthly payments. Under other circumstances, you may be able to talk with your company, and extend your loan term; though you’ll pay more in the long run, you’ll at least be able to meet your monthly minimums.

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The U.S. housing crisis has caused much hardship and now, experts say that it has begun to affect many American’s retirement possibility and prosperity. Indeed, in addition to losing their homes and businesses, many citizens have also seen a marked decrease in their 401(k), IRAs, and other investments.

Stocks and investments fluctuate constantly; in the 90s, tech stocks were hot, in this decade, real estate was the favorite choice. Many of those investors who chose real estate have now found that, though they may still own their home and live a relatively comfortable life, their portfolio has likely lost value. In fact, CNN Money goes so far as to say that “big bets on the investment du jour are more often a recipe for downsizing your wealth than growing it.”

Indeed, no matter how much you invest, you should always keep some money in hard-cash saving. Your home, though it used to be a sure thing, can no longer be considered an unbeatable investment: A home’s value, especially in today’s market, can show bloated values one day and a shocking loss almost the next.

As we move into a new age of investment, be wise and diversify. Don’t be afraid to invest in the market or to purchase your own home, but remember that cold, hard cash invested in interest accounts will never lose value, except against inflation.

photo credit: Paul Worthington

August is just around the corner, and that means back-to-school shopping. While this may be a fun activity for kids, getting them excited for the coming school year, parents feel the economic pressure mounting. In a sluggish economy, retailers know that they need a hook to ensnare customers, so there are plenty of back-to-school bargains to be had.

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If you’re one of the 4 million Social Security or Supplemental Security Income recipients in the United States without a bank account, you have a new option in place for receiving your monthly payments. Instead of receiving a monthly check, the government is now prepared to disburse Social Security payments on prepaid debit cards. (more…)

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With food, gas, and other prices on the rise, families across the country, and the world, have taken creative steps to lighten their financial load. It can be a challenge, at times, to reduce the budget while keeping the fun factor high, but many families have made the switch, and their experiences can help us all to be a bit more frugal. (more…)

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American families have discovered an almost iron-clad method for debt control and financial well-being: cutting up their credit cards.

Begin by closing all of your credit card accounts. If there are one of two that give you great discounts, keep them, but make a promise to yourself that you will always pay the bill of in full. Then, draw up a budget, and take into account paying off debts, saving for future events, and treating yourself to the occasional vacation or expensive treat. Pay for everything in cash - either with money itself, checks, or your debit card. (more…)

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Though you may be feeling unsure about your ability to contribute to your retirement fund or cushion your savings account, CNNMoney has tips to help you keep your nest egg on track: (more…)

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The Internet has long been a haven of availability, variety, and tax-free shopping. When purchasing any big-ticket item, many residents across the country choose to shop online because, even after shipping, tax-free items are far less expensive than their local counterparts. However, states are slowly cracking down on tax-free Internet buys. (more…)