By Molly McClusky
For some, having a friend or family member who's willing to co-sign for a loan can mean the difference between continuing to rent or buying a home, or between postponing school or furthering their education. For others, a co-signer can provide the chance to begin reestablishing good credit after a serious financial setback.
"For the person getting a co-signer, it serves a great purpose. It allows them to use someone else's credit standing to mitigate the risk for the [lender, so] they can get the loan, a better interest rate, or better terms," says David Pommerehn, the assistant vice president and senior counsel at Consumer Bankers Association.
For those who co-sign for a loan, however, the risks are plentiful.
Because co-signers will be responsible for the entire amount of the loan if the borrower defaults, Greg McBride, a CFA and senior financial analyst at Bankrate.com, has this blunt advice for people considering acting as co-signer: "Don't co-sign for any loan that you're not prepared to take on the responsibility of paying."
But some things celebrities lend their name and image to are downright dangerous, particularly when they get in bed with the credit and debit card companies largely responsible for so much debt around the world.
More and more the public is able to apply for credit and debit cards with their favourite celebrities face on them, but the fees and interest charges are often so high that only the rich and famous who endorse these cards can afford them.
Ahead, we'll show you whose promoting what cards and pull back the curtain on what the card companies are charging you to have them.
By Morgan Housel
Mostly by accident, I have never owned a home, and consider it one of the best financial moves I've ever made.
Not because suffering through one of the worst real estate downturns in history would have slammed my finances, although that's likely true. But because in the last four years, my wife and I have lived in four different locations in three different states on each side of the country. Each move was driven by work and school opportunities that would have been out of reach had we been tied down to one home.
Our story is hardly unique. In one of the most telling studies looking at the benefits of home ownership, economists Andrew Oswald and David Blanchflower ask, "does high home-ownership impair the labor market?"
Their answer is "yes."
By Rich Smith
Vices. We've all got them, or at least been tempted by them from time to time.
Whether your poison is a pack of smokes, a six-pack of Bud, a cup of coffee, or an ice-cold Coca-Cola, succumbing to your vices -- or succumbing to the temptation to start one -- can cost you.
How much? That's the question that a new micro-site that recently popped up on the eBay (EBAY) Deals Blog proposes to answer.
Just because you've attained wealth doesn't mean you'll keep it. In 2011, the number of millionaire households in the U.S. dropped by nearly 2.5% (from 5,263,000 in 2010 to 5,134,000 in 2011), according to The Boston Consulting Group, a global management consulting firm.
Even the richest of the rich aren't immune from sudden -- and complete -- plunges in net worth. The big names we've rounded up here, from Elton John to Dorothy Hamill, all filed for bankruptcy at one point, falling into the same money-draining traps that can cost us all: poor budgeting, loose spending habits, failed business ventures, even extending too much financial support to friends and family. They've managed to rebuild their professional and financial lives.
April is Financial Literacy Month, and if there's one thing we know for sure, it's that educating Americans about how to manage their money can't start early enough. In a recent survey of international women's financial literacy commissioned by Visa, the U.S. ranked last among 27 countries when it came to the question: "To what extent would you say that teenagers and young adults in your country understand money management basics and are adequately prepared to manage their own money?" Only 17% of respondents expressed any confidence that young people starting out understand financial basics.
By Eamon Murphy
Carmen Reinhart and Kenneth Rogoff are at the top of the economics profession, with influence inside and outside the academy. Both have worked in senior positions at the International Monetary Fund; both have chairs at Harvard. Rogoff was a chess grandmaster in his mid-twenties, before giving up the royal game to focus on economics. "I'm not a great mathematician," he told the Financial Times, explaining the relation between his interests, "but game theory really clicked for me." This method of analysis offers insight into government behavior during a debt crisis, Rogoff suggested: "One of the reasons that Carmen Reinhart and I hit it off, is that we are both incredibly cynical about governments."
Now the most influential product of their collaboration – an argument widely considered to have helped lay the basis for the West's recent shift toward austerity economics – has been shown to rest in large part on a simple error, a spreadsheet coding mistake discovered by a 28 year-old graduate student at the University of Massachusetts Amherst named Thomas Herndon.
"I almost didn't believe my eyes when I saw the basic spreadsheet error," Herndon told Reuters. "I was like, am I just looking at this wrong? There has to be some other explanation." Herndon asked his girlfriend for confirmation that he wasn't missing something. He was right, she said.
By Michele Lerner
Climbing the ladder of success rung by rung can be a slow process. But once you get there, the opposite experience -- sliding down the chute of economic despair -- can happen all too quickly.
Those in the financial problem-solving business witness this riches-to-rags pattern every day. From their vantage point, it's easy to see how anyone -- no matter what their background or financial means -- can let bad money habits lead them into hard times.
"Even if you earn a law degree or have a high rank in the military, that doesn't mean you necessarily know how to handle money," says Albert Guadiano, counseling director for the Consumer Credit Counseling Service of Greater San Antonio.
Facing financial failure is tough for anyone -- perhaps even more so for successful people who want to keep up the facades of their former statuses. But eventually, they must take action to avoid total disaster -- and often that action is turning to a credit counseling organization.
We talked to credit counselors (one who is a former debt collector) across the country, and came back with five extreme cases of clients who went from riches to rags.
Just ask James and Deanna, this actor and actress couple received a rude awakening about the state of their finances when they were voluntarily ambushed by Vaz-Oxlade and her "tough love" approach to financial health on her new show of the same name (Premiering Friday April 19th at 9 p.m. EST/6 p.m. PST on Slice).
So, what exactly is a "Money Moron" and could you be one?
They're educated, they're motivated and.... they live in their parents' basements. This is the new reality for many new Canadian graduates who, in decades past, would likely be well on their way to homeownership, promotions and family life by now.
Studies have shown that today's generation of grads are facing steeper financial hurdles than those who precede them. Sky high tuition debt, a sluggish job market, and less purchasing power are some of the main factors behind this onslaught of delayed adulthood. In fact, taking inflation into account, today's new grads are actually making less than those in previous decades, despite a sharp increase in educated individuals.
According to Human Resources and Skills Development Canada, the percentage of men and women aged 25 to 29 living with their parents doubled between 1981 and 2011. There's also been an increase in so-called "boomerang kids, who return to the family home after having moved out. In fact, almost a quarter of adults living with their parents have boomeranged their way back there.
Why are so many grads getting the short end of the stick? Let's break down the financial factors.