Insurance Advice and Assistance

Payday loan execrices and assessments

Again, you need to strike a balance between task and relationship development every step of the way. You don’t want to start taking each other for granted, especially after your first activity together. This can be hard for many in business—managers do not want to sit around and “waste their time” talking about relationships. But this is a critical investment—you may have thousands or even millions of dollars riding on the success of your partnership. So it’s absolutely essential to discuss the relationship issues with your partner.

In evaluating your initial activity, of course, you’ll also want to identify new information you didn’t have before. You’ll want to look at other opportunities and synergies your partnership suggests. You’ll also want to account for problems or breakdowns in the process. You’ll want to use this stage as a learning opportunity, not just a “pass/fail” appraisal. At the end of the meeting you might want to list what I call the “pluses and deltas.” The pluses are things that worked well in the meeting. The deltas are the items you’d like to have changed for the next meeting. If you or your partner are having trouble in any of the Six Partnering Attributes—Future Orientation, Comfort with Change, and the like—you’ll want to review Part Two and the attribute that’s causing you difficulty. There you’ll find skill-building exercises and assessments you can complete to help you increase your Partnering Intelligence in each attribute.

Establish task credit objectives

Just by working through the “preflight” checklist, you communicate to your partner that you have certain expectations.When you embark on a planned adventure, you’ve already influenced some of the dynamics of the trip. Spontaneity is replaced by planfulness, which opens the way for communication and sets expectations for both partners.

By establishing a trial project with both task and relationship objectives, you have specified the performance you expect from each other. Based on the criteria, rating system, or measurements you established in the first phase with the Agreement Between Partners Checklist, the results of the initial activity should be obvious. If you set a goal of opening ten stores in ninety days, for example, and you’re now looking back after ninety days, you can measure your progress quantitatively. If you set a short-term goal of developing a joint marketing strategy as measured by a written marketing plan you both embrace, you can measure your progress by that evidence. You’ll also want to talk about the Stages of Relationship Development.

Threat to home equity

The biggest threat to home equity is impulse buying and keeping up appearances in a consumer society. Have you taken out a second mortgage even though you consider home equity your retirement nest egg? Many people run up credit card debt and then refinance it at a lower rate with a second mortgage. At some point, though, the nest egg disappears. Impulse buying and keeping up appearances can turn savers into spendthrifts.

Still, there is some justification for using a home as a savings vehicle. We all need to have a residence. The purpose of saving is to create a sense of financial security in our lives. Renters are subject to rent increases and the whims of landlords. A long-term saver able to pay a mortgage and not take out second and third mortgages will not have rent increases. A longterm saver able to pay off the mortgage will dramatically increase the sense of financial security in his life. Investors and speculators will have little interest in this type of security.

Home ownership works best for long-term savers who are not interested in the value of their home, but the security of their lifestyle. They are able to ignore the ups and downs of home prices, interest rates, and the economy, and focus on paying down the mortgage one payment at a time.

Often, true savers double their mortgage payments to eliminate the mortgage at a faster, orderly pace, whereas investors would not dream of using their excess cash to increase a mortgage payment.

Comparative market analysis

“Comparative market analysis” means nothing more than doing  some comparison shopping before you buy any real estate. Just as  you would compare and shop prices before buying new furniture or  a car, so, too, you need to compare and shop prices for similarly situated  properties before making a purchase. The difference in this  instance is that you are comparing a building that is for sale with  ones that have already been sold.

What do you need to compare? The major considerations are:

Number of units
Square footage of the improvements (structure)
Square footage of the lot (the dirt)
Condition of the surrounding neighborhood
Age and condition of the building
Income-producing capability (current rents versus market rents)
Parking (garages, pads, carports, or none)
Amenities (view, fireplaces, multiple baths, pool, patios or decks, etc.)

The idea when conducting a comparative market analysis is to  locate a few properties in the same or similar neighborhood that  have recently been sold. As outlined previously, look for properties that have traits similar to the one you want to buy. In a perfect  world, the sales should be within the past six months—the more recent,  the better. Once you gather all the data, your job is to compare  and contrast it to determine a fair price for the building you’re considering.

More on compound interest

For every month that goes by, 1% of the balance (12% divided by 12 months) is going to get added to the balance. The following month, that 1% is calculated on the new balance. For example, after one month, the balance would grow to $1,010. That’s $1,000 times 1%.

After another month, with no payments, the balance would grow to $1,020.10. The balance grew not by $10 like the month before, but $10.10. The difference comes from the fact that interest was calculated on the new balance, not the original. It doesn’t take long before this interest-on-interest growth of the balance mushrooms beyond control.

It’s not hard to see that with higher-interest-rate loans, this can spiral out of control. This is especially true when you are making the minimum payments, getting late fees added to your payments, or even skipping payments altogether. To add insult to injury, many companies begin raising their already-high interest rates when you don’t keep your account in good standing.

To make matters worse, most interest is compounded daily, not monthly. This only speeds up the effects of compound interest, and leaves you making much slower progress than you need.

Compound Interest

Albert Einstein, perhaps the most brilliant mind of the twentieth century, had an opinion about compound interest. He’s quoted as saying, “Compound interest is the most powerful force in our universe!”

Now, I know our old friend Albert was being a little sarcastic, but he’s got a semivalid point. Compound interest is a force to be reckoned with. For those who are owed compound interest, it can make them wealthy. For those who owe it to someone else, it can be an anchor around your financial neck.

Guess who loves to charge compound interest? You got it … credit card companies, payday loan providers, and other types of questionable lenders. It’s part of the reason that paying off credit cards is a far greater struggle than paying off a car loan—even when they’re at the same interest rate.

The magic of compound interest is that you are charged interest on your interest until the loan is paid off. In other words, a little bit of interest is added to your debt every month, week, day, or even every second. Then, in turn, you are charged interest on that new slightly higher balance, during the next period.

Like a car that’s lost its brakes on a steep and winding road, it doesn’t take long to go over the edge! Let’s look at an example of a 12% credit card, with a $1,000 balance, that compounds its interest every month.

Venture Capital and Diversification

The behavior of venture capitalists (VCs) is interesting in regard to technology risk management and diversification, for many of the companies in which they invest are pure technology plays.

Not only do the VCs seek diversified portfolios overall, but also they strongly prefer a diverse R&D portfolio within a single company—a one-product company is often shunned. However, VCs still are constrained to building relatively inefficient portfolios because start-up capital is concentrated in relatively few fields, such as biotechnology and software, and the performance of stocks within these groups is highly correlated.

We discussed the role of venture capital in creating value from business plans in Chapter 6. However, we are now focusing on how VCs augment their returns because their high-risk portfolios are diversified. We noted that the hypothetical VC’s experience may indicate there is a one-in-ten chance of meeting or beating the plans of the founders, doing an initial public offering (IPO) and hitting a “home run.” There are three chances in ten of a total failure, three chances in ten of a partial failure where the company is acquired and salvaged by a competitor, and three chances in ten that the company survives but produces average business results—a “single.” The VC may create a portfolio of several dozen, or even several hundred, investments on this basis, depending on her financial resources.

Insurance and Macroeconomics Key Factors

Rent is regarded as a surplus amount paid to the landowner by the user after having deducted the unit costs of optimally employed factors of production involved in using land in its most profitable manner from the MRP generated.

The pattern of urban land use is determined by supply and demand. Classical urban location theory states that on the supply side landowners will seek to maximise land value by allocating land to its optimum use, subject to planning regulation. On the demand side demand for urban land is a demand for space and occupiers or tenants of land pay occupation costs or bid rents that reflect a location’s accessibility. This classical view of the relationship between land use and rent explains whether or not a site is brought into economic use, the intensity of that use and the rent that might be charged. The classical theories also posit that spatial variation in cost and revenue determines the optimum profit maximising location.

An extreme view of the heterogeneity of land is that the supply of each unique parcel of land is perfectly inelastic but of course there will be many plots of land that are substitutable to a greater or lesser extent. When considering urban land, sites in the centre are less substitutable than those on the outskirts simply because there are less of them. Consequently the supply of these sites is more inelastic than others. But these sites are the ones in greatest demand because they are the most accessible to raw materials (labour and capital) and the market (consumers); so their rents are higher and they tend to be intensively developed. This inelastic supply means that economic rent is high in the central area and may even represent 100% of the total rent owing to the inability of supply to increase.