Archive forAugust, 2014

Bad Credit? No Problem. Here’s How to Get a Home Loan

Image Source: Images Money

Youve found the house. You have the savings for a down payment and the cash flow in your budget to afford the payments. Everything is great, except for one thing: Your credit score is bad. Is this a death knell for your home purchase?

Maybe. But then again, maybe not. Here are the best strategies and tactics you can follow to overcome that credit score and buy the house in spite of it.

What is a bad credit score?
Generally speaking, credit scores break down as follows:

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Ex Gov. McDonnell Takes Stand, Reveals Bleak Marriage

Facing corruption charges, former Virginia Gov. Bob McDonnell characterized his marriage in stunningly bleak terms, taking the witness stand for a second consecutive day to discuss a marriage that, as he describes it, was filled with yelling, unpleasantness, and distance.

McDonnell is on trial in Virginia over gifts his family received from Star Scientific CEO Jonnie Williams, who has testified that he believes he was granted access and a platform at the governors mansion to promote a nutritional supplement, in exchange for gifts that included a $20,000 shopping spree for Maureen McDonnell, the governors wife, and $15,000 for the wedding catering of the McDonnells daughter, Cailin. The total amount of lavish gifts, vacations, and cash loans is at least $165,000.

The Lavish Life and Broken Marriage That Put Bob McDonnell and His Wife In Court

The Must-See Photos from the Bob McDonnell Trial

WATCH: Former VA Gov. Bob McDonnell Indicted

A deterioriated marriage and evidence of emotional distance is a key to McDonnells defense, which has contended that Bob and Maureen McDonnell were too far separated by marital differences to have collaborated on a quid pro quo for Williams in exchange for his gifts.

Leaving the jury–and the public–with only one side of the story, Maureen McDonnell has not testified in her husbands trial and likely will not.

In his testimony, McDonnell spoke of a marriage that had been strained by years of his public-service career, underlined by fits of anger and yelling by his wife, whom advisers suggested should seek emotional help but who was unwilling to pursue that option. Things got so bad, McDonnell said, that he began working late purposefully to avoid his wife.

Its going to be very, very difficult, McDonnell said at the beginning of the days testimony, according to The Washington Post. Its going to be hard for me to talk about.

It was revealed that McDonnell wrote an emotional letter to his wife in September, 2011, which went unreturned, where he admitted that, I am lonely sometimes.

It read, in part:

I love you. Yesterday was one on (sic) the lowest points in my life. We have had a very hard year emotionally, despite a wonderful anniversary celebration. You are my soulmate. I love being married to you and having a family. We have shared much good life together (sic). I have made plenty of mistakes in my life which I wish I could fix. I am sorry for all the times I have not been there for you and have done things to hurt you. I know I am a sinner and keep trying to do better. But I am completely at a loss as to how to handle the fiery anger and hate from you that has become more and more frequent. You told me again yesterday that you would wreck my things and how bad I am. It hurt me to my core. I have asked and prayed to God so many times to take this anger away from you and heal whatever hurt is causing it…The letter has been entered into evidence but is not yet publicly available. The above text was reported by The Washington Post.

Asked by his attorney about the current state of his marriage, McDonnell reportedly said it was on hold. He does not believe his wife had a physical affair with Williams, McDonnell reportedly said, and he revealed he moved out of his familys home in suburban Richmond before the trial and is living with his parish priest in the St. Patricks Church rectory.

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Credit Cards May Overtake Cash for Small Purchases

While cash is still king for most of the small purchases we make, millennials in particular are increasing their use of credit cards when they spend less than $5.

About two in three credit card holders use cash for purchases of less than $5, but a clear generational divide in how Americans pay for small purchases means that might not be the case much longer, according to a new report out Wednesday from

Related: 5 Reasons to Pay Off Your Credit Card Debt Now

Almost 80 percent of people age 50 and older favor cash for small transactions, while only 52 percent of Americans between 18 and 49 do.

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Why Cash is Not a Strategy

In my financial advisor days, I had a client who was a
successful commercial airline pilot, and had every intention of
maintaining his comfortable lifestyle in retirement. When he and
his wife came to me to discuss their retirement plan, I
discovered that his company-sponsored 401(k) was made up entirely
of cash. He was unaware that he had not invested his
contributions and missed 22 years of compounding returns by
staying out of the market. While this example is quite extreme,
it begs the question – what is your relationship with cash?

The World has Changed

The return expectations we have for our investments arent
what they used to be. Continued market ups and downs have pushed
many of us out of the market and into cash. I have firsthand
knowledge, both personally and professionally, that sitting in
cash on the sidelines is one of the best ways for an investor to
go nowhere fast. We miss opportunities by staying out of the
market. If we take a closer look at our own behaviors,
understanding what drives us personally, or in some cases
uncovering the things that may derail us, and using this
knowledge to drive our goals, we may be able to ensure we are
doing everything we can to meet our goals.

Self-Awareness, Revisited

In the interest of full disclosure, I must admit my own
self-knowledge can be summed up by the adage, the cobblers
children have no shoes. Its true. My experience in financial
services does not equate to being fully aware of my own drawbacks
as an investor. In other words, Im not perfect. Im guilty of
hoarding cash. I know that this cash is not just earning
little to no return, it will lose spending power during times of
inflation. Yet, for one reason or another, Ive kept a hefty
portion of my portfolio in cash for more than two years now, true
to cobbler form. My colleagues have similar stories. Sue Thompson
reveals in
Hindsight to Insight story

that she and her husband spent so much time trying to decide what
to do with a bonus check that they missed a 20% market surge.

Out of Cash and into the Market

Sitting in cash is not a strategy. While keeping some cash in
your portfolio can be a good thing, its all too easy to make the
mistake of keeping too much cash for too long. Personal biases,
behaviors and fears can keep us from making logical decisions
about our investments, and each misstep can be costly. So whats
an investor to do? I encourage you to ask yourself, what is your
relationship with cash? How much are you holding, just waiting
for the right moment to invest? In the past 12 months, the
market has returned
more than 20%

, and I am personally experiencing an intense fear of missing out

) on any future gains; the fear may be just enough to push me
back into the market.

If youre looking to put your cash to work, you dont have to
spend hours developing a perfect strategy. Instead, I suggest two
potential paths:

  1. Find an investment that gives you exposure to multiple

    This delivers the diversification you wont find with

  2. Go broad based, using an index fund or low-cost

    This gives you full market exposure, another advantage over
    cash. ETFs can also have some tax advantages, which help you
    keep more of what you earn.

Test how well you know yourself as an investor: how much cash
are you currently holding? What are some of your reasons for
staying on the sidelines? Share your stories here.

Heather Pelant is Head of Personal Investing for BlackRock.
She is a regular contributor to

The Blog

and you can find more of her posts



Carefully consider the Funds investment objectives,
risk factors, and charges and expenses before investing. This
and other information can be found in the Funds prospectuses
or, if available, the summary prospectuses, which may be
obtained by visiting the iShares ETF and BlackRock Mutual Fund
prospectus pages. Read the prospectus carefully before

Investing involves risk, including possible loss of

Transactions in shares of ETFs will result in brokerage
commissions and will generate tax consequences. All regulated
investment companies are obliged to distribute portfolio gains to

This material represents an assessment of the market
environment at a specific time and is not intended to be a
forecast of future events or a guarantee of future results. The
strategies discussed are strictly for illustrative and
educational purposes and should not be construed as a
recommendation to purchase or sell, or an offer to sell or a
solicitation of an offer to buy any security. There is no
guarantee that any strategies discussed will be effective.

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Bahrain’s Gulf Finance House Gets $105m Facility From Kuwait Finance

Bahrains Gulf Finance House (GFH) said on Wednesday that it had signed to obtain a $105 million, five-year Islamic credit facility from Kuwait Finance House, which would help GFH redeem two syndicated debt facilities and allow the release of some major GFH assets.

GFH, which suffered heavily in the wake of the global financial crisis and required multiple debt restructurings, said Kuwait Finance House would have an option to convert its outstanding debt into GFH shares. It did not elaborate on the terms of any equity conversion.

The Bahraini firm noted that it had paid down some $30 million of current outstanding debt facilities to date in 2014, representing payment of more than 15 percent of its total liabilities.

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Bull market still alive? Here’s 3 indicators to watch

Editors Note:The following was written by Yahoo Finance Contributor Milanee Kapadia. You can follow her on Twitter @MilaneeKapadia

On Friday, the Samp;P 500 (^GSPC) finished at 1,988.40 after fluctuating near an all-time high. Investors were focused on tensions in Ukraine and were taking in comments on monetary policy by Federal Reserve Chair Janet Yellen.

The benchmark index is 10 points away from the 2,000 mark after a booking a nice week of gains. Three rounds of Fed stimulus and strong corporate earnings has helped the Samp;P almost triple since its low back in March 2009.

But how much further does this five-year old bull market have left? Nick Colas, chief market strategist at ConvergEx Group says he has a three-point checklist to gauge where the market is headed.

First off is the yield on the 10-year Treasury note (^TNX). Colas calls them the Teflon security of 2014 as theyve surprised to the downside. He was expecting rates to rise up to 3% as they did at the end of 2013, instead theyve stayed firmly planted around 2.5%. Colas says thats been good for valuations and for money flowing into the market but we need to see rates rise to validate the notion that we do have a recovery going on underway and inflation is going to pick up modestly.

Second is news flow. Colas is keeping an eye on the stream of earnings and economic announcements. The last quarter showed strong top line and bottom line growth and he wants to see a continuation of that trend in the back half. His target is 8-10% for earnings and 2-3% for GDP. This follows on the heels of second quarter GDP coming in at 4%.

Finally, Colas focuses on asset correlations, ie, how stocks move together during a financial period. The lower the correlation, the more money investors can put into the markets. During the depths of the financial crisis correlations were extremely high– around 95%. He says asset price correlations for sectors in the Samp;P should be 50. The good news is that were back down closer to 70% and even the pullback that we had recently only got us back to 75. So we still have some room for correlations to go down for asset owners to put money into US equities.

If investors can move beyond the Fed and interest rate fears, Colas predicts correlations should come down further.

More from Investing:

New cold war heating up over energy, not arms: Dicker

Yellen’s Fed legacy hinges on rate hike plan: Strategist

Stocks at new highs; will drop follow?

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What Most ATM Cash Planning Models Miss

ATM cash planning requires a delicate balance of having enough cash on hand to satisfy consumers but not so much that banks can’t put extra cash to work. Models can help, says TSYS Deputy Director General for Moscow Andrei Povarov in a recent interview with MPD CEO Karen Webster, but they often miss the one critical element that can make or break ATM and bank profitability. Povarov’s and TSYS’ experience in the cash-intensive Russian market reveal the importance of including economic indicators in ATM cash planning.

KW: Let’s start with the basics, before we drill into the unique aspects of the Russian market. What happens if cash planning in an ATM environment is handled poorly? 

AP: First of all, every organization that has ATM networks needs to have some strategy for cash planning and those who already have one need to optimize it. It may seem strange for those who don’t know this, but the whole point is if you have too little cash in the ATM, cardholders won’t be able withdraw, which will reflect poorly on banks. But if there is too much, banks are missing the opportunity to use it elsewhere. In countries like Russia, cash planning becomes more complicated.

KW: The Russian market, in particular, is very cash-intensive. Some have said that cash represents about 30 percent of the country’s GDP. Is this the only reason that it’s a good market for looking at cash planning?

AP: That’s correct. Another reason why cash planning is important is because Russia is a developing country, so there are always political and economic events that can impact currency exchange rates. Cash planning has become further complicated due to sudden changes in those things.

KW: The Russian consumer seems very savvy when it comes to currency in exchange rates, which makes sense in such a cash-intensive economy. But that seems like a strange concept to people outside of Russia. Has it always been that way, or is this a recent phenomenon?

AP: Yes, it’s been this way for many years. At different points in time, there are different views among consumers on how to use their different cards.  The problem is not new, but it is becoming more acute.

KW: Let’s talk about cash replenishment. ATMs are used to dispense cash in Russia, but aren’t they also used to receive cash for bill payments and settling e-commerce transactions? Does this make cash planning easier or more complicated?

AP: Definitely more complicated, because at some stages, depending on economic forces, people may be more or less willing to bring cash to ATMs, for example depending on interest rates. In some stages, people may more eagerly bring cash to ATMs. If an economic indicator has changed and the bank doesn’t notice, ATMs may suddenly be overloaded with cash and banks would be losing the opportunity to use it elsewhere.

KW: What are the tools that banks can use to help them make better decisions about cash planning? Are there models or data sources that they can use?

AP: There are several methods available for banks to use, some are simpler (but apparently less secure) than others. One shortcoming at the moment is that almost all methods overlook economic indicators – they are more adapted to a static environment where things are not changing so radically in the economy. In developing economies like Russia, this isn’t the case.

What financial institutions in developing markets need to take into account economic indicators and enhance their currently used methods of cash planning by using these indicators.

KW: TSYS is developing a white paper that offers more insight into some of the models and reasons that economic indicators are important. What are some of the key takeaways from the paper? 

AP: The report explains the importance of accurate ATM cash planning, and also explains the existing methods of doing this. It may be useful for those financial institutions that have yet to think about these methods. But the report goes far beyond this, introducing economic indicators that are often overlooked, and lists the risks that banks have with cash overload and its implications. It also shows which indicators can be most disruptive, and recommends considering these indicators when cash planning in efforts to significantly improve bank profitability.

Andrei Povarov
Deputy Director General, TSYS Moscow

To listen to the full podcast, click here.

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So if millennials aren’t using cash, who is?

When you buy your morning latte, do you pay cash or charge it? A recent survey by found that if you’re a millennial, the chances are about 50-50. Moreover, mobile payment options are tilting those odds in credit’s favor.

But while millennials appear to be turning away from cash, their elders still prefer it, says Matt Schulz, an analyst at

For those who are 65-and-older, for example, about 82 percent of them prefer cash, he says. 

The survey also found a country-city divide when it comes to cash. While 80 percent of people living in rural areas prefer paying with greenbacks, only around 60 percent of city dwellers do. 

The survey didnt drill into why, but University of Washington professor David Stearns says we can get a few clues by looking at the unbanked. 

So youve got to remember not everybody has a bank account, Stearns says. 

And those people have to use cash. Stearns says about 8 percent of households in the US fall into this category. He says cash also remains a part of our culture.

When you’re travelling and you want to tip the person who carries your bag, Stearns says. Or when the plate comes around in a Christian church; it’s important to be able to put something tangible in that plate.

Stearns said folks have been predicting the end of cash since the 1960s, but he doesnt see it happening anytime soon.

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The 18 Most Generous Philanthropists in Finance

America has been living through a Second Gilded Age, and some of todays biggest fortunes have emerged from finance, where hedge fund managers and private equity titans score paydays that boggle the mind.

Some of these guys (and yes, theyre pretty much all guys) arent just making tons of money; theyre also giving away vast sums. But whos giving away how much, and exactly how generous they are with their wealth, isnt always so easy to figure out.

Inside Philanthropy recently decided to dig into this subject, with editor Michael Gentilucci taking the lead. In making this list, we didnt want to focus strictly on who was giving the most money away, but rather who is giving away the most relative to their net worth.

To develop the list, Mike drew on IPs extensive coverage of giving by finance leaders through our Wall Street Wallets blog and related guide to top finance donors, as well as a wide range of our sources.

Before we begin our countdown of finance philanthropists to the most generous of them all, a few caveats are in order.

First, its hard to ever be sure how much money somebody has or how much they are giving away, and its particularly easy for anyone to keep their giving a secret by using donor-advised funds or simply making direct gifts that dont go through a foundation and arent subject to public reporting.

So while weve worked hard on our list of the most generous Wall Street philanthropists, its entirely possible that we missed some big givers or significantly underestimated the giving of some of those on the list.

Second, even if you know a persons net worth, and have a pretty comprehensive accounting of their charitable activities, calculating relative generosity is still complicated because great fortunes can sometimes fluctuate wildly. A billionaire may give away a big chunk of his or her fortune, only to see whats left grow by new leaps and bounds, making their earlier generosity seem less substantial. Or, they may give big, and then lose much of the rest, making their philanthropic contributions an even bigger sacrifice of personal wealth in retrospect.

You can read the full article at Inside Philanthropy. Below is an abbreviated version.

18. David Rubenstein

A self-described patriotic philanthropist, Rubenstein has been a major contributor to the National Archives, the Kennedy Center, the Lincoln Center, the National Zoo, the National Gallery of Art, the White House Historical Association, Mt. Vernon, and the Smithsonian, among others. More

17. Bill Ackman

Since creating the Pershing Square Foundation in 2006, Ackman has given away more than $235 million to a variety of causes — including global development, health, arts and culture, human rights, and Jewish organizations. More

16. Charles Munger

Warren Buffetts right hand man has made total lifetime contributions of well over $250 million and all indications are that he plans to keep giving big. More

15. Michael Bloomberg

Mike Bloomberg made his fortune in information and media, but we count him as a finance guy given his Wall Street roots and his companys core focus on financial data. Bloomberg gave away over $450 million last year and will likely give away even more this year. More

14. George Kaiser

The Bank of Oklahoma owner has donated easily a quarter billion dollars to education, mostly to colleges in Oklahoma. With a current net worth of $10 billion, look for even bigger philanthropy by Kaiser in coming years. More

13. John Arnold

Arnold, who is only 40, closed his hedge fund in 2012 so and his wife Laura could focus full time on philanthropy. The couple has already funneled major assets to their foundation, which ranks among the 60 largest foundations in the US More

12 11. Lowell Michael Milken

Ever since the insider trading scandal in the late 1980s that ultimately sent Michael to jail, the Milken brothers have had a lot of time to focus on philanthropy and their total lifetime giving is over $1 billion. More

10. David Rockefeller

At 99, Rockefeller has given over a billion dollars to charity, and with a $2.8 billion net worth, is set to give him more through bequests. More

9. Stanley Druckenmiller

The former Chairman and President of Duquesne Capital has a foundation that now holds approximately $820 million in assets, and has given away more than $40 million per year the last several years. More

8. Warren Buffett

The Oracle of Omaha has famously pledged to give away 99 percent of his fortune, which currently stands at approximately $65 billion, to charity. Hes already given billions to the Gates Foundation and the foundations run by his three kids. More

7. George Soros

Soros is a great example of a finance guy whos been making money faster than he can give it way. His umbrella organization, the Open Society Foundations, has given away $11 billion in the past 30 years, and last year alone gave out $873 million. But Soros is still worth $23 billion. More

6. Julian Robertson

Since starting the Robertson Foundation in 1996, the retired hedge fund manager has donated over $1 billion to charitable causes, and has been further ramping things up in recent years, including big money for education and the environment. More

5. Pete Peterson

Peterson scored a huge pay day in 2008 when he sold his shares in the private equity firm he co-founded, The Blackstone Group, for $1.85 billion. Hes since sunk part of that fortune into a foundation focused on fiscal issues. More

4. Sandy Weill

The American Express and Citigroup executive has given more than $900 million to charity over the course of his career, mostly to health and education-related causes. About half of that has gone to endow the Weill Cornell Medical College. More

3. Denny Sanford

Sanford has given away over much of his credit card fortune and says he plans to die broke rather than leave a legacy foundation. He gave away more than $130 million in 2013 alone. More

2. Herbert Sandler

When the former Golden West co-CEO sold his banking business, he and wife endowed a foundation that has now made grants in excess of $650 million, helping create several new organizations., including the Center for American Progress and ProPublica. More

1. David Gelbaum

This low profile hedge fund winner has given away much of his fortune, or over $1 billion. Most of the money has gone to protect the environment and help veterans. More


There are plenty more top finance leaders who could have made the list, but didnt because we couldnt obtain enough hard information about their giving, their net worth, or both. Others may have simply escaped our notice, which shouldnt be surprising given the number of finance types that have amassed large fortunes — particularly those who havent made the Forbes list, but still have enormous wealth. Compiling lists like this is more of an art than a science.

See the full article at Inside Philanthropy.

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Microsoft Loads Up Its Offshore Cash Stash

In an interesting counterpoint to the recent flurry of tax inversion deals, Microsoft is among many US companies with big cash hordes overseas. It’s pile is just bigger than most: almost $93 million, Business Insider reported. Were the money brought back to the United States, the software giant would owe nearly $30 billion in taxes on it.

Microsoft’s most recent annual report, filed with the US Securities and Exchange Commission on June 30, disclosed that its foreign subsidiaries had “permanently reinvested” $93 billion abroad. That was $17 billion more than a year earlier.

According to a May 2014 Citizens for Tax Justice report, Fortune 500 companies at that time had some $2 trillion in offshore accounts that allowed them to save $550 billion in taxes.

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