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Your Money eZine www.yourmoneyezine.com
Your Money eZine www.yourmoneyezine.com
Much has been said about the International Monetary Fund (IMF) in recent months and one could bet the family farm that much more will be said in the foreseeable future.
There are two schools of thought that have emerged out of Jamaica’s decision to return to a borrowing relationship with the multilateral:
I. There is no alternativeII. The agreement will bring nothing but tough times for the country.
Your Money spoke to Danny Roberts recently about his thoughts on the new IMF and his unique perspec-tive on the public sector.
Roberts, who is the Vice President of the Jamaica
Confederation of Trade Unions, a part time lecturer in International Relations at the University of the West Indies and a labour consultant, spoke firstly of his ap-prehension of the Stand-By Agreement that will be signed by Jamaica. A Standby Agreement is an IMF lending facility that allows a member country to be fi-nanced up to a specific amount. Installments are usu-
ally played quarterly upon fulfillment of stipulations laid forth by the IMF.
Roberts mentioned agreements that had been reached between nine countries and the IMF last year.
“In all of these countries, whether the objectives are to rebuild international reserves, or to prioritize spend-ing on reconstruction, or to sustain fiscal liquidity, or to prevent capital flight, or restructure banks, the fiscal policy prescriptions are invariably the same,” said Roberts. “That is a r e d u c t i o n of the fiscal deficit ei-ther through freezing or cutting pub-lic sector wages and pensions, or the removal of subsidies and other benefits.”
The men-tion of public sector treatment is one of grave concern for the IMF wary. Roberts indicated that steps were being taken to prepare the members of his union for the times ahead by discussing the implications with the members and also to promote a neo-Keynesian approach to eco-nomic development by promoting certain macroeco-nomic policies within members and social partners.
The inevitability of the return to the IMF seems to have sunk in for most people, but it begins to dawn on any-one with a little foresight that the real issue should be long term facilities to ensure that this is the final trip down this unlit road.
“This is the real issue”, explained Roberts. “Jamaica has to reconstruct a macroeconomic framework that promotes greater production and productivity, one that improves our human capital and enhances de-cent work and social protection through dialogue, consultation, greater efficiency and a sense of eq-uity.”B
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Danny Roberts weighs in on the IMF and its implications for JA
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Your Money eZine www.yourmoneyezine.com
If Equifax sounds like a fax machine add-on, Experian brings to mind an obscure comic book villain and TransUnion couldn’t be anything other than a train company then you probably need a little crash course.
“A crash course on what?” you may ask, and the answer would be “The idea of credit reference of course”.
Well, the first item on the agenda would be to inform you that the names above are the names of the three Credit Bureaus that operate within the United States
providing a service to banks and other financial enti-ties.
The service that these companies provide has led to the development of a new culture in the US where individuals think twice before closing an account or defaulting on a loan because of how it will affect their credit rating. The credit bureau or credit refer-ence agency is a “for profit” company that collects consumer credit information from various sources in
order to determine an individual’s credit worthiness. An individual’s financial track record becomes a tool in assessing whether an individual qualifies for a loan and under what conditions.
In Jamaica and other countries around the world, loan qualification hinges on the possession of viable col-lateral such as land, building and vehicles. As such, I n t e r e s t rates are for the most part fixed whether one is a diligent debtor or a person who skirts the is-sue whenev-er they can. In a system of credit ref-erence, one’s past financial fidelity becomes his col-lateral.
The idea of being held responsible for past financial conduct is not a new one. Cooperative credit bureaus were known in history from as far back as the mid 19th century but the industry took off after the First World War. They were used to service merchants who prior to that only had their personal knowledge of a buyer as their sole reference. With the new mobiliza-tion of the US population after the war, more mobile and widespread reference agencies developed to fa-cilitate the wider dispersion of trade. Simply moving one town over to avoid a credit crunch soon became a lot harder.
Later on this year, Premier Credit, a company owned by Jamaican expatriate Lennox McLeod, will begin operations as it seeks to become Jamaica’s first credit reference agency. With the crash course out of the way, Your Money will further examine the Jamaican situation with regards to the establishment of a credit agency.
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The emergence of a Credit Bureau in Jamaica
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Your Money eZine www.yourmoneyezine.com
“I think all greatness starts with one saying yes to an opportunity.”- Mike Litman
Two important attributes of successful entrepreneurs are an ability to envision opportunities for profit, and a willingness to grasp them as they pass by. It has been said that “If you really want to increase your results you’ve got to start saying yes to more oppor-tunities.”
If you’re a budding entrepreneur, how can you pre-pare yourself for business opportunities, and be ready for take advantage of them at a moment’s notice?
BELIEvE In IT UnTIL YoU sEE ITThe first step is to train yourself to recognize prospec-tive ways to earn money. Some people don’t even realise that the sound they are hearing is opportunity knocking at the door. This is due to their ignorance of changing trends or new ideas. In our fast-paced
world where technological advancements quickly make things obsolete, you must keep abreast of what’s in vogue or you’ll be left behind.
Then there are those people that may peek through the door when they hear
the rapping sound, but then slam it shut in opportunity’s face. Their re-fusal to jump on board may stem from a fear of the unknown or an inability to see the big picture. You have to become a visionary,
believing that the desired outcome is possible before it actually hap-pens.
AcT on IT UnTIL YoU AchIEvE ITEven if you understand that earning opportunities are available and be-lieve that they are likely to work, you still have to do what it takes to make the most of your options. Profitable
en- trepreneurs are always prepared t o be pioneers and do the hard work
required to bring new opportuni-ties into fruition.
The good news is that to ben-efit from the breaks that the
world may offer, you don’t have to be extraordinarily talented or wealthy. In his classic, Think and Grow Rich, Napoleon Hill says that to be successful you need “no great amount of intelligence, no particular amount of education, and but a little time or effort.” He outlines four things you must possess in order to be successful:
1. A definite purpose backed by burning desire for its fulfill-ment
2. A definite plan, expressed in contin-uous action
3. A mind closed tightly against all discouraging influ-ences including neg-ative suggestions of relatives, friends and acquaintances
4. A friendly alliance with one or more per-sons who encourage one to follow through with both plan and purpose
Put simply, to move opportunity from your doorstep into your house you have to be clear and passionate about what you want to achieve, make a plan how to get it, persist despite all the setbacks that will discour-age you, and create a network of people that can help to you get what you want.
Listen up! The sound of success might just be tapping at your door. Will you heed it or ignore it?
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Knocks!by: Cherryl Hanson Simpson
( (Cherryl is a financial consultant and coach, and founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallysmartonline.com. Email Cherryl at advice@finan-ciallysmartonline. com. Please add this address to your email address book in order to ensure you receive a response.
Your Money eZine www.yourmoneyezine.com
Question: I already own my own home, but I want to purchase another property since it’s a buyer’s market right now. I need some advice about the right way to buy real estate for investment pur-poses.
Answer: Like any other investment, you should buy real estate with the intention for it to in-crease in value in the future when it can be sold at a higher price, and/or to provide an income stream. Here are some tips to help you invest wisely in real estate:
1. Think about your investment objectives. Are you trying to make a short-term gain, or are you plan-ning to invest for the long-term? Do you need a constant income stream or are you more concerned about the growth in the value of the property?
2. Select a strategy that suits your goals. If you have a long term plan, you could buy land or invest in an area that is expected to improve in the future. For quick profit, you could renovate a fixer-upper for resale. If you need income, you could look for properties with high rental demand.
3. Know the transaction charges. Along with the 10-15% deposit, you will need funds to pay for vari-ous closing costs. Email [email protected] for a calculator that can help you to keep track of the various charges.
4. Consider the recurrent expenses. Ensure that you can afford costs such as mortgage payments, peril and home insurance premiums, strata fees, property tax, repair costs, and maintenance and se-curity fees.
5. Decide on your sources of financing. If you’re borrowing money, you should calculate if the inter-est costs are justified by the rental income and/or increase in property value. If you pool money with others to purchase, think about the legal consider-ations of joint ownership.
6. Consider the effects of another mortgage. The payment will be a new monthly expense on your budget, and it could affect your ability to attain loans for other purposes. If the rental income will pay the mortgage, make an alternate plan if the ten-
ant doesn’t pay.
7. Don’t deplete all your savings. Real estate trans-actions can take several months to complete in Ja-maica, so it might not be easy to get back your cash in the event of an emergency.
8. Find expert advisors. Get help from profession-als to find the right location for your investment, and to determine if the property will require costly repairs that are not immediately obvious.
9. Hire a knowledgeable lawyer. Proper legal advice will ensure that the sale agreement protects your time and money, and can also help you to draft an appropriate rental agreement.
10. Commit your time and effort. If you want to be a successful real estate investor, develop your skills in negotiating, basic accounting and property maintenance; and continually keep abreast of in-dustry developments.
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10 Smart Steps to: Invest in Real Estate
Provided by: Financially S.M.A.R.T. Services
Financially S.M.A.R.T. Services is Ja-maica’s number one source for prac-tical, down-to-earth and independent answers for all questions relating to personal finance. Get more money smart advice at www.financiallysmar-tonline.com. Email [email protected] with comments or questions.
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Your Money eZine www.yourmoneyezine.com
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eZines Limited
Managing DirectorTyrone Wilson
Your Money ReportersAndre’ Burnett
Ryan BlakeKenartur Mitchell Jr.Latoya Hutchinson
columnistCherryl Hanson Simpsom
Financially S.M.A.R.T Services
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