SavvySugar

Can You Cash in on Facebook's $5 Billion IPO?

Emily Co — Sat, 04 Feb 2012 00:15:10 PST

Everyone's buzzing about the Facebook IPO, and after hearing about how many billionaires and millionaires the IPO will create, you might think that it's your chance to make money off this cash cow. But first, you need to educate yourself.

What's the deal about IPOs?

Facebook used to be a private company, which means its shares were not sold to the public. Once a firm goes public, it's on the stock market and it sells a part of itself to outside investors who can afford it. The term for going public is also known as an IPO or initial public offering.

Why would a company go public?

A company that sells shares to outside investors can stand to raise a lot of money. Current estimates of the Facebook IPO are at $5 billion. Companies can do a lot with the capital raised - they can use it to pay down long-term obligations, fund new opportunities, and even acquire competitors. Further, initial private investors who wish to exit can now sell their shares to public investors.

Read to find out about buying Facebook shares.

How Long Should Unemployment Benefits Last?

Emily Co — Wed, 18 Jan 2012 11:54:31 PST

Everyone has a strong opinion on unemployment benefits because while it's helpful for those down on their luck, there are instances where the system is abused. Extending unemployment benefits is actually quite a hefty cost for the government - extending unemployment benefits in the last four years cost us $185 billion, says CNN Money. Then again, some experts argue that the money the unemployed receive goes back into the economy because it's spent on food, money, and other expenses. So, what do you think - how long should unemployment benefits last?

How the American Airlines Bankruptcy Will Affect You

Emily Co — Tue, 29 Nov 2011 11:56:27 PST

There's always a feeling of confusion when a major retailer goes bust, but what we really want to know is what it means for us and how we'll be affected. American Airlines announced it was filing for bankruptcy this morning, which leaves loyal customers wondering what's going to happen to their miles and if it's going to be harder to book a flight with them. Here's a quick roundup of burning questions you might have:

Will American Airlines go out of business and stop flying?

When a company files for Chapter 11 bankruptcy, it doesn't mean it's going to close shop and disappear. It just means the airline gets time off from creditors to do some financial reorganization. Chapter 7 bankruptcy, on the other hand, would mean that business would close. American Airlines has not filed for that, and there seems to be no plans to do so. Airlines such as Delta, Continental, and United have all filed for bankruptcy and are now stronger for it after taking the time needed during the bankruptcy period to put their books in order.

Can I still use my miles?

Yes, the airline says that the frequent flier program will not be affected, and you'll be able to redeem and use your miles. In the past, airlines that have gone bust, such as Pan Am and Eastern, transferred miles to the airlines that purchased some of their assets.

What's going to happen to my flight?

You don't have to worry about the tickets you currently hold, according to Rick Seaney, the CEO of FareCompare, a company that helps customers find air travel deals online. “Tickets won’t be an issue because of the kind of bankruptcy they’re filing,” Rick tells Time. The airline has also said it will continue to honor tickets and reservations.

Read on to learn how you should manage your miles.

Write a Letter to Obama and He May Send You a Check

Emily Co — Sat, 22 Oct 2011 03:05:14 PDT

It sounds pretty incredible but President Obama actually reads some of the letters people write to him, according to the Washington Post. Apparently, the head of state reads 10 out of the 20,000 letters sent to him daily and says it's a great way to feel connected to people as well as a good reminder of why he decided to run for presidency. The Post says:

"A few times during his presidency, Obama admitted, he had written a personal check or made a phone call on the writer’s behalf, believing that it was his only way to ensure a fast result. 'It’s not something I should advertise, but it has happened' he told me. Many other times, he had forwarded letters to government agencies or Cabinet secretaries after attaching a standard, handwritten note that read: 'Can you please take care of this?'

'Some of these letters you read and you say, Gosh, I really want to help this person, and I may not have the tools to help them right now,’ the president said. 'And then you start thinking about the fact that for every one person that wrote describing their story, there might be another hundred thousand going through the same thing. So there are times when I’m reading the letters and I feel pained that I can’t do more, faster, to make a difference in their lives.' "

Most of the letters are written by people in very dire financial circumstances. If you're interested in what people are saying, read some samples of the letters here.

Whether you want to voice your appreciation or frustration, here's the address you can send your letter to:

President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Remember to put a stamp on it before you mail it off!

What Exactly Is Occupy Wall Street?

Emily Co — Tue, 11 Oct 2011 12:17:30 PDT

You might have heard about Occupy Wall Street, a nationwide movement spurred by the frustrations that many hold about the economic state of this country. The protesters are unhappy about a number of issues. Mainly, the great disparity between the wealthy one percent versus the 99 percent of the general population and the fact that banks weren't held accountable for their actions that brought about the global meltdown. Here are a few quick facts to get you up to speed:

When this started: They first marched onto lower Manhattan on Sept. 17 and have been camped out there ever since.

Who they are: Occupy Wall Street is the "leaderless resistance movement" that's headed by Adbusters, an activist magazine.

Why it's gaining momentum: This movement is gaining momentum because of the widespread dissatisfaction among the general public that's spurred by the high unemployment rate, foreclosures, and other money woes caused by the recession. The appearances by various high-profile people like Michael Moore and Kanye West at the protest sites have also raised the movement's visibility in the media.

How to contribute: If you want to get involved in the movement going on in your city, check out OccupyTogether.org for listings of the meetups. Occupy Wall Street is also taking donations through this link.

What they want: The group as a whole hasn't really decided on a specific demand and doesn't have a long-term strategy or goals as of yet. Basically, they are just trying to voice their frustrations through peaceful demonstrations. However, it appears that each individual protester does have certain demands in mind. For a quick look to see what some protesters are asking for, watch the video below:

Do you support Occupy Wall Street?

6 of the Weirdest Economic Indicators

Emily Co — Wed, 28 Sep 2011 05:00:21 PDT

Experts rely on dry statistics such as unemployment figures and the consumer price index to gauge where the economy is going, but there are other less serious ways to monitor our financial state. Even you can get your finger on the pulse of the economy by observing the trends you can relate to. Here are a couple of the weirdest economic indicators:

Divorce rates: A rise in divorce rates is a good sign for the economy - it means the credit markets are opening and the economy is on the mend. The recession drives people to postpone divorce because of the expensive legal fees and inability to sell their houses.
Nail polish: It used to be that sales of lipsticks correlated with the economy, but not so much anymore, says Leonard Lauder, Estée Lauder chairman emeritus. Women used to turn to lipsticks during the recession as an affordable pick-me-up, but have now replaced them with nail polish. In fact, sales of nail enhancers have jumped 65 percent since the first half 2008.
Men's underwear: During a recession, men will skip out on buying underwear. This is one of the most reliable economic indicators, according to Alan Greenspan, the former chairman of the Federal Reserve.
Hot waitresses: When there is a recession, there are more hot waitresses around due to the lack of jobs that will leverage their hotness. The New York magazine says, "In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts."
Miniskirts and dresses: According to the Hemline Index, when miniskirts and dresses are trending, the economy is apparently doing well. The index was developed by economist George Taylor, and the theory apparently has some credence. I can just imagine the men being slapped for trying to conduct this type of "economic research."
Online dating: Lonely hearts abound during a recession, and more people take to sites like Match.com when the going gets tough. The site had one of its strongest quarters in 2008 when the recession was at its peak. Experts speculate that misery loves company and people love to seek other people for comfort during tough economic times.

Brilliant or Baffling: Norway's Luxurious Prisons

Emily Co — Thu, 22 Sep 2011 10:45:03 PDT

Norway's prisons seem like holiday resorts, and it's clear that a lot of money is being spent on them.

In the second largest prison in Norway, the Halden Prison, inmates are treated to a flat-screen TV in their individual cells, and up to 10 to 12 cells share a kitchen and a living room. There are also rock climbing walls, a recording studio, and an official high school within Halden. About $1 million was spent on artwork and light installations to make it a welcoming environment for the prisoners.

The idea behind these hefty expenditures is that prisoners should be treated as people, and the more humanely you treat them, the less likely they are to commit similar crimes again. Perhaps it's working - Norway's recidivism rate is 20 percent compared to America's rate of 60 percent. What do you think: is this a brilliant or baffling idea?

Tax Hikes For the Rich Is Not "Class Warfare," Says Obama

Emily Co — Mon, 19 Sep 2011 12:43:54 PDT

The White House is proposing a new tax rate for the wealthy - those earning more than $1 million will have to pay, at the very least, the same percentage of taxes as middle-income Americans are paying. It's called the Buffett Rule, and it's part of the debt reduction plan President Obama proposed today, which aims to reduce the federal deficit by $3 trillion in the next 10 years.

However, there are naysayers who are calling this move "class warfare." In his defense, Obama said, "This is not class warfare, it's math . . . I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or teacher is class warfare." The president goes on to say that the country can no longer "afford special lower rates for the wealthy" and that the millionaires need to be paying their fair share. "Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett," Obama said.

Weigh in with your thoughts below: is this class warfare or a fair move?

The US Credit Rating Downgrade: What It Means For You

LearnVest — Wed, 10 Aug 2011 00:15:35 PDT

We're thrilled to present this smart LearnVest story here on Savvy!

You’ve probably heard the news already-our country’s credit rating just took a dive.

On Friday evening, Standard & Poor’s, one of the world’s three major credit rating agencies, dealt a major blow to the United States’ financial psyche by announcing that it has downgraded the country’s credit rating from AAA to AA+. This marks the first time in history that the U.S. has lost its top-ranked credit rating from one of the major agencies.

The U.S. moves from the company of other AAA countries like Australia, Canada, France, Singapore and Germany to the company of the two AA+ countries, Belgium and New Zealand. The world is reeling with varied reactions to this news, as analysts try to predict what this will mean for the domestic and global economies. Is this media hype or true disaster? Can we fix the situation and earn our AAA score back? And what does this mean for the average American?

We cut through the noise to bring you the cheat sheet on the credit rating downgrade, the various viewpoints on the downgrade itself, its potential effects-and what it means for you.

What Happened-In a Snapshot

As we reported in our story last week summarizing the debt ceiling deal, governments receive credit rating scores that investors use to analyze credit-worthiness. These credit scores are determined by three major international credit reporting agencies: Moody’s, Fitch and Standard & Poor’s.

After the debt ceiling deal was struck, Moody’s and Fitch maintained their AAA scores for the U.S. (although Moody’s downgraded the U.S. credit outlook to “negative”). S&P, on the other hand, decided on Friday to downgrade the U.S.’s credit rating to AA+. For the first time in history, America lost its unanimous AAA rating across all three agencies. On a side note, however, China’s leading credit agency Dagong Global Credit Rating Co. stripped America, Britain, Germany and France of their AAA ratings last July, accusing the top three agencies of Western bias, and giving greater weight to “wealth creating capacity.”

Read on to find out what it means for you.

Prepare For Credit Card Rates to Go Up

Emily Co — Tue, 09 Aug 2011 00:15:55 PDT

You've probably heard the news that Standard & Poor’s, a credit rating agency, downgraded the US from its AAA rating to AA+. How does that affect us, you might wonder. Well, many experts believe the lower rating will cause a rise in credit card interest rates of up to five percent. This change will only affect cards with variable interest rates because the Credit CARD Act of 2009 protects against rate changes for only fixed interest rates. Here are three things you should do to protect yourself:

Check to see: Call your credit card companies to ask if the credit card you hold has a variable or fixed interest rate.
Put it on hold: Do your best to stop using the cards with variable interest rates or lessen your usage so you're not going to be shocked by the higher bill. You don't have to worry about the previous balance, the CARD Act will prevent banks from increasing the interest on your current balance. You just have to worry about your future transactions.
Don't panic: Don't get swayed by emotion and immediately cancel your credit card because that may have implications for your credit score. You may want to leave the credit card open because after you close it, the account history will be left on your account for ten years or whenever the credit card's issuer decides to remove it. Long credit history shows you're reliable and increases your credit score. Another drawback to closing your card: your available credit will immediately be reduced, impacting your debt to credit ratio, which significantly affects your credit score.