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Ten days ago I said that investing one’s money takes confidence. It seems I was more accurate on that point than ever, as August 2010 turns out to be the worst August since 2001, and that was days before what happened to the World Trade Center.

The Dow dropped 4.3% in August, including dipping under the magic 10,000 number a few times. It’s ending the month around 10,014, but there are big questions as to whether it’s going to stay there. Negative job reports on unemployment, housing reports, and the slow growth of the economy has many of these high powered brokers and their companies scared, and it’s probably scaring the regular investor as well. The Federal Reserve has changed its forecast of recovery and reduced expectation, and there’s even been some talk about lowering interest rates even further, although I not only don’t think that will happen, but I’m not sure it should happen.

Frankly, I’m wondering what’s about to happen as kids get ready to go back to school. Often a time when the retail market gets a nice little boost, it’s possible that things will be drastically different this year, which could continue the slide of the market if retail stores don’t hit traditional numbers that are often expected by early October. Many communities around the country have reduced the number of teachers and canceled programs of study, so those students won’t need supplies or books for those classes. Here in New York, they’ve eliminated the no-tax on clothing, thus parents may not be shelling out as much money as they have in the past for clothes, or looking for more discount clothes, and my bet is that New York won’t be alone. Oh yeah, there are also fewer kids, so more schools are being closed as well.

I haven’t read about their being a rush to get college students laptops for school this season, and if the iPad can handle a lot of what students need (I don’t know the iPad all that well) then traditional computing will be in trouble, as it’s been predicted to occur by technology researcher Gartner.

It certainly doesn’t have the feel of a confidently growing economy, does it?

If ever there was an obvious headline, the one above is it. The housing industry is in trouble, and it doesn’t look like there’s going to be a fix any time soon.

So what’s going on? We’ll start with the news that existing home sales are at their lowest level in 15 years, down 27% over this same period last year, which was a horrible year in the first place. The $8,000 tax credit ended in April and many conservatives were happy, saying the government shouldn’t have had it in the first place, and look where we are now. Home sales can’t keep up with foreclosures, and those homes that are being bought are going for around 25% less than what they were worth because of it.

The Midwest and Southwest are struggling the most. Home sales out that way are down 33%, and bank closures aren’t helping. Neither is Arizona’s crusade against immigrant workers, one which I’m sure legislators out that way thought would help its legal citizens find work, but instead has created a backlash against the state and an interesting exodus of some of its long time citizens, leaving homes that have no buyers.

Already mentioned was foreclosures, and it’s been determined that at the present time 1 out of every 10 homes is close to being foreclosed upon. Actually, that figure is down a tenth of a percentage point from the end of April, which is nothing to smile about. Arizona and Nevada continue to have high foreclosure rates; how long can it continue to be at a high rate, since it has to slow down at some point by pure attrition?

And, interesting enough, the average home size for new homes is on the decline as well, dropping about 150 square feet over the past year. That doesn’t sound like a lot, but the trend had been towards larger, more spacious homes and now consumers are looking for ways to save money, and are not only cutting down on the size of homes but on some of the luxuries as well.

What are the two main problems with housing? Unemployment and banks. What are the two main ways to fix the problem? Employment and banks. Mortgage rates are at their lowest level in, well, decades, yet banks aren’t approving enough people to take advantage of it. Sure, banks have had to tighten up their processes, and that makes sense, but they’re taking longer to make decisions, and sometimes time is of the essence. There are still banks that are behind on figuring out loan modifications, and that was supposed to have been completed a couple of months ago. As for unemployment… well, we just might be stuck on that one, as federal money is being spread a bit thin, and communities are loathe to try something potentially drastic to help get things moving in a positive direction.

If you have a home to sell right now; don’t. If you’re looking for a home right now; do it!

There have been a few times on this blog when I have stated that my belief is that most of the jobs that were let go in 2008 and 2009 we’re never coming back. I’ve had that confirmed by a news story last week where interviews were done with many CEOs on the subject. However, it seems that most of those jobs aren’t coming back for a different reason than what I had believed.

When this group of CEOs was interviewed, it seems that they were actually willing to think about hiring back workers except for one thing. They don’t believe that the economy is going to turn around for at least another few years, and they also don’t believe that the shoppers are going to come back and start purchasing the way they have in the past.

As strange as it seems, they might not be too far off the mark on that one. The economy has grown at a lethargic rate this entire year, and consumer spending has been relatively flat. There are so many industries that in the past had enjoyed great growth and revenue that suddenly are tanking beyond belief. Many specialty stores have gone out of business. Many casino cities such as Las Vegas and Atlantic City have shown drastic reductions in visitors. The housing industry is in shambles for most of the country. And the travel industry has taken it on the chin as well, especially southern coastal cities this year as a result of the oil spill. For what it’s worth, even traditionally fiscally strong businesses such as Wal-Mart have struggled, which wasn’t predicted because of their low prices.

This begs the question as to what we really need to stimulate the economy? It’s somewhat ridiculous to tell people to get out and spend their money when many people are just getting by making sure they can pay their bills. With the national average sitting at 9.5% as it pertains to the unemployment rate, and with no real remedy in sight, most people are holding onto their money just in case they lose their jobs. More of them are worried that there are no other jobs to go to if they’re suddenly unemployed, and they’re correct to have that assumption.

Are there any real solutions to this mess? I’ve offered my suggestions, as have others I’m sure, but someone’s going to have to do something either bold or drastic to get things moving forward. I’m afraid that someone is going to involve the government. And the government being in the state of flux it’s in right now, I don’t think we have a prayer.

Right now, interest rates on home mortgages are at the lowest level in decades, if not ever. If you can get it, going for a lower interest rate might be the most beneficial thing you can do to help you get over some financial humps and get things done.

A real life story came up yesterday while my wife and I were at a regional farmer’s market. There’s one lady there who makes the best chocolate chip cookies, and we always buy from her. She had an extra big smile and started telling my wife her story about being approved for refinancing her mortgage.

She went for a 15-year mortgage, where the interest rate was 3.75%. I don’t know how the rest of this actually worked because I thought it would be rude to ask, but she was granted the new mortgage, it earned her enough money so that she was able to pay for a new roof for the home and some other improvements she’d been wanting to do, and her monthly payments actually went down $350 a month.

I’m not sure where she started from, but I’m assuming she must have had a much higher interest rate than the 5.75% my wife and I have after we took advantage of what at the time were lower interest rates than what we’d bought our house at. We ended up reducing our payments about $200 at the time, but didn’t get the other money bonus this lady did. Then again, we’d only had the house 2 years at the time, so there was no real equity built up either.

At the very least if you have some equity in your home and an interest rate higher than 7%, it’s worth exploring your options to see if there are both money and some savings to be had.

I’m not the best investor in the world; we’ll get that out of the way now. And when you look at what’s been happening to the market lately, where the smallest bit of bad news seems to send the markets tumbling, it doesn’t give you the warm and fuzzy feeling of confidence.

And yet, according to financial experts, investing over the long haul is one of the safest ways for you to not only make money but to help save your money. How is this possible, you may ask? Here’s the quick down and dirty of it all.

First, you get into a money market type of account, where your investments are spread out among a lot of companies. What this does is protect your investment if one company starts to tank, and gives the person handling your account time to switch you to someone else more stable.

Second, say you started out with $500 in your account, and for the next 35 months you put $100 a month into your account. And then say that ever other month the market increased 1%, and on the opposite months the market fell 1%. At the end of 3 years you’d have made $18 and change; that’s not very good, but at least you made money.

Then say that you started out with the same money and added the same amount monthly. Investors say the market makes money at a 10 year rate of around 2.5%; I don’t know if they all agree to this but an investment guru gave me this one so I’m using it for now. Then say I do the exact same thing as I did above, only instead of the 1% increase every other month it’s 2.5%, and yet I still have that 1% decrease. At the end of 3 years you’d have made $565 and change; that’s a little better.

But the market doesn’t really work like that, up and down from month to month. It works in stages. For every six months up you’ll have six months down, yet you’ll still come out to that 2.5% gain after 10 years. We’ll do it a little worse than that. We’ll increase 2.5% for six months, then decrease 1% for six, just to be below that figure. You’ll still have made $447 and change.

The thing is, these are low figures overall. Your money market is probably going to return a higher amount than that 2.5% over time, even with the down times because they’ll drop the bad stocks and move to better ones. What happened in 2009 is more of a fluke than the norm, as it usually doesn’t drop almost 50% of its worth in a year. So, with more stability in the stock market, your money will normally increase faster than it will lose money.

However, it takes a lot of courage to invest long term and not touch any of the money until you absolutely have to. And you also have to be smart when you do decide to invest, making sure you’re not hearing about things such as what happened last year and not getting your money out or moved around in some fashion. I heard the news, wasn’t paying attention, and lost more than 60% of my portfolio at around the same time the company my broker was working for changed how my account would be handled, and he was suddenly not there, which I didn’t know. I removed my funds, but I was a little late on it all.

So, if you have the courage and confidence to leave your money alone for the long haul, and can continue popping at least something into it, you could turn out all right, as long as you pay attention to what’s going on in the world.

Wells Fargo is a multiple offender. Therefore, it came as no surprise to anyone that they lost their court challenge against having to pay a fine for excessive overdraft fees they imposed on their customers.

A California judge determined that they have to pay back $203 million in what the judge determined was a tricky “bookkeeping device” that allowed them to multiply the number of times Wells Fargo could hit its consumers for a fee, even if there was only one breach such as a single overdraft. The judge concluded that sometimes Wells was hitting customers for as many as 10 times for one oversight; that’s just not right.

And what does Wells Fargo do? They’ve stated that they’re going to appeal the case, even though, in my opinion, they’ve gotten off easy because the fees they overcharged consumers was determined to be more than $1.7 billion. In essence, they didn’t even get hit with 20% of what’s now deemed criminal action against its customers and they’re whining that the judge got it wrong. We heard this same type of thing when they were accused of improper handling of minority mortgages.

Although I understand Wells Fargo figuring that they have to try to protect their reputation, I’m mystified that they’re trying to insult the intelligence of the American public and wasting the money of their depositors on something that everyone knows they did. They’re not alone; all large banks have had interesting ways of charging overdraft fees to their customers for years. That’s why there was legislation clamping down on the process in the first place, to protect those of us who every once in awhile calculate our finances incorrectly and thus get hit with a fee. And speaking of which, I hope everyone has gone to their banks and made a decision on how they want the banks to handle their overdraft protection process, as the deadline is near.

This is why I recommend moving your money to local banks you can trust, that will treat you properly, and that might be a bit more stable than these giants, who care more about protecting their reputations than doing right by you, the consumer.

I’m not someone who supports outsourcing most things to other countries. It’s not that I’m against other countries sharing the wealth, so to speak. My reasons are twofold.

One, I see many jobs performed in America going to other places, and I see how it’s hurt our economy. American companies create products elsewhere, then bring them back here to sell for the same money as before, but make bigger profits because they can pay foreign workers less.

Two, because the work isn’t any better than what Americans can do, and is sometimes more deficient and doesn’t fully follow the rules. Two things I can point to are Dell customer service and the medical billing company that threatened to post the private records of American citizens in a dispute with the American company that had contracted them to handle the billing. We may have HIPAA privacy laws in the United States, but there’s nothing the American government could have done to this Indian company.

With that said, I have to change my tune when it comes to having medical services done in other countries to save money. It’s hard to complain against an individual or company deciding that it makes sense to try to save money on major health care procedures for their employees. If a company can spend only $20,000 to send one of their employees to India or Mexico for a heart procedure that would cost $100,000 in the states at a minimum, while knowing that the medical facilities are high quality, then that’s a smart and intelligent move that frankly I can’t go against.

Last year I did research for an article concerning Mexico medical travel and that research showed that not only could patients save anywhere between 100% and 500% for medical procedures, including elective surgeries (laser eye surgery, plastic surgery, etc), but there were full medical packages at resort style hospital / hotels that fully integrated all the costs to save even more money.

The same goes for India, where the preponderance of very well American-trained physicians have set up extensive and specialized medical practices that offer nothing but the best as far as medical procedures are concerned. And the costs can be even less than doing them in Mexico, though getting there might cost a little bit more. But there are more physicians in India, so the concept of having to wait for quality paid medical care is nonexistent.

This is important news to know about as health care costs keep going up. Not only employers, but some insurance companies are realizing that they need to find ways to keep costs down since, at some point, there has to be a cap on the cost of insurance premiums. To see another perspective on this, check out this CNN Money story on the same subject.