Chapter 1 Blog

http://www.courierpostonline.com/article/20081017/OPINION/810170317/1046

Summary:

This article talks about how New Jersey and its people are attempting to deal with the great financial crisis that has recently taken over all of the United States. Apparently, America is in a much worse shape than most politicians had thought (Christine Gregoire). Taxing authorities have now come to the conclusion that they must lower taxes. Just last Thursday, Governor Jon Corzine released a $150 million economic plan to create a more efficient government. As most people believed that their property taxes would have to go up in order to pay for this new “plan.” However, they were wrong, Corzine’s plan heavily depends on distributing money again and speeding up future projects. The New Jersey Turnpike Authority and Schools Development Authority have now been asked to produce an astonishing $4.5 billion in capital projects to make more than 120,000 jobs. The state proposed also to redirect money in order to prevent the foreclosure of homes as well as minimize the property taxes for seniors. This plan seems great but needs to be handled with care.

Connections:

The connections that I was able to make between this article and the chapter are related to the taxing authorities. In this case, they needed to make a drastic change with what they enforced upon the people of New Jersey and they did. Even though they are taxing us on several things, mainly our income, they do not have all the power because as you can see they need to make necessary adjustments according to what is going on in the present. This is a prime example of how taxing authorities do their order of business with real life investors. Also, they aid us by using that money for future projects that will later benefit the entire area, city, or state. Within the chapter there are many references towards the taxing authorities but all that we really know is that they calculate the numbers and deductions off of our wages. The article shown gives us a glimpse of their reality because they must play a much larger role in the government then we know about right now.

Personal Reflection:

I feel that this is a good approach to solving the financial downfall in New Jersey but there have been plenty of others who have proposed ideas such as this and have failed miserably. It is quite interesting to see how Jon Corzine decided not to pile up the property taxes as that is what happens in most case but instead switches it up completely. Redirecting all of the money taken in by the government into new areas in order to seek a new and better outcome for the public is a quite brilliant idea. Even though it has probably been thought of, where Corzine chose to put the money was very smart because he seems to really care for the city of New Jersey. I would never have thought to invest the money in this way and by speeding up projects, more of the money can be handled properly in order to create newer and more advanced plans for the future. This plan has my full support because New Jersey, even American for that matter needs help and I believe that this is the way to go.

-Jason K.

Chapter 2 Blog

https://www.amazines.com/article_detail.cfm?articleid=555476

Summary:

This article explains negative amortization and how it works. It is a great way for new and upcoming house owners to pay the mortgage on their houses because it offers several flexible options of payment. Considerations made by many homebuyers are to get a fixed loan with a clause which has negative amortization for the earlier years of the loan. With these types of loans are usually called graduate payment mortgages (GPM’s). In the conventional plan, the borrowers’ payment is consisted of two parts, the amount paid on top of the interest of the loan and the amount applied to the principal. A negative amortization clause gives the borrowers’ the ability to pay a fixed amount, interest only, or an accrued interest. Also, you would pay more interest in the beginning than your actual principle of your loan in order to pay less interest in the future which can add up. Banks offer these buyers larger loans because they are taking a bigger risk investing in the market for a much longer period of time.

Connections:

My connections in regards of this topic to Chapter 2 of the textbook are quite simple. Well, we have learned about amortization and how it works when you are talking about supplies and equipment of a company but not in a situation that we could easily picture in our future. By the way, if you did not know already, amortization is the decrease in value of an item owned by a company due to time, technical problems, or simple wear-and-tear. With negative amortization, purchasing a house can become much easier when given the chance to make your interest payments sooner. Lenders’ usually offer a wide variety of payment options, allowing you to pay a certain minimum but can still pay a large sum if you have the money right there and then. These sort of deals really attract business owners and homebuyers because they have a choice with their spending instead of being pressured into a deal.

Personal Reflection:

My personal reflection involved understanding exactly how negative amortization works and where it is applied in peoples’ daily lives. I found that it is quite a good method of paying for your house, especially for new buyers who are all around us. They are given the opportunity to take a long period of time to pay off their debt. Along with this, being able to pay more of your interest sooner can really save you money in the future because your principal amount will not change but your interest can increase dramatically. New families and couples can find this wonderful because they are also allowed a long list of payment options which can work with most family situations. Another benefit is receiving larger loans from banks because when showing that you are committed to this kind of thing, it can sway their decisions in a heartbeat which can aid you in the future. One final note, this can also help with retirement as interest is not building up over all this time but instead is being paid off mostly at the start. I cannot find a major factor that would change my decision of signing my own negative amortization clause in the future.

-Jason K.