In the wake of the near-collapse of the financial system and the subsequent bailout of big banks, the truth in the credit scoring system is revealed for all to see. Banks and credit card companies were making loans to virtually every applicant, regardless of their credit score. Why? The reason is simple These institutions didn’t care about the creditworthiness of borrowers because they were selling their loans to unsuspecting investors. Let’s follow the money trail: bank makes loan to borrower for big fee, then sells loan to investor for second big fee. Supposedly, the credit scoring system justified those loans and investments. We all know what happened. Voila, the loans weren’t worth the paper they were printed on, but the institutions that made those loans didn’t lose anything! Why? Because they were bailed out.

Without going into too much detail, because we are simply following the money, the money that bailed these banks out was used in large part to pay huge salaries and bonuses to the bankers who used the phony credit score numbers to justify making those loans in the first place!

Back to that credit scoring system. When those banks were bailed out, no one needed a credit scoring system to know that these institutions were broke. It was headline news in every newspaper – everyone knew those banks were broke. Yet, those same banks were given huge infusions of cash to bail them out – and without any restrictions on how they could use that money. So much for any validity to a credit scoring system as it applies to these financial firms!

In other words, these companies were exempt from ANY credit scoring system. They were broke – but that was ok, they got bailed out, no questions asked.

But what about the millions of people who were victimized by the banking bubble. Many of them were hardworking, paid their bills on time, and took out loans based on the smooth functioning of the credit markets. But because the credit scoring system was abused by lenders, vast sums of money were injected into the economy, leading to the real estate bubble. When that bubble collapsed, the asset value of borrowers’ homes collapsed, leaving them underwater and with large loans they could not refinance.

Many borrowers were unable to refinance and fell behind in payments, so the lenders reported them to the credit agencies, which lowered their credit scores. To make matters worse, consumers have virtually no effective way to dispute that their circumstances were caused by lenders, who refused to refinance the terms of their loans, helping those borrowers who wanted to make their payments on a timely basis.

According to the NY Times: “FICO, which produces one of the most popular credit scores used by lenders, said it viewed different types of collection agency accounts — medical-related or otherwise — as equally damaging. For someone with a spotless credit history, “it wouldn’t surprise me if  (a minor credit incident) caused their score to drop by 100 points or more,” said Frederic Huynh, a principal analytic scientist at FICO. And the blemish does not entirely disappear for seven years.”

So now the scam: lenders are justifying raising the cost of borrowers’ existing loans and charging exorbitant fees based upon the lower credit scores reported by the credit agencies!

There’s a hidden result of this credit score scam: It is one of the main reasons that people cannot build their retirement savings.

Are you angry? You should be. Please add your comment to this post. It’s time this scam was exposed. What’s your opinion?

Over the last decade and a half, Americans’ expected retirement age has slowly risen to 67 from 60, according to a new Gallup survey.

Latest data are based on interviews with a random sample of 672 nonretirees across America, conducted April 9-12, 2012. The maximum margin of sampling error is 5 percentage points.

If a standard retirement age of 60 sounds relatively low, remember that the economy was booming in the 1990s and Americans’ savings were being inflated by the tech bubble. That’s about the time when housing prices began to skyrocket, which also made homeowners feel particularly wealthy. Since then, of course, both the dot-com and housing bubbles have burst.

Americans have been putting their money where their mouths are, so to speak, and have been working longer and longer in recent decades. In 1996, for example, 45.8 percent of workers ages 60 to 64 were either working or looking for work. Last year, the figure was 54.5 percent.

Labor force participation rates have risen for other segments of older Americans, too:

Source: Bureau of Labor Statistics

While more people in their 60s and 70s want to work, the share of those older workers who have found jobs has fallen. Last year, 6.8 percent of workers 60 to 64 were unemployed. That compares with less than 3 percent in the late 1990s.

Perhaps 6.8 percent still sounds low, but consider that once unemployed, older Americans are very unlikely to find a job. The older a worker is, the more difficulty he or she has getting hired.

These trends have worrisome implications not just for older workers and their families, but for government budgets, too.

Struggling with deflated savings and few new job opportunities, older Americans are becoming increasingly dependent on Social Security and other public services.

In the same poll cited above, Gallup found that 33 percent of American nonretirees expect Social Security to be a “major source of income” for them in their old age. That’s an uptick from 27 percent a decade ago.

Of course, if you guessed that the ball and chain represents a mortgage, you’d be right. Mortgage interest payments are a drag on a family’s ability to grow their net worth, and it’s net worth that determines how well those retirement years will be. Why don’t people realize this? Well, they do, but they also have been told to save money for retirement as early as possible.

Most people think this is an important thing to do and that it makes financial sense. In reality, especially for homeowners, trying to save for retirement while carrying a mortgage is what prevents them from ever accumulating enough savings. The results are well documented, because so many people who followed this path had meager retirement savings when they reached retirement age.

The Mortgage Magic System is designed to prevent this tragedy, by helping the average homeowner accumulate a high six or even a seven figure retirement nest egg.

Consider NY Times writer Joe Nocera. Here’s a reprint of his retirement plan – and how it fell apart:

The real suppression of the metals started in 1988. That’s when the leasing game started and was invented by J.P. Morgan.

These guys would go around to the mining companies and say, “Listen, I’m going to pay you for your gold in the ground and I will sell it. You just pay me as you bring it out.” So that was cheap financing to the miners. Barrick, the biggest mining company of them all, went in on this and it financed a lot of Nevada projects.

Once the leasing game came, the actual selling, the extra selling, suppressed the price. In the first five years, it started at maybe three hundred to four hundred tons. It didn’t start to get really bad until probably ’97-’98 with the Long Term Capital affair. And that’s when the leasing started to become around maybe 1,000 tons of gold. And it hasn’t stopped.

And silver is the same.

And that’s why you’ve had a long-term, 20 years of suppression of the metals. The problem now is that the physical is now gone. Where is going? It’s gone from West to East.

A lot of people don’t know that China used to refine close to 80% of the world’s supplies of silver, because it’s very toxic. Up until probably ’85, the Chinese handled 80% of the world’s refining of silver. Now they’re down to 40%, but that’s still a major part of China’s industry. They are keeping every single silver ounce they refine, and gold. They are keeping it for themselves; their reserves are rising (though they don’t tell exactly). Two years ago they went up to 1,054 tons and I can assure you it’s probably triple that now. These guys are not stopping. Just like they are not stopping in oil. They know what the game is and they are slowly taking all their U.S. dollars that are on their shelf and converting them to gold, oil, copper – anything that’s real.

And the game ends when the last ounce of gold has left London — not COMEX, because in a nanosecond it will come back to here.

The big problem in London is that their derivatives on gold are about 50 to 100-to-1. That’s the amount of derivatives. So if I take out that 1 ounce, the balloon around it — the derivative  – is getting bigger and bigger and bigger until it’s ready to totally implode.

And that’s what you are seeing now. So right now, people are going to say: how high can it go? And I’m going to tell you: you are going to go to sleep on Thursday night and gold may be $1,670. And then you wake up the next day and it’s going to be a banking holiday. And gold will be $3,000 bid, no offer. No offer — and it will be a banking holiday. Because there will be a failure to deliver.

You’ve got to have physical coins or bars. If all you have is a piece of paper — that’s all it is!  It will just blow up in smoke.

So just go buy your physical and be thankful that you are getting it at a cheaper price today.

Major trade agreements between China and its trading partners have been struck, using the Yuan as settlement. Even Canada, our largest trading partner, and Taiwan are discussing forming a free trade association. Should this come to fruition it would be a victory for the Looney (Canadian Dollar)  and another step away from the US dollar in settlement in international transactions.

In addition, China, the largest holder of US Government debt, has significantly lowered its dollar exposure by selling a huge amount of US Treasuries and increased its gold holdings. The Chinese are not known to be stupid people.

No one is saying the US  is going out of business, but there are major changes occurring in the financial world that will affect ordinary Americans in ways that they may not be prepared for. For one thing, interest rates can rise unexpectedly, as investment dollars leave the US for higher returns overseas. Because of the dollar’s fall, the Federal Reserve may be unable to control rising interest rates here in the US.

The best advice is to be prepared. The average person should prepare by lowering their exposure to debt. Another thing to consider is to add gold and silver to your investment portfolio. Not paper, but actual metal.

Whatever the future may bring, these steps should be given serious consideration.

“Getting out of debt is the most powerful way to create a comfortable and affordable retirement:

Pay off your mortgage before you stop working. It’s not nearly as hard as you may think.
Get out of credit card debt.
Pay off your auto loans.
All three of those things have one central cost: interest. The money this nation forks over in interest payments for personal debt is obscene. Get your loans paid off early and you not only have peace of mind, you also save tens of thousands of dollars in interest payments that you can use to finance your retirement.

Paying Off Your Mortgage, Not Your Financial Advisors
Once you are in a home you intend to stay in, I want you to accelerate your mortgage payments so you get the loan paid off well before you retire. Just think about this for a second. For most of us, the monthly mortgage is our biggest financial obligation. So if we can eliminate this cost we are going to need a whole lot less to “make ends meet” in retirement.

This is not nearly as hard as it sounds. Let’s review some of the points I made in my previous column on smart mortgage moves:

Consider a 15-year mortgage. The standard mortgage length is 30 years, but by considering a 15-year mortgage you can save a ton of interest. First, did you know that the rate on a 15-year mortgage can be at least one-half of a percentage point less than the rate on a 30-year mortgage? So on a 30-year fixed mortgage today you might pay 5.5 percent (if you have a good fico score), but on a 15-year fixed mortgage you would be paying as little as 4.7 percent. On a $150,000 30-year fixed mortgage at 5.5 percent, the monthly payment is $851. With a 15-year fixed mortgage, the monthly cost is $1,163. But your total interest payments on the 15-year will be $59,319, compared to $156,208 for the 30-year. You’ve just saved nearly $100,000 in interest charges – $100,000 that can go toward your retirement.

One quick note: Some people calling themselves financial experts will tell you this is nuts because why would you want to pay off your mortgage at historically low interest rates when it’s the only investment that gives you a tax write-off? The answer to those who criticize my advice is to ask them to think about this. As you know, your highest monthly payment is your mortgage. On a fixed mortgage, your payment is the same regardless of how much you owe on the balance. With interest rates as low as they currently are, how are you going to generate enough investment income to offset your hefty mortgage expenses? Look again at the above example . If you go with the 30-year $150,000 fixed mortgage, your payments for all 30 years will be $851 a month, or $10,212 a year. To generate $10,212 a year of income from your investments, assuming the 20 percent tax bracket and a 5 percent rate of return, you would need to have about $250,000. That is $100,000 more than your original mortgage was! Well that makes no sense. Also, remember that as you get more and more into the term of the mortgage, you get less and less of a tax write-off. That’s why it makes a lot of sense to pay off your mortgage ASAP, assuming you’re in a home you intend to stay in.  After all, you can’t live in a stock certificate – they get soggy in the rain.”

Using the Mortgage Magic System, most homeowners will pay off their mortgages much faster with far greater savings!!!!

For consumers, ING offers an excellent choice of policy options, including term, universal life, and whole life policies. Not only that, but ING has what we consider the best web tools for consumers, allowing them to select among a variety of policy options and prices. Another reason is that ING policies are highly cost effective and competitive compared to other insurers.

For agents selling insurance, ING makes it easy for them to assist prospective clients with their choice of policies. ING provides agents with their own customized and branded insurance web site. When a consumer visits an agent’s site and selects from the various available choices, the agent is sent an immediate client request via email, along with the prospects contact info and policy choice. Thus, agents have easy access to leads directly from their branded site.

The time is at hand my friends to stash away some gold and silver. Now, Pronto, Ahora, as in Don’t Wait. The worldwide financial system is on “tilt” and what was, won’t be for much longer. What’s happening is that the world financial system is broken, and there is no way to fix it.

The powers that be are using the only tool they have, which is to print money to “paper over” the overhanging government debt. The technical term is “quantitative easing” (QE). Which government is that? Well, take your pick. Virtually all of the westernized countries have debts that they cannot repay, and we’re talking especially the United States and the European Union. The “investors” who typically purchase government debt are the huge international banks that keep the financial world turning. Finance ministers know they MUST protect these “investors”, and will do so at all costs.

Countries that hold large amounts of US debt, such as China, Japan, and oil-rich Middle Eastern countries have been quietly replacing their dollar holding with gold. You haven’t heard this, have you? Well, if you take the time to research this online, you’ll see definite clues. For example, the Chinese balance of trade has large discrepancies, which can only be attributed to large gold purchases. You won’t see this on the Comex, as these governments are not so stupid as to buy gold on a paper exchange. They buy directly from producers, so as not to cause ripples in the marketplace.

You have already seen the gradual effect of QE in the steady rise in prices for essential commodities and food. You can’t do anything about this, as you need these essentials. This may seem complicated: that problems of governments not being able to pay their bills affect you personally. What you need to know is that the purchasing power of your dollars is being eroded. The dollar that used to buy a loaf of bread now only buys a few slices.

Things will get worse – and I’m not being an alarmist. The failure of these governments to pay their debts is exacerbated by the worldwide slowdown in business activity, which in turn lowers GDP. The ratio of debt to GDP therefore is therefore: debt/GDP = “bigger” as the denominator gets smaller.

Ok, so here’s the question: do you think your money will regain its purchasing power (buy the whole loaf), or will it continue to decline? Ponder this,  but it should not take you very long to arrive at your answer!

Now, if all this seems depressing, it need not be. Just re-read the first sentence in this post: “The time is at hand my friends to stash away some gold and silver.”

Well, what are you waiting for? And don’t pay a big premium over spot!

…….And one more thing: prioritize the repayment of your mortgage. If you continue to fund your retirement account instead of accelerating your mortgage, your retirement is seriously at risk, because the purchasing power of your future earnings, after paying that mortgage, will be far less and the result will be that you will have a greatly diminished lifestyle – and that’s before you retire. What do you think will happen afterward?

We’re talking whole life or even universal life. Cash value insurance is the best. A big advantage of life insurance is how it can be structured within a financial plan that protects your family and your retirement savings as well. However, most people don’t take advantage of the unique tax advantages of life insurance. As a result, their family and their assets are not as well protected as they should be.

So-called qualified financial plans include tax-advantaged instruments. In other words, money deposited into the plan, such as an IRA or 401K, is not taxed until it is withdrawn. All gains on those funds are also permitted to grow tax-free in the plan and they too are taxed when withdrawn. Therefore, statements showing the value of such retirement plans are misleading. Not only do they not reflect the value of the net spendable money, but they also don’t account for any penalties that the owner may be assessed if funds are withdrawn early. Alas, what the government giveth, the government can taketh away.

Most people buy term insurance, because it’s cheap. The problem is, of course, that term insurance lapses well before the need for the insurance comes into play in most lives. It’s cheap because insurance companies seldom pay claims on term insurance policies. In fact, only 3% of term policies ever pay off! What’s more, the person may not even qualify for insurance at a later point in their lives.

The bottom line is, that money continues flowing into the qualified retirement account where it is subject to taxation and penalties. Because insurance is too expensive for most people in middle age, its ability to afford protection is a moot point. Then too, its ability to become part of a strong financial plan is lost to the family.

I’ve posted a video that explains how life insurance should be used as the basis for a strong financial plan. Here’s a video showing the explanation of the best way to utilize life insurance to protect your family and your retirement assets.