GLOBALISATION has created a handful of metropolises that attract people, capital and ideas from all over the world, almost irrespective of how their national economy is doing. House prices in such places, unsurprisingly, outpace the national average. In our latest round-up of global housing, we find that prices have risen in 20 of the 26 countries we track over the past year, at an (unweighted) average pace of 5.1% after adjusting for inflation. Prices in pre-eminent cities in these countries, however, have risen by 8.3% on average.

In a survey conducted last year, fewer than one in nine residents of Amsterdam, Berlin, London, Paris, Stockholm and Zurich thought that it was easy to find reasonably-priced housing. In these cities, house prices have risen at an average pace of 6.5% a year over the past three years (again, unweighted), compared with a national average rise of just 3.2%. The value of homes in four cities on the Pacific—San Francisco, Vancouver, Sydney and Shanghai—has increased by 12% a year over the past three years, twice the average national pace.

The supply of housing is rather inelastic, so in the short term...Continue reading

Filed under: Saving

By Dr Penny Pincher

Frugal people who pay off their debt and achieve financial independence don't succeed by accident. They establish habits that allow them to consistently reach their goals over the long haul.

During the past few years as a personal finance blogger and author, I have noticed that the most successful frugal people tend to follow a common set of habits. These same habits remind me of the traits that Stephen Covey detailed in his popular 1989 book, The 7 Habits of Highly Effective People. For this article, I kept the original seven habits, but updated them for achieving financial independence today.

What are the seven habits that allow some people to excel at being frugal?

1. Be Proactive

Frugal people are proactive about their money, taking action to monitor and control spending and maximize income. They find ways to spend less and reduce expenses - even if it requires effort and creative thinking. They direct most of the money they save from reduced expenses into savings and investments for long term goals.

Although the first thing that comes to mind with frugality is saving money, many frugal people maximize income through side hustles or by generating passive income in addition to controlling their spending. An extra dollar saved or an extra dollar earned both contribute favorably to the bottom line.

Frugal people know how much money they have coming in and how much is going out, often with great precision. This is accomplished by creating and following a budget and proactively monitoring spending. They focus on what they can control within their budget to achieve financial success.

2. Begin With the End in Mind

Why do frugal people work so hard to control spending and keep track of their money? Are they simply not interested in buying things? On the contrary, most frugal people are striving to reach financial independence so that they can travel or launch a second career or to have plenty of money to buy the things that matter to them. Frugal people are willing to worry about money now so they don't need to worry about it later.

Surprisingly, many frugal people care more about their time than their money. Saving money buys financial independence, which buys time to do whatever you want. Frugal people want freedom to use their time as they wish and not be locked into working at a job until they reach old age.

Frugal people begin with the end in mind. The end they want to achieve is financial independence. With that end in mind, they make a plan to reach the goal and follow it every day. The sacrifices along the way are worth reaching the goal.

3. Put First Things First

What is the first thing you pay every month? Do you pay your mortgage first? Perhaps you pay your utility bill or car payment first. Frugal people pay something else first - themselves.

Paying yourself first means that you invest in your retirement fund or other savings accounts first, then you pay other bills using the money that is left. Most people pay their bills first, and then save or invest if there is any money left.

Frugal people realize that having money to invest is the most important priority, and they take care of that priority first. If there is not enough money left to pay the bills, then frugal people find ways to make their bills smaller so they can fully fund their investment goals.

4. Think Win-Win

Stephen Covey talked about win-win situations in terms of structuring deals where both parties involved get something beneficial. His point was that someone doesn't have to lose in order to make a great deal - in fact, the best deals happen in win-win situations.

Looking at this habit in the context of frugal success, just because you spend less money doesn't mean you have to benefit less or receive less value. In fact, frugal people find ways to spend less money and achieve greater benefit at the same time.

Frugal people find plenty of win-win situations for their money. For example, why do many of them prepare most of their meals at home instead of dining out? Of course, making food at home is cheaper than paying the bill at a restaurant, but eating at home is healthier as well. The benefit of making your own food goes beyond just saving money.

Buying a smaller house is less expensive than a larger house and it costs less for maintenance, insurance, heating/cooling, and lighting. In addition to the lower initial price and reduced ongoing costs, a smaller house also takes less time to clean and maintain, freeing up time for other activities.

Most win-win scenarios involve not just price, but value. Frugal people consider the overall value that a purchase would provide throughout its life, including hidden expenses and potential benefits. Frugal people are willing to spend money to get a good value, and they shop around and use coupons to get the best deal they can on the right item.

5. Seek First to Understand, Then to Be Understood

Most frugal people don't start out being frugal. They start out as "normal" spenders and rack up credit card bills and student loans like most people. Over time, they come to understand that spending and debt are not the path to contentment. They realize that sometimes less really is more, at least when it comes to debt and spending.

Frugal people reach an understanding of how much stuff they need to be happy, which is often far less stuff than most people think they need to be happy. Frugal people make spending decisions in terms of needs and wants, while most people think primarily in terms of having more and better stuff than their friends and neighbors.

As far as being understood, most frugal people don't seem to care much what "normal" people think of them. Frugal people understand that spending money to keep up with the Joneses, or anyone else, doesn't make much sense and is certainly not the path to long term contentment.

6. Synergize

Synergy is the concept that sometimes, one plus one adds up to more than just two. How is this possible?
If you decide that you can live without cable TV, you can save about $100 per month. Not only do you save $100 this month and every month thereafter, but you have significantly reduced the amount of money you need to retire by forgoing a recurring expense during your retirement years. You could retire years earlier due to the synergy of eliminating a recurring expense.

Another example of synergy is reducing clutter. If you minimize the amount of clutter you collect over time, you will require less space to store your stuff. You will be able to live in a smaller, less expensive house. With less clutter, you will be better able to find and use the items that you do have. Savings of time and money will accumulate over the years greatly exceeding the small amount of effort it takes to nip clutter in the bud. This is another example where a seemingly insignificant action can allow you to achieve your goals years earlier due to synergy. (See also: 8 Ways Clutter Keeps You Poor)

7. Sharpen Your Saw

As you are reading this, you are sharpening your saw! If you have ever tried to cut something with a dull saw, you know that it takes a lot of work and a long time to get the job done. Keeping your saw sharp is time well spent.

Sharpening your saw means to continue learning and finding new inspiration to get the most from your money. Frugal people tend to seek out ideas on saving money from blogs, podcasts, books, and by talking with other frugal friends. Reading about the financial success and failures of others can provide inspiration to keep your goals firmly in mind and on track.

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Filed under: Credit Score

By Marilyn Lewis

A high credit score is your ticket to discounts in borrowing and insurance. It can also be a key to landing a job or a rental home.

Why FICO?

FICO (for Fair Isaac Corporation, the company that invented credit scoring) scores are used in an estimated 90 percent of credit decisions in the United States.

FICO is the score that lenders, bankers, landlords, merchants and other businesses check to gauge your creditworthiness.

Not long ago consumers had to pay for a peek at their official FICO scores. But that's history. Now you can get your score for free if you know where to look.

How to use your score

For free FICO scores you can thank the federal Consumer Financial Protection Bureau. The CFPB pushed the heads of major credit card companies to allow consumers no-cost, regular access to the official FICO score that lenders use, not educational scores likes the ones banks, credit card companies and others often offer consumers instead. The CFPB argued that consumers who can monitor their credit scores are able to improve their credit and avoid delinquency.

Monitoring your score adds to the control you have over your financial life. FICO scores range between 300 and 850; the higher the score, the better your creditworthiness.

Your credit score is meant to predict the risk of lending to you. It is generated when a company like FICO runs data from your creditors through a mathematical formula.

You can see that data, too, in the form of a credit report. It's smart to keep an eye on those reports, too, since they reveal what merchants and lenders are telling each other about you.

The government requires the three major credit reporting companies - TransUnion, Equifax and Experian, which collect data and produce these reports - to give consumers one free every 12 months. You can get these free credit reports from AnnualCreditReport.com. Monitoring your credit reports lets you keep an eye out for identity theft and reporting errors from creditors.

Learn more about getting credit reports and correcting errors from "How to Get Your Free Credit Report in 6 Easy Steps."

"7 Fast Ways to Raise Your Credit Score" tells how to boost your numbers.

Watch your score's movements

Still, credit reports don't include your credit score. You have to get that separately.
It is instructive and kind of fun to watch your FICO score go up or down as you borrow, repay and apply for credit. Also, an unexpected change might alert you to fraud or an error reported by a credit bureau.

How good is the score you see?

Some fluctuation in a score is to be expected. It may move around in response to how you manage your credit, pay your bills and take on new debt.

Despite the decided improvements, a big problem that remains for consumers is the inconsistency among the scores offered, even the FICO scores, writes Washington Post columnist Michelle Singletary:

Even the scores under the FICO brand can vary. FICO has updated its scoring model several times. But this does not mean that lenders use the latest versions. So even within the FICO scoring system, the score you get free could be different from the one a lender eventually pulls when you apply for credit. Still, FICO - new or old - is the go-to scoring system for most lenders.

Getting a free FICO score still takes a little finesse as it's available from a limited (but growing) number of sources. If you ask FICO for your score, be prepared for a $19.95 charge.

Here are six ways to access your official FICO score free of charge (Looking at your credit score does not affect your credit, by the way):

1. Credit cards
Banks can offer their credit-card holders a look at their FICO scores through FICO's Score Open Access.
Who's eligible: Holders of these cards can access their FICO scores, typically by checking the account online:

• Discover: TransUnion FICO scores are on monthly bills
• USAA: Enroll in free CreditCheck1
• Merrick Bank: GoScore, a free benefit, includes emailed FICO scores
• CapitalOne: CreditWise, a free benefit, lets users track FICO scores
• First Bankcard
• Bank of America
• Barclaycard US
• Citi
• Chase Slate card
• American Express

2. Auto loans
Who's eligible: Car buyers financing through these companies can see their scores:
Ally Financial
Hyundai Capital America (including Hyundai Motor Finance and Kia Motors Finance)

3. Credit unions
Who's eligible: Some credit unions give cardholders free access to FICO scores. Among them are:
Pentagon Federal Credit Union
North Carolina State Employees' Credit Union
Digital Federal Credit Union (DUC)
Pennsylvania State Employees Credit Union

4. Student loans
Who's eligible: Borrowers and co-signers of Sallie Mae Smart Option undergraduate student loans can see their FICO scores.

5. Checking accounts
See if your bank offers free FICO scores with checking accounts. Some 100 million U.S. accounts come with free FICO scores, MarketWatch reports.

6. Credit counselors
Who's eligible: You can see and talk over your FICO score by making an appointment with a credit counselor at one of the nonprofit credit-counseling agencies that purchase credit scores from Experian, a credit-reporting agency. These agencies buy credit reports and FICO scores to help in offering credit and financial counseling.

Through FICO's Score Open Access for Credit & Financial Counseling program, participating agencies can share FICO scores with members. The aim is to "aid consumers who have credit management problems by providing FICO scores along with credit education material that helps consumers understand credit scoring and learn about responsible financial health management," FICO says.

When calling one of these credit counseling agencies for an appointment, be sure to ask if you will be able to see your FICO score. If the answer is no, keep shopping. Participating national organizations include:

• National Foundation for Credit Counseling: Call 800-388-2227 or use the online agency locator to make an appointment or learn more.
• The Financial Counseling Association of America (formerly the Association of Independent Consumer Credit Counseling Agencies): Call 866-694-7253.
• Credit Builders Alliance: Qualified CBA organizations are able to share members' FICO scores with them. Call 202-730-9390.
• Local Initiatives Support Corp: Call 212-455-9800.

The NFCC explains what to expect in these private conversations:

Your visit is not reported to a credit bureau.
Visiting a credit counselor does not affect your credit score.
Nonprofit credit-counseling agencies offer help for free or at very low cost.

Alternative credit scores

Plenty of other sites offer free credit scores, just not FICO scores. If you can't get access through any of the cards or accounts above, consider an alternative score. You'll at least get a reading on your credit that you can monitor and compare over time.

Be aware that numerous websites advertise free FICO scores, but there's a potentially expensive catch: These are gateways to fee-based services. You must sign up with a credit card to get a free peek at your FICO score.

You can get free non-FICO credit scores from:

• Credit.com
• CreditKarma.com
• CreditSesame.com

FICO's score estimator

Answering 10 questions at FICO delivers an estimated range for your FICO score.

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Ripe for investment

SPEND a day in Yangon, shuttling among new high-rises and bars before retreating to your boutique hotel, and you can almost believe that after decades of isolation, Myanmar is squarely on the road to prosperity. Spend more than a few days, however, and the cracks start showing: intermittent power cuts, ancient sewage systems, insufficient housing for an influx of migrants from the countryside.

The situation is worse in rural Myanmar, where much of the population lives not just in extreme poverty, but also mired in debt. Bad roads make it costly to get goods to market and impede investment. Around three-quarters of the country’s children live in homes that lack electricity. Myanmar’s voters hope their first freely elected government since the 1960s, which took office this week, will change things for the better.

The task ahead is daunting: within South-East Asia, only Cambodia has a lower GDP per person. Its infrastructure (both physical and financial) is somewhere between crumbling and non-existent; its laws are archaic and, after decades of isolation and underinvestment in education, its...Continue reading

Hoping for a miracle

DISASTER struck Malaysia Airlines twice in 2014. In March, flight MH370 from Kuala Lumpur to Beijing, a Boeing 777 carrying 239 passengers and crew, disappeared an hour after take-off. Experts think it crashed in the southern Indian Ocean, though no one is sure why. Only a few fragments of debris have turned up, off Africa’s coast. Four months later Russian-backed militia in eastern Ukraine shot down MH17, another 777, killing all 298 people on board. Two years on, Malaysia’s struggling national carrier is still flying, but its financial health remains under scrutiny.

Both crashes appeared to have been beyond the firm’s control but hurt business nonetheless. Customers deserted the airline. Chinese flyers feared it was jinxed: sales in China, a crucial market, fell by 60% immediately after the first crash. Shortly after the second disaster, in August 2014, Malaysia’s government renationalised the airline, rescuing it from collapse.

In fact the airline was in a mess before the two tragedies. Malaysia last made a profit in 2010. In 2013 the firm lost $356m. As demand for air travel in the...Continue reading