Bank of America reported a $2.24 billion loss in the third quarter of this year today. The latest news has shaken investors and the bank has failed to meet analysts expectations. BofA posted a net income of $704 million, representing 15 cents per diluted share in the third quarter of 2008. Many analysts expected the bank to lose around 7 cents per share in this quarter.

The latest quarter’s loss includes $893 million that was paid back to the United States government for the money borrowed from the TARP funds. It also paid $402 million to end a government guarantee term sheet.

The blame for the loss can be pointed anywhere. Most are putting the blame on the economy. Poor economic conditions are still haunting the financial sector. There are still rising foreclosures and credit card defaults are still on the rise as well.

The bank also charged off a huge amount of loans in the third quarter. Here are some examples:

•Credit card debt 30-plus days past due dropped to 7.4 percent from 7.6 percent in the second quarter. But the bank charged off 12.9 percent of its credit card portfolio, up from 11.7 percent in the second quarter.

•Home equity loans 30-plus days past due were reported at 1.4 percent, compared with 1.3 percent in the second quarter. Charge-offs increased to 5.1 percent, up from 4.7 percent in the second quarter.

•Consumer loans, including auto loans, 30-plus days past due increased to 10.1 percent from 9.9 percent in the second quarter. Charge-offs also increased to 20.3 percent in the third quarter, up from 18.9 percent in the second quarter.

BofA also reports that it charged off $873 million, or 4.67 percent of commercial real estate loans in the third quarter, up from $629 million in the previous quarter.

The bank charged off $796 million in small-business loans, or 17.45 percent, in the latest quarter, up from $773 million in the second quarter.

In other Bank of America news, Kenneth Lewis, exiting CEO of the company, will not be getting paid for work that he has done this year. He will not even be receiving a bonus of any kind. All of this is at the request of the “pay czar.”

Source

Here are some pretty common things that people tell themselves right before they find themselves in credit card debt:

1. It’s an emergency.
2. We deserve it.
3. It’s a bargain.
4. It’s not that much money.
5. The payment is small.
6. The card rewards make it worth it.
7. There’s an offer of zero percent APR on purchases.
8. Balance transfers are zero percent APR also.
9. Its for my business.
10. I’ll pay it off after graduation.

Here’s some truths to these lies that people tell themselves:

1. First of all, many times credit is not used in emergency situations. Sometimes we convince ourselves that credit cards will only be used in emergency situations and some people are able to stick to that rule, but not most.
2. No one deserves anything that they haven’t earned and later in life, they will be happy when they can afford something nice with the money that they’ve made working instead of paying interest on a splurge when they were younger.
3. A credit card is never a bargain. You will always pay interest. If you have an interest free card, it won’t remain that way forever and you HAVE to pay it off in order to keep from having to pay the interest. Did you know that even when you go to the furniture store and they say “no interest for 24 months!” or something like that, if you don’t have the furniture paid off by the end of those 24 months, you will have to pay interest on the entire purchase price,  not just what you owe.
4. It’s not that much money on the purchase maybe, but over time, the interest adds up and it becomes a lot of money.
5. The payment is small because it is meant to ensure that the credit card companies get the most amount of money they can from you. The smaller payment you make, the more interest the company will earn from your money.
6. The rewards are never worth it. Haha.
7. See number 3.
8. See number 3.
9. Businesses sometimes need loans to start up. However, if you’re going to take out money for your business, perhaps you should consider small business loans first. The interest rates are much smaller. However, if you can avoid it, why would you want to start your company in debt.
10. Haha. College procrastination at it’s greatest. I paid my credit cards off before graduation because I knew I had a crazy high student loan bill. Not everyone will have such an outrageous loan payment, but if you do those credit cards will likely be put on the backburner for awhile.

Lies, Lies, Lies….

College is supposed to be the next step after high school; it is supposed to be where you become a well rounded individual and educated to get out in the “real world” to earn money and afford the life that you dream of.

This is not so much the case when the economy has gone sour.

I just witnessed firsthand a college graduation; I graduated with my B.B.A. on Saturday. Looking at the future is scary, and not having a job is worse. I will be taking classes through the summer, but August will be here in no time and I will be expected to have something lined up so I can start paying my $30,000 in student loans.

Luckily, I have been fortunate enough to be able to make it through college with only student loan debt and not credit card debt. A recent report has indicated that many students are graduating college with around $7,000 in credit card debt and much more debt in student loans. So of course the rate of default on student loans has increased in the past year.

The entire situation of hundreds of thousands of people graduating is exacerbated by unemployment and employers being far more particular about whom they hire. After looking for jobs in marketing, I’ve realized that if you don’t have at least 3 years of experience in the field, you are unlikely to find something right out of college at a marketing firm (unless you graduated with highest honors it seems).

There is some hope though; in July a new federal program will go into effect that allows graduates to cap his or her monthly loan payment to 15% of his or her income. While the program was created to give some relief to those who go into lower paying industries like teaching, it will help everyone. Another benefit to this program is that in some sectors, public service loan forgiveness will go into effect after 10 years of payments; all graduates’ loans will be forgiven after 25 years of payment.

I can’t imagine still paying back loans after 25 years. I am personally hoping to have my loans paid off in 10 if all goes well. I would love to have them paid off sooner, but I have to make sure that the bills are paid first. I think this is where the problem is coming from when students graduate. Like me, they live with their significant other or spouse, or are on their own and have to make sure that they have a place to live rather than worry about student loan payments.

However, it looks like this federal program will be helpful to graduates that will have a hard time paying back their student loans because of other financial obligations.