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Using Financial Leverage To Develop Your Ebay Business

Used in the physical sense, the word “Leverage” means an assisted advantage. As a verb, “to leverage” means to gain an advantage through the use of a tool. For example, you can more easily lift a heavy object with a lever than you can lift it unaided.

Leverage is commonly used everyday in the world of finance. When used in the financial area, Leverage is described as the use of borrowed money to make an investment and the return on that investment.

All the major international banks and financial institutions use Leverage in their day-to-day operations. All banks have limited capital. Instead of lending out their own capital, and thus limiting both the amount of money they can lend because of regulatory requirements and restrictions and the number and type of their business activities, Banks take deposits from customers at say 3% and lend these deposits to borrowers at a markup, say 5%. Since they are lending more money than they have in capital, they thus produce a higher return on equity (ROE).

The banks have thus used leverage i.e. borrowed money to increase their return on capital or equity.

Most of us use financial leverage everyday probably without realizing it. You are using financial leverage whenever you use your Credit Card to buy something instead of using the cash in your savings account. Essentially you are using your credit limit which in reality is borrowing money from the credit card company.

In many instances using financial leverage makes sound financial sense. For example, in the end-of-year sales the gold watch you have always wanted is reduced from $1,000 to $300. Instead of taking the money out of your deposit account, you use your credit card to purchase the gold watch and you settle the credit card balance in full 30 days later when the invoice arrives. By doing this you have taken advantage of the sale price and at the same time you have saved 1 month’s deposit interest on $300. You have thus used financial leverage.

Drop-shipping – The Low-risk, No Cost Way To Sell On eBay

Similarly, you can use financial leverage in the form of Drop-shipping when selling on eBay.

The tremendous advantage of drop shipping is that you have very little or NO risk as a seller. You only pay for items that sell and the drop shipper sends the product to your customers.

The process is very simple. All you need to do is to find companies willing to drop ship for eBay sellers. There are many good and reliable drop-shippers around.

o Step 1 – Find a reliable, or several reliable, Drop-shipping company/companies. There are many around;

o Step 2 – List your auction items on eBay for 3, 5 or 7 day auctions – at your choice. Your eBay’s listing fees are usually advised to you on the 15th of each month and debited to your credit card approximately 1 week later – around the 22nd of each month;

o Step 3 – Sell your item (s) on eBay. You will get paid by the buyer normally within 24-72 hours after the end of the auction;

o Step 4 – Specify in your auctions where you want the buyers to make payment. For example, specify your PayPal or bank account. The choice is yours;

o Step 5 – Collect your payment from the winning bidder in the same account you specified in Step 4 above;

o Step 6 – As soon as the auction is completed and payment received, order and pay immediately for the merchandise from the Drop-shipper using the same account where you received the payment from the seller. Some Drop-shippers prefer to charge a valid credit card. Some prefer PayPal;

o Step 7 – Repeat this exercise as many times as you want;

Let us Summarise:

o Day 1: List your auction items;

o Day 7: Receive payment in the account specified above at the end of your 7 day auction listing. If your listing is for 3,or 5 days you will receive payment at the end of the 3 or 5 day listing;

o Day 8: Order and Pay for the item sold. The Drop-shipper dispatches item directly to the Buyer;

o Day 15: Receive eBay Listing Fees Invoice;

o Day 22: eBay listing Fees debited to Credit Card Account;

o Day 23: You have surplus funds (the profit) in your account;

Thus you have successfully used Financial Leverage to generate profits on eBay. You have not used any of your own money or capital. Instead you have used your credit status with your credit card company:

You received full payment for the item BEFORE you paid the drop-shipper for the item and BEFORE you received and paid the eBay commissions invoice.

The downside risk is that, if your auction item does not sell, you still have to pay the eBay listing fees. BUT this risk is exactly the same if you had purchased and paid for the item in advance using your own money. The SUBTLE DIFFERENCE is that you have not used any of your own money to carry out the operation.

IMPORTANT NOTE: The information presented herein represents the experience and views of the Author with the subject matter at the time of publication. No warranties are made whatsoever about the amount of money, if any, that the reader will earn from following the steps described in this Article and the reader is encouraged to seek competent legal and accounting advice before engaging in any business activity.

Why Spain Is Unlikely to Continue on Its Financial Path

Recently the growing Euro concerns are being shifted towards Spain, and rightfully so. When you take into consideration that Spain’s economy is twice the size of Greece, Portugal, and Ireland combined, it’s becomes clear why it is a serious concern for the EU. Spain’s financial crisis is arguably more of a question of morality than a true financial crisis, at least not yet.

Spain’s bank concerns center around BFA-Bankia, which was formed in 2010 as a merger from 7 struggling savings banks. When Bankia’s market value plummeted by 43%, it was nationalized by Spain on May 9th 2012. Today, the bank’s assets are equal to 1/3 of the county’s assets. To protect this interest, just recently Spain was given $120 billion Euros as an economic stimulus in order to try and recapitalize their banking system. Unfortunately, this is the least of Spain’s problems and the aid of additional funds is likely to throw Spain further in the red down the road; and seemingly sooner than later. Many professionals believe that artificial growth is today’s true culprit in Spain’s financial crisis.

Since the fall of the housing peak in 2007, Spain has approached its foreclosure crisis quite differently. In order to protect the values of the 329,000 properties that were in foreclosure, Spain offered 100% financing with many loans going as interest only loans. This financing model is only available to bank owned properties, and to no one else. This has caused the home values in Spain to drop by only 22% according to Mr. Encinar, CEO of (a Spanish property website), whereas values in Ireland have dropped by over 60% since their peak in 2007. Mr. Encinar speculates that the decline in housing values without artificial support (the 100% financing) would be at least twice what it is today.

The construction industry in Spain is a different but equally shocking story. For years Spain has relied on home and office building as a source of growth, as it is feared that without this growth the country may have too much of an uphill battle. Builders in Spain are continuing to build despite a massive inventory of vacant homes. Spain is allowing this because construction accounted for more than 20% of their GDP at the height of the boom, and it is argued that Spain does not want to lose this momentum. According to Ruben Manso, an economist at consulting firm Mansolivar & IAX, “There has been a lot of cheating going on where banks have lent developers new money, classed as new lending, so they can pay off their original loans”. Old loans that should have triggered credit lines pulled were instead deemed as paid in good standing. These unscrupulous measures were put into place in order to keep prices artificially high, giving the illusion of a growing nation.

This artificial demand for pricing will not be able to continue with the high unemployment rate of 24%. As this process continues, their fiscal cliff gains more elevation day in and day out, which in turn will likely spur a devastating financial drop. “Spain has engaged in a policy of delay and pray. The problem hasn’t been quantified by anyone because there is a huge pressure not to tell the truth” says Mikel Echavarren, CEO of Irea, a corporate finance company in Madrid specializing in the real estate industry.

Bad Credit Lender – Getting You Out From the Financial Crisis Pit

Are you curious what a bad credit lender is? There would be times in our lives when we would stumble down financially. It is a fact and it really happens. The skyrocketing prices of basic commodities due to increase in gas and petroleum prices sometimes lead us to make loans and the worse, bankruptcy. However, it may also be a difficult task for you to look for loans to help alleviate your sinking accounts. Sometimes people get frustrated on finding one and easily give up on their knees. The good news is, there are still institutions which are willing to help you to get out of that nightmare. These are what we call the bad credit lenders.

The name itself maybe threatening but I tell you, but these lenders can be angels for you during your agonizing financial drop. Bad credit lender is an institution who provides financial assistance to the people who are in severe financial crisis. They would offer loans which usually do not require borrowers to have equity or credit. But of course, it would be of higher interest rate.

By consolidating your debts on a single payment, you would be able to get a bad credit loan. But there are lenders who would require a person’s signature which is called the co-signor. The person should be one with a good credit.

The lender also knows the fact that even the rich and the financially elite can be also of financial problem at times. They know these because it is being observed nowadays that the increase of the prices of almost everything in the market is unstoppable. Now because of these things, many people are getting more problematic on how they could get through the expenses of their daily needs. Bad credit lenders could be the answer to their problem. They would help you to get loans for you to re-establish your credits. Loans can be used as mortgage loans, personal, business and auto loan financing and on credit cards.

The good thing about a bad credit lender is that they can help you to get a loan within 24 hours or even faster. They would also help you consolidate your debts into a single payment basis. When you have maintained the ability to get back to rebuilt finances and financial discipline, then you are on your sweet way back to good credit. A bad credit lender isn’t bad at all.