Posted: June 22, 2010 at 8:56 am
We all look for ways to make more money so that we will make enough to put away for the future. The economy being what it is though, earning more is a tall order, and to save money, we need to look to cutting down our spending rather than increasing our earnings.
Settle debts
Debt servicing is an utter waste of your time and money. The money you pay for financing charges on your credit card adds up, and adds up fast. Settle your credit card debt, and get rid of your credit card as soon as you can. You’ll find that the money you once lost to financing will be yours to use or to save as you like.
Downsize housing
High on the list of American excesses in the last few decades leading up to the recession; was the fact that houses got bigger and bigger while families got smaller and smaller. In today’s economic climate big houses just aren’t practical anymore, they cost more, are more expensive to maintain and they are taxed more.
Buy a smaller car
Once again, in the decades that led up to the crisis, American car manufacturers made big gas guzzling SUVs instead of fuel efficient compact cars. Now the whole country is paying for it. A smaller car will drastically reduce your fuel, maintenance and insurance costs. If you need to buy a new car, try to buy second hand.
Take the Train or the Bus
Even the most fuel efficient car can’t beat public transportation for economy, assuming only one or two people use the car. As a country, America really needs to make a conscious effort to save money and energy. A good way to do this is to leave cars at home unless absolutely necessary. For short distances, you can walk or take a bicycle, it’ll even improve your health to do so.
Cut corners on insurance
Insurance is very much a luxury expense and protection against worst case scenarios. Proof that insurance is not usually necessary is the huge profits insurance companies make. Take a good look at your car insurance, your home insurance, your life insurance, and all insurance rates you may be keeping up, and see where you can trim fat.
Take it easy on the gadgets
Gadgets like mobile phones, laptops, Ipods, digital cameras, and other popular electronics are practically perishable goods in this day and age; they are replaced with the next model in months, not even a few years. Before investing in a gadget, ask yourself it is has any essential function or feature that will be of real practical use to you, and that you don’t have with any of your existing gadgets. You’ll find that almost every time you don’t actually “need “the gadget.
Sell clutter
The typical American full is littered with all kinds of unnecessary, forgotten things. A garage sale should earn you some needed cash, as well as give you a more realistic idea of just how big a house you need.
Shop online
Doing your shopping online saves time, energy and money. There are those who say that this type of shopping is risky. The truth is there are just as many risks with conventional shopping, and online shopping is a lot cheaper.
Sun dry clothes
Electric dryers consume a lot of energy and need to be maintained, they also cause a lot of unnecessary wear and tear on your clothes. Air drying saves money on many levels.
These tips may not all apply to you, but whether or not all of them do, some of them will. Aside from these, with a bit of creativity you can probably come up with you own ways to save money. The point is you need to be looking for those ways in these difficult times.
Posted: June 22, 2010 at 8:28 am
Reverse mortgages were designed for older individuals who have paid off a substantial portion of their mortgage and find themselves on a fixed income. Instead of the borrower continuing to pay the lender the monthly mortgage payment, the lender actually pays the borrower a monthly stipend against the equity that the owner has in the home. The borrower must be at least 62 years old and have a good deal of home equity. The loan does not be repaid until the last holder of the mortgage passes away or sells the property. If all owners die, the estate has a grace period of 12 months to either pay off the loan, refinance the mortgage or sell the property. Remaining equity in the property rolls over into the estate.
The official term for reverse mortgages is Home Equity Conversion Mortgage (HECM). They are insured under FHA guidelines and therefore have some substantial restrictions placed on them by the Department of Housing and Urban Development. Lenders must receive approval before they can offer this type of mortgage, whether they be a bank, loan association, mortgage company or any other type of financial institution.
Like any other type of loans, reverse mortgages have both their up sides and their down sides.
The positive aspects of the loans are that they allow a homeowner to remain in their home without making a loan payment and in some cases even receiving a payment. This is especially useful to seniors living on a fixed income. Since credit scores and income are not factors, it’s extremely easy to qualify for one of these loans. Owners have several options when it comes to receiving payouts from the equity including lump sums, monthly payments, a credit line or a combination. The money received from the loan is not taxable. Since the loans are based off equity and total home value, heirs will never be left in a situation where they owe more than the loan is worth.
On the down side, closing costs for these mortgages are higher than conventional mortgages. The income received from the loans may affect the owners’ ability to qualify for certain government programs such as Medicaid.
Though many home owners who have reached retirement age find that these loans fit their living situations nicely, others will find that they are not the best option. Before receiving the loan, HUD requires that borrowers go through a counseling program so they understand exactly what the process entails. Counselors who provide this training must be certified by HUD so they can accurately explain the pros and cons of the mortgage.
Posted: June 22, 2010 at 7:55 am
Though the financial crisis has reduced the number of credit card offers filling the mailboxes of most Americans, there are still plenty to keep us busy. Most of these offers are just another way to lead us into debt, but occasionally one will show its face that can actually help your financial situation. A few simple steps can help you separate the good from the bad or even fraudulent offers.
One of the biggest selling points for credit cards is the phrase “pre-approved.” Rest assured that no one is pre-approved. This simply serves to peak your interest and get you to take the hook. This convenient phrase often masks many costly fees, listed in fine print, somewhere on the application.
The best way to secure a credit card is proactively. If you think the banks are doing you a favor by sending you the best deals, without you having to do anything, then I’m afraid you are sadly mistaken about how credit card companies operate. You have to do your homework. There are good deals available, but the best of them are not publicized. It’s up to you to find them.
If an offer asks you to pay a fee up front, toss it in the garbage immediately. It’s not only not worth it, but it could actually be a fraud. There is absolutely no need to have to pay for a credit card. There are many offers out there that will cost you absolutely nothing up front.
Even if you have terrible credit, you can get a card that is secured by a deposit. The card makes its money by charging you a small fee to use it. This is an opportunity to establish or rebuild damaged credit.
Don’t fall into the trap of transferring balances to keep interest payments low. This will ultimately fail in the end. It’s better to establish a plan to pay off existing debt. Juggling interest rates will lead you to charge more on the card and you will never break even. Eventually the offers will stop coming and yo will have to face the piper.
Credit cards are a convenient tool if used responsibly, but don’t think they are a favor to you. Do your own research and shopping and leave those pre-approved offers to the next sucker.
Posted: June 14, 2010 at 1:14 pm
Good news…financial guru Clark Howard says mortgage rates are at an all time low! Reposted from his site:
MONEY-SAVING MOMENT: With mortgage rates at all-time lows, now may be a great time to refinance — if you meet new stringent criteria.
The national average for 15-year mortgages is 4.1 percent, according to The Los Angeles Times. (Editor’s note: Figures accurate as of June 11, 2010.) That means some people are getting in the upper 3s fixed for 15 years! Those who want to avoid closing costs might be getting in the low 4s. Meanwhile, the national average for 30-year mortgages is around 4.75 percent.
With the purchasing market having fallen off a cliff, lenders are eager to get you in a refi to drum up some business. They’re desperate for those origination fees.
Right now, there’s a bigger spread than normal between 15- and 30-year rates. You’ll still need good credit; you’ll have to intend to stay in your home to make a refi worthwhile; and you must appraise out.
Because of new stringent rules, if you don’t have a lot of equity in home, appraisers are no longer erring on the high side for property valuations. That makes it much harder to qualify.
If you can, though, this is a phenomenal opportunity. It’s also an ironic one because interest rates were trending higher before the European financial crisis of 2010.
Could mortgage rates go lower? No one knows.
Article source here.
Posted: June 11, 2010 at 8:50 am
Certificates of Deposit
If you’re looking for a way to maximize your earnings in a short term of medium term investment, with a minimum of personal financial risk, it’s hard to beat the certificate of deposit. Though you are required to keep the money in the account for a predetermined amount of time to reap the maximum gains from the investment, the periods are very flexible and you can choose the one that is best fro your current situation. What you get in return is a higher interest rate than that paid by a conventional savings account.
Certificates of deposit have a minimum initial investment required to open the account. Usually you will be required to deposit at least $1000 initially, but some accounts can require investments of $100,000 or more. The higher the initial investment, usually the higher the interest rate the account will pay.
Once the account reaches maturity after the required period of time, the investor has two options for how to receive the gains. The money can either be rolled into the account and continue to accrue interest of it can be paid as a separate earnings payment. The interest can also be applied to another CD account.
A few weeks before the CD is set to mature, the financial institution will notify the client and request instructions as to what to do with the account. At this point the saver must make a careful decision as to what’s best in order to maximize their gains. Often the institution will offer an even higher interest rate if the saver agrees to leave the account fully funded. Usually if the bank doesn’t receive instructions, they will roll all of the money, principal and interest, into a new CD with similar provisions. Since CD interest rates change frequently, this is not always a good strategy. For that reason, it’s best to stay current on the status of your CDs so you can make the best decision when the time arrives.
A strategy used by many investors is called the ladder strategy. They invest various sums of money into a variety of CD accounts, rather than putting all their money into one account. This way, they have accounts maturing at various times and can choose which length of investment at the present time, when reinvesting their money. In this way you will always have cash available to invest in higher interest CDs when they become available, rather than withdrawing early from another account and facing penalties.
When you acquire a CD, all potential penalties must be clearly stated and defined as per the Saving Regulation Act. These terms cannot change during the life of the CD. Occasionally a situation might arise when it’s smarter to withdraw the funds early and pay the penalty so you can take advantage of a higher interest rate elsewhere. It pays to keep up with what’s going on with the market.
CDs are one of the safest investments you can make. It is guaranteed to earn you money, without the potential for loss. Many investors find that CDs are the best fit for their situation.
Posted: June 8, 2010 at 11:33 am
As summer draws closer, a lot of kids are already dreaming up ways to earn a bit of extra cash while they have the time off to do it. For a lot of kids, a big drawback of the summer break is that they don’t get a regular allowance like they would during the regular school year. It makes it that much tougher to save up for things they want.
The good news for you if you are a kid, is that people in general actually have come to expect that in the summer there will be a lot of kids looking to do odd jobs. So there is never a shortage of money making opportunities. Here are some tips to earn for that skateboard, or that video game, that comic book, that MP3 player or that hot date:
• Set goals- Knowing what you want, when you want it, and how much it costs will help you plan your summer and give you an idea of just how much work you need to put in to reach your goals.
• Sell old stuff- Sell old clothes and accessories, maybe even a few usable toys that haven’t been played with in years, old game consoles and games, and even VHS tapes. There are a lot of ways you can move such goods. You can try consignment shops, garage sales or even social networks like Facebook.
• Save your cash- Your parents are bound to slip you some cash every once in a while over the summer, if you have a long term goal, pocket the cash and save up. Try not to eat out too much or play at arcades.
• The usual jobs- There is a reason mowing lawns are such a time honored tradition for boys, and babysitting is equally popular for girls. These jobs work, those who hire kids for these jobs are happy to pay for the services, and generation after generation kids keep coming back for more because the money is good.
If you’re resourceful and hardworking enough, you can have a fruitful summer, and even end up getting something really cool for yourself when it’s over.
Posted: June 4, 2010 at 8:46 am
Getting personal injury insurance can be expensive, but given what you stand to lose in a personal injury suit, the question is can you afford to not have it? If you own some kind of business, particularly one where people interact with your employees or physically use your products, you really can’t afford to not have personal injury insurance.
Expect the Worst
There are very few businesses where there is virtually no risk of injury. Some businesses like theme parks, exotic restaurants or construction firms run higher risks than most. For most businesses you need to treat the possibility that people could get injured very seriously. You should thus have personal injury coverage on hand to deal with such eventualities.
General liability insurance does afford some protection from personal injury claims, but typically, there are several exclusions, all in all general liability won’t quite cut it for personal injury cases.
Get a Policy that Covers Appropriate Expenses
Personal injury coverage should protect against medical expenses and other damages paid to the victim. Shouldering such costs without the benefit of insurance can be devastating to a business. Personal injury lawsuits are an extremely common occurrence in America, so much so that there are opportunists who use the phenomenon to make money.
When purchasing personal injury insurance, make sure the coverage you get is relevant to your company. Be proactive, and anticipate how and when injuries could occur, as well as opportunities that less than honest individuals may want to exploit. When it comes to personal injury insurance, it often pays to expect the worst, and to prepare for it.
Posted: June 3, 2010 at 9:22 am
If you are an investor who uses money market accounts as part of your investment strategy, you are familiar with the search for the highest interest rates offered. Banks want your business so it’s a never ending competition, which results in an ever changing market. A few little tricks can help you get the best rates possible.
First, let’s talk about the difference between a money market mutual fund and a regular money market account. A basic money market account is a savings account that places some restrictions on minimum investment and number of monthly transactions. In exchange for agreeing to these restrictions, banks pay you a higher interest rate than for a normal savings account. The bank also accepts the risk for anything they decide to use your money for. A money market mutual fund is a very conservative investment instrument offered by brokerages or banks. The money you invest into the account will be reinvested into the stock market. This allows for an even greater return, but also places more restrictions on the movement of your money. You also must accept that your money is not guaranteed and losses are possible, though rare.
In a money market fund, the money is invested in a variety of low risk securities such as government bonds, CDs and treasury bills. Though you will not earn as much as you would had you invested the money directly into corporate stocks and bonds, there is very little risk that you will lose your money.
Since the institution needs to have access to your money so they can invest it, you will be restricted in the number of withdrawals and their amounts. A minimum balance will have to be maintained. If you need quick access to your money, these funds are probably not for you.
Some of the highest interest rates for money market funds can be found with brokerage firms. They almost always outperform funds offered by banks since they have the know how to make somewhat riskier and more diversified investments. Before deciding on a fund, make sure you shop around for the best rates.
Posted: May 27, 2010 at 12:00 pm | Tags: cds, investing, ira, roth ira
Difference Between an IRA and a CD
Though most of us fail to know how to put money away, we all wish to retire comfortably. There is a lot of technical jargon involved, although the basic theory is straightforward enough. Differentiating between an IRA and a CD is delicate business, because they are both very much alike. Let us evaluate IRAs initially. There are two forms of IRAs, a conventional IRA and a Roth IRA, and the distinction concerning the two is crucial.
A traditional IRA, or Individual Retirement Account, makes it possible for tax free savings over a definite time period. If you put money into a traditional IRA it will be deducted from your yearly pay, which means the total won’t be susceptible to taxation. If you’re age fifty or over, you can add up to four thousand dollars a year in a traditional IRA.
There is a ten percent penalty for withdrawal from a traditional IRA prior to age 60. It is vital to remember that any withdrawal is taxable. Sometimes the ten percent fee for early withdrawal is waived if you are taking the money for educational purposes or purchasing a home.
The alternative class of IRA is identified as a Roth, having been named after Senator William Roth. The foremost benefit of a Roth IRA is the ability to withdraw direct contributions (funds contributed, minus profit) tax free, with recovery of the revenue part tax free in five years. The drawback is that Roth IRAs aren’t tax deductible, and the money won’t be subtracted from your yearly earnings.
A further drawback of choosing a Roth IRA concerns wealthy investors. Probably since the Roth IRA was established as an incentive to middle class Americans, there is an earnings limit that you can not exceed. A Roth IRA is not suggested for persons that earn greater than $150,000 per year. For joint filers the limit is one hundred and sixty six thousand dollars.
A CD (Certificate of Deposit) is a way to save money that is insured by the banks. A CD is considered a protected and steady way to generate profits, as it earns more revenue than a savings account but less than some volatile investments. The best part about CDs is that they are typically exposure free, but it’s important to remember that there are strict penalties for withdrawing the cash earlier than the period ends. It is imperative that you shop around for the most favorable cd rates.
Whether it’s in a CD, IRA, or a 401k (where your employer adds cash to complement your own), you need to be saving at the very least ten percent of your yearly earnings for retirement. Saving for retirement is crucial for young individuals. The only means to monetary safety in retirement is to start saving as soon as achievable.
Posted: May 20, 2010 at 9:21 am
So, you tend not to be acquainted with which investment options to select for your 401K. regardless of the fact that most know they really need to invest to realize their financial plans. Here’s your beginning guide and a uncomplicated investment game plan that will succeed for you in the future and retirement.
Two major financial liabilities challenge working Americans at the moment: health insurance, and the reality that the public doesn’t realize how to make investments. A proven approach that has been successful for individuals in the past follows. Your goal as a clueless investor should be to make good profits with only reasonable danger in your 401k or other retirement budget. This simple investment strategy is planned to do this very thing over the long term.
Normally, most individuals have a high proportion of mutual funds. Money market, bond, balanced, and stock funds are the four main variety of risk. The safe bet is a money market fund. Bond funds yield superior interest, but swing in value, giving them average risk. Stocks funds ebb and flow more in value, so they have the greater risk; but have elevated income potential expansion.. Balanced funds, consisting of stocks and bonds, will not be included in our simple investment game plan.
Your job is to make a decision where your plan contributions go every pay period. This is referred to as investment allocation and is your number one responsibility. Investing in the variety of options entails a uncomplicated two-step procedure. The first phase is to set aside your distribution to enable half of your contributions to go to the money market fund which ought to be offered. The other half gets split evenly between a bond fund and a stock fund. Look at the fund’s literature to reinforce your choice of an INTERMEDIATE-TERM HIGH QUALITY BOND FUND. Select a stock fund which is a LARGE-CAP DIVERSIFIED STOCK FUND.
At this point, your asset allocation guidelines ought to be 50 percent safe, 25 percent bond fund and 25 percent stock fund, for a total of 100 percent. Here’s phase two of our investment stratagem. You want the money, as it accumulates in your plan, to be allotted the exact way as above: 50%, 25%, 25%. If you already have funds in your plan, shift it to the above investment choices and percentages. As time goes on, step two of our investment game plan necessitates your consideration once a year.
It will modify as time goes on, as the three separate investment options will all perform in a different way. Think of it this way: your stock fund might become 55 to 65 percent of your account worth if stocks have a high-quality year. If this were the case, you would be required to restructure your allocations back to the initial 50 percent safe, 25 percent bond fund and 25 percent stock fund. To make this transpire, you will have to reassign assets accordingly. Remember, once a year you have to to redistribute your portfolio to preserve the first allocation percentages.
If your plan offers an Automatic Rebalance alternative, this will be done routinely. If yours will , take advantage of it. Worrying about rates or stock market performance may be prevented utilizing this simplistic policy. You can circumvent considerable losses if the market turns bear like it did in 2008. It’s straightforward, in actuality.
By redistributing, you are repeatedly moving cash to a safer distribution as stocks increase in worth. On the other hand, as stocks get less expensive you are systematically enabling yourself to invest extra in them by redistributing. Traders in 401k plans took vast cuts in 2000-2002 and again in 2008. They did not understand how to invest; and the majority of did not possess a reliable investment policy.
You can not afford to avoid the exposure of stock investing, because that’s where the gain possibility is. When you understand how to devise an investment strategy, you can invest with a little assurance and a smaller degree of hazard. Simply do not overlook to rebalance yearly.
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