Financial crisis can arise from a variety of reasons. Death, injury, divorce, separation, job loss, or what ever caused your credit to be bad. We can help you fix it. When you can't pay your bills this can become very stressful thing. Depending on the severity of the situation you could be faced with judgments, endless collection calls, embarrassment by friends and family, foreclosure, and repossession. These things are some of our worsted nightmares.
You work hard for the things that you have. But certain life events can change all of this. If you are not the sole income provider in your home this could be you at some point. So you want to be aware of this and take the necessary precautions to prevent this from being as big of a problem should any of these events happen to you. Protective measures to protect your financial security can be things like life insurance for example. But your debts that you owe people can be a whole different story. You need to know what steps you need to take to make your life easier when financial disaster hits home. When you are unable to pay credit card payments, your interest rates go through the roof.
Then when you start paying on time again your rates stay there. You must understand that once a bank labels your debt in default interest rate. You could be paying in upwards of 30% or more. Once this happens you need to move your debt somewhere else. Now with bad credit this can be a extremely difficult process. So most people that don't know where to start just don't do anything about it and live with the bad marks on your credit. It doesn't need to be that way. You can start over with your money it just will take some work that's all. If you can't pay the money you owe your credit card companies as a result of a life altering event such as death of a key family member. You have options which can eliminate this debt or make it so you don't have to pay as much every month.
These options can include debt settlement, credit counseling, or bankruptcy in extreme cases. You can get a consultation on your debt situation for just $20 by visiting Credit Repair & Lifestyle Services to find out what you can do to fix your financial disaster. These guys deal with people in all types of bad credit situations. They help you repair and rebuild your credit. That's right, they will not only help you fix your credit.
5 Simple Steps to Maximum Dollars & Sense - Easy To Follow Principles For Financial Independence Pt2
Continuing with what was said last in the first part of this article. I can not stress enough the importance of having someone who know and understands money like a jeweler knows stones and a carpenter knows wood, so you need guidance from someone who has learned and is applying certain financial principles.
Now Simple Step 4. Don't throw your money in the ditch! What is the ditch? I am glad you asked. The ditch is both metaphorical and literal. First lets talk about the metaphorical aspect of the ditch. A ditch is anything that involves the use of your money in any situation that the borrower is not familiar with.
Again don't lend your butcher money to start a night club. Why not? Because your butcher does not know about the night club industry and so therefore would more likely lose the money you've loaned him. So, don't lend money unless the borrower is good for it and everything is written on paper and he/she knows the chosen industry.
And, Simple Step 5. Don't harlot your money. Earlier I said you want your money to have babies and you do, through wise counsel and investing. What we are talking about now is not making a harlot of your money. You know, running around the streets at night, being mistreated and disrespected by all. What does that mean financially?
It means that money and wealth will not come to the man who loosely gambles or blindly gives money into plotted schemes with exceedingly high returns. What I mean by plotted schemes with exceedingly high returns is supposed business opportunities that involve you investing a lot and going to make a rapid return of thousands times.
Now there are legitimate opportunities that do offer high returns in a short time. Of course these will tell you that it is going to take time and dedication on your part to make is bare fruit..
So lets recap the 5 Simple Steps to Maximum Dollars and Sense: Easy To Follow Principles For Financial Independence.
1. Save at least 10% of all earnings
2. Make your money have babies!
3. Money stays with those who are wise in its ways
4. Don't throw your money in the ditch!
5. Don't harlot your money.
Simply follow these 5 Simple Steps and you will be on your way to financial independence. If you have found this article helpful in any way, be sure to keep a copy for you and send the direct link for this article to friends, family and folks you meet anywhere.
Now Simple Step 4. Don't throw your money in the ditch! What is the ditch? I am glad you asked. The ditch is both metaphorical and literal. First lets talk about the metaphorical aspect of the ditch. A ditch is anything that involves the use of your money in any situation that the borrower is not familiar with.
Again don't lend your butcher money to start a night club. Why not? Because your butcher does not know about the night club industry and so therefore would more likely lose the money you've loaned him. So, don't lend money unless the borrower is good for it and everything is written on paper and he/she knows the chosen industry.
And, Simple Step 5. Don't harlot your money. Earlier I said you want your money to have babies and you do, through wise counsel and investing. What we are talking about now is not making a harlot of your money. You know, running around the streets at night, being mistreated and disrespected by all. What does that mean financially?
It means that money and wealth will not come to the man who loosely gambles or blindly gives money into plotted schemes with exceedingly high returns. What I mean by plotted schemes with exceedingly high returns is supposed business opportunities that involve you investing a lot and going to make a rapid return of thousands times.
Now there are legitimate opportunities that do offer high returns in a short time. Of course these will tell you that it is going to take time and dedication on your part to make is bare fruit..
So lets recap the 5 Simple Steps to Maximum Dollars and Sense: Easy To Follow Principles For Financial Independence.
1. Save at least 10% of all earnings
2. Make your money have babies!
3. Money stays with those who are wise in its ways
4. Don't throw your money in the ditch!
5. Don't harlot your money.
Simply follow these 5 Simple Steps and you will be on your way to financial independence. If you have found this article helpful in any way, be sure to keep a copy for you and send the direct link for this article to friends, family and folks you meet anywhere.
Valuation Reports
One of the great bamboozles created for the investment public is the creation of valuation. The broker, financial planner or stock analyst says this stock is undervalued or the market in general is overvalued.
What is even more confusing is the analyst at stock company “A” says a certain stock is overvalued while the analyst at another brokerage firm says the same stock is undervalued. How can that be when each one is working with the same information? Each analyst is right – for him, but there is only one correct answer. The computation, no matter how it was arrived at, will be proven if the price of the stock rises or falls per the prediction. Beautiful multiple page color slick reports are prepared for investors who believe what has been written and gamble (I did not say invest) their money on the outcome. Corporations pay tens of thousands of dollars for deep analytical reports on which their executives rely to make multimillion dollar decisions.
It is less than a 50/50 chance because many times a stock will go sideways, neither up nor down. Reputations of analysts are made on the outcome. A few are very good, but a very wise investor will always trade with an exit strategy to protect capital. Analysts examine P/E ratios (Price/Earnings), cash flow, industry performance of the company sector, general market direction, world conditions and technical analysis for guidance. Economists are particularly fond of Greek formulas, many of which have become famous such as the Black Scholes formula for option analysis. Nobel prizes have been awarded for formulas and theories only later to have been proven wrong. There are formulas such as Tobin’s Q that have proven accurate over the years that predict actual market value based on corporate wealth.
It measures the ratio of market value of a company to the replacement cost of its assets. It is better adapted to the general market then individual companies, but is slow moving. It is subject to judgment by each analyst. It still comes down to the fact that investing (call it trading if you wish and many call it gambling) is not a science, but an art. There are few great (rich) artists. Most of the very rich did their valuation analysis and then were bold enough to act on it. The old saying, “Beauty is in the eye of the beholder” holds true for stock selection, but is phrased somewhat differently.
“Valuation is in the mind of the investor.” When an investor receives a report from any analyst his concern should be with the analyst. Many of the reports sent to customers are merely a compilation of information put together by a college student intern. They are factual, but should be cautiously used for investment decisions. Brokers are not qualified to give valuation reports. Any stock or market valuation report must always be accepted with caution.
What is even more confusing is the analyst at stock company “A” says a certain stock is overvalued while the analyst at another brokerage firm says the same stock is undervalued. How can that be when each one is working with the same information? Each analyst is right – for him, but there is only one correct answer. The computation, no matter how it was arrived at, will be proven if the price of the stock rises or falls per the prediction. Beautiful multiple page color slick reports are prepared for investors who believe what has been written and gamble (I did not say invest) their money on the outcome. Corporations pay tens of thousands of dollars for deep analytical reports on which their executives rely to make multimillion dollar decisions.
It is less than a 50/50 chance because many times a stock will go sideways, neither up nor down. Reputations of analysts are made on the outcome. A few are very good, but a very wise investor will always trade with an exit strategy to protect capital. Analysts examine P/E ratios (Price/Earnings), cash flow, industry performance of the company sector, general market direction, world conditions and technical analysis for guidance. Economists are particularly fond of Greek formulas, many of which have become famous such as the Black Scholes formula for option analysis. Nobel prizes have been awarded for formulas and theories only later to have been proven wrong. There are formulas such as Tobin’s Q that have proven accurate over the years that predict actual market value based on corporate wealth.
It measures the ratio of market value of a company to the replacement cost of its assets. It is better adapted to the general market then individual companies, but is slow moving. It is subject to judgment by each analyst. It still comes down to the fact that investing (call it trading if you wish and many call it gambling) is not a science, but an art. There are few great (rich) artists. Most of the very rich did their valuation analysis and then were bold enough to act on it. The old saying, “Beauty is in the eye of the beholder” holds true for stock selection, but is phrased somewhat differently.
“Valuation is in the mind of the investor.” When an investor receives a report from any analyst his concern should be with the analyst. Many of the reports sent to customers are merely a compilation of information put together by a college student intern. They are factual, but should be cautiously used for investment decisions. Brokers are not qualified to give valuation reports. Any stock or market valuation report must always be accepted with caution.
Creating a Budget - Step-by-Step Guide to Managing Money
It is not as complicated as it sounds nor is it as dreadful. I know the thoughts are running through your head right now of not being able to have fun or having the enjoyment of purchasing clothes, eating out, or participating in exciting activities. However, this couldn’t be farther from the truth. Establishing a budget not only allows you to see what you are spending your hard earned money on, but it also allows you to set aside money each month so that you can enjoy your leisure activities.
What Are You Spending Money On?
It is necessary to write down your spending habits for at least one month. Consistently recording your purchases and bill payments will allow you to see exactly how much money you spend on various expenditures. Daily, jot down how much you spent on food, gas, books, etc… Carry a binder or notebook with you so you can conveniently jot down the amount spent before you forget. Keeping a log will dramatically open your eyes to the amount of money you are spending on a daily basis and will allow you to adjust your budget accordingly.
Create Categories
Create a list of categories that you can organize your expenditures in. For example, you decided to eat lunch at Panera Bread and you spent $10.00. Create a Restaurant category and place this amount under that particular category. Not only will you be able to track your expenses, but you will be able to quickly see where you are spending the most of your money. You may also use a computer finance software program to keep track of your expenditures, whichever works best for you. Write down as many categories as you can think of. You may have 10 categories or you may have over 20, it all depends on your lifestyle.
See Your Results
At the end of the month, tally the results of your log. Pay attention to where you have spent the most money and where you spend the least. Having kept this log should dramatically open your eyes to see exactly where your money has been going during a month’s time. You may be shocked to see that you spent $15 in late charges for overdue books at the library or you noticed that you spend a large amount on fast food. Take some time and sit down and look at ways you can cut back in certain categories or eliminate all together.
What Are You Spending Money On?
It is necessary to write down your spending habits for at least one month. Consistently recording your purchases and bill payments will allow you to see exactly how much money you spend on various expenditures. Daily, jot down how much you spent on food, gas, books, etc… Carry a binder or notebook with you so you can conveniently jot down the amount spent before you forget. Keeping a log will dramatically open your eyes to the amount of money you are spending on a daily basis and will allow you to adjust your budget accordingly.
Create Categories
Create a list of categories that you can organize your expenditures in. For example, you decided to eat lunch at Panera Bread and you spent $10.00. Create a Restaurant category and place this amount under that particular category. Not only will you be able to track your expenses, but you will be able to quickly see where you are spending the most of your money. You may also use a computer finance software program to keep track of your expenditures, whichever works best for you. Write down as many categories as you can think of. You may have 10 categories or you may have over 20, it all depends on your lifestyle.
See Your Results
At the end of the month, tally the results of your log. Pay attention to where you have spent the most money and where you spend the least. Having kept this log should dramatically open your eyes to see exactly where your money has been going during a month’s time. You may be shocked to see that you spent $15 in late charges for overdue books at the library or you noticed that you spend a large amount on fast food. Take some time and sit down and look at ways you can cut back in certain categories or eliminate all together.
Predatory lending and the importance of financial readiness
Sailors often find themselves on a course of spiraling debt that is very difficult to recover from. If a Sailor lacks the cash to stretch between paydays, it is unlikely that Sailor will have the cash to stretch to the next payday--and pay off a super-high-interest loan as well.
The fees these tenders charge can add up quickly, but the lenders have an easy answer for that by rolling over those fees into a new loan. In doing so, a Sailor will find paying an annual percentage rate in some cases of more than 2,00 percent. As a result of turning toward the predatory lenders, Sailors often end up far worse off financially than before.
While junior Sailors with families often are easy targets for these predatory lenders, more senior Sailors have been caught in the spiraling interest trap of payday loans. In one survey of aspects of financial fitness in San Diego among our military members, 21 percent had used a predatory lender for a short-term loan, and 80 percent of those who did were in pay grades E-4 to E-6.
There is no doubt Sailors and their families who turn to the easy loans of payday lenders often suffer personally from the extremely high interest rate and fees charged on these loans. But there is a bigger concern in light of the long war in which we're fighting; Sailors performing the important missions we do shouldn't be distracted by the debt incurred from predatory loan establishments. In fact, the biggest factor in Sailors losing security clearances crucial to doing their jobs are financial problems.
Another way Sailors and families can avoid the temptation of turning to a predatory lender is building and maintaining an emergency savings account to help meet those unexpected expenses. While it may be challenging to save a small amount from each payday on a regular basis, an emergency fund also offers the peace of mind that comes with knowing you can weather a financial emergency. This could also prevent many Sailors from turning to a predatory lender in the first place.
To build an emergency fund, Sailors have to involve their whole family, explain the importance of emergency savings and have everyone help contribute in whatever way they can. Not only will that help you handle those emergency expenses, but it helps build a sense of teamwork in handling your financial fitness and a sense of confidence and freedom you and your family will enjoy.
The fees these tenders charge can add up quickly, but the lenders have an easy answer for that by rolling over those fees into a new loan. In doing so, a Sailor will find paying an annual percentage rate in some cases of more than 2,00 percent. As a result of turning toward the predatory lenders, Sailors often end up far worse off financially than before.
While junior Sailors with families often are easy targets for these predatory lenders, more senior Sailors have been caught in the spiraling interest trap of payday loans. In one survey of aspects of financial fitness in San Diego among our military members, 21 percent had used a predatory lender for a short-term loan, and 80 percent of those who did were in pay grades E-4 to E-6.
There is no doubt Sailors and their families who turn to the easy loans of payday lenders often suffer personally from the extremely high interest rate and fees charged on these loans. But there is a bigger concern in light of the long war in which we're fighting; Sailors performing the important missions we do shouldn't be distracted by the debt incurred from predatory loan establishments. In fact, the biggest factor in Sailors losing security clearances crucial to doing their jobs are financial problems.
Another way Sailors and families can avoid the temptation of turning to a predatory lender is building and maintaining an emergency savings account to help meet those unexpected expenses. While it may be challenging to save a small amount from each payday on a regular basis, an emergency fund also offers the peace of mind that comes with knowing you can weather a financial emergency. This could also prevent many Sailors from turning to a predatory lender in the first place.
To build an emergency fund, Sailors have to involve their whole family, explain the importance of emergency savings and have everyone help contribute in whatever way they can. Not only will that help you handle those emergency expenses, but it helps build a sense of teamwork in handling your financial fitness and a sense of confidence and freedom you and your family will enjoy.
Small business to large business: differences in lending practices: comparing how banks lend to small businesses, middle-market companies, and large c
The Small Business Customer: Hy & Dry Gutter Service
For the small business customer, the distinction between owner and firm is minimal, and commercial lending may seem more like retail lending, entailing many of the same requirements. Let's consider Hy & Dry Gutter Service.
Hy Roller has operated his small business in Springfield for six years and has $750,000 in annual sales. The Springfield branch of Hugo Bank has banked the company for five years, ever since Hy responded to an ad offering a free checking account and a below-market rate on an installment loan. His relationship manager is Bob Friendly, an acquaintance from community activities.
Hy requested a check-based $8,000 business line of credit, unsecured and renewable annually, to meet working capital requirements, as well as a $50,000 term loan to buy a building and a new Ford F-150 truck. He agreed to pledge the truck as collateral for the term loan, and the bank filed a mortgage on the building. While the borrower on both facilities is Hy & Dry, Hy personally guarantees both facilities. For the line of credit, he pays prime plus 1%on the line of credit, which has a 30-day "cleanup" period. The term loan has a 7%fixed rate and a five-year maturity with 20-year amortization. Bob had asked for a $500 fee on the term loan, but Hy considered the fee a breaking point for the relationship, saying he would contact Hugo Bank's competitors if Bob insisted on collecting the fee.
Before he received the credit facilities, Hy supplied Bob with his personal financial statement, personal and business tax returns, a business plan, and internally prepared historical business financial statements. Hy admitted that while he had done his best in preparing the personal financial statements and business plan, he was no accountant. After reviewing what Hy had supplied, Bob asked Hy a few questions about the numbers and accounts, but he did not dig too deeply into accounts Hy was clearly unfamiliar with. Bob also checked Hy's personal credit score, which was 725. The loan amount was within Bob's credit approval limit, and he was able to tell Hy that he would have the documents to sign and could give him his money the next day.
At the loan closing, Hy signed promissory notes for the line of credit and for the term loan, along with credit agreements for each, a mortgage, and a general business security agreement on the business assets. Hy was pleased that there were no covenants in the credit agreements, and he agreed to provide a copy of each year's business and personal tax return as well as financial statements whenever the bank requested them.
Hy and Bob were in frequent (business)contact when the credit facilities were first being approved, but not after. Hy was always busy at customer locations and had no need to talk to Bob; Bob called once to "check in " on the accounts, but Hy didn't see a need to respond. Hy used the bank's drive-up window and the ATM for deposits and cashing checks, and he mailed his monthly loan payment check to the bank's post office box. He also occasionally called the customer service number for transaction information. Bob's assistant sent a reminder letter each April, in response to which Hy mailed a copy of his tax return to Bob. When an acquaintance recently asked Hy where he banks, he replied that he banks with Bob Friendly at Hugo Bank.
Last week, Bob called Hy at home to say that he was now a commercial relationship manager at the Little Community Bank in Springfield. Bob said that Little Community Bank was a much better bank for small business people like Hy because everything is local--loan decision making and operations--and senior management is readily accessible. In fact, Bob wanted to introduce Hy to the bank's president, Sam Smart. Moreover, Bob wanted to propose to Hy a line at prime plus 0.25% and a mortgage at 6.25% fixed, with the maturity and terms otherwise the same. There would be no cost to Hy to switch the loans and open a business checking account. At their meeting, Hy agreed to switch his banking.
It's not that Hy feels any personal allegiance to Bob; nor did he have any problems with Hugo Bank. However, Bob had been helpful, Hy could save some interest, and Hy no longer knew anyone at Hugo Bank. Bob requested a payoff balance from Hugo Bank and sent them a check. Hy never talked to anyone at Hugo Bank to tell them he was thinking of changing his relationship, and he never said goodbye. Only after Hugo Bank was paid did Bob ask for financial information or have Hy sign any documentation. Hy wondered how Bob could move so quickly, but it really wasn't his concern.
For the small business customer, the distinction between owner and firm is minimal, and commercial lending may seem more like retail lending, entailing many of the same requirements. Let's consider Hy & Dry Gutter Service.
Hy Roller has operated his small business in Springfield for six years and has $750,000 in annual sales. The Springfield branch of Hugo Bank has banked the company for five years, ever since Hy responded to an ad offering a free checking account and a below-market rate on an installment loan. His relationship manager is Bob Friendly, an acquaintance from community activities.
Hy requested a check-based $8,000 business line of credit, unsecured and renewable annually, to meet working capital requirements, as well as a $50,000 term loan to buy a building and a new Ford F-150 truck. He agreed to pledge the truck as collateral for the term loan, and the bank filed a mortgage on the building. While the borrower on both facilities is Hy & Dry, Hy personally guarantees both facilities. For the line of credit, he pays prime plus 1%on the line of credit, which has a 30-day "cleanup" period. The term loan has a 7%fixed rate and a five-year maturity with 20-year amortization. Bob had asked for a $500 fee on the term loan, but Hy considered the fee a breaking point for the relationship, saying he would contact Hugo Bank's competitors if Bob insisted on collecting the fee.
Before he received the credit facilities, Hy supplied Bob with his personal financial statement, personal and business tax returns, a business plan, and internally prepared historical business financial statements. Hy admitted that while he had done his best in preparing the personal financial statements and business plan, he was no accountant. After reviewing what Hy had supplied, Bob asked Hy a few questions about the numbers and accounts, but he did not dig too deeply into accounts Hy was clearly unfamiliar with. Bob also checked Hy's personal credit score, which was 725. The loan amount was within Bob's credit approval limit, and he was able to tell Hy that he would have the documents to sign and could give him his money the next day.
At the loan closing, Hy signed promissory notes for the line of credit and for the term loan, along with credit agreements for each, a mortgage, and a general business security agreement on the business assets. Hy was pleased that there were no covenants in the credit agreements, and he agreed to provide a copy of each year's business and personal tax return as well as financial statements whenever the bank requested them.
Hy and Bob were in frequent (business)contact when the credit facilities were first being approved, but not after. Hy was always busy at customer locations and had no need to talk to Bob; Bob called once to "check in " on the accounts, but Hy didn't see a need to respond. Hy used the bank's drive-up window and the ATM for deposits and cashing checks, and he mailed his monthly loan payment check to the bank's post office box. He also occasionally called the customer service number for transaction information. Bob's assistant sent a reminder letter each April, in response to which Hy mailed a copy of his tax return to Bob. When an acquaintance recently asked Hy where he banks, he replied that he banks with Bob Friendly at Hugo Bank.
Last week, Bob called Hy at home to say that he was now a commercial relationship manager at the Little Community Bank in Springfield. Bob said that Little Community Bank was a much better bank for small business people like Hy because everything is local--loan decision making and operations--and senior management is readily accessible. In fact, Bob wanted to introduce Hy to the bank's president, Sam Smart. Moreover, Bob wanted to propose to Hy a line at prime plus 0.25% and a mortgage at 6.25% fixed, with the maturity and terms otherwise the same. There would be no cost to Hy to switch the loans and open a business checking account. At their meeting, Hy agreed to switch his banking.
It's not that Hy feels any personal allegiance to Bob; nor did he have any problems with Hugo Bank. However, Bob had been helpful, Hy could save some interest, and Hy no longer knew anyone at Hugo Bank. Bob requested a payoff balance from Hugo Bank and sent them a check. Hy never talked to anyone at Hugo Bank to tell them he was thinking of changing his relationship, and he never said goodbye. Only after Hugo Bank was paid did Bob ask for financial information or have Hy sign any documentation. Hy wondered how Bob could move so quickly, but it really wasn't his concern.
Comparison Sites - And Why You Should Use Them
In the bad old days businesses had the edge over consumers. The price you were quoted was the price you paid. Few people had the time or inclination to get more than a couple of quotes come insurance renewal time etc, and for most plain old loyalty (or is that inertia?) ruled the day.
The Internet changed all that. Now it was possible to get all the quotes you wanted from the comfort of your armchair, in minutes rather than hours or days.
Price comparison sites were an inevitable development in the evolution of Internet business. Essentially these sites are simply computer programs that collect your details once and submit them to multiple sites to find you the best deal - be it on insurance, consumer goods, utilities and just about everything else.
Price comparison sites are great and I unreservedly recommend them Here’s a couple of tips:
It’s always worth trying two or three such sites as not every site polls every supplier, but between them the top few will cover the vast majority.
Don’t just accept the cheapest deal you’re offered, be sure to read the small print to find out that it really does meet your demands, for example the cheapest insurance may have too high an excess or too many exclusions.
Rather bizarrely English insurance company Direct Line has chosen to exclude itself from price comparison sites and recently launched an advertising campaign deriding them as “middlemen”. In a manner of speaking that’s true, albeit automated rather than human ones. But who really cares about using a middleman so long as they get the best possible deal. My guess is Direct Line will eventually have to change its policy. Watch this space.
The Internet changed all that. Now it was possible to get all the quotes you wanted from the comfort of your armchair, in minutes rather than hours or days.
Price comparison sites were an inevitable development in the evolution of Internet business. Essentially these sites are simply computer programs that collect your details once and submit them to multiple sites to find you the best deal - be it on insurance, consumer goods, utilities and just about everything else.
Price comparison sites are great and I unreservedly recommend them Here’s a couple of tips:
It’s always worth trying two or three such sites as not every site polls every supplier, but between them the top few will cover the vast majority.
Don’t just accept the cheapest deal you’re offered, be sure to read the small print to find out that it really does meet your demands, for example the cheapest insurance may have too high an excess or too many exclusions.
Rather bizarrely English insurance company Direct Line has chosen to exclude itself from price comparison sites and recently launched an advertising campaign deriding them as “middlemen”. In a manner of speaking that’s true, albeit automated rather than human ones. But who really cares about using a middleman so long as they get the best possible deal. My guess is Direct Line will eventually have to change its policy. Watch this space.
Inertia - The Enemy Of Your Pocket
The other day I received a renewal quote for my house insurance for £430-odd (GBP). I was somewhat taken aback to find that my very modest home was being insured up to the value of £1,000,000 (GBP)!
Once I got over my shock I discovered that this was the maximum figure and had been applied to ensure that I remained covered despite England’s current rampant house price inflation. Fast though the cost of housing is rising, I think something pretty dramatic would have to happen for the 500% increase needed for me to take advantage of the maximum figure.
Of course I am sure that the insurance company quoted this figure with my best interests at heart, but I can’t help thinking that it is the poor that are subsidizing the rich by paying premiums for cover far in excess of what they need.
Anyway, to cut a long story short, I decided to take advantage of the Internet to shop around. With a few clicks I found in a couple of minutes was able to obtain a quote of £228 (GBP) including some very useful home emergency cover.
How many of us simply renew existing insurances and other contracts just because it’s convenient and we can’t be bothered to shop around? There may have been an excuse in the olden days, but now with the Internet, and the many fine price comparison sites we can find the best deal from the comfort of our armchair with a few clicks of the mouse and keyboard.
Inertia costs the consumer a small fortune and lines the pockets of service providers. Be a wise buyer, it’s easier than you think and may lead to significant savings.
[NB I do not work for moneysupermarket.com and do not receive any commissions from them for business arising from this posting]
Once I got over my shock I discovered that this was the maximum figure and had been applied to ensure that I remained covered despite England’s current rampant house price inflation. Fast though the cost of housing is rising, I think something pretty dramatic would have to happen for the 500% increase needed for me to take advantage of the maximum figure.
Of course I am sure that the insurance company quoted this figure with my best interests at heart, but I can’t help thinking that it is the poor that are subsidizing the rich by paying premiums for cover far in excess of what they need.
Anyway, to cut a long story short, I decided to take advantage of the Internet to shop around. With a few clicks I found in a couple of minutes was able to obtain a quote of £228 (GBP) including some very useful home emergency cover.
How many of us simply renew existing insurances and other contracts just because it’s convenient and we can’t be bothered to shop around? There may have been an excuse in the olden days, but now with the Internet, and the many fine price comparison sites we can find the best deal from the comfort of our armchair with a few clicks of the mouse and keyboard.
Inertia costs the consumer a small fortune and lines the pockets of service providers. Be a wise buyer, it’s easier than you think and may lead to significant savings.
[NB I do not work for moneysupermarket.com and do not receive any commissions from them for business arising from this posting]
Year End Financial Tips
When year-end is fast approaching, taking a few minutes to give your finances an once-over will help ease the post-holiday money hangover. By completing just a few tasks, you will save money on your taxes, make your tax preparation much less stressful and give you a bit more peace of mind during this hectic holiday season.
At Work
Use up your flex spending dollars at work. If you don’t, you will lose it! This is for those extra medical expenses (eyeglasses, prescriptions). Don't miss out on saving those hard earned dollars. Schedule those doctors’ appointments or get those new glasses you need. Plus, there are some over-the-counter drugs that some flex-plans cover, such as Claritin and Zantac. Check with your HR department about new items that are now covered. If your company offers a flex spending account and you don’t take advantage of it, you could be missing out on saving hard earned dollars. If you are self-employed, you can check out a medical savings account to get similar benefits. If you haven’t already, maximize your retirement contributions for your 401(k) or self-employed retirement plan. Also, if you have moved recently, let your employer (or previous) know therefore you can get all your W-2 forms together. This will save you so much time when you are doing your taxes.
At Home
It’s time to clean out your closet. Donate any clothing or other items you don't use any more to your favorite charity. It is a great tax deduction! Make sure you keep your receipts. You can also attend a charitable benefit (another reason to celebrate with friends and support a good cause). If you itemize your deductions, it should help save money on your taxes. Consider setting up an automatic savings plan. Why not get a head start on your New Year's Resolutions? Start small, $50 a month, and then raise it in 6 months. You will be saving so much money without even thinking about it. If you already have one, raise the monthly contributions by $100.
Your Investments If you are expecting a tax refund, get your paperwork together now (i.e. charitable donations, work-related expenses, brokerage account statements, medical receipts)! You will have a head start on collecting your refund - and putting it straight into the bank - which will save you time and get you your money sooner. Even if you are not expecting a refund, this is a good time to start collecting information for your taxes. You should also put off buying any mutual funds for your taxable accounts until January 1st. Many mutual funds declare capital gains in December and you could be hit with a tax bill right away.
At Work
Use up your flex spending dollars at work. If you don’t, you will lose it! This is for those extra medical expenses (eyeglasses, prescriptions). Don't miss out on saving those hard earned dollars. Schedule those doctors’ appointments or get those new glasses you need. Plus, there are some over-the-counter drugs that some flex-plans cover, such as Claritin and Zantac. Check with your HR department about new items that are now covered. If your company offers a flex spending account and you don’t take advantage of it, you could be missing out on saving hard earned dollars. If you are self-employed, you can check out a medical savings account to get similar benefits. If you haven’t already, maximize your retirement contributions for your 401(k) or self-employed retirement plan. Also, if you have moved recently, let your employer (or previous) know therefore you can get all your W-2 forms together. This will save you so much time when you are doing your taxes.
At Home
It’s time to clean out your closet. Donate any clothing or other items you don't use any more to your favorite charity. It is a great tax deduction! Make sure you keep your receipts. You can also attend a charitable benefit (another reason to celebrate with friends and support a good cause). If you itemize your deductions, it should help save money on your taxes. Consider setting up an automatic savings plan. Why not get a head start on your New Year's Resolutions? Start small, $50 a month, and then raise it in 6 months. You will be saving so much money without even thinking about it. If you already have one, raise the monthly contributions by $100.
Your Investments If you are expecting a tax refund, get your paperwork together now (i.e. charitable donations, work-related expenses, brokerage account statements, medical receipts)! You will have a head start on collecting your refund - and putting it straight into the bank - which will save you time and get you your money sooner. Even if you are not expecting a refund, this is a good time to start collecting information for your taxes. You should also put off buying any mutual funds for your taxable accounts until January 1st. Many mutual funds declare capital gains in December and you could be hit with a tax bill right away.
To ROTH Or Not To ROTH
Even though the ROTH IRA has been around for a few years, it still holds an allure and I am always asked about it. If you qualify, I am a big fan of the ROTH IRA. The ROTH IRA is an individual retirement account with special tax benefits. Your contributions are made with after-tax dollars, they grow tax-deferred but when you start withdrawing the money, it is TAX-FREE. Because it is an account, you can invest in whatever you like (mutual funds, stocks, bonds). As of 2006, you are able to contribute up to $4,000 per year. If you are over 50, you can contribute up to $5,000. This will continue to increase over the next few years.
You can only contribute to or open a ROTH IRA if you make less than $95,000 as a single person or $150,000 as a couple. If you make more than $95,000 the next year, you can't add any more money to your existing ROTH IRA. However, nothing will happen to your existing ROTH IRA. You have to open a Traditional IRA. If you have a year in the future where your income dips below $95,000 you can add to your ROTH IRA again.
You are eligible to start withdrawing money from your ROTH IRA penalty free after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH IRA earnings. One of the great benefits about a ROTH IRA is that there is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH IRA. Another great thing about the ROTH IRA is that if the principal has been in the account for at least five years, you don't pay any penalty to take the money out. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.
If you currently have a Traditional IRA and want to convert it to a ROTH IRA, beware, because you will be hit with a tax bill. Make sure you understand the impact of taxes before making this decision. You can transfer your ROTH IRA from one firm to another. As long as it stays in it's ROTH IRA form, you can transfer it as much as you like. In addition, you can change the investments within your ROTH IRA whenever you like as well.
Other than that, a ROTH IRA is the same as a Traditional IRA or 401(k) in that the money grows tax-deferred and is a great retirement savings vehicle. To understand more about what to invest in an IRA or where to open an IRA, see “Making Your IRA Count”.
You can only contribute to or open a ROTH IRA if you make less than $95,000 as a single person or $150,000 as a couple. If you make more than $95,000 the next year, you can't add any more money to your existing ROTH IRA. However, nothing will happen to your existing ROTH IRA. You have to open a Traditional IRA. If you have a year in the future where your income dips below $95,000 you can add to your ROTH IRA again.
You are eligible to start withdrawing money from your ROTH IRA penalty free after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH IRA earnings. One of the great benefits about a ROTH IRA is that there is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH IRA. Another great thing about the ROTH IRA is that if the principal has been in the account for at least five years, you don't pay any penalty to take the money out. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.
If you currently have a Traditional IRA and want to convert it to a ROTH IRA, beware, because you will be hit with a tax bill. Make sure you understand the impact of taxes before making this decision. You can transfer your ROTH IRA from one firm to another. As long as it stays in it's ROTH IRA form, you can transfer it as much as you like. In addition, you can change the investments within your ROTH IRA whenever you like as well.
Other than that, a ROTH IRA is the same as a Traditional IRA or 401(k) in that the money grows tax-deferred and is a great retirement savings vehicle. To understand more about what to invest in an IRA or where to open an IRA, see “Making Your IRA Count”.
Year End Financial Tips
When year-end is fast approaching, taking a few minutes to give your finances an once-over will help ease the post-holiday money hangover. By completing just a few tasks, you will save money on your taxes, make your tax preparation much less stressful and give you a bit more peace of mind during this hectic holiday season.
At Work
Use up your flex spending dollars at work. If you don’t, you will lose it! This is for those extra medical expenses (eyeglasses, prescriptions). Don't miss out on saving those hard earned dollars. Schedule those doctors’ appointments or get those new glasses you need. Plus, there are some over-the-counter drugs that some flex-plans cover, such as Claritin and Zantac. Check with your HR department about new items that are now covered. If your company offers a flex spending account and you don’t take advantage of it, you could be missing out on saving hard earned dollars. If you are self-employed, you can check out a medical savings account to get similar benefits. If you haven’t already, maximize your retirement contributions for your 401(k) or self-employed retirement plan. Also, if you have moved recently, let your employer (or previous) know therefore you can get all your W-2 forms together. This will save you so much time when you are doing your taxes.
At Home
It’s time to clean out your closet. Donate any clothing or other items you don't use any more to your favorite charity. It is a great tax deduction! Make sure you keep your receipts. You can also attend a charitable benefit (another reason to celebrate with friends and support a good cause). If you itemize your deductions, it should help save money on your taxes. Consider setting up an automatic savings plan. Why not get a head start on your New Year's Resolutions? Start small, $50 a month, and then raise it in 6 months. You will be saving so much money without even thinking about it. If you already have one, raise the monthly contributions by $100.
Your Investments If you are expecting a tax refund, get your paperwork together now (i.e. charitable donations, work-related expenses, brokerage account statements, medical receipts)! You will have a head start on collecting your refund - and putting it straight into the bank - which will save you time and get you your money sooner. Even if you are not expecting a refund, this is a good time to start collecting information for your taxes. You should also put off buying any mutual funds for your taxable accounts until January 1st. Many mutual funds declare capital gains in December and you could be hit with a tax bill right away.
At Work
Use up your flex spending dollars at work. If you don’t, you will lose it! This is for those extra medical expenses (eyeglasses, prescriptions). Don't miss out on saving those hard earned dollars. Schedule those doctors’ appointments or get those new glasses you need. Plus, there are some over-the-counter drugs that some flex-plans cover, such as Claritin and Zantac. Check with your HR department about new items that are now covered. If your company offers a flex spending account and you don’t take advantage of it, you could be missing out on saving hard earned dollars. If you are self-employed, you can check out a medical savings account to get similar benefits. If you haven’t already, maximize your retirement contributions for your 401(k) or self-employed retirement plan. Also, if you have moved recently, let your employer (or previous) know therefore you can get all your W-2 forms together. This will save you so much time when you are doing your taxes.
At Home
It’s time to clean out your closet. Donate any clothing or other items you don't use any more to your favorite charity. It is a great tax deduction! Make sure you keep your receipts. You can also attend a charitable benefit (another reason to celebrate with friends and support a good cause). If you itemize your deductions, it should help save money on your taxes. Consider setting up an automatic savings plan. Why not get a head start on your New Year's Resolutions? Start small, $50 a month, and then raise it in 6 months. You will be saving so much money without even thinking about it. If you already have one, raise the monthly contributions by $100.
Your Investments If you are expecting a tax refund, get your paperwork together now (i.e. charitable donations, work-related expenses, brokerage account statements, medical receipts)! You will have a head start on collecting your refund - and putting it straight into the bank - which will save you time and get you your money sooner. Even if you are not expecting a refund, this is a good time to start collecting information for your taxes. You should also put off buying any mutual funds for your taxable accounts until January 1st. Many mutual funds declare capital gains in December and you could be hit with a tax bill right away.
To ROTH Or Not To ROTH
Even though the ROTH IRA has been around for a few years, it still holds an allure and I am always asked about it. If you qualify, I am a big fan of the ROTH IRA. The ROTH IRA is an individual retirement account with special tax benefits. Your contributions are made with after-tax dollars, they grow tax-deferred but when you start withdrawing the money, it is TAX-FREE. Because it is an account, you can invest in whatever you like (mutual funds, stocks, bonds). As of 2006, you are able to contribute up to $4,000 per year. If you are over 50, you can contribute up to $5,000. This will continue to increase over the next few years.
You can only contribute to or open a ROTH IRA if you make less than $95,000 as a single person or $150,000 as a couple. If you make more than $95,000 the next year, you can't add any more money to your existing ROTH IRA. However, nothing will happen to your existing ROTH IRA. You have to open a Traditional IRA. If you have a year in the future where your income dips below $95,000 you can add to your ROTH IRA again.
You are eligible to start withdrawing money from your ROTH IRA penalty free after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH IRA earnings. One of the great benefits about a ROTH IRA is that there is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH IRA. Another great thing about the ROTH IRA is that if the principal has been in the account for at least five years, you don't pay any penalty to take the money out. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.
If you currently have a Traditional IRA and want to convert it to a ROTH IRA, beware, because you will be hit with a tax bill. Make sure you understand the impact of taxes before making this decision. You can transfer your ROTH IRA from one firm to another. As long as it stays in it's ROTH IRA form, you can transfer it as much as you like. In addition, you can change the investments within your ROTH IRA whenever you like as well.
Other than that, a ROTH IRA is the same as a Traditional IRA or 401(k) in that the money grows tax-deferred and is a great retirement savings vehicle. To understand more about what to invest in an IRA or where to open an IRA, see “Making Your IRA Count”.
You can only contribute to or open a ROTH IRA if you make less than $95,000 as a single person or $150,000 as a couple. If you make more than $95,000 the next year, you can't add any more money to your existing ROTH IRA. However, nothing will happen to your existing ROTH IRA. You have to open a Traditional IRA. If you have a year in the future where your income dips below $95,000 you can add to your ROTH IRA again.
You are eligible to start withdrawing money from your ROTH IRA penalty free after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH IRA earnings. One of the great benefits about a ROTH IRA is that there is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH IRA. Another great thing about the ROTH IRA is that if the principal has been in the account for at least five years, you don't pay any penalty to take the money out. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.
If you currently have a Traditional IRA and want to convert it to a ROTH IRA, beware, because you will be hit with a tax bill. Make sure you understand the impact of taxes before making this decision. You can transfer your ROTH IRA from one firm to another. As long as it stays in it's ROTH IRA form, you can transfer it as much as you like. In addition, you can change the investments within your ROTH IRA whenever you like as well.
Other than that, a ROTH IRA is the same as a Traditional IRA or 401(k) in that the money grows tax-deferred and is a great retirement savings vehicle. To understand more about what to invest in an IRA or where to open an IRA, see “Making Your IRA Count”.
To ROTH Or Not To ROTH
Even though the ROTH IRA has been around for a few years, it still holds an allure and I am always asked about it. If you qualify, I am a big fan of the ROTH IRA. The ROTH IRA is an individual retirement account with special tax benefits. Your contributions are made with after-tax dollars, they grow tax-deferred but when you start withdrawing the money, it is TAX-FREE. Because it is an account, you can invest in whatever you like (mutual funds, stocks, bonds). As of 2006, you are able to contribute up to $4,000 per year. If you are over 50, you can contribute up to $5,000. This will continue to increase over the next few years.
You can only contribute to or open a ROTH IRA if you make less than $95,000 as a single person or $150,000 as a couple. If you make more than $95,000 the next year, you can't add any more money to your existing ROTH IRA. However, nothing will happen to your existing ROTH IRA. You have to open a Traditional IRA. If you have a year in the future where your income dips below $95,000 you can add to your ROTH IRA again.
You are eligible to start withdrawing money from your ROTH IRA penalty free after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH IRA earnings. One of the great benefits about a ROTH IRA is that there is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH IRA. Another great thing about the ROTH IRA is that if the principal has been in the account for at least five years, you don't pay any penalty to take the money out. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.
If you currently have a Traditional IRA and want to convert it to a ROTH IRA, beware, because you will be hit with a tax bill. Make sure you understand the impact of taxes before making this decision. You can transfer your ROTH IRA from one firm to another. As long as it stays in it's ROTH IRA form, you can transfer it as much as you like. In addition, you can change the investments within your ROTH IRA whenever you like as well.
Other than that, a ROTH IRA is the same as a Traditional IRA or 401(k) in that the money grows tax-deferred and is a great retirement savings vehicle. To understand more about what to invest in an IRA or where to open an IRA, see “Making Your IRA Count”.
You can only contribute to or open a ROTH IRA if you make less than $95,000 as a single person or $150,000 as a couple. If you make more than $95,000 the next year, you can't add any more money to your existing ROTH IRA. However, nothing will happen to your existing ROTH IRA. You have to open a Traditional IRA. If you have a year in the future where your income dips below $95,000 you can add to your ROTH IRA again.
You are eligible to start withdrawing money from your ROTH IRA penalty free after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH IRA earnings. One of the great benefits about a ROTH IRA is that there is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH IRA. Another great thing about the ROTH IRA is that if the principal has been in the account for at least five years, you don't pay any penalty to take the money out. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.
If you currently have a Traditional IRA and want to convert it to a ROTH IRA, beware, because you will be hit with a tax bill. Make sure you understand the impact of taxes before making this decision. You can transfer your ROTH IRA from one firm to another. As long as it stays in it's ROTH IRA form, you can transfer it as much as you like. In addition, you can change the investments within your ROTH IRA whenever you like as well.
Other than that, a ROTH IRA is the same as a Traditional IRA or 401(k) in that the money grows tax-deferred and is a great retirement savings vehicle. To understand more about what to invest in an IRA or where to open an IRA, see “Making Your IRA Count”.
Making Your IRA Count
Whenever April 15th rolls around, we all get bombarded with ads reminding us to open or fund an IRA. While that is great, you want to make sure you are making the most out of your IRA and having it work for you. It’s so easy to get overwhelmed and not do anything. An IRA is an Individual Retirement Account. This means that once you open the account, you still need to invest the money in the account. There are three main areas you want to focus on:
• Streamline
• Funding the IRA
• Investing in the IRA
Streamline
Chances are you have more than one IRA. Perhaps you opened one at your bank or at your parent’s brokerage firm. Pick one place and consolidate all your IRAs. If they are in the same format (either ROTH or Traditional IRA), they can be consolidated to one IRA. Simplify your life and consolidate them all to a discount brokerage firm (like Fidelity) or a mutual fund company (like T. Rowe Price) or a full-service brokerage firm (like Morgan Stanley).
Funding the IRA
For 2006, you can contribute up to $4,000 and $5,000 if you are over 50. For most of us, this money goes in after taxes. If you are working for a company that has a 401(k) and you are not maximizing your contributions to the 401(k), you should try and do that first before funding your IRA. If you are working for yourself, or work for a company that doesn’t have a retirement plan, you should look at self-employed retirement plans like a SEP IRA. They let you put much more money in and on a pre-tax basis. However, if you have already maximized your contributions to the 401(k) or SEP IRA, then you can fund your IRA. If you don’t have enough to fund the complete IRA, consider setting up an automatic savings to your ROTH or Traditional IRA. This only comes out to $333 a month. Can’t afford that? Then do $100 a month and fund the rest at year-end.
Investing in the IRA
Make sure the mutual funds within your IRA are aligned with your retirement time line (5 or 20 years need different mutual funds). Keep this simple as well by only having 4 or 5 mutual funds and make sure they are completely different! If you have mutual funds within your 401(k) or SEP IRA, make sure you don’t have duplicates. It will make it much easier to do a checkup on an ongoing basis.
• Streamline
• Funding the IRA
• Investing in the IRA
Streamline
Chances are you have more than one IRA. Perhaps you opened one at your bank or at your parent’s brokerage firm. Pick one place and consolidate all your IRAs. If they are in the same format (either ROTH or Traditional IRA), they can be consolidated to one IRA. Simplify your life and consolidate them all to a discount brokerage firm (like Fidelity) or a mutual fund company (like T. Rowe Price) or a full-service brokerage firm (like Morgan Stanley).
Funding the IRA
For 2006, you can contribute up to $4,000 and $5,000 if you are over 50. For most of us, this money goes in after taxes. If you are working for a company that has a 401(k) and you are not maximizing your contributions to the 401(k), you should try and do that first before funding your IRA. If you are working for yourself, or work for a company that doesn’t have a retirement plan, you should look at self-employed retirement plans like a SEP IRA. They let you put much more money in and on a pre-tax basis. However, if you have already maximized your contributions to the 401(k) or SEP IRA, then you can fund your IRA. If you don’t have enough to fund the complete IRA, consider setting up an automatic savings to your ROTH or Traditional IRA. This only comes out to $333 a month. Can’t afford that? Then do $100 a month and fund the rest at year-end.
Investing in the IRA
Make sure the mutual funds within your IRA are aligned with your retirement time line (5 or 20 years need different mutual funds). Keep this simple as well by only having 4 or 5 mutual funds and make sure they are completely different! If you have mutual funds within your 401(k) or SEP IRA, make sure you don’t have duplicates. It will make it much easier to do a checkup on an ongoing basis.
Demystifying Mutual Funds
Mutual funds are an essential part of your personal finances. They are the fuel of your retirement plan, can help you buy a house and the easiest way to take advantage of the stock market. If you don’t have any money saved, you can still start investing in mutual funds immediately. With over 12,000 mutual funds in the marketplace, they can definitely be overwhelming!
A mutual fund is a group of stocks or bonds (and sometimes both). When you buy shares in a mutual fund, you are buying equity in all of its holdings. The rule of thumb is that if you have less than $75,000 to invest, you should stick to mutual funds to be properly diversified. For a small management fee (more on this later), you get a qualified money manager to manage your money. Mutual funds are much easier than individual stocks and bonds to monitor and determine how your investments are performing. Plus, if you don't have a lot of money, you can start investing in mutual funds for as little as $50 per month!
Because there are so many mutual funds out there, it can be overwhelming on where to begin and how to select a mutual fund that is right for you. The first place to start is to determine what your needs are. Do you want the investment for the short-term (less than 3 years) or mid-term (5-7 years) or long-term (10 years or longer) – like retirement? This will help you decide what kinds of mutual funds you should buy. You want to make sure you are properly diversified which means you are spreading your risk among different types of mutual funds.
If you are investing for the short-term, you should stick with relatively safer Money-Market Funds. For the Mid-Term and Long-Term, you want to build a portfolio with a combination of Large-Cap Growth, Large-Cap Value, Small or Mid-Cap, International and Bonds. The percentage you want in each of these categories depends on your age, time horizon and risk level. If you don't have any investments and only a small amount to invest, a great mutual fund to choose is a Balanced Fund (also called a Domestic Hybrid or Moderate Allocation). This is one mutual fund that combines stocks and bonds. There is also the Target or Lifestyle Mutual Funds. You pick the mutual fund according to the date that you want to retire (ex: 2030) and it will combine all the investments you need for a diversified portfolio. I call it One-Stop Shopping.
You have three main choices from where to buy a mutual fund. You can go to a mutual fund company, such as Vanguard or T. Rowe Price and pick five mutual fund styles such as: Large-Cap Growth, Large-Cap Value, Small or Mid-Cap, International and Bonds. Or, you can go to a mutual fund supermarket such as Fidelity or Schwab. There is a lot to pick from here, which can also be overwhelming. Lastly, you can go through a broker. The broker usually suggests which mutual fund to buy. Just be careful because this is the most expensive route and the broker might be "pushing" a certain fund based on the commission he or she gets paid.
A mutual fund is a group of stocks or bonds (and sometimes both). When you buy shares in a mutual fund, you are buying equity in all of its holdings. The rule of thumb is that if you have less than $75,000 to invest, you should stick to mutual funds to be properly diversified. For a small management fee (more on this later), you get a qualified money manager to manage your money. Mutual funds are much easier than individual stocks and bonds to monitor and determine how your investments are performing. Plus, if you don't have a lot of money, you can start investing in mutual funds for as little as $50 per month!
Because there are so many mutual funds out there, it can be overwhelming on where to begin and how to select a mutual fund that is right for you. The first place to start is to determine what your needs are. Do you want the investment for the short-term (less than 3 years) or mid-term (5-7 years) or long-term (10 years or longer) – like retirement? This will help you decide what kinds of mutual funds you should buy. You want to make sure you are properly diversified which means you are spreading your risk among different types of mutual funds.
If you are investing for the short-term, you should stick with relatively safer Money-Market Funds. For the Mid-Term and Long-Term, you want to build a portfolio with a combination of Large-Cap Growth, Large-Cap Value, Small or Mid-Cap, International and Bonds. The percentage you want in each of these categories depends on your age, time horizon and risk level. If you don't have any investments and only a small amount to invest, a great mutual fund to choose is a Balanced Fund (also called a Domestic Hybrid or Moderate Allocation). This is one mutual fund that combines stocks and bonds. There is also the Target or Lifestyle Mutual Funds. You pick the mutual fund according to the date that you want to retire (ex: 2030) and it will combine all the investments you need for a diversified portfolio. I call it One-Stop Shopping.
You have three main choices from where to buy a mutual fund. You can go to a mutual fund company, such as Vanguard or T. Rowe Price and pick five mutual fund styles such as: Large-Cap Growth, Large-Cap Value, Small or Mid-Cap, International and Bonds. Or, you can go to a mutual fund supermarket such as Fidelity or Schwab. There is a lot to pick from here, which can also be overwhelming. Lastly, you can go through a broker. The broker usually suggests which mutual fund to buy. Just be careful because this is the most expensive route and the broker might be "pushing" a certain fund based on the commission he or she gets paid.
Financially Healthy Holidays
As the holiday season is a tough time to keep your finances in check, there are a few things you can do to keep your cool during the holiday season, stay out of debt and actually keep some of your money for yourself. Wouldn't that be nice?
Shopping
Before you even hit the stores, start with the total dollar amount you want to spend and then work backwards. To make sure you keep within your budget, make a list of who to buy for, what to buy and check it twice! If you can, stay away from the stores and shop online – there are much fewer temptations. Try and look for online sites that offer free shipping or reduced shipping (On www.oldnavy.com shipping is only $5). Don’t forget, it is the thought that counts. Your family and friends don’t expect the most expensive cashmere sweater. However, they do want to know that you thought about them.
Your Credit Cards
While credit cards sure make shopping easier, they can also get you into a lot of trouble during the holidays. If you carry a credit card balance, focus on only using cash for your holiday shopping. Put those credit cards away until further notice. At the same time, continue paying off your debt so you don’t get behind in your debt repayment plan. If you do use your credit card, then bring your checkbook shopping and deduct it from your cash balance. Then write a check to the credit card company as soon as you get home. In addition, balance your checkbook weekly during the holiday season. It will keep you focused on your finances during this hectic time.
Out of the Box Gift Ideas
You can always buy another sweater for your Mom and a pair of socks for your brother but here are a few gift ideas that are easy on your wallet and will still score you big points at holiday time. How about a mutual fund? Open a mutual fund account for anyone on your list. It might be a great way to introduce your children (or other children), and maybe yourself, to investing. Do you have extra frequent flier miles? Then “buy” a flight for a family member or close friend. While it might not seem like you spent any money, it makes a greatly appreciated gift. You can also buy other items with miles: i.e. magazine subscriptions, hotel rooms. How about a magazine? A subscription to a magazine is a great idea for a gift. They aren't that expensive ($12-25 per year) and it is the gift that keeps giving all year long.
When January rolls around, you won’t remember all the gifts you bought but you will be relieved you were able to stick to your financial plan. One last thing, don’t forget to buy a gift for yourself. You can open an automatic savings plan, put an extra $100 in your IRA account or buy a mutual fund. You will thank yourself after the holidays.
Shopping
Before you even hit the stores, start with the total dollar amount you want to spend and then work backwards. To make sure you keep within your budget, make a list of who to buy for, what to buy and check it twice! If you can, stay away from the stores and shop online – there are much fewer temptations. Try and look for online sites that offer free shipping or reduced shipping (On www.oldnavy.com shipping is only $5). Don’t forget, it is the thought that counts. Your family and friends don’t expect the most expensive cashmere sweater. However, they do want to know that you thought about them.
Your Credit Cards
While credit cards sure make shopping easier, they can also get you into a lot of trouble during the holidays. If you carry a credit card balance, focus on only using cash for your holiday shopping. Put those credit cards away until further notice. At the same time, continue paying off your debt so you don’t get behind in your debt repayment plan. If you do use your credit card, then bring your checkbook shopping and deduct it from your cash balance. Then write a check to the credit card company as soon as you get home. In addition, balance your checkbook weekly during the holiday season. It will keep you focused on your finances during this hectic time.
Out of the Box Gift Ideas
You can always buy another sweater for your Mom and a pair of socks for your brother but here are a few gift ideas that are easy on your wallet and will still score you big points at holiday time. How about a mutual fund? Open a mutual fund account for anyone on your list. It might be a great way to introduce your children (or other children), and maybe yourself, to investing. Do you have extra frequent flier miles? Then “buy” a flight for a family member or close friend. While it might not seem like you spent any money, it makes a greatly appreciated gift. You can also buy other items with miles: i.e. magazine subscriptions, hotel rooms. How about a magazine? A subscription to a magazine is a great idea for a gift. They aren't that expensive ($12-25 per year) and it is the gift that keeps giving all year long.
When January rolls around, you won’t remember all the gifts you bought but you will be relieved you were able to stick to your financial plan. One last thing, don’t forget to buy a gift for yourself. You can open an automatic savings plan, put an extra $100 in your IRA account or buy a mutual fund. You will thank yourself after the holidays.
Year End Financial Tips
When year-end is fast approaching, taking a few minutes to give your finances an once-over will help ease the post-holiday money hangover. By completing just a few tasks, you will save money on your taxes, make your tax preparation much less stressful and give you a bit more peace of mind during this hectic holiday season.
At Work
Use up your flex spending dollars at work. If you don’t, you will lose it! This is for those extra medical expenses (eyeglasses, prescriptions). Don't miss out on saving those hard earned dollars. Schedule those doctors’ appointments or get those new glasses you need. Plus, there are some over-the-counter drugs that some flex-plans cover, such as Claritin and Zantac. Check with your HR department about new items that are now covered. If your company offers a flex spending account and you don’t take advantage of it, you could be missing out on saving hard earned dollars. If you are self-employed, you can check out a medical savings account to get similar benefits. If you haven’t already, maximize your retirement contributions for your 401(k) or self-employed retirement plan. Also, if you have moved recently, let your employer (or previous) know therefore you can get all your W-2 forms together. This will save you so much time when you are doing your taxes.
At Home
It’s time to clean out your closet. Donate any clothing or other items you don't use any more to your favorite charity. It is a great tax deduction! Make sure you keep your receipts. You can also attend a charitable benefit (another reason to celebrate with friends and support a good cause). If you itemize your deductions, it should help save money on your taxes. Consider setting up an automatic savings plan. Why not get a head start on your New Year's Resolutions? Start small, $50 a month, and then raise it in 6 months. You will be saving so much money without even thinking about it. If you already have one, raise the monthly contributions by $100.
Your Investments If you are expecting a tax refund, get your paperwork together now (i.e. charitable donations, work-related expenses, brokerage account statements, medical receipts)! You will have a head start on collecting your refund - and putting it straight into the bank - which will save you time and get you your money sooner. Even if you are not expecting a refund, this is a good time to start collecting information for your taxes. You should also put off buying any mutual funds for your taxable accounts until January 1st. Many mutual funds declare capital gains in December and you could be hit with a tax bill right away.
At Work
Use up your flex spending dollars at work. If you don’t, you will lose it! This is for those extra medical expenses (eyeglasses, prescriptions). Don't miss out on saving those hard earned dollars. Schedule those doctors’ appointments or get those new glasses you need. Plus, there are some over-the-counter drugs that some flex-plans cover, such as Claritin and Zantac. Check with your HR department about new items that are now covered. If your company offers a flex spending account and you don’t take advantage of it, you could be missing out on saving hard earned dollars. If you are self-employed, you can check out a medical savings account to get similar benefits. If you haven’t already, maximize your retirement contributions for your 401(k) or self-employed retirement plan. Also, if you have moved recently, let your employer (or previous) know therefore you can get all your W-2 forms together. This will save you so much time when you are doing your taxes.
At Home
It’s time to clean out your closet. Donate any clothing or other items you don't use any more to your favorite charity. It is a great tax deduction! Make sure you keep your receipts. You can also attend a charitable benefit (another reason to celebrate with friends and support a good cause). If you itemize your deductions, it should help save money on your taxes. Consider setting up an automatic savings plan. Why not get a head start on your New Year's Resolutions? Start small, $50 a month, and then raise it in 6 months. You will be saving so much money without even thinking about it. If you already have one, raise the monthly contributions by $100.
Your Investments If you are expecting a tax refund, get your paperwork together now (i.e. charitable donations, work-related expenses, brokerage account statements, medical receipts)! You will have a head start on collecting your refund - and putting it straight into the bank - which will save you time and get you your money sooner. Even if you are not expecting a refund, this is a good time to start collecting information for your taxes. You should also put off buying any mutual funds for your taxable accounts until January 1st. Many mutual funds declare capital gains in December and you could be hit with a tax bill right away.
To ROTH Or Not To ROTH
Even though the ROTH IRA has been around for a few years, it still holds an allure and I am always asked about it. If you qualify, I am a big fan of the ROTH IRA. The ROTH IRA is an individual retirement account with special tax benefits. Your contributions are made with after-tax dollars, they grow tax-deferred but when you start withdrawing the money, it is TAX-FREE. Because it is an account, you can invest in whatever you like (mutual funds, stocks, bonds). As of 2006, you are able to contribute up to $4,000 per year. If you are over 50, you can contribute up to $5,000. This will continue to increase over the next few years.
You can only contribute to or open a ROTH IRA if you make less than $95,000 as a single person or $150,000 as a couple. If you make more than $95,000 the next year, you can't add any more money to your existing ROTH IRA. However, nothing will happen to your existing ROTH IRA. You have to open a Traditional IRA. If you have a year in the future where your income dips below $95,000 you can add to your ROTH IRA again.
You are eligible to start withdrawing money from your ROTH IRA penalty free after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH IRA earnings. One of the great benefits about a ROTH IRA is that there is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH IRA. Another great thing about the ROTH IRA is that if the principal has been in the account for at least five years, you don't pay any penalty to take the money out. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.
If you currently have a Traditional IRA and want to convert it to a ROTH IRA, beware, because you will be hit with a tax bill. Make sure you understand the impact of taxes before making this decision. You can transfer your ROTH IRA from one firm to another. As long as it stays in it's ROTH IRA form, you can transfer it as much as you like. In addition, you can change the investments within your ROTH IRA whenever you like as well.
Other than that, a ROTH IRA is the same as a Traditional IRA or 401(k) in that the money grows tax-deferred and is a great retirement savings vehicle. To understand more about what to invest in an IRA or where to open an IRA, see “Making Your IRA Count”.
You can only contribute to or open a ROTH IRA if you make less than $95,000 as a single person or $150,000 as a couple. If you make more than $95,000 the next year, you can't add any more money to your existing ROTH IRA. However, nothing will happen to your existing ROTH IRA. You have to open a Traditional IRA. If you have a year in the future where your income dips below $95,000 you can add to your ROTH IRA again.
You are eligible to start withdrawing money from your ROTH IRA penalty free after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH IRA earnings. One of the great benefits about a ROTH IRA is that there is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH IRA. Another great thing about the ROTH IRA is that if the principal has been in the account for at least five years, you don't pay any penalty to take the money out. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.
If you currently have a Traditional IRA and want to convert it to a ROTH IRA, beware, because you will be hit with a tax bill. Make sure you understand the impact of taxes before making this decision. You can transfer your ROTH IRA from one firm to another. As long as it stays in it's ROTH IRA form, you can transfer it as much as you like. In addition, you can change the investments within your ROTH IRA whenever you like as well.
Other than that, a ROTH IRA is the same as a Traditional IRA or 401(k) in that the money grows tax-deferred and is a great retirement savings vehicle. To understand more about what to invest in an IRA or where to open an IRA, see “Making Your IRA Count”.
Save Money When Buying a New Vehicle - What You Need to Know
A new vehicle is likely to be the one of the most expensive purchases you'll ever make, so it can really pay to learn a few tricks before heading to the dealership. Here's what you need to know.
Do Your Homework
Savvy car shoppers go to the dealership prepared. You can save big with just a few hours of online research.
Before you set foot in the dealership, know exactly what you are looking for and have a general idea of how much you are willing to spend. You will also want to know the vehicle's Base Price as well as the options (and their costs) that are most important to you. You will also want to know the following:
MSRP
Make sure you know the vehicle's Manufacturer Suggested Retail Price (MSRP), also known as the "sticker price" or "list price." The MSRP is basically the market value of the car. It generally does not include registration, taxes, freight or destination charges, or other fees that the dealer may add to your negotiated price.
The Invoice Price
The invoice price or "factory invoice price" is (in theory) what the dealer paid the vehicle manufacturer. Most cars are sold below MSRP and some even below invoice price.
Why would a dealer sell below the factory invoice price? The stated invoice price often isn't the amount the dealer actually paid. A dealer may get a variety of different discounts and incentives that can make their actual price lower than the "factory invoice price."
While the factory invoice price may not be what a particular dealer paid for the car, the invoice price is the same for all the dealerships, so it's important to know the invoice price so can determine who is giving you the best deal.
Estimated Market Price
A quick Internet search may also provide you with a car's Estimated Market Price (EMP). The EMP is available for a limited number of makes and models and is the estimated price that people are actually paying for the car, based on actual sales made at dealerships.
You need to also pay attention to extra add-ons that may contribute to a higher price tag. Make sure you want or need the extras that you will be paying for. And if the dealership doesn't have a vehicle with the combination of extra features you need, shop around or wait for the vehicle that's right for you.
Shop Around
Don't go to just one dealership and settle. Make sure you have plenty of time to see the prices and available inventory at other dealerships. When you know what other dealerships can currently offer you, you have a great bargaining tool.
Armed with this knowledge, you are ready to negotiate prices. And keep this in mind: Automotive.com reports that a full 25 percent to 45 percent of customers have successfully purchased cars below the factory invoice price (sometimes by thousands of dollars.)
Your down payment is also going to be a big help in your negotiations. If you can use cash as a down payment, it can give you another bargaining chip. If you have a vehicle to trade, you will definitely need to get an idea of its worth before you haggle the trade. And don't settle on this point, either. If the dealer isn't offering you enough for your trade, consider selling that old car yourself and pocketing the cash.
Use everything possible to get the upper hand over the dealer. Remember, as the buyer, you are in control and run the deal. Do not let the salesperson badger you. Know your numbers and stick to your demands.
It's important to not tell the salesperson what you are willing to spend until you get locked into negotiations. Then let them know that you have a certain amount you will spend and if they can't negotiate a deal, you will need to do business elsewhere.
The bottom line: If a dealer wants your business, he'll work very hard to get it. That means you have power. As long as you keep that power, you should be able to save money when buying your new car.
Do Your Homework
Savvy car shoppers go to the dealership prepared. You can save big with just a few hours of online research.
Before you set foot in the dealership, know exactly what you are looking for and have a general idea of how much you are willing to spend. You will also want to know the vehicle's Base Price as well as the options (and their costs) that are most important to you. You will also want to know the following:
MSRP
Make sure you know the vehicle's Manufacturer Suggested Retail Price (MSRP), also known as the "sticker price" or "list price." The MSRP is basically the market value of the car. It generally does not include registration, taxes, freight or destination charges, or other fees that the dealer may add to your negotiated price.
The Invoice Price
The invoice price or "factory invoice price" is (in theory) what the dealer paid the vehicle manufacturer. Most cars are sold below MSRP and some even below invoice price.
Why would a dealer sell below the factory invoice price? The stated invoice price often isn't the amount the dealer actually paid. A dealer may get a variety of different discounts and incentives that can make their actual price lower than the "factory invoice price."
While the factory invoice price may not be what a particular dealer paid for the car, the invoice price is the same for all the dealerships, so it's important to know the invoice price so can determine who is giving you the best deal.
Estimated Market Price
A quick Internet search may also provide you with a car's Estimated Market Price (EMP). The EMP is available for a limited number of makes and models and is the estimated price that people are actually paying for the car, based on actual sales made at dealerships.
You need to also pay attention to extra add-ons that may contribute to a higher price tag. Make sure you want or need the extras that you will be paying for. And if the dealership doesn't have a vehicle with the combination of extra features you need, shop around or wait for the vehicle that's right for you.
Shop Around
Don't go to just one dealership and settle. Make sure you have plenty of time to see the prices and available inventory at other dealerships. When you know what other dealerships can currently offer you, you have a great bargaining tool.
Armed with this knowledge, you are ready to negotiate prices. And keep this in mind: Automotive.com reports that a full 25 percent to 45 percent of customers have successfully purchased cars below the factory invoice price (sometimes by thousands of dollars.)
Your down payment is also going to be a big help in your negotiations. If you can use cash as a down payment, it can give you another bargaining chip. If you have a vehicle to trade, you will definitely need to get an idea of its worth before you haggle the trade. And don't settle on this point, either. If the dealer isn't offering you enough for your trade, consider selling that old car yourself and pocketing the cash.
Use everything possible to get the upper hand over the dealer. Remember, as the buyer, you are in control and run the deal. Do not let the salesperson badger you. Know your numbers and stick to your demands.
It's important to not tell the salesperson what you are willing to spend until you get locked into negotiations. Then let them know that you have a certain amount you will spend and if they can't negotiate a deal, you will need to do business elsewhere.
The bottom line: If a dealer wants your business, he'll work very hard to get it. That means you have power. As long as you keep that power, you should be able to save money when buying your new car.
Identity Theft Tips
You can help protect yourself from identity theft if you have the right tools and tips. You need to make sure that you have all the right information so that you are not unknowingly putting yourself at risk for identity theft. You must be attentive, careful, and realize what actions must be taken to protect yourself and your credit score as well.
Here are some important tips to help reduce your identity theft risk. You may not be able to completely protect your good name from some stranger targeting you for identity theft, but you can lessen the chances. Make habits of the following suggestions to help keep yourself safe.
* Shred and destroy all unwanted documents like junk mail and outdated personal information.
* Bring your mail in daily and do not leave it in your mailbox. Even a locked mailbox can be easily broken into. Locks only keep out honest people.
* Report any lost or stolen credit cards or any suspicious activity on your credit cards or lines of credit.
* Review and check your consumer credit reports on a regular basis. You want to watch for anything that is not right on those reports. You can dispute anything to make sure that it is a legitimate charge that you made on the account. Also, make sure all of the accounts are really yours.
* Do not carry your social security card or numbers on you. You should keep this along with your birth certificate and passport in a safe place at home or in a safety deposit box.
* Check all monthly financial statements of any kind every time you get one. This includes bank accounts, credit cards, investments, mortgages, and loans. Consider switching to online statements because you can get updates at anytime and can catch discrepancies or fraudulent activities sooner, before the damage becomes devastating.
* Scrutinize your financial statements. Balance your accounts. Make sure all transactions are ones you actually made or authorized. Report any suspicious activity immediately.
* Keep or shred your ATM and debit card receipts. Don't leave them behind in the ATM machine or in the trash.
* Shred every piece of mail you discard that contains any kind of personal or financial information.
Here are some important tips to help reduce your identity theft risk. You may not be able to completely protect your good name from some stranger targeting you for identity theft, but you can lessen the chances. Make habits of the following suggestions to help keep yourself safe.
* Shred and destroy all unwanted documents like junk mail and outdated personal information.
* Bring your mail in daily and do not leave it in your mailbox. Even a locked mailbox can be easily broken into. Locks only keep out honest people.
* Report any lost or stolen credit cards or any suspicious activity on your credit cards or lines of credit.
* Review and check your consumer credit reports on a regular basis. You want to watch for anything that is not right on those reports. You can dispute anything to make sure that it is a legitimate charge that you made on the account. Also, make sure all of the accounts are really yours.
* Do not carry your social security card or numbers on you. You should keep this along with your birth certificate and passport in a safe place at home or in a safety deposit box.
* Check all monthly financial statements of any kind every time you get one. This includes bank accounts, credit cards, investments, mortgages, and loans. Consider switching to online statements because you can get updates at anytime and can catch discrepancies or fraudulent activities sooner, before the damage becomes devastating.
* Scrutinize your financial statements. Balance your accounts. Make sure all transactions are ones you actually made or authorized. Report any suspicious activity immediately.
* Keep or shred your ATM and debit card receipts. Don't leave them behind in the ATM machine or in the trash.
* Shred every piece of mail you discard that contains any kind of personal or financial information.
Put Extra Money In My Account - Make The Best Use Of Your Money
Most of the people prefer to put extra money in a bank account when they start making money. This is the most prudent thing that you can do with the extra money you have. Putting your extra money into a bank account carries a plethora of advantages. The banks not only provides you an easy and secure way to store your money, but you also get increments in your saved money from time to time in the form of interest.
Actually, when you put extra money in the bank, the money goes to a huge pool of funds provided by the thousands of existing customers of the bank. The bank keeps a portion of this money as deposit and invests the rest of the funds in various financial ventures. This way, whenever you require some money, you can withdraw it from your deposit. Also, when you keep your money for a long time with the bank, the bank also shares a certain part of the profit earned by the investment it made with your money. This part of profit is termed as interest. Most of the banks fix a certain percentage of interest.
Again, when you put extra money in the bank, the interest is charged after a fixed period of time. Some banks prefer to offer interest annually, while other banks credit the amount of interest half-yearly, quarterly, or even monthly. However, this period also depends on the type of the account you own. There are various types of accounts you can choose from, such as checking account, savings account, current account, and fixed deposit account. You should put your extra money in the bank, but at the same time, you should choose your options prudently.
Actually, when you put extra money in the bank, the money goes to a huge pool of funds provided by the thousands of existing customers of the bank. The bank keeps a portion of this money as deposit and invests the rest of the funds in various financial ventures. This way, whenever you require some money, you can withdraw it from your deposit. Also, when you keep your money for a long time with the bank, the bank also shares a certain part of the profit earned by the investment it made with your money. This part of profit is termed as interest. Most of the banks fix a certain percentage of interest.
Again, when you put extra money in the bank, the interest is charged after a fixed period of time. Some banks prefer to offer interest annually, while other banks credit the amount of interest half-yearly, quarterly, or even monthly. However, this period also depends on the type of the account you own. There are various types of accounts you can choose from, such as checking account, savings account, current account, and fixed deposit account. You should put your extra money in the bank, but at the same time, you should choose your options prudently.
Demystifying Mutual Funds
Do you find yourself with too much month at the end of your money? Would you like to “Pay Yourself First” but haven’t figured how? Would you like to S-T-R-E-T-C-H your paycheck or income? If you answered “Yes” to any of these questions, the good news is that it will only take you half an hour to start feeling financially fit. Isn’t that time worth it to get out of debt, build your savings or save more for your retirement? Fulfilling many of your financial goals is within your reach – or at least your personal spending. You can control every penny that you spend; while it is much more difficult to increase your income. There is money to be found in every spending plan, which is the foundation of our financial health. To uncover that found money, complete the following exercises – especially the first! It should take no more than half an hour. You will find that once you accomplish these exercises, you will breathe a sigh of relief and have the energy to tackle the rest of your finances!
Jot Down Every Dollar Detail
On a sheet of paper, write down everything you spend for the month. The goal is to come up with one monthly number that reflects all your spending (i.e. to walk out your door, it costs $3,000 per month). While this sounds simple, there are two areas that most people forget: annual expenses and small purchases. Annual expenses that are usually forgotten include: vacation, insurance, holiday gifts, professional services, school, medical expenses, clothing purchases, taxes and charitable contributions.
Then take this number and divide it by 12 to figure out how much this adds to your monthly expenses. You might spend $1,000 a year on clothing for your family; therefore, add $83.33 to your monthly expenses. Now tackle the small purchases, such as all food and meals. Perhaps you buy a $3 coffee daily. That equals $60 per month ($3 X 5 times/week X 4 weeks). Don’t forget about clothing, taxis/transportation, gifts, personal beauty, books, CDs and magazines/newspapers. Once you have that monthly number, see how it compares to your income.
Five Places to Plug
Now comes the fun part. Find five places to plug in your monthly spending. Don’t eliminate, just prioritize. Set a spending limit for what you really want to buy. If you love to shop and are spending $200 per month on clothing, lower it to $100 per month. Therefore, you are not depriving yourself, but you now have a set amount that you can spend everything month. By finding five places to plug in your budget, you can squeeze out at least $100 - $300 extra per month from your spending – if not more.
What to Do with the Found Money?
Now that you have your “Found Money”, what should you do with it? Divide that amount into the following categories:
• Debt
• Savings
• Retirement Savings
• Other (children’s college savings)
If you have debt, most of your Found Money should go towards your debt, but you should still save some money every month. If you are debt-free, make sure you have an emergency savings account and a retirement account as well. Next: saving without thinking.
Make it Automatic
Setup an automatic savings account. Most great savers do not think about saving, it is done automatically. Ask your bank to automatically transfer a set dollar amount from your checking account to a money market account. For example, on the 15th of every month, they will transfer $50 to a money market account. This money can be used for your emergency savings or holiday gifts. Check out www.bankrate.com for a higher interest rate money market in your area. You can still link it to your checking account and get that money out automatically.
Still worried about finding that extra money? Don’t fret, just take ½ hour from your schedule this week and get started. Enlist a friend and do it together over a cup of coffee. Call your sister and do it together over the phone. Make it a priority and get ready to start sleeping better at night once you do!
Jot Down Every Dollar Detail
On a sheet of paper, write down everything you spend for the month. The goal is to come up with one monthly number that reflects all your spending (i.e. to walk out your door, it costs $3,000 per month). While this sounds simple, there are two areas that most people forget: annual expenses and small purchases. Annual expenses that are usually forgotten include: vacation, insurance, holiday gifts, professional services, school, medical expenses, clothing purchases, taxes and charitable contributions.
Then take this number and divide it by 12 to figure out how much this adds to your monthly expenses. You might spend $1,000 a year on clothing for your family; therefore, add $83.33 to your monthly expenses. Now tackle the small purchases, such as all food and meals. Perhaps you buy a $3 coffee daily. That equals $60 per month ($3 X 5 times/week X 4 weeks). Don’t forget about clothing, taxis/transportation, gifts, personal beauty, books, CDs and magazines/newspapers. Once you have that monthly number, see how it compares to your income.
Five Places to Plug
Now comes the fun part. Find five places to plug in your monthly spending. Don’t eliminate, just prioritize. Set a spending limit for what you really want to buy. If you love to shop and are spending $200 per month on clothing, lower it to $100 per month. Therefore, you are not depriving yourself, but you now have a set amount that you can spend everything month. By finding five places to plug in your budget, you can squeeze out at least $100 - $300 extra per month from your spending – if not more.
What to Do with the Found Money?
Now that you have your “Found Money”, what should you do with it? Divide that amount into the following categories:
• Debt
• Savings
• Retirement Savings
• Other (children’s college savings)
If you have debt, most of your Found Money should go towards your debt, but you should still save some money every month. If you are debt-free, make sure you have an emergency savings account and a retirement account as well. Next: saving without thinking.
Make it Automatic
Setup an automatic savings account. Most great savers do not think about saving, it is done automatically. Ask your bank to automatically transfer a set dollar amount from your checking account to a money market account. For example, on the 15th of every month, they will transfer $50 to a money market account. This money can be used for your emergency savings or holiday gifts. Check out www.bankrate.com for a higher interest rate money market in your area. You can still link it to your checking account and get that money out automatically.
Still worried about finding that extra money? Don’t fret, just take ½ hour from your schedule this week and get started. Enlist a friend and do it together over a cup of coffee. Call your sister and do it together over the phone. Make it a priority and get ready to start sleeping better at night once you do!
Found Money
Do you find yourself with too much month at the end of your money? Would you like to “Pay Yourself First” but haven’t figured how? Would you like to S-T-R-E-T-C-H your paycheck or income? If you answered “Yes” to any of these questions, the good news is that it will only take you half an hour to start feeling financially fit. Isn’t that time worth it to get out of debt, build your savings or save more for your retirement? Fulfilling many of your financial goals is within your reach – or at least your personal spending. You can control every penny that you spend; while it is much more difficult to increase your income. There is money to be found in every spending plan, which is the foundation of our financial health. To uncover that found money, complete the following exercises – especially the first! It should take no more than half an hour. You will find that once you accomplish these exercises, you will breathe a sigh of relief and have the energy to tackle the rest of your finances!
Jot Down Every Dollar Detail
On a sheet of paper, write down everything you spend for the month. The goal is to come up with one monthly number that reflects all your spending (i.e. to walk out your door, it costs $3,000 per month). While this sounds simple, there are two areas that most people forget: annual expenses and small purchases. Annual expenses that are usually forgotten include: vacation, insurance, holiday gifts, professional services, school, medical expenses, clothing purchases, taxes and charitable contributions.
Then take this number and divide it by 12 to figure out how much this adds to your monthly expenses. You might spend $1,000 a year on clothing for your family; therefore, add $83.33 to your monthly expenses. Now tackle the small purchases, such as all food and meals. Perhaps you buy a $3 coffee daily. That equals $60 per month ($3 X 5 times/week X 4 weeks). Don’t forget about clothing, taxis/transportation, gifts, personal beauty, books, CDs and magazines/newspapers. Once you have that monthly number, see how it compares to your income.
Five Places to Plug
Now comes the fun part. Find five places to plug in your monthly spending. Don’t eliminate, just prioritize. Set a spending limit for what you really want to buy. If you love to shop and are spending $200 per month on clothing, lower it to $100 per month. Therefore, you are not depriving yourself, but you now have a set amount that you can spend everything month. By finding five places to plug in your budget, you can squeeze out at least $100 - $300 extra per month from your spending – if not more.
What to Do with the Found Money?
Now that you have your “Found Money”, what should you do with it? Divide that amount into the following categories:
• Debt
• Savings
• Retirement Savings
• Other (children’s college savings)
If you have debt, most of your Found Money should go towards your debt, but you should still save some money every month. If you are debt-free, make sure you have an emergency savings account and a retirement account as well. Next: saving without thinking.
Make it Automatic
Setup an automatic savings account. Most great savers do not think about saving, it is done automatically. Ask your bank to automatically transfer a set dollar amount from your checking account to a money market account. For example, on the 15th of every month, they will transfer $50 to a money market account. This money can be used for your emergency savings or holiday gifts. Check out www.bankrate.com for a higher interest rate money market in your area. You can still link it to your checking account and get that money out automatically.
Still worried about finding that extra money? Don’t fret, just take ½ hour from your schedule this week and get started. Enlist a friend and do it together over a cup of coffee. Call your sister and do it together over the phone. Make it a priority and get ready to start sleeping better at night once you do!
Jot Down Every Dollar Detail
On a sheet of paper, write down everything you spend for the month. The goal is to come up with one monthly number that reflects all your spending (i.e. to walk out your door, it costs $3,000 per month). While this sounds simple, there are two areas that most people forget: annual expenses and small purchases. Annual expenses that are usually forgotten include: vacation, insurance, holiday gifts, professional services, school, medical expenses, clothing purchases, taxes and charitable contributions.
Then take this number and divide it by 12 to figure out how much this adds to your monthly expenses. You might spend $1,000 a year on clothing for your family; therefore, add $83.33 to your monthly expenses. Now tackle the small purchases, such as all food and meals. Perhaps you buy a $3 coffee daily. That equals $60 per month ($3 X 5 times/week X 4 weeks). Don’t forget about clothing, taxis/transportation, gifts, personal beauty, books, CDs and magazines/newspapers. Once you have that monthly number, see how it compares to your income.
Five Places to Plug
Now comes the fun part. Find five places to plug in your monthly spending. Don’t eliminate, just prioritize. Set a spending limit for what you really want to buy. If you love to shop and are spending $200 per month on clothing, lower it to $100 per month. Therefore, you are not depriving yourself, but you now have a set amount that you can spend everything month. By finding five places to plug in your budget, you can squeeze out at least $100 - $300 extra per month from your spending – if not more.
What to Do with the Found Money?
Now that you have your “Found Money”, what should you do with it? Divide that amount into the following categories:
• Debt
• Savings
• Retirement Savings
• Other (children’s college savings)
If you have debt, most of your Found Money should go towards your debt, but you should still save some money every month. If you are debt-free, make sure you have an emergency savings account and a retirement account as well. Next: saving without thinking.
Make it Automatic
Setup an automatic savings account. Most great savers do not think about saving, it is done automatically. Ask your bank to automatically transfer a set dollar amount from your checking account to a money market account. For example, on the 15th of every month, they will transfer $50 to a money market account. This money can be used for your emergency savings or holiday gifts. Check out www.bankrate.com for a higher interest rate money market in your area. You can still link it to your checking account and get that money out automatically.
Still worried about finding that extra money? Don’t fret, just take ½ hour from your schedule this week and get started. Enlist a friend and do it together over a cup of coffee. Call your sister and do it together over the phone. Make it a priority and get ready to start sleeping better at night once you do!
Interpreting Your Brokerage Statements
I hear over and over - "I don't even open my brokerage statements" or "I let them pile up in a big shopping bag." When some clients come to see me, they just bring their bank and brokerage statements in the envelope - unopened! While I definitely suggest opening your statements, I realize that they can be overwhelming and difficult to read. I have come up with a short exercise you can do to better interpret your brokerage statements and gauge how you really are performing. Just because the numbers are going down, doesn't mean that you are doing so terrible!
This exercise should take you 15 minutes but will buy you many evenings and hours of restful sleep. Isn't 15 minutes worth peace of mind? I think so! You will be doing this exercise on your most recent statement. This can be your 401k, IRA or regular investments. Once you are done, keep it in a file or folder so you can refer to it.
1) Write the price of the stock or mutual fund when you bought it or total dollar amount it cost you. Also, list the date. Some statements list it but many don't.
2) Look at your mutual funds, stocks and bonds and categorize which investment type they are. Are they small-cap growth or large-cap value? This is very important for figuring out your asset allocation. Do you have too much in one investment type ("I didn't realize I had 80% of my portfolio in Large-Cap Growth!")?
3) Instead of thinking "I'm losing so much money!" do a quick analysis and compare yourself to the market. You can do this on www.morningstar.com for your mutual funds. Plug in the ticker to get the Quicktake report. Then look at the performance chart, where it says +/- cat and +/- index. This tells you if your mutual fund is over or under performing similar funds and a comparative index. If you are doing better than the average or comparative funds, you can breathe a sigh of relief. Write + or - if you are performing worse than the market or better. Also, take this time to write how many Morningstar stars your mutual funds merit (1 through 5 with 5 being the highest rating).
4) How much are you earning on your money market at your bank or brokerage account? While it is probably earning a very low interest rate, you could earn more. Check out www.bankrate.com for a higher interest paying money market or look for an Ultra Short-Term Bonds mutual fund elsewhere.
This exercise should take you 15 minutes but will buy you many evenings and hours of restful sleep. Isn't 15 minutes worth peace of mind? I think so! You will be doing this exercise on your most recent statement. This can be your 401k, IRA or regular investments. Once you are done, keep it in a file or folder so you can refer to it.
1) Write the price of the stock or mutual fund when you bought it or total dollar amount it cost you. Also, list the date. Some statements list it but many don't.
2) Look at your mutual funds, stocks and bonds and categorize which investment type they are. Are they small-cap growth or large-cap value? This is very important for figuring out your asset allocation. Do you have too much in one investment type ("I didn't realize I had 80% of my portfolio in Large-Cap Growth!")?
3) Instead of thinking "I'm losing so much money!" do a quick analysis and compare yourself to the market. You can do this on www.morningstar.com for your mutual funds. Plug in the ticker to get the Quicktake report. Then look at the performance chart, where it says +/- cat and +/- index. This tells you if your mutual fund is over or under performing similar funds and a comparative index. If you are doing better than the average or comparative funds, you can breathe a sigh of relief. Write + or - if you are performing worse than the market or better. Also, take this time to write how many Morningstar stars your mutual funds merit (1 through 5 with 5 being the highest rating).
4) How much are you earning on your money market at your bank or brokerage account? While it is probably earning a very low interest rate, you could earn more. Check out www.bankrate.com for a higher interest paying money market or look for an Ultra Short-Term Bonds mutual fund elsewhere.
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