Archive for March, 2010

Good Stock Buys are the ones that make you more

Monday, March 29th, 2010

Good Stock Buys are the ones that make you more money than leaving it in the savings account!

You don’t have to be a financial wizard to know that your money isn’t going to earn a very high return sitting nice and safely in your local bank or credit union. Of course, there’s a lot to be said for not having to worry about if your money will be waiting for you as banks are notoriously risk adverse. There is also the issue of the federal governments guarantee that you money will be waiting. This is also known as the Federal Deposit Insurance Corporation or FDIC.

Now the FDIC is NOT really insurance and the money it has available can cover about 1-3% maximum of the total monies it has guaranteed. No one except the federal government could get away with such low reserves and continue in business. That said, understand that the FDIC, for all intents and purposes IS the government.

If however you need to have your money grow, and who doesn’t, it’s necessary to increase your net worth. Whether it’s for retirement, a home, your children’s college education or a vacation, you should consider learning about stock market trading.

According to most estimates, you can expect to earn an average of 10 to 12 percent annually from stock market trading — even with a very conservative portfolio. When you compare those returns to the three or four percent interest that the typical savings account pays, you can easily see why stock market trading is the better option. So we’re talking about a solid return on investment several times what can be obtained at the local savings and load.

Getting involved in stock market trading is very straightforward and uncomplicated. All of the major brokerage firms maintain web sites that make it easy to compare rates and fees. You can just sign up with one of these firms, talk to a broker to discuss your financial goals, and then let the firm do all the work. If you want to be more hands-on, there are even do-it-yourself stock market trading web sites where you can make trades with just a few clicks of the mouse. Whichever route you choose, you should be able to start building your portfolio within a few days.

The key however is to practice first and THEN invest. Several web sites are available that for a small fee, you can trade an imaginary account that is linked to the actual action on the various stock markets. This was, you are able to hone the trading skills necessary to be successful. It also protects capital and keeps the losses just on paper and not real money.

By starting with a practice account, you can gain confidence in your ability and find out what style of investing is most comfortable. People just like you have been increasing their net worth through stock market trading for decades. If your money is currently languishing in your bank account, it might be time to put it to work for you. Get into stock market trading now, and start building up a portfolio that will be able to support you and your family well into the future.

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Budgeting When Your Paycheck Varies

Saturday, March 27th, 2010

How can you decide how much you have for bills and expenses when your paycheck varies from one payday to the next? That’s a question a lot of people struggle with.

A few of the occupations that I can think of off hand that could fall into this category are waitresses or waiters working for salary and tips, truck drivers that are paid by the mile and never know how many miles they are going to get, the self-employed that their business income varies from season to season, and the list could go on.

Trying to manage your finances with a steady income is hard enough but when you never know what your paycheck will be seems almost impossible, but it’s not. It is, however, going to be a little more tricky.

In my Budget and Bill Organizer I talk about averaging your expenses like your phone and electric bills that vary from month to month. The same principle can be used to average your income.

The first step you need to take is to find records of your pay for as far back as you can. It would be best if you had records going back for at least 6 months.

Take these records and total the amounts you were paid for the entire period. Then divide that by the number of months you have records for. This will give you your average monthly income.

If you don’t have any record of your previous pay you may need to go to your employer to get the information. If there is no way to get this information you should start a log of how much you get paid and use this to develop your budget.

Once you have determined your average monthly income you will need to develop your budget just as if this was your regular pay.

Here’s where it gets tricky. You aren’t always going make the amount you have budgeted. The only way to handle this is to save when you make more than what you have budgeted.

Here’s an example:

You have determined that your monthly budget is $2000 per month;

In January you earn $2500. You will need to put away $500 of that money so that you can make up for any month that your income falls below $2000.

This sounds like a simple solution to a complex problem but it may not be as easy as it sounds unless you accustomed to saving money. It will take some discipline to make sure that money is there when you need it.

There could be a bright side to this method. If you are able to put the extra money away and you have several months that you make more than your budget you could end up with a sizable savings account.

When setting up your budget make sure that you don’t underestimate your bills and expenses. This is one of the major reasons many budgets fail.

By averaging your income it will prevent the “Feast to Famine” approach to your spending. It only makes sense to spread your income out so that you can cover all of your bills and expenses every month.

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Bill Consolidation – What You Need To Know.

Tuesday, March 23rd, 2010

As easy as it is to get into debt, there are a number of strategies for consolidating your bills and lowering your monthly payments while still paying more to principal and becoming debt-free faster than you thought possible.

If youre ready to eliminate your credit card debt, you need to assess your situation and then look at the best alternative for your financial needs. Do you own a home? If you own, do you have equity in your home to tap? Can you afford more than your monthly payments, or are you struggling to get by? Is your number one goal getting out of debt, or is it to meet your monthly payments?

If you own a home, and have equity available, you can look at a debt consolidation loan, or a related solution a home equity line of credit. In this scenario, you are shifting your credit card debt from unsecured to secured debt, which allows you to lower your monthly payment and also lets you deduct the interest payments from your taxes. You may determine that this debt consolidation loan, or second mortgage, can put you on a much faster track to eliminating your debt. Thats because the interest rate on a second mortgage can be much lower than what youre paying toward credit cards or other high interest debt. Trading higher interest debts such as these for a lower interest payment can save you hundreds each month which you can, in turn, put back toward paying off the debt. Last, but certainly not least, the interest you pay on a second mortgage is tax deductible and that savings too can be put toward your bills.

Or perhaps you already have a second mortgage youve been paying on for a while. Especially if you got your first and second mortgages at the same time, it might be time to consolidate them into one loan. Many second mortgages in the last decade carried adjustable interest rates which have increased causing payments to rise. Consolidating your first mortgage and your adjustable rate second mortgage into one low fixed rate loan can also save you a great deal each month which you can use to make payments to higher interest debts.

Two other advantages you may gain through refinancing are the elimination of personal mortgage insurance and the chance to get cash out at closing. When you took out your original mortgage, did your lender require you to carry personal mortgage insurance due to a high loan to value? If so, refinancing may eliminate that requirement. If you have since built up some equity and your new loan to value is low enough to drop the mortgage insurance, your payment amount will be much lower. You may also find that you can take some cash out of your home at closing without significantly increasing your monthly payments. That cash can go toward you guessed it your higher interest debts.

If you dont own a home, or if you own and have no available equity, you can look at debt relief options including debt settlement and credit counseling. If your monthly payment is your number one concern, its worth a try to call your credit card companies and see if a payment plan at a reduced interest rate can be agreed upon. This will allow you to pay more toward your balances each month and eliminate your credit card debt sooner. While your creditors are under no obligation to change the terms of your agreement, they may very well be willing to do so, especially as it is to their advantage to receive payment, and negotiating a payment plan shows that you are taking the initiative to do just that.

If calling your creditors doesnt work, or if you just want a quick fix, you can contact a debt settlement or credit counseling company. Debt settlement is a service for consumers who want out of debt at the lowest cost, in the shortest time frame, with the lowest payment while avoiding bankruptcy. Credit counseling, on the other hand, is a solution that lowers your interest rates slightly and can get you a lower monthly payment.

The path to becoming debt free is as different as the ways you can get into debt in the first place. The first step toward eliminating your debt is educating yourself with all the options available to you. Once youve identified your needs, you can get started taking the right steps for yourself.

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Gold: A True Barometer Of Public Confidence

Saturday, March 20th, 2010

Gold and silver coins, the famous “old world” currency, are fast becoming the “new world” currency because they offer the missing link in all paper currencies: a store of value.

Today, Americans are facing a pile of unpaid debts. At the helm is a new Fed chief, Ben Bernanke, who has already been nicknamed “Helicopter Ben” based on admitting he’d print enough paper currency and drop it from helicopters to keep the U.S. economy from sliding into a recession.

The Wall Street Journal recently published an excellent commentary, “In Gold We Trust,” by David Ranson and Penny Russell of H.C. Wainwright & Co. Economics. They explain why gold prices are the truest barometer of falling public confidence and of growing inflation. Here are a few key points they bring to light:

* Gold is the benchmark for the value of the dollar – not the other way around.

* The falling U.S. dollar is largely being ignored by Washington and Wall Street.

* Gold’s sharp rise represents an equally sharp decline in investor confidence.

* Gold is the barometer of public confidence in paper money.

* The dollar’s collapse of 60 percent since 2001 is a blow to capitalism.

Bottom line: The U.S. dollar is slowly but steadily sliding into oblivion, taking with it the hopes and dreams of all Americans, along with the value of their savings accounts and investments.

Most Wall Street pundits view gold as just another commodity, which they say is now overpriced due to a growing gold fever worldwide since 2001, causing central banks, hedge funds and others to buy gold for the first time in decades. Not so!

Gold is rising because it is real money. The solution is to convert a portion of your “paper” assets into gold – thus putting yourself on a personal gold standard.

Rising gold prices today are a big red flashing signal of coming inflation, which could take gold prices over $1,000 an ounce. So don’t wait to buy gold – buy gold and wait.

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Basic Financial Information Tips (Part I)

Tuesday, March 9th, 2010

Savings. Pay yourself first. Start now stashing 10% of your income in an Emergency savings. Dont use it for anything but real emergencies. Keep a For Sure savings account for yearly expenses you know are coming and you can estimate (e.g. Christmas, insurance, taxes, etc.). Also have a Buy Stuff account. If you do, youll be able to avoid many financial disasters which will face you, and you can avoid borrowing money from high-rate lenders.

Borrowing. Dont borrow money unless you are willing and able to pay it back. Failure to pay debts on time causes severe financial, emotional, and family problems. Experts recommend you dont borrow for wants, only for needs, or for things that increase in value. Many lenders will loan you money you cant afford to pay back, especially high-rate lenders.

Co-signing. Dont co-sign on a loan unless you are willing and able to pay it back. Often, co-signers end up paying off loans they are unprepared for, and financial hardships follow. Numerous co-signors now have negative credit ratings because a primary borrower paid late. Many lenders do not notify the co-signor before reporting delinquencies or repossessions to the credit bureau.

Compare. Before you decide who to borrow from, compare! Find out who is offering the best deal at that time look for the loan with the lowest rate (APR).

APR. The Annual Percentage Rate (APR). It is the standard rate, so we may compare the cost of borrowing. It is the cost of credit expressed as a yearly rate. When you borrow, always beat 13% APR (consider 13 to be unlucky when it comes to borrowing). Some have been illegally stating other rates such as weekly or monthly rates. Compare APR to APR. If you pay your bills on time, and you arent over-extended, you can nearly always find loans or financing arrangements at rates lower than 13%. Beware though, because beating 13% does not always mean you are getting a good deal. For instance: the difference in total interest paid on an 11% versus an 8% 30-year, $100,000 mortgage loan is $64,283 (assuming all payments are made as agreed).

Consolidation Loans. A consolidation loan can result in great savings to borrowers if the new interest rate is significantly lower, and if you dont run-up debt similar to what was just consolidated. But beware, because consolidation loans usually result in substantially more money out of your pocket into the lenders. For instance, mortgage loans usually involve closing costs. They increase the total debt. Many refinances involve reducing the monthly payment, but increasing the length of payback, which substantially increases the total interest paid. Borrowers, who refinance unsecured debt (e.g. credit cards) into a home mortgage, also increase their risk of losing their homes. Also, remember to keep all of your payments current until the old debt is paid off. Too many people have damaged credit ratings, and are in bad financial condition because they counted on money which didnt come when they expected it. Expect delays when applying for loans, especially consolidation loans. Dont spend money before you get it.

Desperation. Dont get desperate for money. The more desperate you are, the less likely you are to get a good loan.

Auto insurance. Keep your auto insurance current. If you fail to keep your insurance up-to-date, you could end up making loan payments for years after your car has been totaled.

Establish good credit. To avoid bad credit, don’t borrow too much, and do pay your bills on time. Inexpensive ways to establish good credit: (1) Obtain a good credit card. When you charge things, pay off the balance each month on time and pay no interest. (2) Establish a revolving line of credit (an empty loan) as an overdraft protection against bounced checks, and dont use it as a loan. (3) Get a loan to buy a car, or furniture, or etc.) and pay it off within a few months.

Late fees. To avoid late fees (which multiply the cost of borrowing), pay early, or at least on time.

Repossessions. To avoid repossessions and associated fees, pay early or on time, and keep your insurance current.

Extra principal less interest. To pay less interest on loans, pay more than the minimum required payment. Even small amounts of extra principal, can significantly reduce the total amount of interest you would otherwise pay over the life of the loan. Before doing this, however, make sure your lender accepts extra principal payments, and find out what particular procedure you need to follow to ensure your extra principal is properly applied.

Bi-weekly payments. If you get paid weekly, or every other week, paying bi-weekly is a very convenient (almost painless) way to reduce your loan term and interest. For instance, if you make of your required monthly payment every 14 days (a bi-weekly period), you pay the equivalent of 13.052 payments in an average year. If you dont get paid bi-weekly, or if your lender doesnt like biweekly payments, you can pay the equivalent amount in monthly installments. If you pay 1/12 of the sum of 13.05 payments each month, you will match the bi-weekly advantage (minor rounding differences).

Contrary to popular belief, the frequency of paying payments bi-weekly doesnt accomplish much, the real advantage is paying the extra principal (13.05 payments, or more, each year) which reduces the term and the interest paid. If you are considering signing up for a bi-weekly program, pay close attention to the cost. Some servicers have large set-up fees and transaction fees. Also consider the credibility of any company handling your money, some have diverted payments into their own pockets, leaving borrowers to make payments twice (once to a corrupt servicer, and a second time directly to the lender).

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Fixed APR Balance Transfers: Better Than A 0% APR

Tuesday, March 2nd, 2010

Fixed APR Balance Transfers: Better Than A 0% APR

0% balance transfers offer great short term savings, free up money to pay down debt quicker, and can ultimately save consumers hundreds, if not thousands of dollars in interest over their duration. However, the very best 0% balance transfer offers on the market only last 15 months. For many, this is not enough time to completely eliminate their credit card debt and they are faced with a decision: pay the new regular interest rate or transfer their balance again. For most, a fixed APR balance transfer credit card never enters their mind. However, this balance transfer offer is often the best option for many credit card users.

First, let me explain a 0% balance transfer worst case scenario. An acquaintance of mine thought he could save a few thousand dollars in student loan interest by transferring his balance to a 0% APR credit card. The student loan had a fixed APR of 7.99%. He figured hed save $1600 the first year on his $20,000 loan, then transfer the remaining balance to a new 0% APR credit card the next year.

What he didnt realize was that its not always that easy to get approved for a new 0% APR credit card year after year, especially when you have a high amount of credit card debt. When it came time to transfer the $18000 left on his credit card, he was only able to get a $2000 0% balance transfer. He was stuck with $16000 of credit card debt with a 12% interest rate and the clock was ticking on his other $2000 in debt. Instead of a comfortable fixed APR of 7.99%, my acquaintance got stuck in a credit card nightmare.

Fixed APR balance transfer credit cards provide consumers with a much better way to pay down long term debt such as student loans or car loans at a set interest rate. Currently, some credit card companies are offering fixed APR credit card rates as low as 3.99% for the life of the balance. A rate such as this is lower than many student loan and car loan rates, and can provide consumers savings of 3% or even 10% on long term debt each year.

A fixed APR balance transfer is also a good option for individuals with high credit card debt considering a second mortgage to pay off their high interest credit cards. For example, a 3.99% fixed APR may be lower than a second mortgages interest rate and it wouldnt involve costly refinancing fees. More importantly, however, is the fact that a fixed APR balance transfer doesnt remove equity from your home.

0% balance transfer credit cards offer consumers great short term savings. In the long run, however, a fixed APR credit card provides a viable, interest saving option for those looking to reduce higher interest loans and credit card debt over a period of more than 12 to 15 months. Imagine how much better off my friend would be if he transferred his $20000 balance to a 3.99% fixed APR credit card instead of getting greedy with 0% APR credit cards.

2006 Credit Card Depot Inc.

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