Finance

Reverse Mortgage For Seniors To Purchase A New Home

Reverse Mortgage For Seniors To Purchase A New Home

Using a reverse mortgage to purchase a new home has been an option since 2009. In 2009 the Federal Housing Administration introduced the Home Equity Conversion Mortgage for Purchase (HECM), which makes it easier for seniors to purchase a new home for themselves. While the overall number of these transactions and of Americans who are reaching retirement age continues to increase, the program has been underutilized. This is a great option for seniors that are looking at owning their dream home before they pass.

How Does It Work

A reverse mortgage for purchase combines a purchase with a reverse mortgage. In these cases, a homeowner has to be at least 62 years old. This streamlined process eliminates closing costs, helping make the acquisition of a new home, condo, or FHA-approved manufactured home faster for them. On the other hand, the buyer must be able to afford property taxes, homeowners’ association dues if any, insurance premiums, and other property expenses. Most of the time the buyer is use to paying these items since they have owned a home before. Many seniors use the HECM to facilitate the purchase of a new place to live without the taking on monthly mortgage payments which can be great for people on a fixed income.

While the reverse mortgage for purchase seems like an attractive alternative to conventional financing, there are a number of factors that a potential buyer should take into account before signing on the proverbial dotted line.

Down Payment

The purchaser is required to make a down payment. Often, this can be as much as 50% of the purchase price. The reason for this fees is that there is no equity in the new home purchase. It is this equity that is used in lieu of monthly payments. Additionally, these funds cannot be borrowed but can come from the sale of existing property, savings accounts, or other sources of investments or financial accounts.

Cost Factor

Using this method to purchase a new property can be complex. Homeowners will still be required to pay taxes, keep the required insurance, and maintain the parcel in order to prevent foreclosure by the lender. Because there are no monthly payments, the overall balance is higher and compound interest accrues.

Additionally, if the borrower lives long enough, the underlying equity supporting the loan could be exhausted, which may result in a demand to repay the loan early. Individuals considering this type of financial move are required to receive mandatory free counseling from a third party or agency approved by the Department of Housing and Urban Development.

Is This The Right Step To Take?

As the economic climate continues to change and evolve, options, such as the reverse mortgage for purchase, may be a viable way to find a new home. It is important to remember that this may not be right for everyone. Doing the research first and defining one’s objectives is an important step in the process to ownership. Also make sure you talk to an investment  or real estate attorney and asking their advice before signing any documents.

 

Posted by Tom in Finance
Ways To Save Money When Renting

Ways To Save Money When Renting

Homeowners have many privilege of being able to save money and receive some great tax benefits for owning a home, but what if you’re a renter, what can you do to save money? We will take a look at what a renter can do to save some hard earned money even if they do not own a home.

There are many people these days that do not have the time to own a home because they are so busy with work and their personal lives, in return many people are opting to rent either a home or an apartment instead of owning a house. In this article we will take a look at some ways renters can save money just like a home-owner does.

  • Location Is Always Important

These three words are always the most important words when it comes to real-estate. It does not matter if you are purchasing or renting location is extremely important. For a renter long commutes can eat up your finances. For example, in our nation’s capital or any big city commuting to work is a nightmare and can be very expensive. Renting an apartment close to where you work will save you both time and money.

  • Budget your housing

We all want to be able to live in a luxury apartment, but most of us cannot afford this type of lifestyle. You need to sit down and figure out what your budget is going to be for housing and then spend a little less than what you can afford. Make sure when you are looking for a place to rent do not go above what your budget is telling you what you can afford. If in the future when your income increases then it will be time to upgrade your apartment lifestyle to something more luxurious.

  • Lease Options

When dealing with leases you can save money by talking to the landlord to give you a long term lease, usually two or three year lease. The longer the lease, usually the rent will be less. This is a great option for both you and the landlord. The landlord will save money in the long run because he or she will not have to worry about cleaning and painting the property to get it ready to rent again for two or three years. This is a win win for both you the renter and the landlord.

  • Purchase Renters Insurance

This may sound like an expense, but if you have ever rented it is well worth the cost. Renters insurance will protect your personal belongings from theft, fire, and water damage. The cost of the policy is very inexpensive. Example, you live in a two story apartment building and the tenants in the upstairs unit floods their bathroom and water comes through the ceiling and floods your apartment and all your furniture is ruined. This example happens to a lot of renters, so the cost of this little insurance policy is well worth the cost and it will save you a lot of money.

  • Purchase Inexpensive Furnishings

When decorating an apartment do not spend tons of money of furniture, and whatever you do avoid rent to own stores (they are a rip off). The best thing to do is get creative, spend some evenings on Pinterest getting ideas of how to decorate on a budget. When your finances do grow or you get married and have two incomes or you purchase a permanent home, this is the time you will want to invest in good furniture. But for now, shop thrift stores and garage sales for inexpensive furniture that you can make work for you and your budget.

  • Cut Energy Cost

A lot of talk on blogs about homeowners cutting back on energy cost to save money, but renters can do the same thing. Here is a list of a few things that you can do as a renter to cut cost and save money.

  1. Turn lights out when leaving a room.
  2. Turn the A/C up when not home or have a programmable thermostat installed.
  3. Change out the lightbulbs to LED bulbs.
  4. Check the water-heater temperature setting, if to high turn down the setting.
  5. Install ceiling fans in the bedrooms to help keep the room cool.
  6. Wash dishes by hand instead of using the dishwasher, this will cut utility cost.
  7. If not using various rooms, close off the heat and A/C vents.
  8. Hang your laundry to dry instead of running the dryer, most appliances in rentals are not energy efficient.

These are just some ideas that can help you as a renter save money by cutting back on your energy cost.

  • Get Rid Of Cable

The cost of cable is going through the roof. I have basic cable and Internet and my bill is over $140.00 a month. If you’re living from paycheck to paycheck the high cost of cable is something that I would seriously look at cutting. Most of us today need to have some-sort of Internet service, shop around and try and find the best deal, cable companies are not always the cheapest way to get Internet.

  • Rent Near Public Transportation

Many renters live in big cities that offer public transportation. If you are one of these renters than you will want to make sure that you rent within walking distance of public transportation. A person can save a huge amount of money if you choose a location to rent that doesn’t require you to own an automobile. Many apartment complexes charge exuberant fees for a parking slot to park your car. And of course you will be saving money on fuel, insurance, car payments or lease payments and maintenance and repair cost for the auto.

Conclusion

Homeowners are not the only people that can save money by cutting cost of living. These few ideas that I have mentioned above can definitely help get you on the path of saving money if you are a renter. We would love to hear other ideas from renters out there that they do to save money.

Posted by Tom in Budgeting, Finance
Finding Financing For Real Estate

Finding Financing For Real Estate

Getting Financing for Your Investment Property Or Your Renovations

Financing For Real Estate

There are countless ways to make money in real estate, all which require skill, foresight and preparation and some hard work. A renovation is no different. Whether your project is a purchase to flip, repairing a rental property or improving your personal residence, there are a few things to consider which we will go over in this post.

First, you must ask yourself whether injecting any money into the property will actually increase its value. To answer this, you need to understand your market. This requires becoming an expert on property values in your neighborhood through sales comparable and so good old research.

You must know:

  • What properties are selling for in your area?
  • How long properties have been on the market?
  • When a property sells did they get asking price?

For us, what we have recently been doing is looking at current comparable’s and tax  assessments to get a better picture of property values for my area. Sometimes finding direct comparable’s is tough. It is always best to find out what the selling price per square foot is going for in your market.

When working and purchasing rental properties I highly recommend doing repairs on rental units in order to keep happy tenants, but tackling a fix and flip or renovating your home for profit must be considered carefully prior to commencement.

If the numbers look good and you decide to move forward, the next step is creating a specific “game plan” for the renovation. Understanding exactly what to fix and what not to fix will give you the biggest “bang for the buck.” Typically the kitchen and main bathroom, including sinks, counter-top’s, fixtures and flooring will provide the most upside. Painting the entire house, both inside and out with a neutral color provides a “flow” to the house and paint is more affordable when you buy a large quantity of the same color.


Landscaping is another area which is relatively inexpensive, yet adds a lot of value and “curb appeal.” The property may also require larger improvements such as windows, roof or furnace replacements, however it is often difficult to justify these amounts of renovation dollars unless your calculations still allow a profit.

To gain perspective on properties in your area, it is important to check out other houses in the neighborhood and understand to what degree people are renovating. This is easily accomplished by visiting open houses or buy checking building permits that are being pulled in local neighborhoods.. Never make the mistake of renovating to a standard that is higher than that of the market.

If the “fix and flip” model is a little too daunting, a very affordable, slow and steady strategy is to renovate your principal residence for profit. Once the renovation is complete, you have presumably increased the value. The next step is to refinance the property and use the capital to purchase another property and repeat the process. This is a great way to begin building a portfolio. Remember, you can continue to purchase with as little as 5% down, move in, renovate and repeat. Make sure you are buying properties that will gain profit once you move and continue the cycle. By repeating this process, many people ultimately wind up in their dream home, often with a fair amount of equity.

You may simply want to renovate your home to make it more energy efficient or accommodate a growing family or just bring a new look to the house. Either way, strategic renovation comes into play.

As a side note, there are many government grants and rebates available for a number of these renovations that will add to your savings on your renovations.

Before you jump into buying supplies and hiring contractors, ask yourself the proverbial question… how are you going to pay for this renovation?

The first thing to do, whether you are paying with your own cash or intending to get a loan, talk to a financing specialist, A good financial adviser will be able to help you understand your options and pre-approve you for a specific amount of money needed for your renovation, fix and flip or your next purchase. Let’s look at some of the options to consider.

Cash

If you have saved adequately, use your own funds. Make sure the cash outlay won’t overly affect your ability to qualify for your next property or affect your cash flow. When choosing to cash in an investment such as a stock or mutual fund to do the renovation, measure the loss amount it could be making in interest and include any early redemption fees versus the amount of interest paid on the renovation loan.

Credit Cards

The convenience of plastic allows the renovation to begin immediately rather than waiting for a loan approval. Remember to pay them off quickly or be faced with high interest rates. Be careful not to carry a high balance relative to your limit as this can significantly affect your credit score.

Credit cards from one of the big box stores can be an option. Some of these stores have been known to offer zero interest charges for 6 months. Again, consider your ability to pay off the card quickly as well as the credit bureau “hit” when considering any credit card.

Unsecured Personal Line of Credit

An unsecured “personal line of credit”  could be just the thing to pay the renovation costs. Banks give an unsecured personal line of credit based on a favorable credit bureau, confirm-able income and an amicable history with the bank. These vehicles allow the borrower to pay off as much as desired at any time. They are available in fixed rates but are more commonly offered with variable rates.

Secured Line of Credit

A secured line of credit, commonly known as a “home equity line of credit or HELOC” is a lower interest way which lets a homeowner use the equity in their home to borrow money, where the home is used as security. This allows payments that can be as low as interest only. You can pay as much as you want above the minimum required payment.

You can access up to 80% of the appraised value (or purchase price) of the home and as you pay down the outstanding balance, the available credit increases. Most lenders will allow a conversion into a lower fixed rate mortgage.

Bank Loan

A bank loan is perhaps the simplest way of financing your renovation. Payments on the loan will be withdrawn at regular intervals from your bank account to repay the loan. Just like a mortgage, if you can pay down the principal faster, you pay less interest. Therefore arrange your payments for a bi-weekly or weekly payments.

Refinancing Your Mortgage

When you refinance a mortgage, use the existing equity in your house to increase the mortgage amount up to 80% (or more based on the lender and insurer’s approval) of the home’s appraised value. This enables the mortgage payments to be spread over a longer period of time which take advantage of lower mortgage rates, ultimately resulting in lower payments than a PLC or HELOC.

There are costs involved which may include appraisal fees, legal fees and possibly a penalty for breaking the mortgage. Crunch the numbers and determine if this makes sense against other options available.

 

Second Mortgage

Depending on the amount of equity in the property, a second mortgage for renovation can be acquired in the form of an equity based 2nd mortgage. This is typically repaid over a shorter time period than a conventional mortgage. A second mortgage can be acquired from private lenders or many “B” lenders and will be registered as a second charge behind the first mortgage.

Many second mortgages commonly have higher interest rates as well as lender, broker and lawyer fees which are often paid upfront as a deduction to the mortgage advance. Second mortgages typically have a term of one year with interest only payments, although an open 2nd mortgage is possible.

Joint Venture Partners

Joint venture partners can become money partners, mortgage qualifiers, bird dogs or fix and flip partners. Whatever level you are at, just make sure that you partner with someone who is involved full time in real estate that can help you gain knowledge, experience and profit.

In closing, make sure to crunch the numbers and carefully consider the amounts you will pay for these loans, mortgages, credit lines or partnerships as compared to the potential profit or equity value you expect to gain from the property, prior to deciding to move forward with any renovation.

Posted by Tom in Business, Finance
Attitudes For Successful Money Management

Attitudes For Successful Money Management

Attitude of Successful Money Management

Do you really need to learn money management or do you need to learn a new attitude about your money? Where did you learn your ideas about money? Probably if you’re like most, you learned what your parents taught you. Maybe your spouses’ money habits and concerns have rubbed off on you. Most importantly, how will yours rub off on your children? Before you can teach money management to your teen, what do your words and actions say? If your children use the same techniques for money management in 20 years, will they be headed toward success or disaster? Maybe it’s time you rethought this love/hate relationship with your old friend, money. Maybe it’s time you adopted some successful attitudes; such as:

Have A Attitude of Gratitude

So often, as parents we give our children this line when there are complaints about what’s for dinner, who got what toy or got to sit in which seat. We say, “Stop complaining and be grateful for what you have,” or something to that affect. If it’s become rote, more than likely what you’re really saying (which is what your child is hearing) is “Shut-up and stop complaining,” which amazingly enough, doesn’t sound grateful at all, does it? The way we teach our children to be grateful is by being thankful for what we have and expressing it regularly; and no other topic comes to mind so regularly as money. Are we thankful for our good health and yet whining about our paycheck or our taxes? The more grateful we are for what we have, the more we’ll have to be grateful for.

Have a Attitude of Respect

We’ll spend time teaching our kids to respect their elders, respect our rules and have respect for themselves, but too often respect for money gets pushed aside. There seem to be 2 schools of thought, neither of which are respect; fear or disregard. If the budget rules your house with an iron fist and every penny is squeezed, you are passing down a fear of money to your child. If money is so scary that it controls even Mom and Dad, the most powerful people in the universe, it must be bad. Total disregard of the finances is just as bad. A lazy attitude of, “Oh the mortgage will just be late and I have no idea how we’ll pay for the credit card, but we’ll stop thinking about that once we go shopping,” teaches disrespect for money, which will translate into lack of money later in life.

Be Joyful

Money is fun and if you’ve forgotten that, let me remind you. There was a time; maybe a long time ago, maybe you were still a child that you suddenly “came into” some money that you weren’t expecting. There it was, a whole $20 and you couldn’t believe how great it was and started right away imagining all the cool stuff you could buy with it! Why should you give up that joy as an adult? Spending money is fun and when you give with love and an open heart, not only is it fun but you are making abundance possible in your life. Spending money begrudgingly and reminding your children and spouse about how much they “cost you” every time you leave the house not only stops the abundance coming into your life, but makes you a killjoy.

Show Interest

How much do you really know about money? We all know that in order to have a good relationship with our spouse, we have to communicate. We have to find out what makes them tick. We have to get to know them. We know as parents that we need to know our child’s interests and spend time growing those talents. We are successful at what interests us because we automatically take the time to find out more. So wouldn’t that apply to our money as well? How can expect to have a great relationship with your money if you don’t know the first thing about it? When the only time you spend with money is that dreaded day of the month where you grip the checkbook, hope for the best and pay the bills, how can you really know what makes your money tick? Get involved with your money and invest the time in finding out more. Get your family equally involved with the finances. If one spouse handles all the money, the other one should still know the essentials of what this family is doing with finances. Your family budget, the one your kids know exists but never find out why or how it works, is a “family” budget. Take the mystery out of your money and spend time with it.

Understand the Value of Money

Understanding the value of money goes beyond, this is $10, it’s worth $10. How you value yourself and your personal values in life are expressed through your value of money. Are you spending every waking moment in a desperate attempt to keep up with the Jones’s? Are your kids always dressed to impress even though they’d rather be just comfortable? Is it not good unless it’s the most expensive? These are all ideas that scream, “I am not enough, not valuable without money.” Is that what you want your children believing later in life? On the other end of the spectrum we have those that never buy anything new, their house is in desperate need of repair, their children live in hand-me-downs and they’re not satisfied unless they got “it” the cheapest that they could get. They even love to brag about how little everything they own cost. Are you really being frugal or have you taken the “we don’t deserve nice things” and made it a lifestyle? Are your feelings of self-worth controlling your money habits? And if so, what kind of value are your children seeing?

6. An Attitude of Confidence

Obviously if you are married with children, fear of the unknown doesn’t really faze you. You walked down the aisle despite what the statistics told you that the odds were. You had children and are raising them in the face of awesome odds. Look at you – you’re doing it! So why, when we’re brave enough to face the challenges of marriage and parenthood, do so many of us figure that money is totally out of our control. We can trust God with our kids, but money is up to fate, luck and maybe the lottery. We can count on our spouse to be with us through sickness and through health but we can’t count on ourselves to be “good” with money. We’d start that business if we had the money. We’d buy that stock if we had the money. Confidence with money comes from the knowledge that you come from abundance. There is plenty more where that came from. Being bold is the only thing that’s going to take you from struggling to success. Are you passing down an entrepreneurial spirit? Or are you going to whine about all the missed opportunities? Will your kids?

Be Ethical and Honest

Are you honest with your family about the finances? Isn’t it amazing that as a parent, you can expect your child to be truthful about why they got in trouble, and yet cheat on your taxes, feeling somehow that you’re entitled? Why is it that we expect our spouse to tell us every little thing that happened at work that day but what’s going on with the checking account is a big mystery? Do you talk about your salary like you talk about that 6-foot fish you almost caught? What’s your money story? And if it’s not a good one, or it doesn’t have a happy ending, what’s the moral of the story for your kids? If the truth shall set you free, how free are you financially?

When you think about the relationship you have with one of your old friends, or the relationship you have with your spouse when things are going really well, what are you doing to make that relationship a success? Of course you’re grateful for the time the two of you spend together. You have a deep respect for that person and you feel a joy when you are with them that always brings you back for more. You are extremely interested in what they’re doing and find their ideas and feelings to be fascinating. You value their ideas and opinions and love knowing they value yours. You are confident that the future of your relationship is going to be even better than the past. And you would never dream of dishonoring that relationship by being anything less than truthful.

If you became friends with your money, would you need to manage it? Growing a relationship with your money is not only key to your own success, but a vital part of teaching your child to reach for their own financial freedom.

 

Posted by Tom in Finance
Take Control Of Your Personal Finances

Take Control Of Your Personal Finances

I have been working in finances since I was about 18 years old, most of the time I was just guessing at what I was doing. Then one day I woke up and knew that I had learn the in’s and out’s of finances if I was to be successful. I found out early in my career that people that are financially successful at the ones that take the time and energy to regularly budget and plan out their finances. Most of them like myself have taken the time to get a financial education and continue to expand their knowledge over their lifetime.

Some of us go through life with no formal financial education and then there are others of us that have received a education in finances and receiving a education is a primary component of financial success. Here are some steps that will help you gain the financial foundation to help you to be financially successful.

 Mark your calendar to spend a few hours a week on your finances. 
Millionaires spend, on average, 8.4 hours a month managing and planning out their finances, according research by business theorist, Thomas Stanley. To be financially successful you need to dedicate time and energy just like the millionaires do. When I started my career I found out early that it takes dedication and time to regularly plan out my budgets and my road map to financial success. Don’t think it happens overnight like winning the lottery.

Set up a recurring date on your calendar to study your financial road map weekly and dedicate an hour a week just to your personal finances. Take a look weekly at your budget, look at your upcoming expenses and make sure you have the money in the accounts to cover your bills, then pay your bills which should already be automated to your accounts. Take a look at all the transactions for the week to make sure no one is siphoning money from your account and check to make sure that your accounts are accurate. Be consistent with this weekly money date and make it a fun time don’t think of it as a chore.

 

Commit 30 minutes a week to study about personal finances.

There are plenty of reading material on personal finances and financial education. The more knowledge you have the more you will feel comfortable with your finances. Don’t burn yourself out trying to learn everything overnight, break up your education sessions in to 30 minute increments. I love reading about personal budgets and financial secrets, but like  I said there are thousands of topics when it comes to finances.

Ask for advice from successful people that you know.

Talk to mentors, ask successful people to help mentor you. Seek out advice from people you know that are successful in business. Most of these people have made the mistakes that you will want to avoid, this is why it is best to get advice from them so you do not go through the same troubles that they have lived through. Take their advice to heart and make sure you thank them for sharing their information.

Gather information and put it to work for you.

Now that you have studied some different ideas and asked successful people for advice. Take these things that you have learnt and try them out for yourself. As you have done your research you have seen that there are lot’s of examples and strategies out there on the web, you need to look at these examples and strategies and see which ones best fit your finance goals and give them a try. If you try something and it does not work, don’t get discouraged look for something else that will fit your goals and keep looking till you find the one that best works for you. The key is don’t give up.

Hire a professional.

If at the end of it all you are still not comfortable about your finances then hire a professional to help you get your financial affairs in order. Sometimes we all need that helpful hand from a professional just to get started on the right track, and then there are those that just don’t have the time to dedicate towards their finances.

Conclusion.

Where ever you are in your financial path remember it takes dedication, time, energy and continued education to be successful with your finances. To be a master it takes a person to devote the time and practice consistently to sharpen their skills. If you devote the time to study and commit the dedication to honing down your skills with your finances one day you will be a master of your financial success.

 

Posted by Tom in Finance
Money Management Tips For Your Finances

Money Management Tips For Your Finances

Money management for your financial dreams

Money management is so much more than a few simple math equations and then you’re done. Math does play a part in money management but also does discipline and emotion and goal setting. The simple rule of money management is to spend less money than you bring home and to invest the leftover money wisely. If everyone lived by this simple rule then there would be no financial issues in families.

I remember when I was young (a long time ago) some of the greatest advice that I received was, take $20.00 a week and put it into some investment that compounded interest and forget about it till you’re ready to retire. At the time I thought wow $20.00 is a lot of money, this is money that I play with I cannot do that. To this day I kick myself in the rear-end for not taking that advice to heart. If I would have followed this simple piece of knowledge at the time I would have over $50,000 plus interest in my nest egg.

Of course I was a lot like other young people in my generation, I did not listen to wise old men and I took every penny I made and wasted it on foolish items. Today I wish I would have listened to people that were wiser than I was at the time and not have followed my emotions and wasted my hard earned money on foolish items.

The past is the past and I need to only look at the future now since I am fifty plus years old and I want to retire in ten years.


Obstacles get in our way.

About twelve years ago I had a major setback in my financial situation that was a wake-up call for me. My wife at the time wanted to have a new life and asked me for a divorce. Going through a divorce is a life and financial changing experience that I wish on no one. If you are not psychologically, emotionally and financially prepared then it will be like getting hit over the head with a baseball bat. Divorce can put you in such a financial tailspin that it can ruin your life for many years.

This was a difficult time for me, but God had other plans for my life and he took me out of that situation and today I am able to help others that are in that same boat that I was in. Since that life changing curve ball that I was given, today I am writing and teaching others how to reset you’re financial goals and take steps to get you back on the right path to financial freedom. Let’s now take a look at a couple of steps that you can start with to get you started.

Be Content.

First you need to understand that you will not find happiness in materialism and spending money on things you do not need. You must stop believing that money buys happiness. I remember the days of bringing home $25,000 a year and how I wished I could bring home $50,000 a year, I would so much happier. Well when I did hit that goal of making $50,000 I was no happier than when I brought home $25,000.

 

You need to learn to be happy with what you are given each day, when you make more money and you are not content you will not find happiness. There are no shortcuts and secrets to be financially set. What you need to do is learn how to mentally be happy with what has been given to you and learn to live within your means.

Learn to say no.

Learn to say no, every parent has problems with saying no to their kids, especially when it comes to purchasing back to school items and when it comes to the holidays. Right now is the time of year when families are running around and purchasing items for their kids to go back to school and I am hearing horror stories of families spending hundreds of dollars for new clothes and equipment like tablets, computers and new cell phones to go back to school with This is absolutely crazy. There is no need to purchase these items and go deeper in debt just to make your kids happy. You need to learn to say no, our parents did and we survived and so will your kids.

And It is not just kids that we need to be saying no too, it is us adults also. Many of us want to purchase new adult toys even when there is nothing wrong with what we have now. We need to be looking at cutting expenses and not getting deeper into debt just because we want something new. If you have the cash and you really feel the need to purchase that item them go for it, but do not purchase the item on a credit card or use money that will be going for another bill, only purchase the item if you have spare money laying around.

Use technology to your financial advantage.

When it comes to saving for your retirement use technology to help you stay on track. Computerize you savings and retirement accounts, when you set up monthly payments to come out of your check to go directly into a 401k account or some other savings account you will not miss the money since you don’t see it come from your paycheck. I set my retirement account to come directly out of my earnings and I was amazed at how quickly that account grew over time.

Computerize your spending habits in order to keep track of where you are spending money. Using software like bill pay will help identify where you are spending your money. At the end of the month take your statement and look it over to see where you have wasted money. Take for example, how many times did you go to Starbucks to purchase coffee, how many times did you purchase fast food during the month, and etc. Software like bill pay can shine a light on where you may be wasting money.

Take action now!

Nobody cares about your money and your future more that you do, so don’t procrastinate on getting your retirement started or work to get out of debt. Another thing is; don’t make excuses and blame other for your financial situation. Your financial condition may not be entirely your fault, but stop complaining and fix your situation now. You have the brains and no-how, take your expertise and fix what needs fixing with your finances.

Passion

Make money management a passion, when you do this it will give you the motivation to keep working harder to save and get out of debt. A wise person once said “”I like entrepreneurs who decided to solve a pain point that affected them personally,” says Vasu Kulkarni, Courtside Ventures. “The conviction to solve a problem is always stronger when you are passionate about it, and generally that tends to stem from issues that you can relate to personally.”

If you goal is to build for your retirement or get you and your family out of debt, take time right now to light the passion in your home with your family to be as passionate about this as you are. The larger the support group you have the stronger you will be to break your goal.

 

Posted by Tom in Finance
Why Must You Be Financially Literate

Why Must You Be Financially Literate

Why you must be financially literate

Usually April is Financial Literacy month but we are going to take a look at it now since we are a little over halfway through the year. Financial literacy is not just knowing and understating how to manage your personal financial matters but actually taking what you know and putting it into action. To be totally financially literate you need to understand how to manage debt, do financial planning / budgeting, and learn profitable ways to save the money you earn. Learning these principles and applying them is what is needed to gain financial confidence and financial independence.

To be financially literate.

There are several steps for a person to have financial literacy which include key skills in making and keeping a budget, track your spending habits, learn simple ways to pay off debt, and plan for your future. Being educated in these areas from a financial expert can be very beneficial in achieving your financial goals and give you and your family peace of mind and financial confidence which leads individuals to be self-sufficient.

How financial ignorance can affect you.

Based on a report by National Financial Educators Counselors Council in an article that was published in Cardtrak.com the lack of financial knowledge is costing Americans more than $2.3 trillion dollars over their lifetime. The lack of knowledge cost people money, bank charges, high interest, credit card debt, losses on investments and it can hurt you from getting your dream job if your credit is poor. Also based on this report, financial ignorance affects all ages and demographics levels. The lack of knowledge can lead to owning large amounts of debt, which can lead to poor credit, bankruptcy, and or foreclosure.

Now I am not close to being financially perfect myself. I have had money troubles in the past and at one time I was close to living out of the back seat of my car. This was the wakeup call I needed to get my act together with my finances. I have worked extremely hard in the past ten years at applying financial principles and strategies to get myself out of debt and get ahead of the financial curve and become financially independent.

Here are a couple of excellent resources on how to become financial literate:

Rich Dad Financial Education

Financial Literacy

PBS – Financial Literacy

A statement that I read not too long ago makes perfect sense. “The key to building great wealth is having great knowledge to act on and great wisdom to know which course of action is the best”.

What are some of your financial goals that will help you to become financial literate and independent.

 

Posted by Tom in Finance
7 Items That Can Ruin Your Credit

7 Items That Can Ruin Your Credit

7 Easy Ways To Ruin Your Credit

Some the biggest financial mistakes I made were when I was in my 20’s and 30’ that set me on the road to financial disaster. I was young and dumb and I had a good paying job, credit was no problem. I was receiving credit cards daily in the mail so it was no big deal filling my wallet with these cards. If I wanted something I would go out and purchase it or if I did not have the cash I had the plastic card to pay for the item.

After I matured and received a job handling loans for lenders I got a great education in how credit and loans worked. There are many items that will affect your credit, there are a few things that can have a positive effect on your credit score but there many things that have a negative effect and many things that you have no control over.

Having Good Credit

In today’s world your credit is so important. I am an employer for a large service based company and one of the hiring criteria is having good credit. We will take an application that looks good and if the person has bad credit we will not hire the person. This is just one issue that can hinder your life if you have bad credit. Many things in life revolve around your credit score, one would be amazed at how your life is judge by just your credit score.

There are many things that affect your credit score. Let’s take a little walk down the path and take a look at a few of these simple things that will ruin your life when it comes to your credit score.

Too many credit cards

Everybody is giving away credit cards, these cards are a huge money maker for companies. The last time I was at my dentist and took my dog to the vet they both were trying to get me to take out a credit card with them. Any department store, home improvement store, airlines you fly on and etc have credit cards that they want you to sign up for. Before you sign up for these cards read all the fine print on the contracts. Also take some time and do some research, some of these cards offer some great point reward programs.

Remember that every card you apply for is a loan program. When you apply for these cards your credit report is run and it is scrutinized which affects your credit score. Every ding against your credit drives down your credit score.

Pay your credit card payment on time

While we are on the subject of credit cards remember you MUST pay your credit card payment on time. Do not miss a payment even if it is a one off and say I will pay it next month. If you do this you will be charged a expensive late fee, plus you will rack up more interest. But what is worse is that your credit score will take a major hit and it will show all the times that you made late payments.

Read your email and open all your mail

This just happened last night to my wife and I, my wife was scanning her email and found that our cell phone invoice was due the These companies are saving on postage and administrative fees by sending the invoices by email. If you were to be late with your cell phone bill or utility payments this may show up on credit score and possibly lower your score. Make sure you read all your mail and catch those bills that come in a plain white envelope, read all your email and junk email because with technology these days your bill may be sitting in your email box.

Cosigning for a loan

I highly frown at people that co-sign for loans. First if the person is needing a loan cosigned for then they probably have bad credit for not paying their bills on time. If your child is needing a loan for a car and they have no money for a large down payment then I would wait and make them save their money until they have a good enough down payment for a car loan where they do not need me to cosign for it. I have two daughters that I have turned down cosigning for loans for them, they both have bad credit and it is due to the fact that they cannot manage their finances. It may sound bad, but I am not going to ruin my credit because they cannot manage what they have.

Getting buried in debt

It is getting easy again to finance just about anything. Home and car loans are flying out the door again and money is being lent to people are such cheap rates. Although you may qualify for a home loan and it is not in your budget don’t go out and purchase a home that you know will not fit into your monthly budget. If your debt to income ratio are not inline this will affect your credit very negatively. This negative score will stay with you until you have paid down some of the debt and get your income to debt ratio straightened out.

Large ticket purchases

If you are in the process of purchasing a home while the loan is being processed by the lending institution do not purchase anything on credit until you have closed on the home. Many people while purchasing a home will go and purchase all new furniture and supplies for the home on credit which will have a terrible effect on your credit score. If the hit on your credit score is bad enough you may lose out on the loan for the home. Be extremely careful if you are having a large loan processed, there are many things that can affect the loan, do not add to it with materialistic purchases.

 

Posted by Tom in Finance