Archive for July, 2011
Saturday, July 30th, 2011
Fantasizing about great wealth is a frequent pastime for many of us. How wonderful it would be not to worry about paying bills, to be able to buy whatever we want, and have the freedom to travel as often as we’d like. It’s a lovely fantasy, but how accurate is it, really?
One mistake most of us make is believing that money will solve all of our problems, and our lives will become smooth and serene. Not true! Having more money might help ease certain struggles, but it will not transform our lives. If anything, having a lot of money will bring on a new set of problems beyond anything we might imagine.
Before we will TRULY be ready to handle increased abundance, we need to foster certain qualities within ourselves:
Self-Worth – We first need to be willing to believe that we deserve better financial circumstances. If we struggle with poor self-esteem and don’t have a positive self-image, we will continue to push abundance away when it presents itself. Though this is largely a subconscious process, we can gather clues from the rest of our lives to determine if this is an issue we need to work through. If we continuously resist positive changes in our lives, in everything from relationships to health habits, we might need to work more on our level of self-worth before we can accept true abundance.
Confidence/Courage – Wealthy people need to be strong people. Why? Because of all the shysters out there who would do anything to get their hands on our money. This could be anyone from close friends and family members to complete strangers and scam artists. If we are timid by nature and afraid to stand up for ourselves, we might subconsciously push prosperity away because we’d feel threatened by all the attention we would receive from others who want a piece of our pie. Wealthy people need to be shrewd, firm and confident about saying “No” when necessary.
Perspective – As mentioned above, money will NOT solve all of our problems. When we don’t have any money, it’s easy to convince ourselves that money holds much more power than it really does. In its tangible form, money is simply slips of paper and chunks of metal. It has no magical abilities. We don’t really want money, we want what money can provide us with! Understanding that money is simply a form of energy in our lives, we can learn to welcome the ebb and flow of financial abundance, and therefore attract more of it without being emotionally attached to it.
Responsibility – Though this is a hard thing to admit, we need to acknowledge the part we play in our lack of financial resources. We need to examine our own spending and saving habits. We need to look at the ways we might be careless with the money we do have, and the ways we set ourselves up to experience lack. If we live paycheck to paycheck and never seem to have enough left over, we might need to explore higher-paying jobs, or other avenues of income generation. We might need to learn how to wisely invest our money so it will grow, rather than continuously leak out of our budget. The truth is, proper handling of the money we do have right now will encourage more money to appear in our lives.
We need to remember that we create the quality of our own lives, moment to moment, and it all begins with our thoughts. If our lives don’t resemble the lives we’d rather be living, we can choose to examine the reasons for it, take responsibility for our actions, and make a commitment to improving our circumstances. While this can be a daunting task, how freeing it is to finally understand that it’s all within our control.
Tags: Close Friends, Confidence, Courage, Family Members, Fantasizing, Financial Circumstances, Friends And Family, Health Habits, Mistake, Necessary Perspective, Pastime, Poor Self Esteem, Positive Changes, Prosperity, Relationships, Rest Of Our Lives, Scam Artists, Self Image, Shysters, True Abundance
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Wednesday, July 27th, 2011
Many homeowners make the mistake of thinking re-financing is always a viable option. However, this is not true and homeowners can actually make a significant financial mistake by re-financing at an inopportune time. There a couple of classic example of when re-financing is a mistake. This occurs when the homeowner does not stay in the property long enough to recoup the cost of re-financing and when the homeowner has had a credit score which has dropped since the original mortgage loan. Other examples are when the interest rate has not dropped enough to offset the closing costs associated with re-financing.
Recouping the Closing Costs
In determining whether or not re-financing is worthwhile the homeowner should determine how long they would have to retain the property to recoup the closing costs. This is significant especially in the case where the homeowner intends to sell the property in the near future. There are re-financing calculators readily available which will provide homeowners with the amount of time they will have to retain the property to make re-financing worthwhile. These calculators require the user to enter input such as the balance of the existing mortgage, the existing interest rate and the new interest rate and the calculator return results comparing the monthly payments on the old mortgage and the new mortgage and also supplies information about the amount of time required for the homeowner to recoup the closing costs.
When Credit Scores Drop
Most homeowners believe a drop in interest rates should immediately signal that it is time to re-finance the home. However, when these interest rates are combined with a drop in the credit score for the homeowner, the resulting re-financed mortgage may not be favorable to the homeowner. Therefore homeowners should carefully consider their credit score at the present time in comparison to the credit score at the time of the original mortgage. Depending on the amount interest rates have dropped, the homeowner may still benefit from re-financing even with a lower credit score but it is not likely. Homeowners may take advantage of free re-financing quotes to get an approximate understanding of whether or not they will benefit from re-financing.
Have the Interest Rates Dropped Enough?
Another common mistake homeowners often make in regard to re-financing is re-financing whenever there is a significant drop in interest rates. This can be a mistake because the homeowner must first carefully evaluate whether or not the interest rate has dropped enough to result in an overall cost savings for the homeowners. Homeowners often make this mistake because they neglect to consider the closing costs associated with re-financing the home. These costs may include application fees, origination fees, appraisal fees and a variety of other closing costs. These costs can add up quite quickly and may eat into the savings generated by the lower interest rate. In some cases the closing costs may even exceed the savings resulting from lower interest rates.
Re-Financing Can Be Beneficial Even When It is a Mistake
In reality re-financing is not always the ideal solution, but some homeowners may still opt for re-financing even when it is technically a mistake to do so. This classic example of this type of situation is when a homeowner re-finances to gain the benefit of lower interest rates even though the homeowner winds up paying more in the long run for this re-financing option. This may occur when either the interest rates drop slightly but not enough to result in an overall savings or when a homeowner consolidates a considerable amount of short term debt into a long term mortgage re-finance. Although most financial advisors may warn against this type of financial approach to re-financing, homeowners sometimes go against conventional wisdom to make a change which may increase their monthly cash flow by reducing their mortgage payments. In this situation the homeowner is making the best possible decision for his personal needs.
Tags: Amount Of Time, Calculators, Closing Costs, Credit Score, Credit Scores, Existing Mortgage, Financial Mistake, Inopportune Time, Interest Rate, Interest Rates, Mortgage Loan, New Mortgage, Original Mortgage, Present Time, Property Financing, Viable Option
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Wednesday, July 27th, 2011
Most experts on the subject believe that the Social Security system will be bankrupt in about 15 years. However, some new studies have offered a ray of hope. They seem to indicate that the assumption that the boomer generation will retire at 65 or 67 and sit back to collect their social security checks is incorrect.
They believe a sufficient percentage some estimates are as high as 80% – will continue to work in some capacity or another, relieving much of the pressure on the system.
This is probably the only ray of hope for many who have visited financial planners or bought personal finance software to see how much they need for retirement. These usually show you need a million or more dollars to retire with your current lifestyle. But again, they dont take continuing earnings into account.
Many in the baby boomer generation plan to retire at around 65, but then start a second career, doing something they enjoy. Most dont want to continue on in their present jobs or move to low paying work at fast food restaurants or supermarkets.
Rather they would rather make their accumulated knowledge work and, if possible, also give something back to society at the same time.
Health experts say this trend will be beneficial in that by staying involved, those past retirement age will stay healthier and will be happier with their life.
So it seems that several trends are converging. Those in their 60s, 70s and early eighties are healthier than ever. Because of their increased longevity and the shortfall in their retirement savings, they need to continue to earn. And many companies who once looked on older workers with distain, now seem to realize the value they can contribute to the company and to society in general.
There is speculation that colleges and universities may allow retirees to earn fast track degrees, taking into account their prior education and work experience. Also some states are already loosening license requirements for teachers to allow those with degrees in fields other than education to become teachers with little if any further training.
Another way to continue to earn in retirement is by making wise investment choices now.
Buy rental properties, learn how to manage money effectively or start your own business now in your part time so that you have something up and running by the time you retire.
The internet has opened up new ways to earn, be it drop shipping, affiliate marketing or selling goods on Bay.
If you always wanted to be an author or if you can write software programs, it is simple to self publish and sell electronic goods through services such as Clickbank.
Or you could just do something youve always wanted, like baking breading or making shoes. If youre good at whatever you choose, you should have little trouble finding a clientele.
But if you are depressed because you have to continue to work after 65, dont. Youll have a lot of company and youll will also be healthier and happier for it.
For more advice on retirement planning and personal finance, visit http://www.credit-yourself.com/financial-planning.html
Tags: Baby Boomer, Baby Boomer Generation, Colleges And Universities, Distain, Eighties, Fast Food Restaurants, Financial Planners, Health Experts, Knowledge Work, Older Workers, Personal Finance Software, Prior Education, Ray Of Hope, Retirement Age, Retirement Savings, Shortfall, Social Security Checks, Social Security System, Time Health, Work Experience
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Thursday, July 21st, 2011
Planning for your retirement is obviously a good idea. The phrase “the earlier, the better” describes what your policy should be for handling your transition from a harried work life to your relaxed golden years. At best, take twenty four to eighteen months to prepare for this significant change in your life.
* Cleaning Up – Try to pay off any outstanding debts or fiscal responsibilities before moving on, especially those that are hedged against your retirement plan. If you don’t, you’ll probably be paying them out of your pension/savings and that is an incredibly bad idea for a retired individual.
* Doing the Paperwork – A year before you retire would be a good time for you to start doing the necessary paperwork for your retirement. Birth certificates, passports and other identity papers should help smooth your transition to a senior citizen.
* Health Care – Always check with the employee benefits department six months to a year before retirement. Ask them how your health insurance will change once you’re not a member of the company. Depending on the answer, you may have to look around for new or additional insurance for yourself. Also, take into consideration any continuing ailments that you may have. Covering them with health insurance is a good idea, since they may take out a significant part of your retirement income.
* Budgeting For Yourself – Check what your income sources will be after retirement. This can be from your employer – with the company’s own pension plan, Social Security and your own personal savings. After that, make a budget that would fit your approaching financial situation. You really need to do this well in advance, so that you may be able to change it for any required adjustments such as paying for new medical insurance and other expenses that may pop up. A year should give you a large enough margin to prepare. If you’re having trouble balancing it all, a financial advisor is a good investment. Try to find one that has a good solid reputation so as to avoid any problems.
* Making a New Tax Payment Plan – Switching from your salary to your retirement income is a big change but you still have to pay taxes for that change. After retiring, contact your tax advisor on what forms you’ll have to submit and how to set up a good payment plan so that you’ll be able to maximize what you can out of your payout from retiring.
Tags: Additional Insurance, Ailments, Bad Idea, Birth Certificates, Citizen Health, Employee Benefits Department, Financial Situation, Fiscal Responsibilities, Health Insurance, Income Sources, Medical Insurance, Necessary Paperwork, Outstanding Debts, Passports, Pension Plan, Pension Savings, Personal Savings, Retirement Income, Retirement Plan, Senior Citizen
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Tuesday, July 19th, 2011
If your bills are piling up and you’re worried about losing your home, you’re not alone. As rising foreclosure rates indicate, thousands of Americans are touched by foreclosure every year. But many could be prevented, if homeowners sought help sooner from their mortgage company or through a new toll-free, confidential hotline.
Unfortunately, according to a national poll recently funded by the Homeownership Preservation Foundation, 53 percent of American homeowners would not contact their mortgage company for help if faced with delinquent payments.
Fortunately, many foreclosures could be prevented if homeowners called their mortgage company or the Foundation’s toll-free hotline-(888) 995-HOPE-as soon as they recognize that they may have a problem paying their mortgage. The longer homeowners wait to call for help, the fewer options they have.
If you’re a homeowner whose debt is continuing to grow and you’re finding that you’re having more and more difficulty paying your bills, consider taking the following action:
1. Take a close look at your bills-unopened envelopes or a steadily growing pile of bills from utility companies, your mortgage company, etc., are the most immediate signs you have a problem.
2. Open letters from your mortgage company and other creditors. Don’t ignore these letters.
3. Admit you have a problem and dedicate yourself to getting help. If you avoid your mortgage company and other creditors, you may lose your home, and you will damage your credit.
4. Don’t take it on yourself. Call for help. Call your mortgage company to understand what your options are.
5. If you don’t feel comfortable calling your mortgage company, call the Homeownership Preservation Foundation at (888) 995-HOPE to receive free advice from counselors who work for HUD-certified nonprofit agencies.
6. BEWARE of phony counseling agencies (deal only with HUD-certified agencies), as well as offers in the mail or by phone that seem too good to be true.
7. Develop an action plan that focuses your resources on family essentials (shelter, food, health care, basic utilities, and transportation).
8. DO NOT sign any papers you don’t understand.
9. Determine if you have the cash flow to continue paying a mortgage or to refinance your current mortgage. This will help you determine if you should sell your home and find less expensive housing.
10. Set a long-term goal of getting and staying out of debt and ensuring steady cash flow.
Tags: American Homeowners, Confidential Hotline, Counseling, Counselors, Creditors, Delinquent Payments, Envelopes, Foreclosure Rates, Foreclosures, Free Advice, Free Hotline, Homeownership Preservation Foundation, Hud, Mail, Mortgage Company, National Poll, Nonprofit Agencies, Open Letters, Signs
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Sunday, July 17th, 2011
Why it is Important to Teach Your Kids About Money
Do your kids understand how money works? Do they earn an allowance for doing chores around the house? Do they baby-sit or mow lawns to earn a few extra bucks? Do you take them to your office during school breaks so they see what its like to work a real job?
Do they know the fundamentals about saving? Do they understand how to figure out which is the best deal? Do you set a good example for them about handling money?
When I was HR Manager of a consulting company, we hired a college student to intern during the summer. He came to ask me about the FICA and Medicare deductions in his first paycheck. He politely told me he didnt want this deducted anymore, and I had to keep from laughing. I started to explain to him that payroll taxes are not an option, but realized this was his first job and he had never been taught how much of his paycheck he would actually get to keep. He truly believed it all was his- no one had ever told him about Uncle Sam getting his cut first.
The statistics on college students who graduate with thousands of dollars of credit card debt are shocking. Turns out, as they signed up for classes in their freshman year, they also signed up for a credit card without understanding what it would really cost them in the long run. So before they even start earning a living or saving in a 401(k) plan, they have to pay off years of debt. Its sad that theyre still paying for the pizza they ate two years ago.
Its so important for kids, especially teenagers, to understand the concept of money and how it flows in and out of your hands throughout your lifetime. How to save it and how to spend it. Why is it important to give some back to others through charitable donations. If you dont develop an understanding of money early in life, how can you possibly be able to manage it later on?
Parents have a responsibility to make sure their kids understand how money works before they go into the world to earn that first paycheck. Having this knowledge gives them the confidence to make smart money decisions as they navigate their way in life.
Tags: 401 K, Charitable Donations, Chores, College Students, Consulting Company, Credit Card Debt, Fica, First Job, Freshman Year, Hr Manager, Lawns, Medicare, Medicare Deductions, Money Works, Paycheck, Payroll Taxes, Pizza, Teenagers, Thousands Of Dollars, Uncle Sam
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Thursday, July 14th, 2011
When looking towards retirement many people just think about the joy of not having to work anymore. Unfortunately, even though a person retires they still have bills to pay. The need for careful planning is perhaps the most overlooked part of retirement. Having a set plan in place before retirement will help to ensure the golden years are golden.
The following list gives some great points on how to plan for retirement.
1. Save money. Before retirement setting up a savings account or 401K will get a person prepared for life without a steady paycheck. A 401K is usually sponsored through an employer where the employer matches contributions the employee makes. Money put into a 401K also goes untaxed which can mean immediate savings. IRAs are also another way to save for retirement. These accounts are also not taxed.
2. Determine your expenses after retirement. A person should have a fairly good idea what monthly expenses they expect to have after retirement. Having a rough idea will help a person determine how much they need to save to be able to make it. Then considerations also need to be made for special purchases like cars and trips.
3. Working after retirement. Many people chose to take on a part-time position after retiring. Most often it is to supplement their income, but for others it is a way to socialize and gives them something to do with all the spare time they now have. If a person is not planning on working anymore at all then they should have some idea what they do want to do with their time. Many retirees find that retirement can be boring after years spent in the work force.
These three points will give a person something to think about when planning for retirement. Getting a good financial plan is the first step. It is also important to consider what life will really be like once the daily work schedule is gone.
Tags: 401k, Cars, Iras, Many People, Money, Monthly Expenses, Part Time, Planning For Retirement, Planning Retirement, Retirement Accounts, Rough Idea, Savings Account, Spare Time, Steady Paycheck, Time Position, Working People
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Saturday, July 9th, 2011
Americans hear a lot about the shaky outlook for Social Security. In the future, the federal program likely will play a smaller overall role in Americans’ retirement plans.
One way to fill in the gaps of a savings portfolio is to put money in annuities. With an annuity, you pay a premium in exchange for guaranteed income payments at regular intervals. It is most often used for retirement purposes.
The basic types of annuities are equity indexed, fixed rate and variable. The major advantage of annuities is that they all guarantee benefits such as tax-free growth, the ability to pass money directly to heirs or charities and an income stream for life.
Over the past few years, equity-indexed annuities have gained a great deal of popularity. They offer interest or benefits that are linked to an external equity reference – a stock index like the S&P 500, for example. But you get a guaranteed minimum return in exchange for a limited maximum return; that is, you get less upside, but also less downside, to your stock-market investing. Your principal is never at risk.
Fixed-rate annuities, on the other hand, guarantee an interest rate and a declared minimum. They have traditionally been the most popular annuities.
Variable annuities provide more options. They enable you to invest in stock, bonds, mutual funds and money-market instruments.
Reputable financial companies, like TrueYield Financial, want to make sure investors are comfortable when purchasing annuities. Here are some tips for the potential investor.
* Be sure the firm you work with is not limited to offering just one company’s annuities. There are many options available, so work with an agent that can get the one that best fits your needs.
* Understand what you are buying. Talk to your financial adviser or agent about which annuity may be right for your retirement portfolio. Fully understand the annuity contract you are considering.
* Define your goals. Annuities can be used to accomplish a number of financial goals. For example, they can supplement your monthly income or provide emergency funds. Decide which purpose your annuity will serve.
* Ask your agent if you have a “free look” period to review your annuity contract and make sure you have made the right decision.
* Investigate whether or not a bonus annuity is right for you. Bonus annuities credit premium bonuses to allow a retirement saver to make up for stock market loss or to provide an immediate boost to the account value.
Tags: Annuity Contract, Downside, Equity Indexed Annuities, External Equity, Financial Adviser, Fixed Annuities, Fixed Rate Annuities, Gaps, Guarantee Benefits, Heirs, Income Payments, Income Stream, Intervals, Maximum Return, Money Market Instruments, Retirement Portfolio, Retirement Purposes, Stock Index, Stock Market, Variable Annuities
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Tuesday, July 5th, 2011
I am eligible to retire from my current job on April 4, 2010. And that is the day that life without work begins.
My retirement will be different than most in that my monthly take home will increase over the years. This is due to a government pension, military retirement and social security.
When I hit 57 years and 4 months, I will be able to call it quits. I will have 5 years working with the US government and will be eligible for a small pension. It will not be enough to live on, but I also have a Thrift Savings Plan (TSP) which is very similar to a 401(k). Unlike the 401(k), I can withdraw my TSP when I retire as long as I am at least 55 years old. I will use this to supplement the small pension.
I also have a 401(k) that I invested in while I was a government contractor for 5 years. I can start making withdrawals at 59 and must have it depleted by 70 .
Once I hit the ripe old age of 60, I become eligible for my US Army Reserves retirement. This will triple my monthly income and make living a lot better. Then, at 62, I can add in my Social Security. I can also defer this until 66 or 70. I will have to crunch the numbers to see which one is most beneficial and find the break even points.
I also plan on selling my house when I initially retire and will use this money to purchase my retirement home in Thailand. Yes, I will leave Hawaii and move to Khon Kaen, Thailand. The cost of living is way less than Hawaii and I will be able to live out my golden years easily.
Add into this mix, I live online and make some money marketing on the Internet. I make money from ads and banners, affiliate hotel rooms, credit cards and a few more. This will provide beer money for me and keep me occupied.
For most retirees, their money starts to dwindle as they get older. For me, at least for the first five years, it increases. Plus, I still have some “gravy money” in my 401(k) and some other investments.
All of this didnt happen overnight. And it didnt happen because I saved for 40 years. Granted, the military retirement is based on 30 years service, but all the rest is over the past 7 years. Contributing to a 401(k) and now to my TSP makes it easy to see that I will be taken care or, and that I wont be a burden on my family.
I look forward to that day when I can walk away from my desk and never have to return. Starting work at age 12 with my paper route and being able to retire at age 57 is a long time but not as long as those who have to wait until 65.
Right now I put in the absolute IRS maximum allowed into my retirement fund and add as much as I can to my mortgage payment in hopes of paying it off early.
It may be hard to save when you are young and plan for retirement, but, trust me, it is well worth it. You want to have everything all set up once your work days are over.
Tags: 4 Months, April 4, Army Retirement, Beer Money, Cost Of Living, First Five Years, Government Contractor, Government Pension, Gravy, Hotel Rooms, Kaen, Marketing On The Internet, Military Retirement, Money Marketing, Retirement Home, Thrift Savings Plan, Thrift Savings Plan Tsp, Us Army Reserves, Us Government, Withdrawals
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