To follow up on her story about dealing with loan modification companies, we bring you this post by Stacey Doyle.

After paying our mortgage on time for eight years, we found ourselves three months behind. To try to save our home and finances, we are considering a home loan modification. Unfortunately for us, we are past due on other bills, so our credit rating has plummeted. We’ve therefore contemplated on doing a mortgage loan modification, but we worry about what the effect of such a move will be on our credit.

Can A Home Loan Modification Ruin Your Credit?

Homeowners who find themselves unable to catch up on their mortgage payments have several options to get rid of the obligations. But many debt management solutions available today may actually have a negative effect on a borrower’s credit score — and in particular, their FICO score. In those cases when homeowners decide to walk away from their problems, there may be grave financial consequences.

What do the FICO score people have to say about it? According to FICO PR Director, Craig Watts:

“The single worst thing any person can do to his or her FICO credit score is to have serious delinquency such as foreclosure or bankruptcy appear on their credit bureau report. The impact that serious delinquencies have on FICO scores can vary from person to person, based on what other information is on the person’s credit bureau report.”

So how is my credit going to be affected now that I’ve fallen behind on my mortgage payments? Clearly, it will fall by some points, and it will take time to repair my credit regardless of which solution works out best. In the worst case scenario, credit scores are typically lowered by up to 300 points after a foreclosure. Anyone who opts for a foreclosure will see it on their credit report for seven years, and it may take a minimum of two years before they notice any improvements to their credit score.

What Are My Options?

While it is clear that my credit will be negatively impacted by my past due mortgage payments, I still have options. Some possibilities to resolve the problem include a refinance, loan modification, foreclosure, deed-in-lieu of foreclosure, short sale or bankruptcy. Here was how I analyzed and reviewed each of these options:

• With my current poor credit, a refinance is not a viable option. It would raise my interest rate and monthly payment, which I cannot afford.
• Foreclosure might leave me with a hefty bill since currently my house is worth about what I owe.
• A short sale or deed in lieu of foreclosure would pay off my current mortgage and leave me free and clear but will make a big dent on my credit score and force me to move to a new home.
• If I were to file for bankruptcy, I may be able to keep my home, but my credit would get shot. My credit history would be seriously impacted for seven years.

After reviewing my options, I knew that I definitely wanted to avoid foreclosure: this led me to what I thought may work best for my situation, which is to negotiate a loan modification.

Dealing With Mortgage Lenders

And here’s where I am today: I’ve been negotiating with my mortgage lender since last November to no avail. My original lender was bought out by another, who claimed to have lost all my paperwork. I had the local bank branch manager handle my most recent submission, which they finally received and processed. Now I was not hopeful about this because the bank manager herself admitted that she was unsuccessful with negotiating a loan modification with her own employer. And as expected, I was turned down for the modification four weeks ago and became despondent.

After some thought and additional research, I eventually decided to enlist the help of the state Housing Authority. After two meetings, they agreed to represent my interests to try to get a loan modification and also directed me to a wealth of local resources including possible free legal services.

These days, I feel more hopeful that I am headed in the right direction after reading statements from Edward A. Mermelstein, a New York real estate attorney:

“Banks are not in the foreclosure business, so they may be more willing to renegotiate or modify their rates to help get the loans off their books and keep you in your home. Also, research the foreclosure laws and time frames in your state [every state is different] by contacting the State Government Housing Office.”

Can Troubled Homeowners Get Help For Free?

The short answer? YES.

Prior to contacting the Housing Authority for help (the assistance they offer is free!), I had spoken with some debt counselors (e.g. Home Foreclosure Fighter) whom I connected with through online searches and ads. But these folks all wanted a fee, something I can’t afford to pay right now. It didn’t make sense for me to pay for any more services when I could no longer afford my own mortgage.

According to Brian Mikelbank, a Cleveland State University professor, homeowners should try not to pay for assistance. He states: “There are other resources that are financing the (housing authority) counselors, enabling them to offer free services.” He suggests looking for help through HUD (Housing and Urban Development) counselors and community leaders: “If foreclosure can’t be avoided, these are the folks that can help you get out… with the least amount of damage to the rest of your financial situation.”

The Bottom Line

No matter which way my situation goes, I realize I am not completely doomed. Linda Ferrari, author of “The Big Score”, states:

“If the Fair Credit Reporting Act doesn’t require lenders to report negative information at all or in a specific manner, then this leaves the door wide open for negotiating deletions or non-reporting of these items.”

While a loan modification will lower my credit rating, it won’t make as much of an impact as foreclosure or bankruptcy. If the terms are negotiated well, I might even be able to have negative credit notes removed. On the other hand, if we are unable to reach a settlement, a short sale or deed in lieu of foreclosure might be the only remaining path for me to take. I will keep everyone posted about my progress and findings.

Can A Home Loan Modification Ruin Your Credit?

YNAB Pro Giveaway Code: fibonacci

Those of us doing any kind of work on our personal computers know how crazy things can get when the “infrastructure” goes down. Perhaps you want to start an online business or more likely, you care a lot about what you’ve got stored in your machines. If so, then you should get into the habit of backing up your data. Once, I actually had to shell out $1,450 for data recovery when my computer crashed without a back up system in place. Ouch! On this note, I thought to share the following guest post by Millie Kay G., about a couple of software options one can look into for managing online back ups.

For a lot of us, losing our important computer files means losing money. I keep many of my documents and pictures backed up in a portable hard drive, but using a computer backup service like Carbonite or Mozy is something I’ve been considering lately. I took a closer look at these well-known services to see if they are worth trying out.

Carbonite Backup Service Overview

Carbonite is a popular choice in the data backup arena. Their service will back up your documents, emails, pictures, and even data from programs like Quicken. Once you pay for the service, you can elect to have it back up your music, videos, program files, and other types of data as well.

You won’t run into limits on the amount of data you can back up. However, if you try to upload more than around 20 gigabytes of data, you might find the process slow going. As far as security is concerned, your data is protected by encryption. So if someone doesn’t have your account password, you won’t have to worry about them snooping through your stuff.

What if you need to restore data? Let’s say you lose a file or a whole folder. In that case, you could go to your desktop to seek out your file or folder from your Carbonite Backup Drive and recover it by using the Restore option. Alternatively, if you don’t have access to your computer, you can always visit the Carbonite website to get a hold of your data backup. It won’t take more than a few minutes to recover small files or folders, but if you need to restore a large amount of your computer data, then you should plan on it taking a day or two, depending on how much data is involved.

Windows XP, Vista, and Mac users can all use Carbonite. Their website offers handy tutorials to show you the basics.

Mozy Backup Service Overview

Another computer backup service that has earned kudos is Mozy. For users who want to use the service for personal use, there’s MozyHome, which comes free with limited 2 GB of space. For unlimited storage, it’s $4.95 a month. With it, you download the backup software, then choose which files you want backed up. Your files are encrypted while they’re backed up, and they’re encrypted a second way for storage.

You can schedule when your backups happen. The first backup you make will generally take the longest, if you’ve got a lot of data to archive. After that, the backups should be incremental. As mentioned, if you’re using MozyHome for personal use, you can get 2 GB of storage for free. You can have two computers on one MozyHome Free account.

You can restore your data in a variety of ways. You can right-click on any folder that needs recovery; you can go to the Mozy website to download your files from there; or you can order a DVD of your backup. It may actually be faster to order a DVD than wait for your backup to download on your home internet connection (think of the famous saying from the annals of computer networking: never underestimate the bandwidth of a truck full of magnetic tapes hurtling down the highway).

For business users, there’s MozyPro. It provides an Administrative Console to manage backups from multiple computers, and you’ll benefit from encryption, alerts, bandwidth throttling, and more. For each server and each computer you want to back up, you’ll need to buy a license.

Now with regards to pricing: for desktop computers, it’s $3.95 as well as $.50 per gigabyte each month; while for each server, it’s $6.95 plus $.50 per gigabyte each month.
 

Before you decide on a computer backup service, keep in mind that this works best for users with high-speed internet connections due to the large amount of data involved. A free trial or account can give you a good idea if the service is a good match for your backup needs.

Why Outsource Computer Back Ups?

Why go with a computer backup service if you can do these tasks yourself? Well it’s about making the time and effort to actually do what’s needed, and frankly, for less than $5 a month, it’s something I’d rather outsource. In my opinion, the convenience and peace of mind these services provide are worth way more than several dollars a month.

Also, if you did your own backups yourself, then you’d need a portable hard drive to make it work. It could make more sense to get some “data redundancy” by opting to store data elsewhere via a backup service. Data that’s stored offsite can be easier to recover than say, a hard drive that’s been burned, drowned, or dropped during an emergency.

Clearly, the consequences of missing out on regular backups are not pretty: if you forget to back up something yourself, then you might lose your precious data to a hard drive crash, a wayward virus, or theft if your computer’s ever stolen. Rather than risk your livelihood, family pictures, novel-in-progress, or your music collection, you could rely on a computer backup service as your data storage solution.

For those who use (or have used) Carbonite or Mozy — do you have any thoughts on your service of choice?

Carbonite vs Mozy: Online Backup Services

YNAB Pro Giveaway Code: fibonacci

There have been a lot of developments with Mint.com lately, the biggest of which was their acquisition by Intuit (the makers of Quicken software). Mint is known primarily for their free online budgeting tool, which we’ve enthusiastically recommended here; and if you haven’t had a chance to check them out yet, you may want to give them a try. They’ve vastly improved their software, web site, blog and overall content.

They’ve recently gone on the social media bandwagon and have leveraged the power of Twitter by developing what they call their “Money Tweets” feature, a section of their site that’s devoted to up-to-date, real time personal finance information. This is just one more handy way to organize financial content around the web in one place.

Mint’s Money Tweets Section

In this new section, you’ll find selected tweets covering various personal finance topics such as Saving, Investing, Budgeting, Loans and Retirement. There are additional tabs that share tweets that are “about Mint” and “from Mint” along with a Q & A tab, where you can tweet your answer to Mint’s Question of the Day.

And finally, there’s the cool tab that measures how certain financial topics are trending for the day: it’s a quick, visual way to see which money topics are picking up the daily buzz.

Mint’s Trending Financial Topics

If you haven’t checked out Mint yet, I’d encourage you to pay them a visit, not just for their popular and free online budgeting tool, but also for the rich multi-media content resource library they now offer for students of personal finance.

Now for additional financial resources, I’d also like to put in a word for this great Q & A resource called Cash Commons, which I just came across via Mighty Bargain Hunter. I’ve been spending some time perusing this site along with these excellent articles on finance:

Personal Finance Articles

• OneMint: List of Gold ETFs
• Brip Blap: Too Busy For Vacation
• Credit Karma: Paying Back Part of Making Work Pay Tax Credit
• Cheap, Healthy Good: 100+ Thanksgiving Recipes and Links (just wow!)
• Free Money Finance: How to Graduate from Harvard for $40k or Less
• Lazy Man and Money: Trade your CDs for an iPod or iPhone… legally?
• Million Dollar Journey: A Little Food Planning Goes a Long Way
• Monevator: The reality of making money from iPhone apps
• Personal Financier: How I Bought My Son $150 Worth of Cardboard Boxes
• Frugal Dad: Corporate Security Or Freelance Freedom?

Recent Carnivals

• Festival of Frugality: Awesome! Many thanks to the delicious blog called Cheap, Healthy, Good for selecting my post on how to lower credit card interest rates as an Editor’s Pick!
• Carnival of Debt Reduction: I’m glad I made it to John’s short list! Good list of debt management tips here.
• Festival of Stocks
• Carnival of Personal Finance

Mint.com’s Twitter Feature: Money Tweets!

YNAB Pro Giveaway Code: fibonacci

Here’s how to become a millionaire overnight: win the lottery. But before you start playing, know that rich people have their own set of problems. You may have heard about how some of them harbor millionaire secrets, but they’re not the kind you’d want to have.

Image from guardian.co.uk

A study I read several years ago revealed the fate of sudden millionaires through lottery tickets or unexpected inheritance. The panorama was devastating. Very few people are able to survive the fame, the incessant supplications for help, the recent accumulation of “friends”, the hounding from salesmen and, especially, the advice and recommendations for “good” investments.

Sudden Wealth: Too Much, Too Soon

One case in particular caught my attention, since I knew the man personally. One of eight grandchildren, he lived most of his adult life struggling to make ends meet, although he knew that eventually he would inherit a sizable sum from his grandparents. When the time came to receive his share, he was 39 years old and unemployed. I had the opportunity to visit him a couple of months later at his luxury home where he had stashed 8 very expensive automobiles (maybe he figured he was Jay Leno).

Since we were not close friends, I did not see him again for 2 years, until a casual encounter in a local restaurant. When I asked how he was doing, he confessed that he had lost everything and was looking for a job. Here’s what had happened to him: perhaps you remember a craze in Russian bonds several years ago. He had invested over a million dollars (his liquid assets) in these bonds, believing the broker who claimed that returns would be “fantastic”. The Russian government defaulted, and billions of dollars disappeared in smoke.

Lottery Winners And The Curse of Sudden Wealth

Another case involves “William “Bud” Post, who won $16.2 million in the Pennsylvania lottery in 1988 but now lives on Social Security. He says: “I wish it never happened. It was totally a nightmare.” There are many horror stories out there of riches to rags, even of attempted murder by relatives hoping to get their hands on the pie.

So why do so many lottery winners go broke over such a short amount of time? In truth, there are many factors as to why the suddenly wealthy end up going broke as quickly as they got rich. I’d like to explore one factor in particular that may contribute to their downfall.

Wall Street Casino

In the investment world, a very interesting theory called “Prospect Theory” analyzes the behavior of investors, and uncovers the fact that emotions are more powerful than reason. Prospect theory also explains why investors hold onto losing stocks: people often take more risks to avoid losses than to realize gains. For this reason, investors willingly remain in a risky stock position, hoping the price will bounce back. Gamblers on a losing streak will behave in a similar fashion, doubling up bets in a bid to recoup what’s already been lost. Here’s a bit more about this theory:

Individuals are much more distressed by prospective losses than they are happy by equivalent gains. Some economists have concluded that investors typically consider the loss of $1 dollar twice as painful as the pleasure received from a $1 gain. Researchers have also found that people are willing to take more risks to avoid losses than to realize gains. Faced with sure gain, most investors are risk-averse, but faced with sure loss, investors become risk-takers.

Have you checked your stock brokerage accounts lately? As we have seen with the stock market during the financial crisis of 2008-2009, investors — especially the small ones like you and me — tend to panic when they see their (paper) investments dwindling rapidly. On a whim, they decide to engage in stock market timing and sell at a loss, or hold onto bad stocks because Uncle Rick (or a co-worker) gave them a “winning” tip. Let’s face it: Wall Street is a huge casino that attracts the gambler inside of all us. Who can resist making a lot of money without really working? Well, the smart ones, for example; those who refuse to let their emotions get the better of them: Warren Buffett anyone?

Greed Is Not Good

The Russian scheme peddled by unscrupulous brokers and the record-breaking Ponzi pyramid for $50 billion attracted very smart and powerful people who let greed dictate their decisions. Once greed takes hold, people may find themselves behaving irrationally. Over time, greed can prove to be the downfall of many fortunes.

So, dear friends, apply your own personal Prospect Theory in these challenging economic times. If you are holding stock in solid companies, keep them; if your investment is too risky, get rid of the shares, even if you lose money in the process. Now that the market seems to have begun some kind of recovery, it’s a good time to take stock (pun intended) of your financial position and to make the right decisions.

Why Lottery Winners Go Broke: Prospect Theory At Work

YNAB Pro Giveaway Code: fibonacci

Should your college student own a credit card? That’s an interesting question that many parents dwell upon. This much is true: applying for and finally receiving that first credit card is a big step for any individual. I believe that it can be helpful for someone to become exposed to using a credit card early (with caveats), depending on how “ready” for this exposure the individual is. With the appropriate guidance (and guidelines), using the right kind of credit card can prove to be a helpful financial tool for a student. What distinguishes a student credit card from all other cards? Usually, they offer lower interest rates and a lower spending limit than regular credit cards.

Let’s start out by identifying which credit cards may be most suitable for college students. Then we’ll cover some important points about card use.

Best Student Credit Cards For College Students

Here are a number of good rewards credit cards that are geared towards the younger set:

1. Discover Student Card: You’ll earn 5% cash back on choice spending categories such as travel, gas, restaurants and groceries and 1% cash back for everything else. The Discover Student Card is also a 0% APR credit card that offers no interest rate for 6 months for new purchases. It has no annual fee.
For more information, please visit this link.

2. Citi mtvU Platinum Visa for College Students: This card has no annual fee and offers 0% APR for 6 months for both balance transfers and purchases. This is a rewards card that will give you 5 reward points for every $1 you spend on books, movies, music and restaurants. For $1 spent on everything else, you’ll earn $1. You’ll also earn 25 reward points per month if you stay below your credit limit. There’s also an incentive to get good grades: earn up to 2,000 reward points twice a year with proof of a good GPA. Check out their “GPA vs reward points” table:

For more information on Citi mtvU Platinum Visa, you can check out this link.

3. Citi Forward Student Card: Here’s another no annual fee rewards credit card that rewards you for good behavior. It’s also a 0% interest credit card that won’t charge you interest for 6 months for balance transfers and new purchases. With this card, you’ll get 6,000 bonus points after spending $250 in 3 months, 5,000 points when you go paperless and 5 reward points for each $1 you spend on restaurants, music, books and movies. You’ll get 1 reward point for each $1 spent on everything else. For managing your credit well, you’ll be eligible for up to a 2% reduction on your APR and an extra 100 points per billing period. For more details, check out this link.

Tips For Using A Student Credit Card

I am a firm believer that one’s money management habits are forged at a young age. I believe that anyone can learn how to manage money and understand credit cards while in college or shortly thereafter. But on the flip side, if you aren’t savvy with money or tend to hang out with friends who are spendthrifts, you may end up developing some bad habits. If you are a student and want credit, you need to understand what you are getting into. It would be great if all of us learned about money management and paid more attention to the basics of credit card use right when we start using credit cards.

I learned a few things when I got a hold of my first few credit cards — that there’s a right and wrong way to use them. Like anything else, there are pros and cons to using a student credit card. Let’s review some of these points:

The Pros

For students, one big benefit that credit cards provide is the convenience that they offer when there are emergencies. Who knows what emergencies a student will encounter, and it is comforting to know that your college student can be financially covered with a credit card in such cases. Typical scenarios might include vehicle breakdowns and attendant car repairs and towing expenses, motel bills, meals, doctor charges, or midnight apartment repairs, such as water leaks. But impromptu trips to the Bahamas certainly don’t qualify as an emergency!

Having a student credit card will help your child learn how to be financially responsible and will also help them develop a credit history.

Here are some ways to start off on the right footing with your college student: Teach your kids to use a credit card only if they can pay off their balance in full each month. Point out that using a card for installment payments is a no-no. Other good habits to develop include keeping one’s balance below the credit limit and always paying on time.

Finally, show your kids that by using a credit card in the “right” way, they can potentially receive rewards; and using cards irresponsibly can lead to financial problems later. Making these distinctions early should help your child develop a healthy outlook on debt, credit and money management.

The Cons

One of the biggest arguments against credit cards for students is the potential for these cards to get an unsuspecting teen into financial trouble. There’s the potential to develop bad money habits when you own a credit card: one month of not paying off your balance can easily snowball into something more problematic, and where can that lead you? When you accumulate debt early in your life, it’s a problem that becomes much harder to surmount.

A student may end up with several credit cards, repeating the same mistakes with each one. It therefore goes without saying that credit cards should be used with caution especially when a student is first starting out as a card holder. If you’re a parent, you must first determine if your child is ready to start using a card, and before you give them the green light for this, lay down your ground rules well in advance.

 
Contributing Writer: BEM

Best Student Credit Cards For College Students

YNAB Pro Giveaway Code: fibonacci

Last month was actually the third anniversary of this site. On some occasions, it seems like I’ve been blogging forever, while on other days, it feels like it was just yesterday when I began doing this as a hobby. The past year seemed to fly by pretty fast!

Well, to mark the occasion, which also appears to have coincided with our three millionth visitor to the site(!), I’d like to host a giveaway of my favorite budgeting tool: YNAB (You Need A Budget) personal budget software. I’ve mentioned this desktop software package a few times on this site and it’s no secret that I like what it has to offer. While free budgeting tools seem to be the rage these days, those of you who feel more comfortable about doing your money management in your own secure desktop environment will appreciate a tool like YNAB, which has proven to be a great alternative to the more popular Quicken and the now defunct MS Money.

YNAB Pro Download Giveaway Details

YNAB’s current version is called YNAB Pro, and it’s typically available for download at a regular price of $49.95 (you can get it for a 10% discount by using this link and applying the coupon code “digerati” when you order). However, today, I will be giving away free copies of YNAB plus a few other items:

1. A copy of YNAB Pro software (for 2 recipients). Note that YNAB Pro doesn’t run on the Mac though a future version of YNAB to be released shortly, will be. Winners will receive a free upgrade to YNAB 3 when it comes out.

2. One Lending Club t-shirt (size L) bundled with one financial book (for 3 recipients).

As a blogger, I receive a lot of books to give away. So for this opportunity, I’ll be sending out the following books: Mobs, Messiahs, and Markets, Killing Sacred Cows and 10,0001 Ways To Live Large On A Small Budget to three readers. Each book will come with a t-shirt from Lending Club, a top peer to peer lending network. For more information on both Lending Club and YNAB, you can check out this article.

How To Join Our Giveaway

Here are some (hopefully) simple instructions for participating in this giveaway:

1. If you haven’t already, subscribe to my feed here via RSS or email.

2. You’ll find a special code at the bottom of the articles that you’ll start receiving from the feed.

3. Leave me a comment below with your email address and that code, and they’ll count as 2 entries to the giveaway (you won’t see these comments published here, but I will be counting them).

4. Existing subscribers will find that code already at the bottom of each new post received through the feed, so you can just enter a comment here with that code.

5. Alternatively, you can leave a comment below (this post) that discusses your best tip to manage your budget during the holiday season. This comment will garner you 1 entry to the giveaway.

6. I’ll run the giveaway for a few days, then I’ll announce the winners and contact them personally for shipping information (U.S. residents only).

My Big Thanks

Thanks again to everyone for helping this blog make it through yet another year in the personal finance online universe . A heartfelt thanks to all you awesome readers, subscribers, visitors, commentators, fellow bloggers and advertisers for all your support! I hope that I, as well as wonderful guest writers who’ve published their work through this site, have been able to contribute something positive to your personal finance journey.

YNAB Pro Download Giveaway at The Digerati Life!

YNAB Pro Giveaway Code: fibonacci

When did you start saving for retirement? Think you’ve missed the boat because you didn’t get a chance to invest early?

Reality Check For Those Nearing or Approaching Retirement Age

Awesome image by Mark Stivers

For many of us who are 65 years or older, we live by our social security checks. In fact, this is literally the situation for a third of seniors who’ve reached retirement age, according to government reports. A good number of people rely completely on social security and wouldn’t survive without this help. We can thank the New Deal of Franklin D. Roosevelt for its creation in 1935: this was really a huge step after the catastrophic crash of the stock market in 1929.

Whenever Wall Street goes through some volatility, we wonder about what happens to those who’ve invested most of their savings into stocks, mutual funds or any other risky financial instrument. The most appropriate answer I can think of? They are going through hell, and if they are over the age of 50, they may well panic and sell for a significant loss. This is all the more reason why many seniors rely so much on their fixed income stipend from the government.

Our social security payments depend on how much we’ve earned before retiring. It ranges from 28.9% for the high salaries all the way to 55.9% for those making an average of $16,739 a year. A wife who has not worked outside the house will receive about 50% of her husband’s entitlement. Social security income doesn’t really seem like much, given the conventional wisdom that we would typically require between 80% to 90% of our pre-retirement income to live on once we do retire. Therefore, it would certainly help if we had a secondary source of income, such as a pension plan and /or personal investments.

Retirement Investing Advice For Late Start Investors

But what if you are one of those investors who is worried about not having enough when you finally hit your retirement years, say because you started investing later in life? AARP’s site offers some valuable advice to those between 50 and 65 who have to scramble to find other sources of income:

1. Look Into A Reverse Mortgage. If you have equity or if you have finished paying for your house, you can obtain a reverse mortgage, a financial instrument advertised by a well known actor, Robert Wagner. You get money for your home and you don’t have to pay it back for as long as you live there. Please check the AARP site for details, and weigh all the pros and cons before reaching a decision.

2. Go Back To Work (or Never Quit Working). “Working past retirement” doesn’t necessarily mean that you are going to say hello to incoming customers at Wal-Mart, although any job is an option. If you have accumulated skills and knowledge that many companies value highly and if your health permits it, don’t be afraid to apply for a job you know you can do well. Or see if you can find an income-generating activity that you’ll be able to enjoy no matter what age you are. For instance, you can consider checking out the online universe for opportunities: you may not realize it, but there are a lot of online work options that abound. I’m actually a freelancer, and I’m a grandfather of 4, still hitting the keyboard (and having fun)!

3. Be Frugal. By learning to cut unnecessary costs from your budget, you may find that you can get by with less of your pre-retirement income than you normally thought. By learning to conserve and by developing frugal habits, you may realize that instead of 80% to 90% of your previous annual salary (or income) to live on, you’ll only require 60% to 70% (or less!) of this income for your living expenses.

4. Avoid Risky Investments. For people over 50, risky investments are an absolute NO-NO. Take a good look at what happened to the stock market this year. Millions of people have lost a lot of money. Even mutual funds, with their diversification, have taken a hit. Ask your financial adviser or do your own extensive research to seek out safe and productive investments.

5. Believe That It’s Never Too Late. Maybe you’re a fifty-something, and you still have another 10 to 15 years of hard work and saving opportunities ahead of you. But you need to find out how much you’ll need (and how long you’ll live) during your later years: well you can check out this page (from CNN Money) for some helpful resources and to see if you are saving and investing enough for your retirement. There are calculators there that will let you know how much you’ll need to save and how much your assets will need to grow to support your lifestyle.

It’s never too early or too late to develop a retirement plan. Unless you are on Bill Gates’ last will and testament, you should do what you can to prepare for the future, no matter where you are in life right now. Something is always better than nothing.

Retirement Investing Advice For Late Start Investors

YNAB Pro Giveaway Code: fibonacci

Here’s a strong online savings bank offering decent savings account rates.

Stories about failing banks make front page news, eclipsing a lot of the more positive events that occur in the banking industry. During a time when the economy has been unkind to us and especially to our friends in the financial industry, it’s welcome news to hear about the success stories. So I’d like to give this update on EverBank, which is one of those institutions that has bucked the current economic trend.

Top Online Savings Bank: Why EverBank Remains Solid

EverBank is actually the first online savings bank I took an interest in. I mentioned them on my site a while back, while covering a fascinating investment topic, which was on how to hedge for inflation. During my research, I stumbled on EverBank as the one bank that offered products, particularly high interest savings accounts, that addressed some of my diversification needs (through their foreign currency products). Well, I’m happy to report that they’re actually one of the banks that has done extremely well during the past year:

EverBank recently reported positive earnings gains with a third quarter net income increase of 197% over last year’s third quarter numbers. Also, the growth this past quarter is around 37% compared to the previous quarter of this year. EverBank’s done particularly well in their mortgage banking business, showing strong mortgage asset portfolio returns.

On top of this, EverBank has been looking to make acquisitions; they’ve actually just recently acquired a financial company called Tygris Commercial Finance Group Inc, which they targeted for diversification purposes. The acquisition is expected to provide more commercial exposure to EverBank, whose primary business is in retail banking. They also believe that this transaction will “have a strong impact on their earnings and will increase their capital base by around $470 million.” It’s obvious that EverBank is doing more than a few things right here: they were one of those institutions that sidestepped the subprime mortgage meltdown thereby keeping their powder dry. Now they are in a great position to grow: there’s no better time than today, to be in a position of financial strength.

This online bank is a solid company that caters to a “mass affluent” customer base; if you can afford their minimum balances (typically $1,500 per account), then they’re a great choice for your basic banking needs. They’re also known for relatively higher yields compared to their retail banking counterparts. Here are just some of their more popular savings products:

With higher yields, low expenses, excellent customer service, quality products and strong fundamentals, I consider EverBank as a top choice for savers. Here’s where to visit their site for more details and information.

Top Online Savings Bank: Why EverBank Remains Solid

YNAB Pro Giveaway Code: fibonacci

Some considerations before you decide to buy a foreclosure.

Not All Cheap Houses Are True Bargain Homes

A bargain is synonymous to a “great deal” — something that has value and has an ROI. The truth is, not all cheap houses are great deals; in fact, some are considered liabilities. But let’s not forget that liabilities can be found anywhere as well: for instance, I once discussed how some friends made a bad investment and lost a million dollars on a vacation rental they owned.

These days, cheap homes are everywhere, especially in certain residential communities that have fallen into foreclosure. I still can’t seem to wrap my head around how Detroit houses can be purchased for a third of the money you’d need to spend for a new car. That’s also because that same $7,000 house in Detroit would probably fetch several hundred thousand dollars if it were located here in San Francisco: I can’t find any homes here that will go for less than $100,000.

With these fire sale prices around the nation, people are flocking to buy foreclosures and hoping to pluck some distressed properties off the market. Before you indulge your dream of finally becoming an absentee landlord, check out these lessons on real estate investing that I picked up from CNN Money:

Lesson 1: Forget about flipping. The days of fast appreciation in home prices are now over. So if you’re going to invest in real estate, you’ll want to make money the way it’s traditionally done: through rental income and cash flow.

Lesson 2: Realize that the property’s purchase cost is just the start. With any piece of property bought, there’s always going to be ongoing upkeep, along with taxes (depending on where you live). But the crappier the house you buy, the more money you should expect to spend on fixing it up to be ready for use. So just keep in mind that even with a super cheap house, your costs can balloon after all is said and done.

Lesson 3: You’ll need cash. With the tough credit environment, it’s much harder to get the financing you’ll need from banks to bankroll your real estate investment plans. Those with cash will have an advantage in this market.

Lesson 4: Know the neighborhood. While it used to be just “buy, flip and profit” some years ago, these days it’s all about finding the diamond in the rough. With so many cheap houses vying for your attention now (who knew that a buyer’s market could be such a hassle!), you’ll need to do some due diligence. You can’t buy blindly like real estate investors of years past were wont to do — or you’d risk making an erroneous investment decision.

Lesson 5: Know and screen your tenants. With the economy in the tank, you can bet that it’s probably going to be more of a challenge to find good, reliable tenants. Aspiring landlords will be facing more work and spending more time screening for the right people to rent out to.

Thoughts On Real Estate Investing

I’ll admit that when the real estate market was soaring, I too, fell under the spell of wanting to be a landlady one day. I had this interest (”dream” is too strong a word) to try out rentals as an investment. Now that the market has crumbled, I’m no longer as interested in this endeavor, and have discovered that this is really not my “thing”. You see, if you are truly a landlord at heart, you’d stick to your calling through thick and thin. When you evaluate the things you’d like to spend your time doing, you’ll know that something is “in your blood” if you’re willing to do it even with much less money involved.

On that note, I’ve decided that real estate investing for me will be relegated to REIT investing. And for cash flow, I’ve instead decided to stick to investing in “virtual” real estate, or web properties, if you will. I think I’ve established that this is how far I’m willing to stretch beyond my comfort zone.

Personal Finance Articles

Special read for the week:

Econobusters is a new site I came across that’s all about frugal tips, tutorials, home management and recipes. Molly Green’s site is listed in my frugal hacks blogroll so I thought to give her a shout out. She covers the gamut of topics ranging from frugal shopping, decorating and cooking to thrifty finds, freebies and special deals. Here’s a taste of what she loves to write about:

• Tackle The Shopping List
  
• How To Set An Attractive Table
• How To Be Content

Oh and you can also sign up for a newsletter when you visit her site!

And here are more articles I enjoyed reading this week:

• Len Penzo: Price Comparison of 10 Sandwiches
• WeSeed: Learning About the Market in School
• Money Magazine: Economists do poor job of job forecasting
• Monevator: Think long term
• Lazy Man and Money: Adventures in Dallas (and how we saved money there)
• Mighty Bargain Hunter: Where Is The Extra French Hen?
• Almost Frugal: Have I Changed That Much?
• The Financial Blogger: Alternative Ways to Make an Extra Buck
• Money Smart Life: Open Enrollment Deadlines

Recent Carnivals

• Carnival of Debt Reduction
• Carnival of Personal Finance
• Carnival of Money Stories
• Festival of Frugality

Not All Cheap Houses Are True Bargain Homes

YNAB Pro Giveaway Code: fibonacci

Will I need a new credit card again?

We haven’t had much luck with our credit cards lately. Within the year, we had some issues when our Advanta business credit card accounts got closed with little warning. Advanta closed down their credit card division due to tough business conditions.

This time around, we’re hearing rumors about what may happen to our personal credit cards. You see, we carry Upromise rewards cards which used to be managed by Citibank. For years, we were happy with our cards, given that we were great customers who paid in full and on time, each month. Then came what we thought was a minor inconvenience: Upromise switches out their card issuer to Bank of America. No biggie for us just as long as they keep with the status quo.

Bank of America Credit Cards: Introducing New Annual Fees?

Except…. we’re now hearing that BofA is thinking of making some changes to their credit card terms, a rumor which has got many customers and consumer advocates up in arms. Apparently, the company is planning to introduce annual fees in cards that never had fees before. As a customer, I must say that this just blows. I really only care about having a good credit card rewards program and no annual fees to deal with, and it would be a shame if, after all these years, I end up having to do away with Upromise because of principle. And because I don’t intend to ever have to pay for the use of plastic.

Let’s place this all into context by reminding ourselves what the new credit card rules state. The Credit CARD Act of 2009 is intended to protect consumers from credit card companies’ more underhanded tricks. Here are just some of the proposed changes in the Act:

• Credit card bill payments will be applied to the highest interest portion of your balance rather than the portion that generates the lowest interest. This is contrary to what card companies want, which is to keep your high interest debt around for as long as possible (such as what you owe for cash advances).
• Interest rate hikes will be much more limited. With the new rules, you will no longer be getting rate increases for existing balances unless you fall delinquent on your account or you’re dealing with a promotional rate that expires.
• There will be limits on “over the limit fees”. This time, you won’t forget that charging over your credit limit will incur penalties and interest on those penalties; you’ll now be required to “opt in” before you’re allowed to charge beyond your credit limit.
• Credit card terms and conditions can only be changed after you’re given 45 days’ notice. So those with rewards points, for instance, can be alerted to the potential expiration of their rewards, way in advance. Hopefully this will mean “no surprises”.

Some of these rules have already passed, while others are set to go into effect in early 2010. As credit card companies anticipate these changes, many astute industry watchers, insiders and commentators have been predicting that some of these card companies may decide to pull one last trick or two out of their hats before the doors of opportunity close, so to speak.

Sneaky Bank of America Hat Trick

So is BofA trying to sneak one past us based on how they interpret a particular rule? With the company allegedly intending to introduce new fees with their cards, BofA insists that “annual fees” are not the same as “interest rates”. And while the CARD Act protects us from unexpected changes in interest rates, we’re supposed to think that annual fees are something else altogether and are therefore, not subject to the same rules.

Then again, there’s supposedly at least one court case that does establish a loose equivalence:

Interest = Annual Fees.

as per The Consumerist. But this is something for the legal eagles to handle.

Nevertheless, I’ve heard that Bank of America will try to “test” their customer base with the new annual fees. And while I think this is quite annoying, I wonder how much of this they can actually get away with — will their customers, like me, abandon them for the nearest No Annual Fee card? Or will there be loyalists who stick around? Who among us will simply roll around and take it, thinking that $30 a year isn’t really “that bad” in the whole scheme of things? The worst case scenario is that this sets a precedence for companies to start raising annual fees because they can no longer get away with much else. Sure, go ahead and pick on your best customers.

If this pushes through, I’ll regret having to abandon Upromise’s great rewards program that feeds cash rewards into my kids’ 529 savings plans.

Bank of America Credit Cards: Introducing New Annual Fees?

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