Debt Free Consolidation

Why is Your House So Expensive? You’ll Be Surprised

noreply@blogger.com (PungPond) — Tue, 04 Mar 2008 09:52:00 +0000

Even though in many areas the cost of a house has plummeted over the last 12 months or so, it is still a huge stretch to afford a decent house, especially for first time homebuyers in many major metro areas. Why are houses so very expensive? Are the developers overcharging? Are the homebuilders all sending their children to Harvard and driving Porsches? Are homes now, filled with expensive standard features that used to be options a decade ago? Perhaps, but in some areas that’s not the largest reason for the increase. What is the single largest reason that a house costs so much in these locations?

In these areas, the single largest component in the increased cost of housing is the cost of government regulation. You read that right. The more “progressive” an area, such as Seattle, or San Francisco, the more expensive these government regulations seem to be for the average citizen looking for a home. Does your friendly state and local government respond to their constituency’s concern by reducing the level of government regulation, restriction and red tape?
Hardly, they’d get little credit for that. They wouldn’t want to reduce the cost of regulation and compliance for the guy just trying to get the house built. There would be nothing concrete local pols could point their finger at and say “See how I reduced the cost of housing for the little guy/gal”. Obviously most politicians are concerned with things they can point to during their next campaign. Now, if they can come up with some money to help Joe/sephine homebuyer in their quest for affordable housing, that’s something that can help them get elected next time around.

Are you having trouble believing me about all this? Well, I can understand that. After all houses are so very expensive, it’s hard to imagine that the cost of government is higher than the cost of wood, labor, or windows. Well, sad to say, it is. It’s not only me saying this either, although decades of involvement in the building industry has provided me with ample anecdotal evidence that it’s true. No, greater minds than mine have actually done real research on the problem of expensive housing, and gotten concrete data to back these theories up.

Government regulations, from land use regulations and environmental laws, to extremely complex and expensive building permit processes have piled on a huge amount of additional costs. They reduce the supply of buildable land, and economic law dictates that when you reduce the supply of something that is demanded, its price will increase. They have also increased the cost of compliance through such regulations as restricting the times of the year when work can be done on building projects. In addition some areas are notorious for the cost of building permits and the lengthy and complicated process one must go through to obtain them and keep them open.

I said that greater minds than mine have concluded that all this is true, and one such mind is University of Washington professor Theo Eicher, founding director of the University’s Economic Policy Research Center. He has released the results of a study, itself derived in part from the Wharton Residential Land Use Index, a detailed analysis of the cost of regulation and its contribution to the cost of housing in MSIs (Mean Statistical Areas) throughout the country. Professor Eicher’s study has concluded that in Seattle, fully $200,000 is of the average home price is attributable directly to the effects of government regulation. When you stop and consider that the average home price in Seattle is $447,800, and that $200,000 of that is due to government regulation, it’s amazing that the citizens of Seattle and King County (Seattle’s county) haven’t risen in revolt. The ironic thing is that it is these very same citizens lamenting the increased housing costs that voted in the politicians that enacted the laws, and in a few notable cases, the laws themselves.

The United States Economy - The Ferrari Effect

noreply@blogger.com (PungPond) — Mon, 25 Feb 2008 04:34:00 +0000

07 F430F1 Spider, Russo Corsa, Beige Lthr, 721 mi, $339,995’07 F430F1 Spider, Russo Corsa, Beige Lthr, 1,321mi, $324,995’06 F430F1 Spider, Nero, Cuoioe Lthr, 4,545mi, $314,995’05 F430F1 Spider, Grigio Silverstone, Girgio Lthr, 3,444mi, $289,995

These Ferrari ads are straight from yesterday’s business section. What can be gleaned from this, vis-à-vis the U.S. economy? Well, when you consider the base price of a 2007 Ferrari F430F1 Spider is $211,000 before any (extremely high priced) options are added, it means that there is tremendous demand for a car that costs upwards of a quarter of a million dollars. Now the price of admission to enjoy the wonderful shriek of a Ferrari power plant at full boil has never been cheap, but this makes that $1,995 2nd sticker your local Mitsubishi dealer has on a new Evo X look positively tame.

This indicates that certain segments of the U.S. economy are humming along nicely indeed. I call this the “Ferrari effect”. When there is such pent-up demand for extremely expensive goods, it indicates that there is an extreme amount of wealth floating around, and those that hold it aren’t afraid to spend it. That propensity for the wealthy to continue their unabashed spending on luxury goods is a great thing for the rest of the economy.

Ferrari must agree that those that have money will continue to spend it, as they just announced that carbon ceramic brakes, formerly a (are you firmly seated) $16,800 option on the F430, will be made standard equipment for 2008. Rest assured, they will not just give those beautiful discs of carbon away, a large portion of the $16,800 will be rolled into the base price of this year’s cars.
It is really quite astounding the level of demand of such an expensive vehicle. A client of mine recently took a journey to the local Ferrari dealer to buy Ferrari’s latest masterpiece, the 12 cylinder 599. The 599 lists for over $250,000, but that hasn’t discouraged a lengthy queue of buyers from forming. My client actually returned from the dealership with a 2005 F430F1 that he paid who knows how much for, after putting down the requisite deposit to secure his place in line for the 599. Sometime in the next 24 – 30 months, he’ll actually take deliver of it.
Something else that indicates the propensity of those that have money to spend it when they really want something
(As an aside, many of the very wealthy people I’ve known, and I've known quite a few (never been one of them, though), are extremely cheap. They won’t spend one extra penny if they don’t see the value in it. It’s an extremely common trait in those that have generated their own wealth. From that you can draw your own conclusions. Consider this, however; the major cause of the massive level of credit card debt exhibited by Americans today is a pattern of consistently spending beyond one’s means. Anecdotal evidence from those people I’ve seen that have accumulated a large amount of wealth do not have that trait.)
is the price structure of luxury vehicles, such as Porsches and Ferraris. Many would expect cars in this price stratum to have a very high level of standard equipment. Actually quite the opposite is true. Many things you’d expect to be standard are actually options, and very expensive options at that. For example, consider the Bose sound system (including 3-way component front door speakers with 10-inch subwoofers) on a new Infiniti G35, by all accounts a very nice car, is a $2,500. For good measure, Infiniti has also thrown in a power sliding tinted glass moonroof, heated front seats, a power tilt and telescoping steering column, automatic anti-glare rearview mirror with HomeLink® Universal Transceiver and compass, heated mirrors and a Bluetooth phone interface.
On the Ferrari F430, the Bose sound system option, all by itself, never mind such niceties as a Bluetooth interface, is a robust $7,250. Ouch! So, maybe you really don’t care all that much about a better sound system. You’d rather listen to the engine anyway. Well, you’d think a car that retails for as much as a house in Cleveland would at least include power seats, but no. In the Ferrari they will set you back an additional $2,653. The ones in my Jeep were only ¼ that much.
The point is that the Ferrari effect is still alive and well in many areas, although the economy looks like it’s poised for a slowdown. When the Ferrari effect goes away, we’re in for some rough sailing ahead. So, take a look at the business section. When the ads for overpriced Ferrari’s disappear, you’ll know we’re really in a lot of trouble.
Have a great, Debt Free weekend.

- Debt to Income Ratio – How to Calculate Your Debt to Income and Why

noreply@blogger.com (PungPond) — Mon, 18 Feb 2008 02:04:00 +0000

Your debt to income ratio is one your most important financial statistics. If you've ever bought a home you'll remember that was one of the pieces of financial information your lender wanted. If they were concerned about getting you the best mortgage, they showed you how you could improve it.

Just how do you calculate debt to income ratios anyway? For that matter, after you calculated it, what is an acceptable debt to income ratio? Calculating your debt to income ratio is fairly simple, You merely divide your monthly gross income by your outstanding debt. To calculate the ratio, you have to take your annual gross income and divide by twelve. I know, you were told there would be no math, but it's pretty darn simple, really. This calculation gives you your average monthly gross income. Here's where you wish you'd claimed all those tips and side jobs you've been gloating about. If you haven't reported them, you'll have a harder time getting your lender to believe you really have that level of income.
After you figure out your average monthly income, you'll need to look at two different percentages. If you are going to get a conventional mortgage, you'll use 28% and 36%. If you are getting an FHA or VA mortgage, you'll use slightly higher percentages; 29% and 41%. What do those percentages mean? The first is the percentage of your gross income you can use for housing expenses. That will include your house payment, all your housing associated insurance, and interest. These expenses are abbreviated PITI, for Principle, Interest, Taxes, and Insurance.
If, for example, your W-2 income was $55,291 last year, you'd divide that by 12. The result of that calculation is your average monthly income: $4,607.58. Depending upon the type of mortgage you'll be getting, that will give you the amount of house payment you can be approved for, all else being equal. In this example, you'd be able to afford a house payment of $4,607.58 x .28 for a conforming mortgage. $4,607.58 x .28 = $1,290.12. As you can see, that's not too much house in many metro areas. For example that house payment will allow you to technically afford, at this week's average 30 year fixed mortgage rate of 5.52%, a mortgage with a balance after your down payment of $227,000. You might want to avoid the mistake made by too many people leading up to our recent credit problems, and finance less than that.
Wait a minute, what about that second percentage? What does it mean? That 36% or 41% is the amount of house you can afford according to the standard debt to income calculation, after you include all your other recurring debt. This is where you include your credit card bills, car payments and store charge card payments. This is why your loan officer is telling you to pay down some of this type of debt. You can qualify for a larger mortgage if your recurring debt is lower.
Let's look at the above example, but assume you have only one car, a 2005 Honda Accord LX. That's a nice, sensible, family sedan with a price when it was new of about $22,000, depending upon the option level. Say out the door, with taxes an license, you're into it for $24,000. If you financed this car when it was new, and got 4.9% financing, your monthly payments would be about $450 per month. Let's also assume that you have the national average credit card debt of about $8,500, depending on whose statistics you look at. If you are also paying the national average gold card interest rate of 11.73%, your monthly minimum credit card payment amounts to somewhere around $260. (You can take heart in knowing that if you make only the minimum monthly payment on your cards that it will take only about 15 years to pay off the $8,500 and you'll pay about $4,000 in interest on the $8,500 principle amount!).
If you include your car payment of $450, and your credit card payment of $260, your recurring monthly expenses are $710. $710 added to $1,290.12 gives you a nice, round $2,000. Your mortgage lender will let you have 36% of your monthly gross income be consumed by PITI and recurring monthly expenses. Your current gross monthly income in this example is $4,607.58. 36% of your monthly gross is only $1,658. In this example, you're way too high after adding in your monthly expenses, to qualify for your house. Now you see why you see so many used car ads that read “Must sell, buying house”. With this level of monthly recurring expenses, you can only qualify for a house that's $948/ month. You'll be staying above the garage.

Your Other Largest Household Expense

noreply@blogger.com (PungPond) — Wed, 13 Feb 2008 06:40:00 +0000

A few days a go I did a couple of posts on lowering household expenses and how you can attack some of the largest expense to save yourself some money. In case you missed it, here are the largest expense categories of the typical American family from 2005, courtesy of US Department of Labor statistics.

1 - Shelter and associated expenses $15,167 (32.7%)

2 – Transportation $ 8,344 (18.0%)

3 – Food $ 5,931 (12.8%)

4 – Pensions and Social Security $ 4,823 (10.4%)

5 – Health care $ 2,664 ( 5.7%)

6 – Entertainment $ 2,388 ( 5.1%)

7 – Clothing $ 1,886 ( 4.1%)

Something's missing. What is it? Give up. Well for many people it is the largest expense category, for most of the rest, its in the top 3, yet for many people it gets completely overlooked much of the time. What is this major expense? Well, of course, it is taxes. You may just look at you paycheck to see what is taken out every month, but you'd be woefully underestimating how much the “Average American” pays in taxes every year.
Many taxes are hidden. Think about how much is really paid. There is employer matching of Social Security. You think the employer just takes that straight out of their bottom line? Guess again; they pass it on to their customers (you and me). There are gas, fuel and utility taxes, at the local, state and federal levels. Property taxes, which are borne by both renter and property owners. Sales taxes, B&O taxes on businesses, state income taxes, and capital gains taxes; it boggles the mind! There are just so many taxes. All the taxes paid by business are passed on to the consumer in some way or another, so don't be fooled into thinking that this tax or that doesn't, in some way, affect you. They affect all of us to some extent.
The upshot of all this is that there a about a million different tax reform organization, foundations and groups out there. Together they give some kind of picture about how much is paid by the “Average American” in taxes every year. The Tax Foundation has their Tax Freedom Day, the day when you stop working for the government and begin to line your own pocket. In 2007, it was April 30th. That works out to 32.8%. Hey, that's expense number1! Even if you give our taxing authorities the benefit of the doubt and this number is 20% too high, it would still come in at 26%, and fall neatly into slot number 2.
That's why I tend to rail a bit about taxes. The other expenses you can do something about. You can control taxes too, albeit to a lesser extent. but it requires much more effort and planning, in addition to a trip to your local polling place (or post office for a growing number of communities, where absentee is the new voting method of choice). I wouldn't care so much. After all the government provides many essential services that we desperately need, and should pay for. The problem is that they also provide many that we don't and shouldn't, in addition to being the model of inefficiency in many of the things they do.
Have a great, Debt Free weekend.

American Fortune

noreply@blogger.com (PungPond) — Thu, 07 Feb 2008 03:29:00 +0000

Americans are unbelievably fortunate. That point was driven home while in the car, listening to Mike and Mike in the Morning on ESPN Radio this morning. They were interviewing basketball coach Ron Hunter of Indiana University-Purdue University Indianapolis (IUPUI). Coach Hunter is working with a charity called Samaritan's Feet, which is dedicated to providing shoes for children around the world who have never owned a pair of shoes. Stop and think about for just a second, please. We are so fortunate, and take so many things for granted, while there are kids who have never known the comfort of walking in a pair of shoes, something Americans (and citizens of just about every other developed country) take for granted.
The coach is dedicating his game tonight, which he'll coach sans footwear, to raise awareness for the charity, with the goal of getting 40,000 pairs of shoes, which he will personally deliver to the kids. Coach Hunter definitely has a knack for publicity, because his campaign appears to be an unqualified success. A Converse executive even appeared on the show to donate 15,000 pairs. LA Gear had earlier donated over 5,000 pairs. If you'd like to help out the kids on this one

Where the Real Superbowl Action Is - It's Not on the Field

noreply@blogger.com (PungPond) — Mon, 04 Feb 2008 02:31:00 +0000

$9.07 Billion. That's a positively huge amount of money. What's it for? Well, you could buy 2 Nimitz class nuclear aircraft carriers and have enough left over for 4,250 new Cessna 172 Skyhawks, complete with Garmin GPS, to fly off of them. I don't think you could fit 2,100 Cessnas on each one, but you get the point. In any case, that's about 10% of all such aircraft produced since production began in 1955.
According to cost figures from a University of Kentucky study, you could build your own, private 67 mile long Interstate Highway. Maybe you'd like to do something a bit more charitable. You could buy 30 nice, new, 250 bed, suburban hospital facilities, and locate them in the communities of your choice. You like cars? Well, you could have one hell of a car collection with that much money. In fact you could pick up a couple of motorcycles too. That $9.07 billion would buy just about every vehicle produced by the Honda Motor Corp. for the first 3 quarters of 2007.
What are people spending so much money on? Well, betting on the Superbowl, of course. About $90.7 million was spent on legal betting on last year's Superbowl in Nevada sports books alone. By some estimates, this accounts for roughly 1% of all action seen on the game. Simple math reveals that people drop about $9.07 billion betting on the big game. Wow! How much of that is illegal gambling? The majority of it, although much of this illegal money changes hands in office pools throughout America, and is wagered by people who seldom bet on much else. Gambling has been legalized in many communities throughout the country. The benefit, or lack thereof, of such gaming is a subject for another discussion, however only Nevada has legalized sports betting.
Since Nevada's sports books raked in only $90.7 million, the remainder is illegal. I never knew there were so many crooks in this country. The FBI estimates there may be as much as (are you firmly seated?) $380 Billion bet on sports every year in this country alone. A 10% tax on that would take care of a few things, you can be sure. Cure for cancer anyone? Mars mission? Give it all away to cure poverty? Hold on, are you insane? Giving money away on a regular basis never cures poverty, it only makes people dependent, and in most cases, less likely to ever become self sufficient. Sadly, that huge amount of money would probably only swell state and federal coffers, get the government beneficiaries of such largess accustomed to sucking at yet one more teat, and eventually be frittered away, leaving precious little benefit for you and me.
Have a great weekend, and keep trying to get Debt Free.

Home Buyer's Down Payment Assistance - How to Get It

noreply@blogger.com (PungPond) — Mon, 21 Jan 2008 02:26:00 +0000

For many of us, especially first time home buyers, the most difficult part of buying a home was scraping together the money for the down payment. With house prices a bit lower now than they've been for the last few years, it is a great time to buy a house, if you're currently a renter. But that old down payment issue keeps rearing it's ugly noggin. There are, however, some ways you can get down payment assistance that will pay all or part of the down payment on your new house for you.
If you are looking to make the leap into home ownership, and are a bit savings challenged, here are a few down payment assistance solutions you can look into. It might be just what you need to finally get a house of your own.
For all you home sellers out there, just dying on the vine because your house hasn't sold, especially if you bought a new house before you sold your old one, these could be a tool you can use to help market your house. It might be the one thing that helps you get out from under that old house and all its expenses.
Get Downpayment Assistance From a Charity No, I don't mean call up the Red Cross or the American Cancer Society and ask them for a handout. It works more like this; a 501(c)(3) non profit organization or charity gets a contribution for the amount of the down payment, which they then transfer to the seller. The contributor gets a tax deduction for the contribution and the charity pockets a service fee. You get your down payment. What a deal! No doubt.
As with anything that seems too good to be true, there are some problems with the arrangement, namely for the IRS, who hates to let some good tax dollars go to waste. In 2006 they published a notice with the intent of removing the tax exempt status of 501 (3)(c)s who's primary activity was to move money from sellers to buyers in order to facilitate real estate transactions. Shortly thereafter HUD followed suit, releasing a proposed rule that would forbid the use of this process for the purchase of FHA properties.
Ah, but not so fast! The HUD rule only states that if you use an FHA loan, you cannot use down payment assistance if seller financed organizations are the source of the money. You can still use this method if you are not using a FHA financing or if you use a non profit, or charity organization who's chief function does not entail financing down payments using money from sellers.
In addition, in October of last year, the DC U.S. District Court denied HUD from prohibiting the seller financed transactions until such time as they can further review HUD's rationale for their decision. The Court basically said they felt HUD didn't do their due diligence before issuing they made the ruling. One important note here. One of the reasons HUD made their ruling in the first place is that in their opinion, such financial sorcery artificially inflates the selling price of the home, costing the buyers money. This is due to the seller passing along the service fee charged by the charity for the transaction.
That may be true, but numerous organizations in the home buying process pass along fees to one or more of the parties involved. At least it allows people to actually buy a house when they could have otherwise not done so. The problems arise when people buy a house they can not afford, because they have no down payment requirement and they get a mortgage based upon shaky financials (probably not going to happen so much anymore).
The National Association of Realtors is pushing for a 0 down FHA program to be implemented. Their reasoning is that eliminating the down payment requirement will remove the incentive for these assistance organizations. That may be true for homes bought using FHA loans, but what about all the rest? As house prices rise, the problem of obtaining sufficient funds for a down payment is only going to be exacerbated. Thankfully for buyers, they are experiencing a temporary reprieve, as real estate values have declined in many markets. In the long term however, this pricing trend will inevitably reverse itself. Even so, the prospect of a recent college graduate, new to the workforce, plunking down the down payment for a new home can be a bit laughable, when you consider the price of homes in many major cities.
Even at 3%, this can add up, depending on where you land your first job. For example, the average home price (preliminary Q3, 2007) in Indianapolis, Houston, and Omaha was between $125K and $155K. The average college graduate or young family may be able to come up with the $6,000 they'd need to get into a home after all was figured in. However, if you find yourself in Seattle, Boston or Washington DC, you'll find the going a bit tougher, with homes fetching around $415K.
If you've come to the sun of SO Cal, forget it. To get the average priced home in Orange County you'll need $700K, one in L.A. will cost an average of $588K(that factors in the many really bad L.A. neighborhoods, so a nice house will cost more than you'd think), and San Diego brings $589K. Not only can you not even get an FHA loan that big, if you could, you'd need to have almost $20Gs stuffed in a bag, an amount few recent college graduates, or any other workers with young families have a prayer of getting.
Get Downpayment Assistance From the GovernmentSpeaking of Southern California, the Golden State is one of the states that has an Austrian born Governor...wait, wrong post, I mean a state guaranteed, no down payment program for home buyers. California's is known appropriately enough, as the California Homebuyer's Downpayment Assistance Program (CHDAP). As with many such assistance programs, they work by combining an FHA loan and a “silent” second mortgage. Given the state's relative dearth of homes that could possibly qualify for FHA financing, especially in the major metro areas, one might ask about the relevance of such a program, but something is better than nothing. If you live in California, or may be relocating there soon, you can find out more about their program at the California Housing Financing Agency's website.
Washington State has a similar program fro down payment assistance if you are disabled or have a disabled person living with you. It is termed the HomeChoice Second Mortgage Program. One wonders how much money states might save if they stopped hiring marketing consultants to come up with catchy names for state programs. In any case, to learn more about Washington states program, visit the Washington State Housing Finance Commission's website.
Arkansas, a state who's had 2 of the current Presidential candidates reside in it's Governor's Mansion (triple-wide) has such a program too. Theirs is targeted at first time home buyers and is offered by the Arkansas State Development Finance Authority in cooperation with a Federal program, the American Dream Downpayment Initiative (In this case, the Feds hired the marketing consultants), which was originally signed into law by President Bush in 2003. Arkansas' down payment assistance program provides downpayment and closing cost assistance for low income families making 80% or less of the area's median income. See it at the Arkansas Development Finance Authority's web page.
To find out more about the Federal DPA program, check out the American Dream Initiative website.
There you'll find about each state's program that ties in with the ADI. However, many other states have other programs that are not affiliated with the federal program, so take the time to visit your state's housing, and/or finance authority or agency website to find out how to qualify.

How Long to Double Your Money?

noreply@blogger.com (PungPond) — Tue, 15 Jan 2008 09:46:00 +0000

How can you find out how long it will take to double your money when you invest it at a certain interest rate? It's simple, really, thanks to what investment types call the 72 rule. The 72 rule simply states that, to find out how long in years it takes to double a nest egg, just divide the interest rate by 72. For instance, if you have money invested at 10% it will double in 7.2 years (10/72). If it was earning 8%, it would take 9 years to double.

Holiday Gift Ideas to Save Money

noreply@blogger.com (PungPond) — Wed, 12 Dec 2007 11:13:00 +0000

This is the holidays; that time of year that so many people love, a few hate and many just quietly endure. The feelings of gift giving obligation drive many people foolishly deeper into debt just so they can either feel better about giving, or avoid the embarrassment of failing to do so. While the thought may count, unfortunately too many people feel that giving an expensive gift counts so much more.
It only gets worse as you age and more relatives have even more children. The obligatory gift exchanges can push even families on the strongest financial footing toward the brink of bankruptcy if a bit of financial restraint isn't exercised. With that in mind, here are some gift giving ideas to keep you on the path toward getting debt free, while retaining that festive feeling that's so fun about the holidays.
Money Saving Holiday Gift Idea 1 -Don't give so many gifts! Too many people feel that they have to give gifts, and expensive ones at that, to every single member of their family, all their friends, and their associates at work. Think about that for a minute! All that adds up in a hurry. Exercise a bit of gift giving restraint. If you're a guy, ease up. Your friends don't expect gifts from you anyway. Hell, for most of us, if our wives didn't push the issue and remember this sort of thing, we'd forget to give anything to our immediate families for their birthday.
For those of you with young families, just give gifts for the kids. The adults will understand. If they don't, too freakin' bad. That cuts a lot of the pressure to not only give so many gifts, but spend so much time shopping for them. See, you're saving money already, and avoiding those ultra crowded parking lots.
Money Saving Holiday Gift Idea 2 -Timing is everything. Get your gifts throughout the year when ever you find a spectacular price on something. Nothing is written that you have to purchase your gifts in the 2 days immediately preceding the holiday in question. If you're shopping for a Christmas gift, you can buy it during the Labor day sale, if that's when you find it. Buy your Christmas gifts for next year at the after Christmas sale this year.
Money Saving Holiday Gift Idea 3 -Avoid the trendy gifts. Who cares if the hot pink iPOD with flames is the hottest gift this year? You don't have to be the one giving it. Those trendy gifts aren't going to be had for a discount, and you'll have to wait in line to get them. Avoid the stress altogether, and get something a bit less in demand.
Money Saving Holiday Gift Idea 4 -Make your gifts. I posted about this last year, and its still great advice this year. For those of you with more time than money, take a trip back a few hundred years, to a time when the holiday season was less a commercial shot in the arm for business, and more a time for joy and family. The time you save shopping and working to pay for presents will free up some time for you to actually make some gifts for people. No, you're not going to be able to give the cousins that latest game for their X-Box 360, but oh, well.
Money Saving Holiday Gift Idea 5 -Try giving some like a magazine subscription. Like a good version of a gift that keeps on giving, a magazine subscription will bring happiness all year long. On top of that, they'll think of you every time the latest issue shows up. There's a magazine available for every interest under the sun. Even better, they're super inexpensive gifts, with subscriptions being had for under $15.00 for nearly any type of magazine you can think of, if you shop online. To top it off, they'll know you thought about the gift a little bit, because you got something just for them.
Money Saving Holiday Gift Idea 6 -There's a trend no toward environmentally friendly, experience based gifts. While some of these aren't as environmentally friendly as those purveying them would have you believe, it's a great idea nonetheless. Why not reduce all that trash we generate during the various gift giving seasons, such as Mother's Day, Hanukkah, and, of course, Christmas? Remember that if you're giving the gift in the spirit of environmental friendliness, you have to take into account all the fuel you'll bur getting to whatever experience you've selected, and all that it will consume.
Money Saving Holiday Gift Idea 7 -Here's a novel idea. If you can afford it, but those who you're giving the gift to are finding money a bit tight, why not give them something that will save them money? If everybody gave gifts that would save the recipient money, imagine how much of their cash that would free up! Most gas saving products for the car are ineffective, and a total waste of money, but how about a new money saving appliance for the home, or a fuel saving product for the car that actually does work. I'm sure the auto enthusiast on your list would love a new intake or exhaust system for their ride. A bit rich, perhaps? Why not a reusable air filter. They'd save money on gas, and the filter would last a lifetime, saving them about $20 a year on replacement filter costs.
A programmable thermostat sure isn't what most people think of when they think “gift”, but with rising energy costs, you can save a bundle using one. According to Consumer Reports, a programmable t-stat can save well over $100 every year. That's a pretty nice gift, $100 a year.
You can give a membership to a discount store, such as Costco or Sam's Club, as a gift. If the shopper can resist the temptation to buy unnecessary items, they'll save big money on most items, such as food. It may cost you $35, but whom ever you give it to will save far more than that in most cases.
These are just a few money saving gift ideas to use this holiday season. Not just for the holiday season, you can use these for Mother's Day, Father's Day and Birthdays too. Spend less money, pay off your debt, and get that much closer to being debt free.

Government Grant Money – How to Get It

noreply@blogger.com (PungPond) — Sun, 09 Dec 2007 08:33:00 +0000

If you listen to that question mark suit guy on the late night infomercials, you’d think there was an unlimited pool of government money out there for the taking, if only you’d grab his directory. Well, there is a great deal of government (our tax) money out there that you can get, but usually it’s not just like falling off a log. The government only gives money for special purposes, and typically to specific groups of people. There are almost 1,500 government grant programs and nearly all of them are structured to allow special groups of people to benefit from the grants.
That’s great news, I don’t want just anyone grabbing their share of my share that I worked until May for. However, it also smacks of favoritism, something the Feds excel at. Perhaps the best known government grant programs are for students. If you ever went to college, there’s a good chance you were a beneficiary of a Pell grant or knew someone who was. There are also many grants available for small business; either to start or grow them. In fact, the majority of government money is used for this purpose. Nearly 60% more money is allocated for small business grants than for education grants.
The government also doles out grant money for research and development, minorities, women, and community development. Your first step is to find a grant that offers money for exactly what you’ll be using it for. There are, as I noted above, numerous examples. If you are a n actual 501(3c) non-profit you’ll have the best chance, but you can get money as a plain Joe/sephine also. The key to getting government grant money is to request the grant for a specific purpose that falls within the narrow requirements the specific grant program is looking for. The other factor is to write the grant request exactly as the bureaucrats would like to see it. You need to conform exactly to their expectations, and use the proper language, if you would like to see any money from Uncle Sam.
What goes into writing a government grant request? You’ll need to write a cover letter first. Inside the request you’ll need to demonstrate you, or your organization’s need for the funds. You’ll have to show a use plan to explain exactly how you’ll use the money as well. If you’re really lucky, the agency offering the grant will have an application form for you to fill out. Otherwise, you’ll have to remember what you learned in your creative writing classes back in college. Some of these apps can be real whoppers too, so limber up your typing fingers.
There’ll be a grant application kit you’ll have to get from the government agency offering the grant. In it will be everything they’ll require to give you the best chance of prying the money out of their clammy paws. There may be a template that will be very specific in what the agency is requesting. Some of the more common information required by the template will include who’s applying for the grant, a detailed description of the project the grant will be used for, how much grant money is being requested, a timeline for its completion, what contribution the requestor will make toward the project, how the project will benefit the grantor, and personal/contact information for key members of the team.
There will most often be a list of deliverables the granting agency will be expecting, so you’ll know just what to documents and data include, and how to organize them.
One last thing; don’t be picky. There are often multiple grants available from the same and different agencies that you may be eligible for. You should apply for every last one of them in order to maximize your chances success. It’s easy to be debt free if your money was free, just don’t waste it.

Debt Cures – How You Can Get Out of Debt

noreply@blogger.com (PungPond) — Thu, 06 Dec 2007 16:04:00 +0000

People are scared of debt. In many cases they damn well should be, while in others, debt can be your friend. By a score of 39% to 20%, a recent survey by the National Association for Business Economics found that Americans feel that excessive debt is a greater threat than to the nation than terrorism. Weather or not that's true will never be confirmed, if we have any luck (plus some great intel and a lot of hard work) at all.
If you are one of those that does have excessive debt, weather you fear it or not, a debt cure may be in order. Curing debt is easier said than done in many cases. Sure, it's simple to spout such platitudes as “Just put 10% of your pay toward your debt until it's paid off. You'll never miss the money.” Weather or not you would, in fact, miss the money is academic. To find a cure for your debt, you'll need to analyze it and determine what will be the best course of action to eliminate it.

Debt Cures – Strategy 1 - Step by Step

Debt Cure Step 1 –Get a copy of your credit report from at least one of the three credit reporting bureaus. You need this not only to establish a baseline credit score, but for debt elimination purposes, you need to be sure if all your debts are valid. Your credit report will show you if you have any debts you are unaware that may be invalid. If you have any debts you feel are in error, you can contest these while you move on to the next steps required to cure your debt problems.

Debt Cure Step 2 -List all your debts. Put down the creditor, the type of debt, the balance owed, the monthly payment, any past due balance, the interest rate, and if it is a fixed term loan, the payoff date.

Debt Cure Step 3 – Analyze your debts. Why are you in debt? Determining the root cause of your debt is absolutely essential. You can have debt from a pattern of overspending, or from an extraordinary event, such as natural disaster or medical problem. If your debt is caused by overspending, you must cure the root cause. If you’re spending beyond your income, you’ll be doomed to a life of indebtedness.

Debt Cure Step 4 -When you have all your debts listed and categorized, sort them by the interest rate. Now it's time to plan your debt elimination strategy. Usually you'll work on paying off the highest interest rate obligation first. There are some exceptions to this.
If you have any past due debts, you must satisfy these first. There are two reasons for this. One, they are probably charging you a late fee every month you are late. Second, past due debts devastate your credit score. Lowering your credit score can actually make the interest rate rise on some of your other debts, in addition to making sure any new credit you receive will be more expensive. The farther past due the debts are, the greater the detrimental effect they have on your credit score. So, if you do have past due debt, make sure that is taken care of first. Make the minimum payment on your other debts until you have satisfied all your past due debts.
Once you’ve taken care of any past due debt, it’s time to begin eliminating current debt. Make the minimum payment on all your debts but the one with the highest interest rate. You can use some discretion here. For example, if you have a credit card with a $12,000 balance and a 21.9% interest rate, and another card with a $1,250 balance and a 22% rate, you should probably pay off the 21.9% card first. The amount of interest you’re paying every month on the larger card far exceeds the interest you’re paying on the smaller card, so you should eliminate that debt first.
When that debt is gone, take the money you were paying on the now retired debt, and shift it toward paying off the next highest interest rate debt. You’ll have more money to use for this because you’ll have the minimum payment from the retired debt and the extra money you were using to pay for it as well. You’ll add those two amounts to the minimum payments you had already been making toward debt number 2. When number 2 is gone, you’ll repeat the process with debt number 3, and so forth, until you’re debt free. Yipee Ki Yay Motherf….

Strategy 2 –

Using strategy number one will get your debt paid off, but you will take an interest rate hit. After all, the entire time you’re paying off the debt, you’re also paying interest, and at a fairly steep interest rate. You can use another strategy to pay less in total interest if you do it correctly. There is much more risk with this strategy if you do it wrong, however. Strategy number 2 is to get a debt consolidation loan. Unlike what the shills on the radio will tell you, A DEBT CONSOLIDATION LOAN WILL NOT GET YOU OUT OF DEBT!!! You get yourself out of debt by making payments on the darn thing.

The advantages to this strategy are that you’re only making one payment, so it is much more convenient, and you’re far less likely to inadvertently miss a payment. The interest rate is typically much lower as well, so in theory you’ll pay less in total interest.
The disadvantages are that although the interest rate is lower, the term of the loan is much longer, so if you only make the minimum payment, you can actually pay more in total interest by using a debt consolidation loan, than you would have if you’d just paid the debts off using strategy 1 above. The other disadvantage is, and this one is huge, you must use collateral to get that lower interest rate. What collateral? In the vast majority of cases, it’s not your comic book collection. Typically the lender will want your house as their collateral. Now if you fall behind, you not only screw up your credit, you have to find a new place to live. If you have to do that with no money and poor credit, I imagine it’s no easy task.

The other problem with using a debt consolidation loan is that in many cases, the problem that caused the indebtedness is not fixed. You can easily find yourself in a situation where you are back in debt from credit cards, vehicles, and now, a debt consolidation loan as well. Not a pretty picture, that.

Remember there are debt cures, but no magic potions. Here’s to getting debt free.

College Consolidation Loans – You Could Be Paying Too Much For Your Education; After You’ve Been to College

noreply@blogger.com (PungPond) — Mon, 03 Dec 2007 14:47:00 +0000

How many new college graduates enter the world saddled with debt? According to some recent stats on the subject, college loans are a fact of life for most students leaving school. In the decade between 1993 and 2003, student loan debt increased 137%, and that’s adjusted for inflation! According to a study of student loans and debt by Pew Research done in 2005, the average level of debt carried by a college student upon graduation was all over the map, and varied by a number of factors, including the state where they attended college, the college they attended, and the level of education they achieved.
The study had some interesting conclusions; to wit – There isn’t a correlation between the state’s cost of living and the level of debt carried by students when they graduate. In addition, North Dakota, a state with a fairly low cost of living was number 3 in the level of student debt. Iowa, another state with a low cost of living, ended up in the number 2 spot on the list of indebted students.
You’d think that going to a state school would be less expensive and help avoid graduating with a boat load of debt, but no, that’s not always how it works. In some states, North Dakota and Iowa among them, but also Kentucky, Delaware and Tennessee, you could easily end up with greater levels of debt than those who attended private schools, according to researchers.
There is also not a direct correlation between the cost of tuition at a college or university and the debt level of its graduates. Some schools with very high tuition had relatively low levels of debt among graduates. That could be because a large number of students attend the private schools on scholarships and thus pay no tuition, or because they come from relatively wealthy families that could afford to foot most or all of the bill for the student’s education out of their own pocket. In addition, some schools and states with high tuition costs have better financial aid programs to offset some or all of the student’s costs.
Student loan provider Nellie Mae reports that the average undergraduate debt upon graduation is now up to $27,600. If you’re one of these students with crushing student loan obligations what can you do? You can just gut it out and pay off your loans, or you can default and leave your lender hanging. Okay, so you’re probably trying to avoid the second choice in this scenario. The fact remains though, that high levels of student debt can set you back substantially when it comes to building a solid retirement account, buying a home or, ironically, setting up a college account for your own kids.
One way to reduce your loan payments is to consolidate your student loans. Much like any other loan consolidation program, a student loan consolidation program allows you to use a single, large loan to pay off many smaller loans, in theory at a lower interest rate. As with consolidation loans for other types of debt, such as credit cards, you’ll substantially reduce your monthly payment by doing so. You’ll also make your life more convenient by paying a single loan, instead of a myriad of smaller ones.
The major difference between consolidating a student loan and your credit card debt is that you won’t have to put your house on the line when you consolidate a student loan, as you would with credit card debt. This holds true for federally insured student loans, but typically is not the case if you got a personal loan to help pay for your education.
There are some huge benefits to student loan consolidation, such as dramatically reduced monthly payments, but it’s a little different than rolling your credit cards into a single loan. When consolidating student loans, you have a deadline for application each year. In the last few years there have been several changes by the U.S. Department of Education regarding how you proceed with consolidation.
Student loan interest rates are determined by the 91-day T-bill auction. To receive the current year’s rates, and this is important, your completed consolidation loan application must be received by the lender, and they have to confirm the loan before July 1st. If the loan isn’t approved by July 1st, you’ll pay the following year’s rates. In years gone by, there was a grace period that would allow people to skate in past the deadline as long as their complemented application was in the lender’s hands. Now they must have completely processed the loan request and approved the loan by the deadline. You can thank the 109th Congress for that.
Unlike your credit cards, you should almost always consolidate your school loans, if they are federally insured and you can drop the aggregate interest rate. Another difference is that you won’t have to submit to much of the documentation required with other types of loans, such as credit checks or any other such nonsense. Your school's financial aid office can be a big help with your consolidation efforts. One last thing; verify if your lender will give you an interest rate reduction on your consolidation loan if you have your payment automatically withdrawn from your checking account.

Save Money on Organic Foods

noreply@blogger.com (PungPond) — Sun, 02 Dec 2007 10:24:00 +0000

More Americans are eating organic and minimally processed foods. A study from Whole Foods in 2004 found that more than half of Americans had tried organic foods, and over 10% eat them regularly. If you can count yourself among that group of eaters, you’ve doubtlessly noticed that these foods command premium prices and are traditionally found at places such as Whole Foods and other specialty markets. Since you’re probably looking to save money on food, that probably causes a bit of conflict in the ole’ melon (if not talking about the cantaloupe you’re holding, either).
Well, you can relax a bit. Recently, due to organic and minimally processed foods increased popularity, many more grocery stores have begun to stock these items. You can even get organic foods and items such as free range chicken and no cage eggs (from chickens not fed hormones or antibiotics) at warehouse stores like Costco and warehouse grocery stores such as Boise based Winco Foods.
So, just because you want to live a healthy lifestyle, and shy away from foods that contain antibiotics, hormones, chemicals, and were raised in cages full of crap, there’s no reason you should have to pay excessive prices for them. Instead of paying huge prices for premium, organic foodstuffs at specialty food markets, trot on over to your local warehouse grocer, Costso, or even check the selection at your local Safeway or Albertson’s. Chances are you can find much of what you’re looking for there, keep eating healthier, and save some money while you’re doing it.
It’s easier to get debt free if you save money any place you can, and stay out of your doctor’s office. Eating better foods, and paying less to eat them, is a big step in the right direction.

401k Rules – What You Need to Know About Withdrawal, Distribution, and Rollover

noreply@blogger.com (PungPond) — Sat, 01 Dec 2007 08:03:00 +0000

Your 401k is one of the most powerful tools in your investing and retirement toolbox. Do you want to live well after you've left the world of the gainfully employed, but before you've left this world altogether? Make sure you max out your 401k. If you made some good employment choices along the way, your employer kicked in some matching funds and you took full advantage of their generosity.
Now it's time for you to begin living, and you need to fund your retirement so you can tool around Arizona and Nevada in the Prevost. Maybe you're still working and you've changed jobs, hopefully to a new employer that has a handsome 401k plan with contribution matching. Either of these two occurrences may cause you to have some questions about 401k rules for withdrawal, distribution or rollover. Hopefully this post can help.
401k Rules for Withdrawal and Distribution-Want to take some money out of your 401k? Here's what you can and can't do if you'd like to withdraw some funds. The first thing you'll want to look at is your age. There are strict rules regarding age for 401k withdrawals. The magic ages are 59-1/2. and 70-1/2. If you're past 59-1/2 years old you can withdraw funds from your 401k without incurring a penalty from the IRS. The IRS will withhold 20% of the total amount you withdraw, however. This will count toward your income tax due for the year. If you're lucky, an planned well, you may have a refund coming. In that case, the 20% will be basically a short term, interest free loan to the U.S. Government, and you'll get some or all of it back in the form of a refund.
The 59-1/2 and 70-1/2 ages refer to April of the calender year in which the plan participant reaches them. You must take your distribution to qualify. If you don't take a distribution in the starting year, the required distributions for 2 years must be made in the next year (one by April 1 and one by December 31).
If you are under age 59-1/2, you can still withdraw money from your 401k plan, but the IRS will ding you 10% for the privilege. The rules here state that there are actually limited circumstances where you can avoid the 10% early withdrawal penalty. These circumstances include total and permanent disability, death (also total and permanent for most of us), medical expenses that exceed 7.5% of your adjusted gross income for the year, ESOP dividends for your employer's securities (in the 401k), and the IRS levy of your plan.
If you're over 70-1/2 years old, you are required to begin taking mandatory withdrawals. You can leave the money in the plan if you have more than $5,000 (otherwise they'll usually just cut you a check), but that's cost prohibitive, as your friends at the IRS will take a full 50% of your minimum distribution. That basically means you have to begin taking that minimum distribution.
401k Rules for Rollover –If you leave the employer who sponsors a particular 401k that you have funds invested in, you may want to move your money into one of 2 other investment vehicles; another 401k (if the plan allows such transfers), or an IRA. Your funds in a 401k aren’t actually owned by you, they’re in a trust owned by your employer. An IRA, on the other hand, is really your asset. This is the reason it’s more complicated to move assets from a 401k plan than it is to transfer them from an IRA.
If you’re moving to a different employer, you may want to transfer your assets from your old employer’s 401k plan to your new employer’s plan. On the other hand, it may fit your financial plan better if you move it to an IRA. The process of transferring assets from your 401k into another one, or into an IRA, is termed “rollover”. Rollover is the financial term for moving assets from one tax protected entity into another.
In order for you to rollover a 401k, you’ll first have to set up an account for the funds to go to, if you don’t have one already. This is not created at the time of the rollover, but before. The primary rules that apply to a 401k rollover are as follows;
Rule 1 - If the money is transferred directly to you, you have a 60 day window to make sure it gets to the other tax deferred account. If you miss the 60 day window, you’ll owe a 10% penalty if you’re under age 59-1/2.
Rule 2 - You can roll it over without the 20% IRS withholding if the dollar amount is greater than $5,000. If it’s smaller than that, you’ll normally just get the distribution check sent to you, less the 20% IRS withholding.
Rule 3 – There are some changes coming for tax year 2008. After 2007, you will be able to roll over your 401k directly to a Roth IRA if you make less than $100,000, and are not married filing separately.
Rule 4 – Although the rollover is not viewed as a taxable event by the IRS, you still must report it on your federal income tax return, so don’t forget to do so.
Rule 5 – There are certain distributions that do not qualify for rollover status. These include required minimum distributions for those older than 70-1/2, hardship distributions, employer stock dividends, life expectancy based payments over a greater than 10 year period, and life insurance payments.
For more information on rules for 401k rollovers, see the IRS, here.
Have a great, Debt Free, weekend.

Rent a House to Own – What to Watch Out For

noreply@blogger.com (PungPond) — Sat, 01 Dec 2007 01:14:00 +0000

With the recent problems in the credit industry, money’s a bit tight. It can be a bit more difficult to scrape together the requisite down payment that many lenders are after, now that most of the private zero down and creative mortgages have gone the way of the dodo. Rent to own can be a way for some of you to get into a house or condo without throwing away all your hard earned cash on rent. Like anything else, rent to own houses can be a great deal (depending on your situation) or they can spell doom. The devil is in the details.
How these rent to own, also called lease to own plans typically work is that you pay rent plus a small additional surcharge that goes toward your future down payment. You’ll usually pay an option fee for the privilege of participating in the whole shebang. In most cases you’re actually not renting to own, but renting with an option to buy. You will have to exercise the purchase option by the expiration of the option period.
What to Watch Out For in a Rent to Own House 1 – Contract stipulations - As with any other legal arrangement or real estate purchase, look over the contract very carefully. It should stipulate the price of the house, the length of the option period, the option fee, the rent payments, and the rent premium the potential buyer has to pay. In addition as a buyer you should be very aware of any other stipulations and clauses that could have you out in the street. In most rent to own housing arrangements, you will forfeit the fees and premiums if you are evicted, fail to make payments or decide not to exercise your rent-to-own option. Make sure the former isn’t too easy.
What to Watch Out For in a Rent to Own House 2 – Fairness - Make sure that the renal contract isn’t too one sided. In a few instances, sellers know they have a buyer with few options due to poor credit and/or few available funds. They can use the buyer’s desire to own a home, coupled with their relative lack of ability to do so, to put them into a one side contract. Don’t let that happen to you.
What to Watch Out For in a Rent to Own House 3 – Home Price. Make sure that the premium you pay isn’t too high. One of the goals is to be able to exercise your purchase option. You’ll have a much better chance of doing so if the house appreciated by the end of the option period. Similar purchase options on stocks, purchase options on homes state that you can purchase the house for an agreed upon price at some point in the future. You are gaining equity in the house as it appreciates above your option price. The goal is to accumulate sufficient equity such that securing financing is relatively easy, even with bad credit. Obviously the lower the home’s price, the greater you’ll benefit from appreciation.
What to Watch Out For in a Rent to Own House 4– The Real Estate market - In many areas home values are down. The question is how long they will stay depressed. If values stay low throughout your option period, you may not have enough equity in the home to purchase it. Evaluate the market in your area thoroughly before committing to such an agreement.
What to Watch Out For in a Rent to Own House 5 – Problems and repairs. Another section of the contract should determine who is responsible for any needed repairs to the property. It should state which party pays for different types of repairs. You don’t want to get stuck paying for a new roof, for instance, only to either decide not to exercise your option or be forced to leave.
The bottom line is that rent to own can be a great strategy to purchase a home, if you have few other options. It beats losing money on rent and can also be a great way to try out a neighborhood or home before you buy it. Just watch out for those details that can make your life a bit rough.

Renter’s Insurance, Pay a Little, or Lose Everything?

noreply@blogger.com (PungPond) — Wed, 28 Nov 2007 13:40:00 +0000

If you look at the risk involved in renting, it’s amazing that all renters don’t have renter’s insurance. In a situation such as an apartment or condo, where everyone is together in one structure, it only takes one tenant to inadvertently leave a pan on the stove and you’ve lost everything. It would be one thing if renter’s insurance was really expensive, but in most cases, it’s relatively inexpensive. You should be able to get renter’s insurance coverage for around $15 – $50 a month, depending upon where you live and how much you want to insure.

Make sure you get replacement value coverage. With many insurance companies, it will cost you an extra 10% - 15%, but since the premiums payments are fairly small, we’re not talking about very much money here. It will be worth it if you ever need to actually use your insurance.

Another bonus is that, in the event of a fire or natural disaster, most renter’s insurance will cover the costs of temporary relocation. That really helps if you’ve got to move into a hotel and eat out for a while as you find a new place to live, or your apartment is repaired. As with homeowners insurance, renters insurance will cover the costs of someone injured on your property (subject to the limits of the policy). In today’s society, that’s not a bad idea.

To get renters insurance, try your auto insurance provider. You may even qualify for a multi line discount. You can also check with friends for a referral to a god insurance provider.
The bottom line; it’s pretty inexpensive, and unless you own nothing, a little insurance is probably a good idea.

How to Find the Best Performing Mutual Funds

noreply@blogger.com (PungPond) — Tue, 27 Nov 2007 09:59:00 +0000

If you have and IRA or other investment accounts there's a great chance you'll count among your holdings a mutual fund or two. That being the case, you'll probably want to find the best performing mutual funds to maximize the power of your retirement savings. A mutual fund is basically a group of different investments run by a fund manager, who ostensibly knows more than you do about investing, especially in one or more particular areas.

In many cases, mutual funds are made up of different securities that have some type of similarity. There are funds that are made up entirely of stocks, known as equity funds. Others are primarily composed of debt instruments, these are called, appropriately enough, bond funds. Sometimes the funds are made up of stocks of companies with particular characteristics. These are classed according to the particular attribute that loosely defines all of the stocks that make up the fund. Some examples would be growth funds or value funds. Growth funds are made up of stocks that demonstrate capital appreciation, where value funds look to count among their holdings primarily equities that investment professionals feel are undervalued and have great potential for future growth.

Some funds are defined by their market capitalization (the total value of their outstanding stock). These are typically known as large cap, small cap, mid cap, and micro cap funds. Basically large cap companies are large, and small cap companies are small. Pretty easy, huh? Large companies are usually more stable, while smaller ones are more volatile, but can offer more growth potential (but that rule definitely does not apply not all the time).

There are also income funds. These babies are composed of financial instruments that pay good dividends, which are then either reinvested if the aim is to achieve growth, or withdrawn, if the aim is to sustain a lifestyle. Stocks that pay handsome dividends are typically from solid, established companies. They don't experience the same amount of capital appreciation, but are not as likely to depreciate either. For this reason, and the aforementioned income possibilities, they are often used by older investors that seek to obtain steady income and capital preservation to serve them in their retirement years.

Some mutual funds specialize in a certain industry or group of companies. These are known as sector funds. Examples would be funds that deal primarily in energy companies, transportation, electronics, communications, computers, and so forth. These have the potential for tremendous growth, if the particular sector is rapidly expanding. However, they can be devastated if the sector takes a large hit, as happened with many tech related sectors in the early part of this decade.

There are also mutual funds that are defined as combinations of terms, such as large cap value funds, or small cap sector funds. In such cases they are just more tightly defined for investors that are looking to more narrowly invest in stocks and/or bonds with certain characteristics.
Given the huge varieties of mutual funds available to the average investor, how can you find the best performing mutual funds, without sifting through financial data for endless hours? Many of you probably don't find that all too stimulating. Keep in mind that performance should mean different things to you depending upon your requirements and where you lie in your investing life cycle. Also remember that most investment advisers (I am not one) recommend a buy and hold strategy when aiming to maximize retirement savings.

Here are some ways to easily find the best performing mutual funds:

Best Performing Mutual Funds - Lesson 1 -Look at the past performance numbers. All mutual funds have published statistics to make comparing them easier. You'll be able to see how much they have gained this year to date, over the past year, five years , and since the fund's inception. Keep in mind that many excellent funds can have a down year or two, so be careful of letting poor current year performance solely determine your decision.

Best Performing Mutual Funds - Lesson 2 -Don't forget the expenses. Those fund managers have to get paid somehow. They are paid by charging the fund's shareholders a fee. The fees also cover administrative expenses incurred by the fund. This fee is often called a “load”. This fee will be subtracted from your returns, so it is definitely worth examining when making your decision. No load funds shareholders aren't charged a fee. Lower fees are better, obviously, but need to be viewed against the background of the fund's overall performance. This will be listed in the fund' prospectus as the “expense ratio”. Lower numbers translate to lower expenses. Remember that small numbers can add up to big numbers during the length of time you'll hold your investment.

Best Performing Mutual Funds - Lesson 3 -Take a deeper look inside. You wouldn't buy a car without looking under the hood, even if you aren't a mechanic. The same should be true for your mutual funds. Look at the industry the particular fund is invested in, and the companies that it holds. You don't have to perform an in-depth analysis, that what they pay the mutual fund company for. However, you should look to see if they hold anything that looks like an obvious dud. You want to stay away from any “here today, gone tomorrow” stocks, especially if you are investing with an eye towards that tomorrow.

These are just some simple rules to help you find the best performing mutual funds. Remember that a bit of caution now can pay huge dividends later (especially if you're investing in a value fund).

How to Save Money on LCD and Plasma TVs and Other Consumer Electronics

noreply@blogger.com (PungPond) — Mon, 26 Nov 2007 07:46:00 +0000

Well, it’s that time of year again. Soon there will be some fantastic day after Thanksgiving Day sales. These are known in the retail industry as “Black Friday” sales, because the Friday after Thanksgiving has long been the day that so much product was sold it transitioned many retailers from red to black on their P&L statements.

These days it is a day for stupidly low prices on may items, so if you have to buy a TV, HD-DVD or BluRay disk player, now’s the time. Here are some of the specials you can look forward to at many of the Nation’s big box retailers. These are leaked deals only; no accuracy guarantees.
Circuit City:Samsung Blu-Ray Player w/8 Free Movies -- $377.99 – once you get used to the quality of an HD-DVD or BluRay disk on a larger set, you’ll never be able to go back. Be advised, that movies are $20 - $35, however. You can rent them from NetFlix and BlockBuster though.Panasonic 42-inch Plasma HDTV -- $999.99**Polaroid 40-inch LCD flat panel HDTV -- $699.99Samsung 50-inch Plasma HDTV -- $1399.99**Samsung 50-inch Slim DLP HDTV -- $799.99Sharp 32-inch LCD flat panel HDTV -- $599.99Sharp 46-inch 1080p LCD flat panel HDTV -- $1299.99**Sharp 52-inch 1080p LCD flat panel HDTV -- $2199.99Sony Bravia 32-inch LCD flat panel HDTV -- $699.99Zenith 50-inch Plasma HDTV -- $999.99Toshiba 50-inch 1080p DLP HDTV -- $1499.99Best Buy:Mitsubishi 65-inch 1080p DLP HDTV -- $1499.99**Panasonic 42-inch 720p Plasma TV-- $899.99**Philips 32-inch 720p LCD flat panel HDTV -- $599.99Samsung 50-inch Plasma 720p HDTV -- $1399.99**Westinghouse 47-inch 1080p LCD flat panel HDTV -- $1299.99Toshiba 1080i HD-A3 HD-DVD Player -- $199.99 (Great, but WalMart had them for $100 less)Samsung 1080p Blu-Ray Disc Player -- $399.99Dynex 37-inch 720p LCD HDTV -- $629.99Dynex 32-inch LCD HDTV -- $449.99HP 42-inch 1080p LCD HDTV -- $996.99SearsPanasonic 56-inch LCD HDTV -- $1199.99Proscan 42-inch 1080p LCD flat panel HDTV -- $899LG 37-Inch LCD HDTV -- $899.99LG 42-Inch Plasma HDTV $899** (If it is the real HD version, not the 480p version)Samsung 40-inch LCD flat panel HDTV -- $1199.99Samsung 46-inch 1080p LCD flat panel -- $1999** (If it the 120Hz model)Samsung 50-inch Plasma HDTV -- $1399Samsung 61-inch DLP 1080P HDTV -- $1999Sharp 46-Inch LCD flat panel HDTV -- $999Sony 40-inch 1080p LCD flat panel HDTV -- $1999Sony 46-inch Bravia LCD flat panel HDTV -- $1499Sony 50-inch LCD 1080p Projection HDTV -- $1399Sony Bravia 32-inch LCD flat panel HDTV-- $999Sylvania 42-Inch 1080p flat panel HDTV -- $899Toshiba 42-inch 1080p LCD flat panel HDTV -- $1249** Vizio 32-Inch LCD flat panel HDTV -- $598
** = Great buy on a great set
If you are going to get away from your Debt Free quest for a major purchase, this is the time. If you don’t want to stand in line at 5 am, try looking online. Many of these stores will let you buy on-line then deliver the merchandise to your house.

Wal Mart as an Economy

noreply@blogger.com (PungPond) — Sun, 18 Nov 2007 10:16:00 +0000

Wal Mart is actually an economy within an economy. This situation exists almost nowhere else in American business. Total revenue for Wal-Mart in 2006 was about $345 Billion. To put it in context, that dollar amount exceeds the GDP ( according to World Bank figures) of the following countries: Poland, Austria, Norway, Saudi Arabia, and Denmark (not combined). It's about equal to Peru, the Philippines, and Singapore, combined. Wal-Mart also employs about the same number of people that reside in the cities of Seattle, Washington DC, and Boston combined.
Wal Mart has become a center of American life in many towns. Are they helping us sink deeper in debt to China? Definitely, but much of the blame for that can be placed squarely on the shoulders of consumers themselves. After all, if the majority of consumers would look farther than the price tag when they made their purchases, they may decide that the trade offs of buying non-Chinese produced products (if they could find them) would be worth making.
Why has Wal-Mart been so successful? A number of reasons, but two of the primary ones that stand out are their prices and the ultra efficient distribution system that allows them to be profitable at very low margins. Indeed, a 2003 study by economics professor Kenneth Stone of Iowa State University found that Wal-Mart's distribution cost per unit of sales was approximately one fourth that of Sears, and one third that of K-Mart (maybe one reason why K-Mart had to declare bankruptcy?).
Wal-Mart Super Centers can dramatically affect the economy of the entire county. Indeed, a Mississippi study in 2002 found that total sales in the counties with such stores were up over 10% beginning three years after the store opened over counties without Super Centers. Another finding cited in the Stone study was that when a building materials super center such as Wal-Mart, Home Depot or Lowe's is opened, it causes the gross sales in that town to rise by between $30 - $50 million.

Another effect of Wal-Mart on our nation's economy is cited by a 2005 study performed by economic research firm. They found that Wal-Mart made a statistically significant impact on keeping U.S. inflation at bay because of their low prices. They also found that Wal-Mart improved the entire U.S. economy's efficiency by .75 percent. Note here: The study was commissioned by Wal-Mart.

Many critics complain bitterly about the tactic used by Wal-Mart to secure such low prices, but vendors trip all over themselves in order to count themselves as one of the retail giant's customers. Perhaps it would be better to exclude them from one's customer list and avoid the pressure of succumbing to their every whim? After all, having such a large account is similar to the way taxes affect our government; once they get used to a revenue source, it is very difficult to let it go. Better to avoid it in the first place?

Prevent Credit Card Fraud – People Really Are Out to Get You

noreply@blogger.com (PungPond) — Thu, 15 Nov 2007 16:21:00 +0000

While doing some research, I discovered something pretty damn scary about credit card fraud. There are not only a few scammers here and there, and maybe some organized crime syndicates in Eastern Europe you have to worry about. There are thousands of people all over the world that are actively trying to find out how to pull credit card scams every day.

In a single day Google gets what I found to be a very surprising number of searches that pertain directly to the mechanics of perpetrating credit card fraud. For example, the search term “credit card generator downloads” got 873 searches, “credit card generator” got 407 searches, and the term “credit card reader / writer” got 1010 Google searches. This is in one, single, day! That means that on a single search engine (admittedly, the world's largest) for only three search terms on how to get the tools to perpetrate credit card fraud, there were 2,290 people actively trying to steal money from you, your credit card issuer, or from their perspective, preferably both. Perhaps I'm a bit naive, but I found that frightening.

Here are some things you can do as consumer to help prevent credit card fraud:
Sign your card card as soon as it arrives.

Don't keep your cards in your wallet. Keep them in a zippered compartment or a business card holder.

Record of your account numbers, their expiration dates, and the phone number and address of each company. Keep the record in a secure place.

Watch your credit card during a transaction, and get it back as soon as possible.
Void all incorrect receipts.

Destroy carbons created by non-electronic processing.
Compare your card receipts with billing statements.
Reconcile your card accounts monthly, just like your checking account.
Report any questionable charges promptly and in writing to the card issuer.
Notify card companies in advance when you change your address.
Merchants can help prevent credit card fraud on their end with some relatively simple strategies. As this sort of fraud is omnipresent and expensive for business owners, it's something they should be actively engaged in preventing. Here are some things that business owners can do to head off credit card fraud before it strikes.
Address Verification System (AVS) - This checks to determine if the card's billing address and the ship to address, or the address listed by the person trying to use the card match.
Checking ID – I'm always surprised by the number of employees that fail to perform this very simple step when I make a purchase. When I was a business owner this was grounds for disciplinary action. From the customer's perspective, it isn't a hassle. Most customers will be thankful that their ID was checked before their credit card was charged.
CVM – this is that extra 3 digit number on the back of the card. The trick is that this number is found nowhere in the mag strip information, so if the card is swiped by one of those fraudsters that steal your card by illicitly using a card scanner, they will not get the number. In theory, you actually have to have the card in your possession to have the code number. Most online merchants will demand it. If you aren't asked for it when you're placing an online order, shop elsewhere. If you're a business owner, you are crazy not to use this verification technique.
Payer authorization programs add an extra secret password that must match before the card will be approved. It does add an extra step in the checkout process, but if you, as a customer, don't have an extra few seconds to help prevent this growing problem, shame on you.
Hopefully these steps can help both merchants and consumers avaid credit card fraud.

Financial Misconceptions To Avoid – You Will Be Richer for It

noreply@blogger.com (PungPond) — Mon, 12 Nov 2007 10:33:00 +0000

When it comes to personal finance, a little misconception can go a long way. Here are a few that have been so oft repeated, they may as well be true, except they’re not in many cases. It can be expensive for you to fall into one of these financial traps.

Financial Misconception 1One such financial misconception that’s been spread around for years is that you have 3 days to make up your mind after you sign a contract. So, it's a bit of a legal misconception with large financial implications. If you decide you really shouldn’t have made the deal, you can cancel the contract. Well, that’s not really true, except in a few isolated cases. Where this can get really expensive is when you’re buying pricey items such as vehicles. You must check with your state AG’s office to find out what items in your state actually give you a grace period after you’ve signed a contract. In legal parlance the 3 day contract grace period is known as the “3 day right of rescission”.

In Washington for example, you have this right on certain products and services, such as health club memberships, some timeshares, and a few other select sales. In Texas, you can get a 3 day right of rescission on certain sales made at locations other than the seller’s place of business, with some exceptions, the same is true in Oregon. In fact, sales made in your home are one of the only places where the 3-day grace period applies in virtually all locations. The Federal law on the subject can be seen here:http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title16/16cfr429_main_02.tpl

In short, you should expect not to be granted any such rescission and treat it as an exception if you are lucky enough to get one. You must check your state’s laws to be sure.

Financial Misconception 2Another common financial misconception is that Social Security disbursements aren’t subject to Federal income tax. This isn’t true in many cases. It all depends on how much income you have from sources other than Social Security, and if file a single or joint tax return. If you file singly, you will have a greater chance of having to pay tax on your social security income. Look on the bright side, though; the IRS can never treat all your Social Security income as taxable, only 85% of it! Make sure you go over how you’ll be receiving all your sources of retirement income with your tax professional to ensure you get to keep as much of your hard earned SS income as possible.

Financial Misconception 3You can only contribute up to the IRS set maximum to your 401(k). For many, this is true, however, if you’re over 50 years of age, the Feds will allow you to contribute a bit extra, in the event you need to catch up to where your retirement account should be. For 2007, this catch up amount is $5,000. The amount is subject to your employer’s plan limit maximum, which can be smaller, so ask at HR to find out. There are similar catch up rules for those over 50 who have IRA’s, but the contribution limits are smaller.

Financial Misconception 4Paying the minimum payment on your credit card is enough. Hardly. Actually, even though the minimum payment percentages have recently been increased, it is still a brutally slow way to pay off your credit cards and is virtually sure to keep you in debt forever. If you want to have any chance of getting debt free, especially if you ever use your credit cards, you’ll have to pay more than the minimum.

The exception to this is if you have multiple credit cards. In that case, you should pay the minimum on all the cards except the one with the highest interest rate. That one you should pay as much extra every month as you can afford to. When it’s paid off, use the money to pay off the next highest card, and so forth, until you’re debt free.

The aforementioned scenario is about the only one where consistently paying your card’s minimum payment is the proper course of action (one exception would be a no interest card, in that case, you want to pay off the card as late as possible. This is because, assuming you pay no interest, the money you use to pay off the card in the future has less value than the money you would use to pay it off today.

4 Things to Check Before You Buy a House

noreply@blogger.com (PungPond) — Sun, 11 Nov 2007 08:18:00 +0000

If you are about to buy a new house, or are contemplating doing so at some point in the future, there are some things you should check before you sign the papers. A little judicious checking now can save you from some serious problems later. You could end up losing your house, or paying some serious money out of your pocket that could have been avoided.
Thing to Check Before You Buy a House 1 -This first thing to check before you sign the papers are the papers themselves. Have your mortgage contract looked over by a real estate attorney. In addition to that, you should peruse them yourself, even if you think it's all a bunch of legal mumbo-jumbo. Every day there are sob stories in the media about someone who claims to have been sold a bad loan by this or that lender or mortgage broker. Guess what? In many cases they got the loan due to their own greed and / or ignorance. Outright fraud or misrepresentation is one thing, but many times this never occured.

It's true that you should be able to trust your lender or broker, but far too many people were so eager to get their house or loan that they failed to even perform some basic due diligence. Come on, people! You are about to sign what is, for the majority of people, the largest contract of their lives. Before you do so, you owe it to yourself to have at least a basic knowledge about mortgages. If you don't know what an ARM is, at least find out before you agree to one! You should not only find out what it is, but you should be aware the financial implications of it.
Thing to Check Before You Buy a House 2 -Take a look at the neighborhood schools. Even if you will never avail yourself of their services, it is important to know about them for a couple reasons before you purchase your house. First of all, even if they are not important to you, they are to many people, and thus the quality of the schools in your neighborhood can have a major impact on the resale value of your house. Secondly, look at how they are financed. With many schools today, it seems to be all about the money. Where do think all that money comes from? That's right, the property taxes on your house. Some of the school's budget will come from federal and state grants, but much of it will come from your property taxes. You need to check on how they are paying for the schools, along with their levy and tax history.

Thing to Check Before You Buy a House 3 -Does your house have a propensity for flooding? Look at the FEMA flood hazard index and check the local news archives. This is vital if you think there's a chance of flooding. All houses are in a FEMA flood zone, it's just a question of the severity. If your house is in an area that has a flood history, you may get the short end of the stick when it comes to rebuilding after a flood. You can look up FEMA's flood zone info on your prospective house here:https://hazards.fema.gov/femaportal/wps/portal

After every flood there are plenty of people who lose everything who should have known better. If you build or buy a house in an area with a known flood history, you have no one to blame but yourself when the inevitable happens, and it floods again. Sadly many of these people look to the government (our tax dollars at work) for a bailout in this situation. I have absolutely no problem spending tax dollars to help rebuild a community in the event of a rare, serious flood. I do, on the other hand, object strenuously to spending our tax dollars to help someone rebuild their house, again, because they built on a lot only 5 feet above the level of river that floods every 5 – 10 years, like clockwork.

One note on FEMA flood zone data, it is being revised in some areas. Find out if your area is affected by the revision before using the data. In most cases flooding will not be covered by your homeowners insurance, so if you do sustain flood damage, the repair and property replacement will come out of your pocket. In addition, you don't want to buy a lot for your dream home, only to find out later that a home is un-insurable due to flood hazard. If this is the case, you'll probably have difficulty getting a construction loan to get the house built as well.
Thing to Check Before You Buy a House 4 -Look carefully at the CC&Rs. Many communities have CC&Rs (Covenants, Conditions, and Restrictions) dictating many things about how you can use, and what you can (and must) do with your house and property. This is legal contract you enter in to with your neighborhood's home owner's association. CC&Rs are just what some people want, because it mandates things such as lawn condition, and house color for example. They can keep you from parking your boat in the street, or limit how long vehicles are parked in front of your house.

You want to be aware of all the provisions contained therein however, because you do not want to buy a house with the intention of using it a certain way, only to discover that you desires are prohibited by the CC&Rs. This is serious stuff, so don't underestimate the importance of it. People have actually lost their homes fighting the home owner's association over CC&R provisions. It pays to be informed before you buy your prospective house.
These are just 4 of the myriad things you should be aware of before you buy a house, there are countless others, but many people never consider these 4 items.

Credit Card Bills and Autopay – Timing is Everything

noreply@blogger.com (PungPond) — Mon, 05 Nov 2007 08:16:00 +0000

One of the most important things to do when you have a credit card is to sign up for the card issuer's auto pay program. That will prevent accidental late fees that can decimate your finances by bombarding you with late fees and raising your interest rates. Upon examining one of my statements for a credit card that I recently switched to auto pay, I noticed this explanation: “The amount debited to your primary bank account will be automatically be reduced by the amount of any payment received.” What the heck??? Can you not pay any more than the minimum unless you send a check for the entire payment amount, plus any additional, thus rendering your auto pay amount zero?
Upon a brief conversation with the bank's CSR, it became a bit more clear. In order to pay extra and have your auto pay debit your bank account by the normal amount, your check for the additional amount you wish to pay must arrive at the credit card issuer after the auto pay date, but before the closing date of the credit card statement. Go that?
It's pretty important, because if you have your credit card set up to debit your account for the amount of the minimum credit card payment, and you want to pay extra, you have to ge3t your check in during the proper window. If not, you will only succeed in reducing the amount of your auto pay debit by the amount of your extra payment. If your check for the extra amount you wanted to pay was greater than the amount of the minimum payment due, you would only ending up paying the amount your check was for and nothing would be debited from your account for the auto pay.
Hope that makes it a little more clear than mud.

The US Will Lose Big With the Law of the Sea Treaty

noreply@blogger.com (PungPond) — Sun, 04 Nov 2007 08:27:00 +0000

Maybe most Americans don’t really care if we have control over our sovereignty. It seems that the 89% of congress that the American people think aren’t doing their job very well, and the President that 76% of Americans think is doing a crappy job are about to sell it down the river. They will be putting the United States in a subservient position, with little control over defense outside our borders, and other matters of international import. The Law of the Sea Treaty is one of the most dangerous documents to the continued existence of the United States of America, as we know and love it, that has ever been put forth.

Those who feel uncomfortable with unaccountable government officials in control over matters that affect them had better get used to it. Your congress and President are about to secede control of the majority of the planet to unelected, unaccountable internationalists ensconced in the corrupt, bureaucratic morass that is the UN. After experiencing the corruption that was the UN oil for food program in Iraq, or the UN “Peacekeepers” raping women and keeping sex slaves, does any among us feel the least bit comfortable allowing them to be in a position of authority over our nation in any way, shape, or form?

If you can answer yes to this question, perhaps you had better take a good, long look in the mirror. Jack booted thugs in blue armored personnel carriers rumbling through our streets? Perhaps not, but we’ll be losing precisely that control over our destiny that our forefathers fought the redcoats for over 200 years ago. Will we have any say in global events that affect us so greatly? Maybe but a whisper, if we’re fortunate, and toe the line as we’re asked. If we are signatories to this document, our time in the sun will have passed and the U.S. will cease to be the dominant force in the world.

Inasmuch as many would revel in seeing this come to pass, we should remember what we were able to accomplish for the time we held this esteemed position on the world stage. If you feel frustration with your inability to be heard by your elected officials, how will you feel when they are not only unelected, but have no interest in your opinion at all? In fact, there are many around the world, and even inside our borders that are wringing their hands with delight at the mere prospect that the U.S. will be foolish enough to sign the treaty.

For those of you that are unsure how an international treaty could possibly affect them, you should know that such a treaty is the ultimate legal document, superseding even our own Constitution. A treaty is the ultimate abridgement of our rights guaranteed us by the very Constitution, certain provisions of which a treaty would render impotent. If the prospect of yielding authority to such a legislative body frightens you, as well it should. Stipulations unfavorable to our national interests will have to be obeyed, as unpleasant as the consequences may be.

Taxes will have to be paid, treaty stipulations abided by. The U.S could easily be denied the ability to gather intelligence on foreign powers or terrorist groups that could be a threat to our citizens, either abroad or within our own borders. The UN will be a taxing authority, and yeas they will have authority to collect taxes from you. Even better, they’ll not spend your money building your neighborhood school, improving your roads, or hiring additional police officers for your community. The taxes collected by the UN would be distributed to other countries, and you’ll have no say in how or where your money goes. Will the UN be taking money out of your check or levying property taxes against you? Not yet. They have yet to figure out that angle (when they do, check your pay stub), but they will be collecting taxes from U.S companies, possibly the one your work for.

It’s very disconcerting that so many members of congress are eager to jump on such a dangerous bandwagon. By doing so they are yielding an unprecedented amount of our destiny to foreigners who definitely don’t have our best interests at heart. It seems many in our own government may not either. Write, call and / or email your member of congress at once to voice your opinion about this threat to our national future.
You can contact your senate and congressional members here:http://www.senate.gov/general/contact_information/senators_cfm.cfm
http://www.congress.org/congressorg/directory/congdir.tt