Everything Finance

Can't Control the Markets? Try controlling the Costs

noreply@blogger.com (Everything Finance) — Thu, 25 Jun 2009 04:59:01 PDT

You can't control the markets, but you can control investing costs

As 2008 proved, the financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results that many mutual funds posted in 2008 and at the outset of 2009 may have left you feeling concerned over your financial future. You're not alone.

However, one maxim seems to hold true: There's one very important element affecting long-term investment return that you can exert a great deal of control over, and that's your investing costs.

Keeping costs to a minimum can help boost long-term investment success. That's because every dollar paid for management fees, trading costs, and taxes is a dollar less of potential net return. And while some costs are not as transparent to the average mutual fund investor, a fund's expense ratio is always transparent.

Although lower costs aren't a guarantee of superior mutual fund performance, higher costs don't necessarily translate into higher returns either—turning the adage "you get what you pay for" on its head.

The track record: Higher costs have often led to lower returns

In the interactive illustration below, U.S. stock funds are divided into three categories: small-capitalization, mid-cap, and large-cap, reflecting the size of the companies the funds invest in. The funds are further divided into quartiles (that is, 25% of each respective group), based on expense ratios. As you can see, the best-performing funds for the period were the ones with the lowest costs in almost all capitalization and expense categories.

The components of investment cost

The costs associated with investing in a mutual fund include operating costs—the fees paid to the fund's portfolio manager—as well as recordkeeping, administrative, and reporting expenses. Together, these costs are deducted from every fund's earnings and are expressed as its expense ratio.

Other costs can also affect your mutual fund returns. For example, some funds charge a 12b-1 fee, which covers the marketing and distribution costs. Sales charges may apply if you choose to invest in a fund that collects a front-end load. Yet another expense is the cost of trading securities, including brokerage commissions.

When thinking about the impact of costs on your own investments, bear in mind that although the cost factors that make up a fund's expense ratio aren't directly deducted from your accounts, they do act as a drag on your net returns.

Tips to help make kids financially responsible

noreply@blogger.com (Everything Finance) — Sat, 20 Jun 2009 16:30:01 PDT

A recent national survey said that parents are more apt to talk about the birds and the bees than money and finances. Good thing you're not one of them, right? No matter what age, your kids need to hear from you about the money basics. Here are a few tips to help you begin the financial dialogue with them (and keep it open):

Start'em young – Start their education about money matters by having a monthly family finance meeting. That savings account you've been meaning to open for them? No time like the present.
School the school-aged kids – After-school jobs are more than just a way to get the kids off the couch. Fiscal responsibility becomes real when it's their hard-earned money at stake.

College kids? Tell them instant credit = lingering debt – The average college student with credit cards graduates already $4,000 in the hole. So make sure they know to look at the fine print. Tell them to read the agreement before accepting the "free" gift and signing away their financial future.

Help them make grown-up decisions (with their first grown-up job) – Adult children can learn to budget and curb spending (and make saving part of the equation). An emergency fund should be figured into how they save (think 3-6 months' salary). Scheduling reminders to pay monthly "bills" will help them avoid late fees. And setting up a monthly Automatic Savings Plan will grow their money even faster.

Your child's financial responsibility starts with you. Speak up. Talk to your kids about money and spending. It's one "adult" discussion that won't leave you or your kids blushing.

Local or Direct Bank or Broker

noreply@blogger.com (Everything Finance) — Mon, 15 Jun 2009 16:33:00 PDT

If you're looking to finance a mortgage, expect to invest some time (and maybe some angst) in the process. Many options are out there – we'd like to help you narrow down the field to 3: local banks, direct banks and brokers.

Local bankers lend the money directly without a middleman, using their bank's money, rates and terms. Direct banks work directly with homeowners (online and by phone) and are usually more flexible. Mortgage brokers work with banks and borrowers to "broker" the best deal. They don't lend their own money. Here are some other difference "makers":

Local bankers may provide good rates/discounts for existing customers, can add your mortgage to a suite of the bank's products, allow you to set up online automatic payments, etc. But the loans are more conservative, the process can be arduous, possible mistakes and overcharges can appear and they're not required to disclose the "yield-spread premium" (lender's fee for a higher interest rate).
Direct banks can offer you better rates because of low overhead. With little to no fees, you can save thousands of dollars. Plus, online account access is there 24/7. You can compare lenders, often in record time, from the comfort of your robe and slippers.
Brokers handle details, shop around, disclose yield-spread premium and can help finance complicated mortgages. But watch out, there's a markup for services. You could end up spending thousands more.

What matters most? Find the best deal, the lowest rate and the fairest closing costs. Do this and come out a good judge of the best mortgage come closing day.

When It Pays To Use Cash For Purchases

noreply@blogger.com (Everything Finance) — Mon, 08 Jun 2009 04:57:19 PDT

For years there have been many consumers who have charged through life (pun intended) putting any and all expenses on their trusty credit card. Roughly half of those consumers managed their accounts responsibly and benefited from the many perks associated with using their credit card and paying the balance in full each month. The other half....well many of those people are dealing with the fall out from the economy and struggling with high levels of debt. Not surprisingly more and more people are choosing to pay with cash, debit cards or any other means besides their credit card. This is likely due to the extreme changes going on within the industry as well as an awakening that many of us have been living beyond our means for far too long. The good news is you can reduce debt and also save money by keeping your plastic in your wallet. In fact, while merchants should not charge more for the convenience of using a credit card, there is no rule preventing them from offering incentives to encourage consumers to use cash. Here are a few examples of when it pays to use cash for purchases.

* As many of you may have already noticed, the price for gasoline is slowly creeping upwards again. We are not seeing the numbers that were posted last year (at least not yet) however many merchants still remember the sting of paying hefty credit card fees for purchases made with credit cards last year. As a result many gas stations continue to offer a discounted price per gallon if you pay with cash.
* One area many people do not think about in terms of cash payments is health care. More people are forced to deal with the high cost of routine or emergency health care visits due to job loss (insurance loss). Patients who have no insurance or have high out-of-pocket costs can actually save up to 50% on medical procedures by paying cash. Granted 50% is not the norm, but the point is, you should ask before you pay for services if there is a discount for paying cash.
* While not as common as gas or a trip to the doctor, paying cash for big purchases can also save you money in the long term. If you save money in advance to pay for your next car or even home in cash. Even if you cannot pay off the entire balance upfront, making a large down payment will significantly impact the amount of money you have to finance, in turn reducing the interest fees you would otherwise incur.

When it comes right down to it, with the recent changes in the credit card industry and other areas of the economy, paying cash is one of the easiest ways to save money. Not only will it help you avoid racking up high amounts of debt that may become more than you can reasonably handle when you pay cash you avoid interest charges that drastically increase the original purchase price. While there may be situations when paying cash is difficult or seemingly impossible, consumers who make the effort in this economy will most likely benefit for their efforts.

Trisha Wagner is a freelance writer for DepositAccounts.com, where you can compare rates of checking accounts from dozens of banks in one place. Trisha writes regularly on the topics of personal finance and savings accounts.

Long Term Investing

noreply@blogger.com (Everything Finance) — Tue, 02 Jun 2009 16:27:00 PDT

Investing has its own language and understanding it can make it easier to be a confident investor. Two common terms you hear when people talk about investing are "bid" and "ask." Here's an explanation of what they mean:

In short, "Bid" is the highest price someone is currently willing to pay for a stock. "Ask" is the lowest price at which someone is currently willing to sell a stock.

* Say you decide to buy stock in XYZ Company. To buy those shares, you'll have to pay what sellers are "Ask"ing.
1. First, you check the "Ask" price.
2. If the price looks good, you place your order.
3. The order is routed to an exchange and executed at the "ask"ing price the market is offering at that moment.

* Eventually, you decide to sell your stock in XYZ Company. Since you're now the seller, you'll receive the current price that the buyers are "Bid"ding – or willing to pay.
1. First, you check the "Bid" price.
2. If the price looks good, you place your sell order.
3. The order is routed to an exchange and executed at the "bid" price the market is offering at that moment.

Luckily, brokerages do all of this action behind the scenes – it's what they get paid to do. Although the bid and ask prices for any security are great indicators of the market, keep in mind, the bid and ask prices change constantly throughout the day. The price that you get might not exactly match the bid or ask price.

Now that you've got your bids and asks straight, you're on your way to becoming a savvy investor.

Leadership is a Results Contest

noreply@blogger.com (Everything Finance) — Tue, 26 May 2009 05:50:33 PDT

Guest Post By Tony Jeary

If you go to Amazon.com and search in books using the word 'leadership' you get over 300,000 possibilities. If you are interested in getting a formal education in leadership, you can earn Phd or Masters degrees in such disciplines as Organizational Leadership, Change Leadership, Leadership Communication and others. You can even earn a Servant Leadership Certificate if you need one of those. The point is that leadership is a big subject and it means many different things to different people. The dictionary definition of the word lead is: To show the way by going in advance, and to guide or direct on a path. So, in its purest sense leadership engages the ability to do those two things.

It's important to understand what the core issue of leadership is. By that I mean the most foundational issue of leadership that is easy to understand and easy to measure. One of the undeniable facts of leadership is that leaders are measured and subjected to criticism and scrutiny. The heart of that critical process goes to measuring the results that leaders achieve. That makes leadership a results contest and is the means by which every leader must understand their most strategic duties and responsibilities. People can spend years studying and refining their leadership styles, philosophies, techniques and other tools that leaders must use -- but the real issue for all leaders is getting results!

When the economy is good, it's easier for business leaders to achieve good results. When the economy is good profits are high and money is available. People are secure and relatively happy. Life is good for all. It's not to say that leaders don't have challenges to overcome in good economic times. It's just that the nature of the challenges and the environment that frames the challenges have a different character about them when people are prospering . It's also easier to get results that are perceived to be acceptable in good economic times and the judgment, measurement and criticism of leaders is rather tame -- compared to the uproar that frequently accompanies leadership evaluation in a tough economy. Just look at the public rage that has recently been directed toward business executives whose companies have been heavily subsidized by taxpayers.

Please let me be even more direct: Successful leaders get superior results, faster! Unsuccessful leaders don't!

Have heard of OLX ?

noreply@blogger.com (Everything Finance) — Mon, 18 May 2009 00:46:01 PDT

Me neither. But I was recently contacted by them to see if I would let me readers know about OLX.

What is OLX ?

OLX is an internet company based in New York, NY and Buenos Aires, Argentina. The OLX website hosts free user-generated classified advertisements for urban communities around the world and provides discussion forums sorted by various topics.

Facts about OLX

OLX is the largest free classifieds site no one’s ever heard of!
OLX has over 50 million unique visitors per month and 400 million page views per month!
Almost 2 million new ads are posted monthly on OLX!
OLX has raised $28.5 million in funding since March, 2006
Americans are not likely to have heard of OLX because its popularity lies mainly outside of the United States in places like Spain, India, Portugal, Mexico, South America, China, and the Philippines
OLX has offices spread over the globe with 125 employees working out of New York, Buenos Aires, Beijing, and Moscow
OLX provides a simple solution to the complications involved in selling, buying, trading, discussing, organizing, and meeting people near you, wherever you may reside
OLX is the first classified sites to merge Web 2.0 functionality with the ease of use and simplicity of Craigslist
OLX is now present in 87 countries and 36 languages

On OLX you can:
Easily design rich colorful listings with pictures and videos
Control your selling, buying, and community activity in My OLX
Display your listings on your social networking profile (Facebook, Myspace, ...)
Access the site from your mobile phone
View OLX in your local language

Why OLX?

If Craigslist was the online classifieds of the early internet, OLX is the future:

100% free (forever) even in jobs and real estate
Ability to include videos and pictures in listings
A city, neighborhood and zip code database so the entire country is covered and not just pre-selected cities
Ajax "WYSIWYG" rich-text editor for richer listings
Ability to comment on listings to create a stronger community
Advanced search functions with sliders allowing searches at variable regional settings
A distance field allowing you to see postings near your zip code wherever possible
Ability to post listings in any language in any country
Ability to view the site in any country in any language
Global reach
Mobile version

Also,

OLX has over 50 million unique visitors per month and 400 million page views per month!
Almost 2 million new ads are posted monthly on OLX!
OLX is now present in 87 countries and 36 languages.
The company has over 125 employees in New York, Buenos Aires, Beijing, Delhi and Moscow.
Raised $28.5 million in funding

Thats pretty impressive. I believe OLX is the Craigslist of the world with the exception of the US.

Has anyone used OLX ? I would love to hear about your experience with it.

Are you House Poor?

noreply@blogger.com (Everything Finance) — Fri, 08 May 2009 08:17:06 PDT

The great American Dream has always revolved around owning a home. Sure, having the 2.3 kids, the cushy corporate job and the stylish car to drive to work everyday are part of the myth, too, but nothing quite summed up Americana quite like the white picket fence. But if recent economic numbers are any clue, this dream is becoming a nightmare for many in the US.

According to date released by the United States Census Bureau, an increasing number of homeowners are spending a larger and larger amount of their incomes on housing than in previous years. People in 49 out of 50 states reported an increase. The only state that didn’t, Alaska, spent the same amount. The report showed that people are spending around 21 percent on their housing needs, up from 19 percent in 1999.

This is a huge problem for first-time buyers who may now be priced out of housing markets all across the country. Economists point to rises in home prices in the last 7 years, as well as higher interest rates, coupled with stagnant wages over the same period.

While everyone seems to be in agreement that the housing “bubble” is either bursting, or getting ready to burst depending on where you live, housing prices are still up a remarkable 32 percent since the beginning of the decade.

Household incomes, on the other hand, haven’t done a very good job of keeping up. The same Census report showed that income has actually dropped, not risen, over the past 7 years, down 2.8 percent.

Maybe the worst news in the report was the percent of people who allot more than 30% of their income for housing. The numbers are up almost 8%. National guidelines suggest that more than 30% of household income for housing is excessive and not financially healthy.

What does this mean in the long run?

Most experts agree that until income can catch up to housing, the real estate market will remain lifeless. And since real estate is one of the biggest drivers to the overall economy, a weak real estate market means a weak economy.

Things appear to be the worst in California. Not only do they have the most expensive real estate in the nation, 48 percent of California homeowners spend more than 30% of their income on housing related costs.

Until income can begin to grow as quickly as the real estate market, this trend shows no signs of slowing down. Which could mean that the upcoming real estate slump could last much longer than anyone predicted.

Forex Trading

noreply@blogger.com (Everything Finance) — Wed, 29 Apr 2009 08:33:28 PDT

Forex Trading, which is more commonly known as FX, is for the purpose of selling and buying currencies of various countries in an international market for the exchange or competing against each other in the money arena. The ability of the investors to sell and buy these different currencies is for the reason of making a small profit with each transaction.

Investors are attracted to it and many end up Forex traders. The FX market is open for trading from Monday 0:00 GMT and shut down on Friday 10:00 GMT and traders are not only locked to the NASDAQ or The New York Stock Exchange time frame.

Frankly, the Foreign Exchange Market fluid and really appealing to investors who can attain trades ranging equal to two trillion dollars on a day by day basis. Such vast sums of money in the trading arena make it nearly out of the question for an individual trader to create a discernible impact.

Foreign Exchange Trading is the dealing by buying and selling one nations currency for a different nations. The strong point or weakness of that currency, the ups and downs of it's economic value to that of a different country. For instance, an investment of three thousand American dollars ($3000.00) against the British pound, at 1.7999 and a margin of one percent anticipating the climb of the exchange rate.

Whenever this occurred you'd finish the rate of exchange at 1.8050 you'd attain around one thousand two hundred dollars ($1200.00). This would generate you a 40 % profit on your initiall investment. That's how come there are a bunch of Forex investors, but it still demands planning and knowledge of the currencies to be favorable.

Forex investors are provided with an a tremendous opportunity to trade and earn an enormous profit and losses if they try without a thoroughly thought out sensible short term trading plan. Forex is not like the stock exchange which holds positions for a much longer span of time. While Forex traders are numerous, they hold on to these positions for intervals of shorter duration of time.

Forex trading in marginal accounts are very desirable and they allow traders to amass larger positions without the necessity of large deposits. You can find marginal accounts many situations with five percent of the required funds. For example five thousand dollars ($5000.00) would get a position of one million dollars ($1,000,000.00).

To trade well and enable you to maximise your net profit you must develop and employ a few methods of trading and be systematic and adopt them. There are a a couple of methods applied in making a decision on which FX trades to make the best of are: Forex technical analysis and Forex fundamental analysis.

The most analysis used is the technical. It applies the premise shifts come about in the Forex exchange are true and occur for a reason. The consensus being whenever a particular currency is traded towards a high it will maintain that trend. The opposite, as a rule, also holds true. Opinions of the technical Forex don't draw out predictions of long-term on the market, merely attempt to capitalize on the experiences of the past.

The fundamental analysis examines all the aspects, factors and trading currency of countries involved. Such as the rate of interest, economics, rate of unemployment all taken into consideration. For example, interest rates rising suddenly can compel Forex traders to open a position which is supported by data at that time. It might also cause him to remove an active position as a means to prevent monetary loss.

Forex trading can potentially exceed profitability when properly done. Discover how to Forex trade - go online and open a Forex Account, using a Demo, used without any funds. This will help you learn about the methods of trading, currency activity around the world and how they are shaped by this. Once you become familiar with the Forex market you will build confidence with trading.

Be sure you feel at ease with what you will be doing before you begin. Once you feel you are prepared you'll be able to open an active account and maybe begin trading and earning profits. All the same, I strongly suggest you, as with any investing, never utilise funds you don't have. Leave behind the mortgage money where it is. Through following these hints you'll be prosperous in time.

Best Free Personal Finance PDF Guides and Ebooks

noreply@blogger.com (Everything Finance) — Fri, 24 Apr 2009 07:40:54 PDT

By managing your personal finances well, you will be able to get more out of every dollar that you earn - regardless of what your income or your lifestyle is.

Managing personal finance involves the ability to set financial goals, work towards them and secure your financial future.

However, reliable and unbiased financial advice is not easy to come by. As a result, many people keep making the same mistake over and over again. They do not plan well in advance, give in too often to temptation and spend unnecessarily, listen to dubious advice given by enthusiastic financial salespeople and most importantly do not do sufficient research before making decisions of a financial nature.

Further, personal finance includes all aspects of one’s financial life: tracking income and expenses, saving and investing, understanding taxes and insurance as also planning for long-term goals like retirement, college education for one’s children or buying a house.

It is therefore very important that a personal finance guide helps you think about your finances in a holistic way so that you can work on a comprehensive plan for your present and financial future.

Here are some of the best free personal finance PDF guides and ebooks that will allow you identify your financial goals and that will give you advice on how best to achieve them.

Building Wealth: A Beginner’s Guide to Securing Your Financial Future.
(http://www.dallasfed.org/ca/wealth/pdfs/wealth.pdf)

This guide from the Federal Reserve Bank of Dallas contains excellent financial advice for both individuals as well as families. It helps them understand various wealth-building strategies like financial planning, saving and investing, budgeting and managing debt. It also helps the reader work out a personalized plan for building personal wealth.

Money Matters: Your Guide to Financial Security.
(http://www.pueblo.gsa.gov/cic_text/money/moneymatters/moneymatters.pdf)

This ebook will give you plenty of tips on how to set financial goals for yourself, organize all your financial papers, choose a reliable financial professional, understand various investment options and learn to invest safely and plan for a financially secure future.

Pathways to Getting Ahead.
(http://www.bos.frb.org/consumer/pathways/index.htm)

Contrary to what many young people believe, it is never too early to start understanding and taking charge of one’s personal finances. This booklet is meant especially for young adults and aims to make them aware of the importance of managing one’s personal finances and managing them well. Along with educating them on the kind of benefits that jobs can bring, other than a simple paycheck, it also provides them with information about other financial resources that can be used when there are no jobs or if there is a financial emergency.

Be Prepared, Be Informed, Be In Charge: Simple Strategies for Managing Your Money.
(http://www.fdic.gov/consumers/consumer/news/cnwin0607/winter06-07.pdf)

This guide from the Federal Deposit Insurance Corporation provides help with some of the most important money matters affecting consumers today. It offers advice on how to stay financially fit, avoid unhealthy debts and also importantly, on how to protect one’s deposits with FDIC insurance.

10 Questions to Ask When Choosing A Financial Planner.
(http://www.mint.com/blog/10questions.pdf)

There is no doubt that a good financial planner can provide you with valuable advice and assist you immensely in managing your personal finance as well as in planning for long-term financial security. However, how do you know if the financial planner you are about to hire will give you reliable and unbiased advice? This simple brochure lists the most important questions that you should ask before choosing any financial planner.

66 Ways to Save Money.
(http://www.pueblo.gsa.gov/cic_text/money/66ways/66ways.pdf)

As the title indicates, this ebook lists not a mere ten or twenty but a remarkable 66 ways in which you can save money. From simple ways to save costs of food, transportation, housing and utilities, the ebook also lists some helpful ways of saving money on insurance, banking and loans.

Get the Facts on Saving and Investing.
(http://www.sec.gov/pdf/facts.pdf)

This excellent ebook from the SEC helps you understand the fundamentals about saving and investing. It explains how by taking simple, small steps one can plan for one’s financial security through saving and investing. The book contains plenty of tips and more importantly worksheets aimed at helping you track your income and expenses as also to calculate your net worth.

This is a guest post written by Hadar Kadar. Hadar works for Cogniview, world-leaders in _PDF to excel conversion tools_

Should you choose secured or unsecured loans?

noreply@blogger.com (Everything Finance) — Tue, 05 May 2009 08:53:15 PDT

Most people only associate money with the word loans. Loans are not always a monetary exchange but these are the most common type of loans.

Monetary loans can be given based on several different guidelines, be repaid in several different ways, and last for any duration of time.

A loan can be secured by collateral. These loans are usually offered when making a large purchase such as a house or a motor vehicle. In this type of loan, if you do not pay the loan back within the specified guidelines, the item that you purchased with the loan can be taken from you by the entity that has loaned you the money.

You may also obtain a secured loan by offering a house or a car that you have purchased as a type of insurance that you will pay the loan back. Once again, if the loan is not paid back within the guidelines your home or car can be taken by the entity that loans the money. They will then sell the home or car to pay back your loan.

Another type of loan is an unsecured loan. This type of loan carries more risk for a lender so the amounts loaned are usually smaller than what would be given with a secure loan. Credit cards are unsecured loans. If the balance on a credit card is not paid there is no collateral that can be confiscated to pay back this balance. However, no matter what type of loan that you decide to receive or give it is imperative that you note the details of repayment, as this will vary with every individual loan.

How to choose a financial planner

noreply@blogger.com (Everything Finance) — Thu, 23 Apr 2009 17:52:22 PDT

There's retirement to plan for and college tuition for the kids. Insurance. Estate planning. And, oh, don't forget a wedding for your daughter. If all this sounds familiar, it may be time for you to start shopping around for a financial planner.

Certain experts, such as stock brokers or tax preparers, are there to help you deal with specific aspects of your financial life. But if you don't have an overall plan, you may well be spinning your wheels trying to get ahead. That's where financial planners come in. One who's trained and astute will typically draw up a written plan that focuses on such things as your retirement and insurance needs, the investments you need to make to reach your goals, college-funding strategies, plans to tackle debt - and finally - ways to correct any mistakes you have made in haphazardly trying to plan on your own.

Before you begin shopping for a planner, one word of caution: Unlike brain surgeons, hairdressers, and plumbers, a financial planner doesn't have to crack a book, take an exam or otherwise demonstrate competence before hanging out a shingle. In other words, anyone can claim the title - and thousands of poorly trained people do. That means finding the right planner for you and your family will take more work than researching the best new flat-screen TV. And so it should. After all, it's your financial future that's at stake.

Here's how to get started:

The old-boy network

One easy way to begin looking for a financial planner is to ask for recommendations. If you have a lawyer or an accountant you trust, ask him for the names of planners whose work he's seen and admired. Professionals like that are in the best position to judge a planner's abilities.

But don't stop with the referral. You should also look closely at credentials. A certified financial planner (CFP) or a Personal Financial Specialist (PFS) must pass a rigorous set of exams and have certain experience in the financial services field. This alphabet soup is no guarantee of excellence, but the initials do show that a planner is serious about his or her work.

You get what you pay for

Many financial planners make some or all of their money in commissions by selling investments and insurance, but this system sets up an immediate conflict between the planners' interests and your own. Why? Because the products that pay the highest commissions, like whole life insurance and high-commission mutual funds, generally aren't the ones that pay off best for the clients. In general, we think the best advice is to steer clear of commission-only planners. You also should be wary of fee-based planners, who earn commissions and who also receive fees for their advice.

That leaves fee-only financial planners. They don't sell financial products, such as insurance or stocks, so their advice is not likely to be biased or influenced by their desire to earn a commission. They charge just for their advice. Fee-only planners may charge a flat fee, a percentage of your investments - usually 1 percent - under their management or hourly rates starting at about $120 an hour. Still, you can generally expect to pay $1,500 to $5,000 in the first year, when you will receive a written financial plan, plus $750 to $2,500 for ongoing advice in subsequent years.

Where to get help

If people you trust can't recommend planners in your area, or if you want to broaden the field from which you choose, you can get lists of local planners from the following trade organizations. Check out each group's website.

* National Association of Personal Financial Advisors, www.napfa.org.
* Financial Planning Association, www.fpanet.org.
* American Institute of Certified Public Accountants, www.aicpa.org.

Trust but verify

After putting together a list of at least three candidates, arrange face-to-face interviews. These consultations are usually free. Among the questions you'll want to ask are:

* Do you specialize? Many planners try to be jacks-of-all-trades and take any client who can pay. Some, however, work primarily with a certain type of client, such as small business owners or widows. Others tend to focus on one area of financial planning, such as retirement issues or college funding. You'll want to make sure the planner has experience working with people whose financial lives are similar to yours.
* How are you compensated? Any reputable planner won't flinch when you ask this question. It's imperative to find out ahead of time both how you'll be charged and how much.
* May I see your ADV form? This is a report the planner files with regulators. Part I of an ADV (the name stands for adviser) will tip you off to legal or regulatory problems in the planner's past. Part II outlines his or her experience, investment strategies and potential conflicts of interest. Planners are legally required to show you Part II if you ask. They can refuse to show you Part I, but that's a good reason for you to refuse to give them your business.
* May I have the names of three clients similar to me? You'll want to talk to these clients about their experience with the planner. It's also a good idea to ask to see at least one recent written plan; the planner can block out the name of the client to protect his or her privacy.

Finally, be alert for canned sales presentations, which are not uncommon in the field of financial advice. And give the highest marks to an adviser who listens closely to you and asks insightful questions. Notes Stuart Kessler, past chairman of the American Institute of Certified Public Accountants, "Someone who isn't able to listen carefully won't understand what you are looking for."

Put Your Tax Refund to Work for you

noreply@blogger.com (Everything Finance) — Thu, 23 Apr 2009 17:52:40 PDT

Does the idea of a tax refund or stimulus cash have you dreaming of sunny beaches and shiny big-screen TVs? Before you dream it all away, run down this checklist. It may be just the personal relief package you need:

Cover the basics – Make sure to take care of the most important things first:
- Are you working? If not, hang on to that cash to cover the bills until you've got a job again.
- Living with high-interest debt? Pay it down or pay it off. Bye-bye, interest charges!
- Have an emergency fund? Ballpark 3 to 6 months of expenses. Even $500 could cover a surprise car repair so you're not running up a credit card.
Stimulate your cash – You could put extra stimulus cash in a place where it can help build for the future. It may only be a few extra bucks a paycheck, but a little can go a long way. Most employers allow direct deposits to at least three accounts. So, arrange to have pre-set direct deposits sent to your:
- 401(k) or 403(b)
- Investment account
- Kid's college fund
- Rainy day fund
Revisit your investing principles – With stocks hitting historic lows, consider investing. Use your tax refund as an opportunity to:
- Rebalance your portfolio more affordably. Instead of a sell/buy action, just buy more of any under-represented investment you might already have.
- Keep diversifying – There's no need to raise money by selling an investment while it's low. Just buy the stock or fund you've been eyeing.

If you've been doing without that "found" money all this time, you won't even miss it. So why not use the extra cash to invest in the future?

Book Review: The New Coffeehouse Investor

noreply@blogger.com (Everything Finance) — Mon, 13 Apr 2009 06:28:00 PDT

This little how-to-invest book, The New Coffeehouse Investor, which elegantly summarizes our common worries about how to build wealth, was initially published 11 years ago. This updated, revised, and revamped edition stands the test of time—and of updating. Seattle-based Schultheis states his three principles of investing—allocate assets, approximate stock-market average, and save—then proceeds to expand and expound with personal stories and provocative questions. When is enough enough? What’s behind this Wall Street obsession to beat the market? Why do we need to lead a penny-pinching life today for a high retirement style tomorrow? Forget the complicated formulas, the diversity of spreadsheets. Concentrate instead, he advises, on understanding your burn rate, the meaning of diversification, and the value of being on financial autopilot. Like his peers (Suze Orman et al.), the author exposes two myths: “no load” mutual funds and “great companies make great investments.” All in all, solid and comfortable investment counsel that will help balance (and, eventually, grow) your balance sheet. Appended: partial list of index funds; notes; additional reading

"The New Coffeehouse Investor" Book Details:

Hardcover: 224 pages
Publisher: Portfolio Hardcover (April 16, 2009)
Language: English
ISBN-10: 159184245X
ISBN-13: 978-1591842453
Product Dimensions: 8.6 x 5.8 x 0.9 inches
Shipping Weight: 12.5 ounces

Most managed mutual funds do not consistently even beat the market and rather than trying to do the impossible (selecting which managed mutual fund will beat the market this year), the intelligent investor will invest in a low cost broad based index mutual fund and do much better than the non-index investor.

You can read "The New Coffeehouse Investor" in an hour or two, but it will take a lot of determination to ignore the Wall Street noise that shouts that there exist investment gurus who can consistently beat the market.

A visit to "The New Coffeehouse Investor" book's web site reveals how successful a good asset allocation has been the last 5 years. A good asset allocation helps weather the storms we occasionally see in the U.S. stock market......like 3 down years in a row in 2000-2002. The example portfolio in this web site includes a 10% allocation to the real estate area using a Vanguard REIT.

This book has a lot of style and is a very enjoyable read. The material is presented in understandable form.

All-in-all, a great primer on successful investing strategies.

You can buy this book at Amazon: The New Coffeehouse Investor

The Top Twelve Investing Mistakes

noreply@blogger.com (Everything Finance) — Sat, 11 Apr 2009 12:14:00 PDT

Mistake # 1. Buy and hold mutual funds
This strategy lost money over the last 10 years. ETFs, Modern Portfolio Theory and semi-annual rebalancing worked beautifully. You were able to capture gains of NASDAQ 2000, real estate 2005, clean energy 2007, DOW 2007 and more!

Mistake # 2. Commission Based Brokers
They are paid to sell you things and most don’t have the ability to offer you ETFs and no incentive to offer you Modern Portfolio Theory. Commission-free brokers are paid for "assets under management," meaning they want to keep you happy.

Mistake # 3. Trading on Analyst Recommendations
Following analyst recommendations is a losing proposition. Researchers at the University of California and Stanford found that, in the year 2000, the stocks most highly rated by analysts lost 31 percent for the year. Even more incredible is this finding from the study: The stocks least favored by the major analysts soared 49 percent. This study examined 40,000 stock recommendations from 213 brokerages. Analysts are not all crooks, but they are definitely not fortune-tellers. This is mostly just a case of supply and demand, not dumb, corrupt analysts (though there are a few of those).

Mistake # 4. Bankruptcy Buying
Think buying Delta at $1.54 a share when you’re positive that they will come out of bankruptcy is a brilliant idea? Guess again. Reorganization plans commonly call for the cancellation of the existing common stock, with holders receiving nothing. Nada. (Translation: your stock becomes toilet paper.) Lawsuits are a difficult and costly way to try to recover losses.

Mistake # 5. Pet Rocks
It’s very tempting to buy stock after shareholders have earned seven thousand times their investment, or real estate after the industry has posted intergalactic gains, but that is called chasing money. There were people, lots of them, who bought real estate at peak prices in 2005. Too bad losing weight isn’t as easy as losing money.

Mistake # 6. Hot Tips
Hot tips are often merely "Pump and Dump" or Ponzi schemes. Shysters and scam artists prey on you through this mechanism – from Madoff to the penny stock ads that you receive in your email.

Mistake # 7. Sure Shots
If someone promises to double your money in a set period of time, or to give you annual returns that are double or more of what the average person can achieve, assume that you’re dealing with a novice or a scam artist, especially if they want you to write a check before you do any due diligence into their real rate of return and a background check. This would have saved you from Bernard Madoff. Even though he had a good pedigree (like a handful of high-profile scum bags before him), he was notorious for providing no backup documentation of how he achieved his astronomical gains. Beware anytime someone wants you to hand over money before you have a chance to read or research anything.

Mistake # 8. Buying on Headlines
Headlines are written by editors to catch your eye. If you don’t read the fine print, you could be missing the most important information. Before United Airlines declared bankruptcy, investors gobbled up UAL shares on the headline that United had received $1 billion in promised concessions from its unions. The investors assumed that this was great news and that the labor concessions were all that United needed to soar the skies once again and be profitable (with the help of some federal loans). A key consideration was hidden on the inside pages of the article, however: that the Federal Loan Guarantee required. $1.5 billion in union labor concessions. In fact, receiving only $1 billion in concessions – when the loan was going to fall through unless $1.5 billion was delivered -- was very bad news, not the good news that the headline trumpeted.

The Loan Guarantee application was rejected, and United Airlines was forced into Chapter 11 only a few weeks after that headline appeared in what many people consider the country’s most reliable news source, the New York Times. The headlines of less respected news sources can be even further from the complete story. The New York Times had actually printed the complete story, but too many didn’t take time to read it.

Mistake # 9. Press Releases
Press releases are written by professional writers, who are employed by the company they are writing about. A company can talk about an increase in revenue without ever mentioning that increased revenues don’t mean the company is profitable or that, due to cash constraints, the company’s fiscal health is on the ropes. If you read anything that is from PRNewsWire or BusinessWire—services that distribute press releases written by corporate PR people—ask yourself, "What aren’t they telling me?" Press releases can have valuable data and information, but they are designed to give you a snapshot of something newsworthy, not to draw out the full picture.

Mistake # 10. Placing all your chips on one sector
Diversify with Exchange Traded Funds so that you can see and capture your gains, with your semi-annual nest egg rebalancing! The former Blue Chip Index has become the Bailout Index, so it is more important that ever that you know what you hold in your ETFs. Mutual funds are too big and too diversified, which makes it impossible to know what you own and to take profits when one segment of the stock market – industry or size or style – has a rapid run-up in gains.

Mistake # 11. Keeping too much stock in your employer’s company
Rule of thumb, according to ERISA guidelines: no more than 10 percent of stock in your own company.

There’s one exception to this rule: if you’re the owner of the company, you may need a dominating percentage of the stock for voting/power reasons. In the early days of Apple Computer, Steve Jobs was booted out of the company he had co-founded.

Mistake # 12. Handing your investments over to a loved one, relative or friend
I’ve spoken with women executives who have commanded billion dollar corporations, and others who have multi-million dollar salaries, who turned over their personal investment portfolios to a husband, in order to make him feel like "more manly." With men, it’s more likely to be the guy at the country club who convinces his poker partners to come in on a sure shot investment of his. Interview your Certified Financial life partner as if your life depends upon it, because your lifestyle does!

Written by Natalie Pace of NataliePace.com

You can read my review of her new book "Put Your Money Where Your Heart Is"

Lost your Job ?

noreply@blogger.com (Everything Finance) — Fri, 10 Apr 2009 06:25:44 PDT

The news is out. There is strong evidence to suggest that the number of applications for any available vacancies is increasing dramatically. Leading accountancy firm, Deloitte Touche Tohmatsu, has reported a 34% increase in applications for its graduate positions. Many people will be losing their jobs. Will you be one of them? What does that do to your attitude?

To most, it will send them in a downward spiral of self pity, disappointment and negativity. They will become a victim and it will be reflected in their attitude. They will let the outside world enter and destroy their inside world. They will loose more than their job. They will lose their role in life, their self confidence, their self esteem and self respect. They will loose their sense of self worth and their net worth.

Why? Primarily because they never took control of their life or never determined what things are within their control. They were living a life of chance and circumstance from the outside in. They forgot who the most important person in the world is and got caught up in today’s fast growing addiction - becoming a corporate junkie.

They became corporate junkies because they had nothing better to do or because of the fear of loosing their jobs if they didn’t keep up with the other junkies. In the process they forgot themselves, their desires, their dreams, their aspirations and even their families. And now, they stand to lose it all.

Losing your job is an awakening call. It is time to wake up and to start living your life from the inside-out. It is time to get to know you. It is time to define what you want to be, to do or to have and to create a plan to make it happen the way you envisioned. It is time to take control of your life and start living the life your so desire.

You may or may not know if you are going to lose your job, but why wait to find out. Have a proactive attitude if you want to take care of the most important person in the world. Don’t wait, as a reactive attitude is sure to destroy your spirit.

Start planning your future life today. If you were to lose your job, what would you do next?

If you comprise a prepared mindset and a contingency plan, they will set you apart from the junkies. Your proactive attitude will shine and your actions will speak louder than words. Your changed attitude will make you more desirable and thus, you may not loose your job.

Wouldn’t it be great to be in a position to have a choice of opportunities? These opportunities only come to those who are in control of their lives and know what they want, where they are going and how they are going to get there.

You need to take control of your life and make some decisions. Do you want to live a life of chance and circumstance or do you want to live the life of your dreams? Do you want to work for the accomplishment of your goals or for the accomplishment of someone else’s goals? Will you have a proactive attitude or a reactive attitude?

Only you, the decision maker, can make the decision work. It is your life so what will it be? Rise up, make a decision and reap the benefits. Nothing is standing in your way.

Getting finances in order

noreply@blogger.com (Everything Finance) — Wed, 08 Apr 2009 12:28:00 PDT

Organized records can ease a family's burden following one's demise

Losing a loved one is hard enough. But grief is often compounded when one's financial records are in disarray.

Keeping organized records is a gift to your family and to yourself. It helps ensure that your wishes are followed, that your assets are accounted for, and that your money is available to meet your family's needs in a timely fashion.

The following is expert advice on what you need to keep on file, how long to keep it and who should get copies.

Fire proof your papers

Consider buying a fire-retardant box or safe to file important financial documents and insurance policies that you keep at home.

Tax records: These include any forms and statements that show income or verify deductions (W-2s, 1099s, canceled checks, receipts, etc.), as well as copies of your return. Keep them for a minimum of three years. That's typically the amount of time the IRS has to audit a return, and sometimes three years of tax records are required for an estate audit, said estate planning attorney Roger Levine of Levine, Furman & Smeltzer in East Brunswick, N.J.

To be safe, however, experts recommend you keep them for six years, since that's the time the IRS has to audit a return if you underreport your gross income by more than 25 percent, said Cindy Hockenberry of the National Association of Tax Practitioners.

Homeowner records: The deed and title to your house, your closing and mortgage statements, and any receipts documenting how much you spent on home improvements should be kept indefinitely. These will help you - or your heirs - track the house's value (and appreciation) when it's sold.

Investment records: Retirement and brokerage account statements, especially those indicating purchases, distributions and stock splits, should be kept indefinitely, since they create a paper trail of your investments, and they can be used to determine the cost basis when you sell your stocks or funds. They also help your heirs trace the origins of an investment if you bequeath it to them after you die.

Insurance records: You should keep records of your insurance policies - life, health, disability, auto, homeowner, liability, etc. - for at least as long as the policy lasts, and possibly longer if you've arranged for tail coverage, which covers you for a certain period after policy expiration.

Other relevant documents: Your birth certificate, marriage certificate, divorce decrees, and military records should be kept indefinitely.

Life- and estate-planning documents: You should always make sure you have on file an up-to-date copy of your will, your living will, your healthcare proxy, and your power of attorney documents.

Copying important documents

When copying an original will, never remove the staples. If the original will appears to be tampered with, its validity may be questioned in probate court.

You should keep the original of your will. Or, if you prefer, you can give it to your lawyer for safekeeping so long as you keep a copy in your files and indicate on that copy where the original can be found. You needn't give a copy of your will to your executor unless you wish, although you should let him or her know where it is, Levine said. And you shouldn't give a copy to your heirs. It's a private document, and you may wish to choose other heirs at a later date.

If you've set up a revocable trust in which you're the trustee, give a copy of the trust to your successor trustee or make sure he or she knows where it is.

Give a copy of your health-care proxy and your living will to your general doctor and to the person you named as your medical agent. You might also consider giving a copy to a close friend or trusted neighbor, if you don't live near your family or medical agent, Levine suggested.

If you've assigned power of attorney to someone, that person should know where the document can be located in the event that it's required.

Make a locator list

One of the most useful things you can do for your family is create a list of where all your accounts, policies, and other valuable documents are located.

For each item, include relevant information such as the type of account or policy, the company, bank or area where it's housed, the account or policy number, and the name, address and phone number of the agent, broker or lawyer you've dealt with. Be sure to give a copy of the list to someone you trust, or let that person know where the list can be found in case of emergency.

Obviously, your locator list will need to be updated periodically. "But even if the list becomes out of date, it's a starting point," Levine said.

Lets Compare Various Savings Products

noreply@blogger.com (Everything Finance) — Mon, 06 Apr 2009 08:47:48 PDT

What’s the right product for you? Deciding where to put your money is a big decision. Here are some key facts to help you make the right choice.

Online Savings Account

If you’re looking to earn a higher rate than a traditional savings account, but still want easy electronic access to your money, this may be the account for you:

* Offers a higher yield than most traditional savings accounts or money market savings accounts.
* Includes easy online access to your funds through electronic funds transfer.
* Offers up to six withdrawal transactions per statement cycle.
* Requires only a $1 minimum deposit, and no minimum balance thereafter.
* There are no monthly service fees.
* FDIC-insured up to $250,000 per depositor.

Money Market Savings Account

Want high yields, easy access to your funds, plus the flexibility of checks and a check card? Then this account could be right:

* Offers a higher yield than most traditional savings accounts.
* Access your money easily through electronic funds transfer, checks and a VISA®Check Card.
* Offers up to six withdrawal transactions per statement cycle, three of which may be checks or check card transactions.
* Requires only a $1 minimum deposit, no minimum balance thereafter.
* There are no monthly service fees.
* FDIC-insured up to $250,000 per depositor.

Certificate of Deposit

If you can afford to lock your money away for anywhere from three months to five years, you’ll earn even higher interest rates than a Money Market Account:

* Offers a higher yield on deposit than a savings, checking or Money Market account.
* The longer the term, the higher the yield.
* The CD’s fixed rate makes it immune to market fluctuations.
* Requires a $500 minimum investment
* Money is not accessible (without a penalty) until the term has expired.
* FDIC–insured up to $250,000 per depositor.

Right now GMAC Bank is offering fantastic rates for these savings products.

2.25% APY for Online Savings Account
1.90% APY for Money Market Savings Account
2.65% APY for Certificate of Deposit

Health Savings Accounts explained

noreply@blogger.com (Everything Finance) — Thu, 02 Apr 2009 00:11:00 PDT

One thing is certain with healthcare: premiums continue to climb higher.

As a result, more employees may find that health-savings accounts (HSA) have been added to their benefits packets this year, in some cases replacing HMO and PPO offerings.

HSAs are tax-free accounts tied to an insurance policy with a high deductible of $1,250 for an individual and $2,500 for a family. After the deductible is reached, policy holders receive comprehensive coverage.

To ease the burden of those out-of-pocket costs, participants can contribute, pre-tax, up to $2,650 for an individual and $5,250 for a family into an HSA. Withdrawals from HSAs are tax-free as long as they are used for medical purposes.

Unspent HSA money automatically rolls year to year and those funds can either earn interest or be invested into participating mutual funds for greater returns - potentially building a tax-free nest egg for healthcare costs.

Consider it the 401(k) plan for healthcare

Victoria Craig Bunce, director of research and policy at the Council for Affordable Health Insurance, said employers can save between 25 percent and 30 percent on health premiums by switching to an HSA. Those savings usually translate into lower premiums for employees - savings that employees can use to maximize their health savings accounts.

A study by Mellon Human Resources and Investor Solutions in May indicated that 7 percent of the over 360 employers surveyed already offer HSA plans to employees and 32 percent plan to offer them in 2006.

While it sounds like a win-win for both employers and employees, it's still a hard sell for some companies. With some current healthcare deductibles as low as $150, employees may get put off by HSA's much higher ones. And there's something disconcerting about paying the entire cost of a doctor's visit up-front, rather than the standard $15 or $20 co-pay.

David Bauer, past chairman of the Independent Insurance Agents and Brokers of New York, said in New York, many carriers have filed HSA offerings but despite interest from employers, clients are still cautious about signing up for these products.

"With these high deductibles, employers are skeptical about HSA renewal the following year," he said.

He added that the perception that HSAs are for the "healthy and wealthy," rather than the average wage earner, is also proving to be a hurdle for early adoption.

Wave of the future

But advocates insist that HSAs, which only became available in January 2004, are the wave of the future.

"It's common that people are afraid of change," said Dr. Stephen Neeleman, chief executive of HSA provider HealthEquity, and co-author of The Complete HSA Guidebook. "In 1981, when people began opting for 401(k) plans from traditional pension plans, we saw slower adoption."

Neeleman added that of the 800 businesses HealthEquity services, over 90 percent of employers also contribute a portion of their cost savings towards partially funding high deductibles - making HSAs an increasingly attractive option.

Consumers may also want to consider the extra control they have over the type of healthcare they receive through an HSA, said Tom Richards, senior vice president of products at CIGNA.

HSA participants are no longer bound by referrals to receive medical care and, in some cases, physicians are willing to negotiate lower prices for up-front payment because it saves them the trouble of dealing with insurance companies.

Richards added that HSAs are also appealing because of their portability - if an employee leaves his company, he can transfer the funds to his new company's HSA. Considering the benefits, CIGNA expects overall consumer driven plans to account for 3 percent to 5 percent of its market next year, he said.

Not for everyone

HSAs, however, aren't for everyone. It's generally a good idea to sit with a financial planner to see if the savings really do add up. Keep in mind that while savings are accumulating in the first year, if there is a sudden expensive health emergency, you may not necessarily have the funds to cover it in your HSA. That mean you're responsible for those out-of-pockets costs.

But analysts expect HSAs to become an increasingly common choice for employers.

Peter Delano, senior analyst at research and consulting firm Tower Group said that HSA assets will reach between $10 billion to $26 billion by the end of 2010. Just don't expect traditional healthcare plans to fall by the wayside, he said.

Don't overpay for your higher education

noreply@blogger.com (Everything Finance) — Sat, 28 Mar 2009 17:31:39 PDT

In today’s economy, every dollar back in your pocket helps. That is why taxpayers who paid college tuition or interest on student loans for themselves or their children should ensure they are taking advantage of tax savings, says Sallie Mae, the nation’s leading saving- and paying-for-college company.

According to the College Board, 8.5 million taxpayers recently benefited from federal education tax credits and deductions, saving approximately $6.5 billion. Sallie Mae recommends taxpayers in college, taking a course, or paying interest on a student loan investigate whether they are eligible to claim one of the following credits or deductions:

529 College Savings Plans grow tax deferred and withdrawals are tax free when used to pay for qualified higher education expenses. Additionally, many states offer taxpayers deductions for contributions into their 529 plan accounts.
The Hope Tax Credit provides up to a $1,800 tax credit per eligible student. This credit, which grew by $150 from the previous year, may be claimed for college freshmen or sophomores.
The Lifetime Learning Tax Credit provides a tax credit of up to $2,000 per family for higher education expenses. Students in any year of college or graduate school or taking continuing education courses may be eligible.
The Tuition and Fees Tax Deduction may reduce taxpayers’ taxable income by as much as $4,000 for tuition expenses and related fees.
The Student Loan Interest Tax Deduction may exclude up to $2,500 from taxable income for eligible taxpayers who paid student loan interest during 2008.

Students attending eligible institutions in Midwestern disaster areas in the states of Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska, and Wisconsin may be eligible to claim increased credits or an enhanced deduction for college costs in tax year 2008.

While taxpayers are encouraged to consult their tax advisor for individual tax guidance, Sallie Mae offers students and families these general tax filing tips to help them maximize their savings:

Earn rewards for purchases of tax software or tax preparation services. Members of Upromise, a free program that helps students and families save money for education expenses, can earn cash rewards when they purchase TurboTax. Visit http://shop.upromise.com/mall/tax08 for more information.
E-file for free. Simple federal tax returns may be e-filed at no cost by using TurboTax Federal Free Edition. More information is available through Sallie Mae’s tax center at www.SallieMae.com/taxcenter.
Understand the income limits and restrictions on how education tax credits and deductions can be combined. For example, the Tuition and Fees Deduction cannot be combined with the Lifetime Learning Tax Credit, but the Student Loan Interest Deduction can be used in combination with any other education-related benefit. IRS Publication 970, “Tax Benefits for Education,” available at www.irs.gov, provides full details.
Gather the right supporting documents. To calculate the Student Loan Interest Deduction, taxpayers need to obtain form 1098-E from their loan servicer. Sallie Mae customers may download their form securely at www.SallieMae.com/taxcenter. Anyone claiming one of the credits or the Tuition and Fees Deduction will need Form 1098-T from their college or university.

Families planning ahead for the 2009 tax year should be aware of changes enacted as part of the American Recovery and Reinvestment Act of 2009 economic stimulus package that will help make the investment in higher education more affordable at tax time next year. Under this new law:

For tax year 2009, the American Opportunity Tax Credit will expand the Hope credit from $1,800 to $2,500 and allow families to use the credit for up to four years of college instead of only the first two. For the first time, lower-income taxpayers who, when filing their 2009 tax forms, do not have a tax liability, may also benefit. Because the new credit will be partially “refundable,” they may qualify for a payment from the federal government of up to $1,000.
Account owners of tax-advantaged 529 college savings plans will be able to count the purchase of a computer for a beneficiary college student as a qualified education expense in 2009. 529 college savings plans allow families to save money for higher education while earnings grow federally tax deferred and can be used to pay for the cost of college.

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Vacuum Your Way to Energy Savings

noreply@blogger.com (Everything Finance) — Mon, 23 Mar 2009 07:14:00 PDT

We know that vacuuming isn’t always your favorite chore to do around the house, but it may help you make your home more energy efficient. Next time you get the vacuum out to do some cleaning, think of it as your “secret weapon” for reducing your future electric bills. Below are a few ways you can vacuum your way to energy savings:

• Vacuum refrigerator coils twice a year to keep the appliance running efficiently. Unplug your
refrigerator (this is important – safety first) and pull your refrigerator away from the wall. The
coils will either be located on the back or on the bottom behind a panel. Using the long non-
metallic nozzle or brush attachment on your vacuum, clean out all the dust and debris lingering
in the coils.

• Seek out all heating and cooling vents (i.e. supply vents) and use the vacuum’s brush attachment to clean the vent plate and behind it, if possible. Removing dirt and dust will allow air to flow freely, so your system doesn’t have to work so hard to push air through the house.

• To keep your clothes dryer operating efficiently, while not operating and unplugged, detach
the exhaust hose and vacuum out built-up lint. Also, be sure to clean your lint trap after each
load to help prevent lint build up.

These are just a few tips to help make your home more energy efficient.

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10 Investing Habits of Rich People.

noreply@blogger.com (Everything Finance) — Thu, 19 Mar 2009 23:18:00 PDT

Embody the habits of the rich to enrich your own wallet!

1. Tax-free: Contributing and trading within a tax-qualified brokerage account means that you could be earning up to 30% additional in returns (which you don’t give to the IRS for capital gains taxes). Compound that year in and year out and it could be worth millions.

2. Play it Safe: Always keep a percent equal to your age safe, i.e. out of the stock market. Certificates of Deposits, savings accounts, money markets, and bonds are less risky than stocks. (Bond funds should be counted as stocks, not bonds.)

3. Stocks on Steroids: Take a small percentage of your stock portfolio for trading. (Don’t trade the whole nest egg.) Subscribe to a great stock newsletter, which is tracked by an independent agency, to achieve superior returns.

4. Great Partners: Interview your financial partner (broker) as if your life depends upon it. Your lifestyle does!

5. Tithe: The first check you write each month should be to your financial freedom fund. 10% for investing, so that your money can make gains while you sleep! With this habit alone, you could be a millionaire in 31 years, even if you only made $14/hour.

6. Don’t be the Bank of Mom and Dad: You’re not qualified to, nor would you want to, establish the underwriting guidelines for loaning out money to relatives. If someone needs money, consider any gift you give to be a gift or charity. If someone wants you to go into business with him or her, consider whether or not you want to provide that widget or service to the world. In most cases, you’ll be better off considering your help to be charity, fun or an education, and not a loan or investment..

7. Avoid Fair-Weather Friends: Whether it is a new broker, a new person you met by email or just new interest from someone who never cared much about you, if the new relationship is all about the money, make sure you are doing business with a monk! Do your due diligence and don’t be seduced by promises of guaranteed riches, guaranteed love or a fabulous lifestyle.

8. Switch-Hit: Do as much of your day trading as possible in a tax-qualified retirement plan, such as an IRA or even possibly a college fund or health savings account. That could help you reduce the taxes you pay on capital gains.

9. Getty/Guggenheim Your Fab Self: Find out every tax-qualified account that exists and stock up your holdings in as many protected accounts as possible, including IRAs, 401 (k)s, health savings accounts, college funds and foundations!

10. Live the Rich Life: Wealth is not just money. Wealth is enjoying a happy, fulfilling rich life with people you care about, and investing in products and services that make the world a better place. Health is wealth, so get happy & exercise! Breathing is health, so invest in green!

Written by Natalie Pace of NataliePace.com

You can read my review of her new book "Put Your Money Where Your Heart Is"

More on Foreclosure "Rescue" Scams

noreply@blogger.com (Everything Finance) — Thu, 19 Mar 2009 09:31:07 PDT

What is a foreclosure rescue scam?

Rising foreclosure rates have led to a growing number of scam artists offering to "rescue" homeowners in financial distress. They use a wide variety of scams and target people of all ages in virtually every community across the country. Anyone can become a victim.

Foreclosure rescue scams usually revolve around heavily promoted deals supposedly designed to save the homes of people facing foreclosure - those who have fallen behind on their mortgage payments. They proclaim to "save your home" or "pay your mortgage," but in reality generate a quick profit for the scam artist or strip away the value of your home with no benefit to you. Scam artists can evict you from your own home and then sell it on the open market.

How does a foreclosure rescue scam work?

The "rescuer" identifies distressed homeowners through public foreclosure notices in newspapers, via the Internet, or at government offices. The "rescuer" then contacts the homeowner by phone, personal visit, card or flyer left at the door, or advertising. The initial contact typically centers on a message that tells homeowners that they can stay in their house easily, get a "fresh start," keep their credit rating or receive instant cash.

During the first meeting, the homeowner is often told to stop all contact with lenders, credit counselors or lawyers and let the "rescuer" handle all the details. This cuts off the homeowner's access to legitimate financial solutions.

The scam artist generally looks to make a quick profit through fees or direct mortgage payments that are never passed on to the lender. Sometimes the scammer assumes ownership of the property by deceiving the homeowner.

Once it is too late to save the home, the "rescuer" either takes the property or the owner loses the home to foreclosure after it has been drained of equity through fees and charges.

What are some of the most common scams?

The Bait and Switch: The homeowner is purposely deceived and therefore does not understand that he is selling the house in exchange for a "rescue."

Many believe they are signing documents for a new loan or other financial arrangement that would allow them to retain ownership by paying off mortgage payments that are past due.

The False Intermediary: The "rescuer" charges an upfront fee or very high fees to "save" the house by negotiating with the lender or promising to quickly find a buyer for the house. The scammer usually seals the homeowner off from legitimate help or legal relief by telling the owner that he should not talk to the lender, seek out credit counseling or legal advice. Once the fees are paid, he vanishes with a quick and easy profit.

The homeowner is usually left without enough help to save the home and with little or no time left to prevent foreclosure.

Sometimes, the scammer will insist that a homeowner make all mortgage payments directly to him while he negotiates with the lender. He may collect a few months' worth of payments before disappearing.

The Bogus Rent-to-Buy Scheme: The homeowner surrenders ownership of the house thinking he will be able to pay rent and then buy it back over a few years. The terms of the buy-back deal are usually stacked against the homeowner, with the resale price well above market value. Sometimes, the scam artist hikes rental fees very significantly over time.

Once the former homeowner misses rent payments, the family is evicted, leaving the "rescuer" free to sell the house.

Even if the former homeowner is able to pay the rent, the terms of the buy-back are so burdensome that he ends up losing possession of the house and the scam artists keep all or most of the equity.

How can you know if a company is legitimate?

Legitimate companies will sit down with a homeowner and collect documentation. Their representatives will explain the offer and the process in as much detail as you need to make an informed decision. All promises and agreements will be in writing. Their representatives will not object to your desire to consult a lawyer, credit or housing counselor, family member, friend or other expert resource.

Most legitimate companies will not solicit your business through high-pressure direct marketing, nor will they make promises up front to save your home, offer immediate cash or save your credit rating.

Before you sign any contracts, you should contact your lender, a credit or housing counselor, or a lawyer. You can also check out many companies at www.bbb.org.

What are the red flags to keep in mind?

Homeowners should proceed with extreme caution if an individual or company:

Calls itself a "mortgage consultant" or "foreclosure service."
Contacts people whose homes are listed for foreclosure, including anyone who uses flyers or solicits for business door-to-door, by phone, or email.
Encourages you to lease your home so you can buy it back over time.
Collects a fee before providing any services to you.
Instructs you to cease all contact with your lender, credit or housing counselors, lawyer or other legitimate experts.
Tells you to make your mortgage payments directly to him or his company (not the lender).
Requires that you transfer your property deed or title to him or his company.
Makes a promise that seems too good to be true, for example, instant cash with "no strings attached".
Tells you that as part of the deal you will need to move out of your house for some period of time for remodeling or other reasons.
Offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale.

For additional information, you can see the U.S. Department of Justice U.S Trustee Program's list of warning signs at www.usdoj.gov/ust/eo/public_affairs/factsheet/docs/fs06.htm

What should a homeowner NEVER DO?

Don't be pressured to sign a contract. Take your time to review all documents thoroughly, preferably with a lawyer who is representing your interests only.
Don't send or give your mortgage payments to someone other than your lender, even if he promises to make the payments for you.
Don't sign away ownership of your house to anyone without advice from a credit or housing counselor or lawyer.
Don't rely on verbal agreements - they mean nothing. Get all promises in writing and keep copies of all documents,
Don't sign anything containing blank lines or spaces. Scammers can add information later without your knowledge or approval.
If you do not speak English, use your own translator. Don't depend on someone who is provided by the "rescuer."
Don't fall for promises that are often used to lure homeowners into scams. For example:

Claims to save your credit rating
Promises of instant cash
Guarantees that a buyer will be found within a certain number of days
Help in filing for bankruptcy to "stop the foreclosure"
Offers of free rent or gifts

Source: http://www.mortgagehelpnow.org/

That’ll be 787 billion dollars. Cash, check, or credit?

noreply@blogger.com (Everything Finance) — Fri, 27 Mar 2009 08:42:18 PDT

In the few days that have passed since President Obama signed the economic stimulus bill into law, many Americans have begun to wonder how this massive government spending will benefit their own lives. Not much, according to economic expert David Cowan. In fact, though some speculate that the price tag is high enough to finance 13 wars in Iraq and Afghanistan, the end result of the bill can be nothing more than a temporary (and very expensive) feeling of relief.

David Cowan has worked as a journalist, editor, and bank executive in Europe and North America for organizations such as Financial Times, Euromoney, and the World Bank Group in Washington, D.C. His perspective on the current financial crisis stands in stark contrast to the recent stump speeches and the alarmist reactions of many in today’s media. “People keep making these allusions to the Great Depression, and I simply don’t think we are in that situation. There will be enough resilience in capitalism and the economy to bring us back—if we let the free market work. I think this current mess is more of a contraction in the economy. Maintaining the equilibrium is a painful but necessary process,” Cowan states.

Though there is no doubt that the U.S. is experiencing a recession, Cowan challenges the assertion made by any politician that the government can create enough jobs to reverse the current downward trend. Sometimes, he says, there is nothing that can be done except to get on with life, bide our time, and wait until things turn around—just as they have done time and again when the free market has purged the ineffective or poorly run business and cleared the way for new opportunities.

“It’s only the creation of wealth that will get things moving again. The truth is that there are people in the economy who are finding opportunities. They are finding wealth. Yes, it will be very difficult for those who have lost their jobs and their homes. As for the rest of the country, 787 billion dollars is an awfully high price tag for a package that is more about generating peace of mind than generating wealth,” Cowan states. “Politicians and bureaucrats will get their paws on the money and apply it to the causes that interest them. These may be good causes, but, generally, they don’t generate wealth.”

Who, then, does generate wealth? It is the people that a free market economy ultimately rewards—the individuals and companies that step up to the plate to meet demand, bring innovation, and invest wisely. Cowan insists that it is those people, not the government, that will begin paving the way back to prosperity.

“In a healthy economy, these jobs come about spontaneously. Does a massive social employment program actually solve your problem?” he asks. “My feeling is that the approach President Obama and the U.S. Congress have taken is a bit like pulling off a band-aid slowly instead of just ripping it off and getting it over with. This will only prolong the pain.”

With or without a stimulus plan, many companies are already assuming 2009 will be a write off, while hoping cautiously that we might begin to see recovery next year. Cowan states that businesses have been taking actions in the last four months to equip themselves to ride through this current economic storm, and this effort will do more to improve our economy than all the talk from government quarters.

www.economicparables.com

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Reduction and Elimination of Credit Card Rewards on the Rise

noreply@blogger.com (Everything Finance) — Mon, 09 Mar 2009 02:01:00 PDT

There is an increasing trend of credit card companies to reduce and, in some cases, eliminate their popular reward programs entirely. At one time, rewards programs were one of the most effective promotional tools used by card issuers to get people to sign up for their cards. Nowadays, rewards incentives are simply too costly for the card issuers to maintain and the reduction and outright elimination of credit card rewards programs is on the rise.Consumers who are using credit cards simply to get rewards need to stay on top of what rewards programs are being eliminated and what changes are being made to the programs utilized in the past. As the economic crisis continues to put more and more financial pressure on banks and credit card issuers, borrowers and cardholders are more likely to see even more changes to rewards programs in the near future.Great Rewards No Longer

It wasn't so long ago that credit card companies were aggressively promoting their incentive programs to entice new card applicants. As airline incentive programs were starting to be eliminated from many airline companies, credit card companies jumped in and offered double rewards points for frequent fliers as well as more cash back incentives for their customers. Card issuers were battling to remain competitive and were offering more and more incentives than ever before.

Financial Fallout

When the recent economic crisis began to emerge, the fallout hit the card issuers very hard financially and, as a result, began to quickly pull back on their rewards programs. Some merely began changing the rules, hitting consumers with shorter expiration periods and smaller caps on the rewards customers were earning. But others began to make major changes, starting with the dissolution of their rewards programs entirely in order to save money. Double mile programs were dropped from many card company programs, leaving customers to pay more cash money upfront for supposed free flights.

Reduction of Airline Miles and Other Rewards

Other travel rewards have been reduced or cut out all together. For those consumers who used to receive free stays at select hotels for one or two nights, they are more likely to earn a monetary credit instead. In some cases, the credit will not pay for even one hotel night stay, let alone cover the cost of the two-for-one deals that were the cornerstones of rewards programs for so many years.

There are still some rewards programs available but, at best, it appears that consumers will have to spend more on purchases just for the privilege of earning less in rewards points. Card issuers contend they are only eliminating those incentives that were the least popular among customers so they can focus on more popular rewards programs, including the ever popular cash back rebates. But even the cash back incentive programs have been seeing more changes. Typically the best cash back rewards programs provided rebates of up to 3% back on all purchases. Now, credit card companies are only offering the 3% rate for a very short promotional period, then dropping it down to 1% after the introductory period has ended. Other cards will only give cash back rewards when customers buy certain items, such as groceries, gas, or other specific things instead of getting cash back on all purchases.

This article is a guest post contribution from Steve Sildon, Senior Editor for CreditCardAssist.com. Steve is a frequent contributor in the personal finance blogosphere, writing about credit-related topics such as credit card rewards programs and small business financing.

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