But is now a good time to buy a first home or to upgrade from your existing one? The answer is “it depends”. It may be a very long time before real estate once again becomes a solid investment strategy. The days of steady housing price increases we have seen over the last decade may even be over forever.

It’s important to separate out your investment goals from your need for shelter. The latter you will need no matter what form it takes: a house, an apartment or even a tent in the woods. Evaluating whether buying a house meets your need for shelter is a simple task of comparing it to the alternatives. How does the monthly mortgage payment compare to rental payments you would have to make on a leased property? What happens to rates when you have to renew the mortgage? What is the condition of the house (i.e. could it result in thousands of dollars in repairs)? What other expenses would you incur that you wouldn’t have to with renting?  

Deciding whether buying a house now makes sense from an investment perspective is a very different value proposition. If the house would be your largest investment, the current market makes it a potentially risky investment right now, especially if you need the money for retirement or other purposes in the next ten years. While most experts agree that the housing market will turn around in the future, there is no universal agreement on when that will happen. It may be next month, next year or not until 2030. If your investment time horizon is long enough, the combination of low mortgage rates and low housing prices may make the investment attractive, but, as always, consult your independent investment advisor before making such a large investment decision.

So, is now the right time to buy a house? The answer to that will be as individual as each person’s financial goals. It is, however, a perfect time to re-evaluate those goals and to determine if buying a new house fits.

Unemployment not only means the loss of a steady income but also the end of group health insurance. That can put a family at risk until a new job picks up the slack. COBRA health benefits can help in this situation.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. The Act was originally drafted in 1986 and has been recently updated as part of the presidential stimulus bill. COBRA provides for a continuation of health benefits for employees and independent contractors in certain situations.

All employers who have 20 or more employees are required to maintain group health insurance benefits for terminated employees for a standard period of 18 months. The catch for the employee is that he or she now has to pay the premium that was once paid by the employer. That can still be a substantial amount of money monthly but it is often less expensive than paying private individual health insurance premiums.

If the employee is or becomes disabled, COBRA health benefits can be extended for up to an additional 18 months. COBRA may also be available for families of a deceased employee.

Under the new stimulus bill, if you were let go from your position between September 2008 and December 2009, you may be eligible to pay only 35% of the premium for COBRA benefits for up to nine months after which time, you pay the full premium. Employers can choose to continue to pay a portion of the health insurance premiums for terminated employees but they are not obligated to.

While COBRA health benefits can be expensive while you are seeking a new job, it is a better solution than losing group benefits altogether and having to purchase more expensive individual insurance. It can make the transition between jobs less risky and financially dangerous.

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One of the most popular types of life insurance is term life. Term life is straight life insurance without any of the bells and whistles. Whole life, on the other hand, usually carries an investment portion which grows in value and can be cashed out over time. Term life pays the face value of the policy at the time of death of the insured.

Term life insurance has both positives and negatives in comparison to whole life. On the positive side, the premiums are usually significantly lower than whole life premiums because there is no investment portion. Many individuals with term life insurance find that having a separate investment account allows them to have more control over both their insurance and investments.

The major downside of term life is that it has a limited life or “term”. It must be renewed at intervals, usually every 5 or 10 years. As you are older at every renewal date and may have increasing health issues, the renewal rates are generally progressively higher. Whole life policies last for just that- the whole life of the insured without having to re-qualify.

The amount of term life insurance you need depends on your circumstances and your family’s financial goals. Think about what income your spouse would have to replace if you died. How many liabilities do you have right now including your mortgage, credit cards and car loans? Would it make your spouse’s life easier to have those obligations paid off on your death? You also may choose to include college funds in your term insurance face value but a better option is to set up an education fund separately an contribute to it regularly.

Term life insurance makes sense for many families who need an economical way to protect themselves financially against the risk of death. Speak with your independent financial adviser about the type and amount of insurance that’s right for your situation.

But how big does this emergency fund really need to be? Some financial planners suggest three months salary is a good general rule. If you would ask Suze Orman, (yes I do watch her show especially the “Can You Afford It” segment) she will say 6-8 months or even one year if you can afford is more advantageous. However, the right answer for you will depend on your circumstances and the risks that you are trying to cover. Some of the risks that people put aside savings for can be covered less expensively with insurance.

Take home repair for example. If your air conditioner or furnace were to quit for good, the expense of buying a new one might damage your current cash flow.

Medical expenses present a similar situation. If a $5,000 trip to the emergency room would put you in serious financial jeopardy, adjusting your health insurance plan to lower your deductible would make more sense than socking the $5,000 away in an emergency fund.

Insuring against a job loss is something that an emergency fund makes sense for. How much you need depends on your monthly expenses and how long you predict you will be out of a job. Because of the current employment situation in the country, many are finding that it takes longer to find a new job and therefore, you would need more savings put aside to get you through the lean times. Three to six months’ salary is a long term savings goal that will get most unemployed individuals by until they become re-employed.

Even if that amount seems daunting to you, set aside some money every paycheck for your emergency fund. Having two weeks of savings is better than having none. Knowing that you have some money for a rainy day will give you peace of mind in an uncertain economy. SAVE – SAVE – SAVE!

Technorati Tags: emergency fund, Saving Money

The Dogs of the Dow is an investing strategy first promoted 35 years ago by Michael O’Higgins, a fund manager who now runs his own firm. The strategy calls for choosing the 10 stocks in the Dow 30 index that have the highest dividend yields at the end of the year. You hold these stocks until the end of the following year when you re-balance your portfolio based on the new Dogs. A dividend yield is calculated by dividing the dividend by the stock’s price. Therefore, the stocks with the highest dividend yields have the lowest stock prices and may be ready for a jump.

Because all of the stocks in the Dow 30 are large cap, stable companies, the Dogs of the Dow strategy states that the companies chosen are likely to be solid in bad times and rise quickly in price in good ones. 2009’s Dogs are: Alcoa, AT&T, Bank of America, DuPont, General Electric, JPMorgan Chase, Kraft, Merck, Pfizer, and Verizon.

The Dogs didn’t fare so well in 2008. The Dow fell around 32%, the S&P 500 dropped 37% and the Dogs tumbled 38%. Overall, however, since 1972, the Dogs have outperformed both indices.

The current markets, though, are markedly different from any we have seen in the past 35 years. All companies are hurting as the word “depression” continues to be tossed about. Many companies that have weathered every downturn in the past hundred years are foundering. Dividends are being cut as cash and liquidity dry up and a dividend-based strategy may no longer make sense. Companies that pay dividends despite the need to conserve cash may prove to be risky investments, regardless of their long history of stability.

While the simplicity of the Dogs of the Dow strategy appeals to investors who do not want to be monitoring and adjusting their portfolios on a regular basis, the current market meltdown may make this strategy obsolete. The best strategy is to review each stock’s fundamentals and make your picks based on solid balance sheets and liquidity.

Let me know what you all think of this strategy.

Technorati Tags: emerging markets, Stock Market Investing, stocks

However, there are several questions you need to ask yourself before making the decision:

• How much do you have in your savings right now?
• How much money do you owe?
• How much interest are you paying for your debts?
• How much are you earning every month?
• How secure is your source of income?

Essentially, people who are not worried about losing their current source of income in the near future should focus on debt repayment. They should start paying off the debts with the highest interest such as credit cards before moving to secured debts. In addition, if the amount of debt you owe is easily payable within one or two months, don’t put it off because it is just a waste of interest money. The main point is, you should plan debt repayments thoroughly and carefully.

While debt repayment will take priority in most instances, it is also essential not to neglect your savings. Having a financial safety net can be very helpful and even life-saving during emergency situations. Savings are particularly important for individuals who weren’t able to set-up an emergency fund. However, it possible, it is best to save while paying off your debts at the same time.

Whatever you decide, the main thing right now is to avoid getting deeper into debt. Borrowing more hinders you from financial freedom. Nobody wants to be indebted throughout his entire lifetime but there is a high chance that it will if you don’t take the necessary steps now.

Technorati Tags: debt consolidation, paying off debt, Saving Money

In February, the $787 billion package has been passed. Though some sectors have lauded it, the economic stimulus has also been called “careless” and “wasteful” by some critics. This is because it contains a lot of the so-called earmarks for politicians. But a deeper problem persists. The $787 billion, as big as it sounds, may not be sufficient to spur economic recovery.

As the global economic condition takes a turn for the worse, the US is also affected. The US economy is already contracting in ways not seen since the Great Depression. With forecasts showing a vicious cycle, it is no wonder that economic contraction is difficult to stop despite everyone’s best efforts.

Is It Enough to Stop Foreclosures?

There are many arguments about economic theories and political policies in Washington and Wall Street. However, the real effects of these problems are being felt by the average American particularly when it comes to housing. Borrowers, by the millions, are losing their homes because they are not able to make payment. This American tragedy has sadly become commonplace. Though there had certainly been plans to save the housing market, it cannot save the homes that had already been lost.

In addition, it is highly doubtful if the housing stimulus package is enough to save the number of homes it has been designed to save. Despite Obama’s prediction that the economy can begin to recover during the second part of 2009, it doesn’t look that way from many perspectives. Time will tell whether his forecast will come true or not.

Technorati Tags: barack obama, stimulus bill, stimulus package

The cost of water is not something that most people think about. The price of water has actually risen at double-digit levels compared to several decades ago. And with scarcity becoming a serious problem in different parts of the world, it is safe to assume that the price of this commodity will increase even more in the near future. The amount being forked over every month for this commodity is not something to be sniffed at. Significant savings can be realized by simply conserving water.

Below are 8 tips that can help you eliminate wastage and unnecessary expenses:

• Turn off the tap water as you brush your teeth – obviously, this is a good way to reduce wastage. After all, you don’t need running water while brushing your teeth; you only need it for rinsing.
• Fix your leaks – a leak that loses one tap for every second will translate to 15 liters per day
• Take a shower instead of a bath – taking baths requires a lot of water. On average, it requires 100 liters. Taking a shower will reduce this consumption by more than two-thirds.
• Maximize your appliances – don’t run a cycle in the dishwasher or the washing machine until it becomes full
• Wash fruits and vegetables in a container – use a container to save water. Then, use the remaining water for your plants.
• Lastly, check your water bills regularly – when you noticed a jump on your water bills from previous months, this should serve as an alarm that something needs to be investigated on.

Aside from saving money and conserving the environment, there are also a lot of benefits related to conserving water. For example, it will extend the lifespan of septic tanks since it lowers the amount of soil saturation. In some areas, expensive expansion on the sewage systems has been avoided thanks to the conservation efforts of local households.

It is also important to take note that saving water also translates to conserved energy. In many areas, the amount of energy used to pump and treat water is significant. You can actually lower your electricity bill and water utility bill simultaneously by simply getting rid of water wastage.

Technorati Tags: save on water bills, Saving Money

This is good news for some homeowners but contains some risk for others. One way the programs tries to make home ownership affordable is to allow refinancing for homeowners who are current on their mortgages but do not have enough equity in their homes for a conventional refinance. This plan only applies to those who have their mortgages through Fannie Mae and Freddie Mac, so only a small fraction of at-risk homeowners will be able to take advantage of this plan.

The second part of the plan is for mortgage servicers to allow modification of the terms of the mortgage to ensure that homeowners can stay current on their payments. This is done mainly through interest rate reductions that are partially financed by the government. Each bank has some discretion as to how to manage these loan modification plans, but most require proof that the current mortgage terms are unaffordable to the homeowner.

And therein lies the rub. Qualifying for assistance requires homeowners to admit to the mortgage lender that they can’t afford their mortgage. While that may help homeowners in the short term, there is no guarantee that this disclosure won’t come back and bite them a year or two down the road when the program no longer exists. Borrowers who do not continue to qualify for their existing mortgage could possibly face increases in interest rates in the future or even a calling of the loan.

How can you protect yourself from the foreclosure crisis? The first line of defense is to know your budget inside and out. Make sure that you are putting your mortgage first before discretionary expenditures. Getting behind on your payments should be a very last resort. You have more flexible options before you default. Be on top of your payments. If you recognize that you are struggling to stay current, discuss refinancing options with your bank before you default. If you still have equity in your home at current real estate values, you may be able to negotiate a lower mortgage rate which will help your cash flow.

Third, use the new federal program if you need it. If the decision falls between taking advantage of the program and losing your home to foreclosure, the former is the better answer. In the long run, however, you will be financially stronger by heading off mortgage default before it occurs.

Technorati Tags: mortgage, real estate investing

When looking to rebuild your savings, the thing to do is to start small and start safe. Simply choose a small amount of money that you can afford to invest and put it away consistently into a savings account. While savings accounts don’t offer incredibly high rates of return, they are extremely safe and any amount of interest you earn will be more than you would if your money was stuck under your mattress or in a coffee can in your closet. Choosing to have a small amount of money deducted regularly from your paycheck and deposited into a savings account is a fantastic way to begin to rebuild your savings.

Another safe and secure investment is a CD, or certificate of deposit. The rates they offer are usually higher than those of savings accounts because they make you keep your money in them for specific periods of time. Once a CD is purchased, your money will stay in them and accumulate interest for the term of the particular CD and once the CD matures you will get your money back with the interest it earned. If you are tempted to take out your money before the end of the CD’s term you will face penalties which can negate the effect of these safe money making tools.

One way to limit the amount of time that all of your money is tied up in CDs is by the use of laddering. Laddering is a technique in which you invest your money in the purchase of several CDs of different terms thereby allowing you to get hold of your cash in timed increments. For instance, if you wanted to purchase $5000 worth of CDs, rather than put it all into a five-year CD you might put $1000 in a one year CD, $2000 in a three year CD, and another $2000 in a five-year CD.

By using simple safe and secure savings vehicles, you can quickly and easily begin rebuilding your savings after experiencing a financial loss.

Technorati Tags: certificate of deposit, Saving Money