Money Advice

Planning for the unexpected

2009-06-01T23:34:00.001-04:00

Job loss, short term illness, long term illness, these are a few of the unexpected things that life throws at you. You might see the job loss coming but then again you might not. Sure the company is in a rough time and maybe they have laid off a few people, but I’ll be okay. My health is pretty good. I eat right and exercise, what could happen? Illnesses can come out of the blue and can be devastating emotionally and financially. Are you prepared for them?

Let’s hope so. If you don’t think that you are, don’t feel bad I ‘m sure that a lot of people are in the same boat. It’s time to get out of that boat.

It is always a trauma when you lose a job no matter if you saw it coming or not. Fear and despair set in, you self-esteem drops like a rock. And you worry about the money or lack of it. That is why it is so important to start an emergency fund right now. The rule of thumb says that you need to have about 6 months of money to cover your bills till you find another job. If you can save more then do it. Make sure to keep the money in an account that you can easily get to. Don’t invest it in stocks or mutual funds. Having the money put away will help ease off that stress.

Illnesses can strike at any time. If your company has short term disability that’s great because they will usually pay you a percentage of your salary for a short period of time. If they don’t you might want to consider investing in a policy. That also goes for long term disability insurance. Many companies will allow you to take a little out of your salary every paycheck to pay for a higher percentage long term disability. You should take advantage of that. It might mean the difference in taking home 70 percent of your salary versus 40 percent.

Remember it is always good to be prepared.

Should you buy mutual funds now?

2009-05-29T13:15:00.000-04:00

In the past year the mutual fund market like the stock market in general has taken quite a hit. 401ks that many people depend on have been crushed due to the slump in mutual funds. This time it hasn’t been just the high risk high return funds that have suffered; the low and moderate funds have also lost value. With all that said do you really want to put your money in a mutual fund?

That depends on your expectations. Do you need the money 6 months from now or a year from now? Forget about the mutual funds go to the bank and open a CD or open your mattress up. But if you are talking about long term investments, how ever you define that, then mutual funds might be for you.

It used to be that the old investment crowd would tell you to put the money in safe, dividend drawing stocks or mutual funds that have a track record of making money slowly. That point of view has come under scrutiny in the last 6 months. The argument is that nothing is guaranteed, which is true, and safe stocks and funds can go down precisely when you need them. Become more of a trader.

So what should you do? Stuff the mattress or open another CD. No, you need to keep an eye on your investments and diversify. I know that the word diversify has been used a million times when discussing stocks and mutual funds, but it’s true. Is it safe proof? No, nothing is but in the long run, it will be worth it.

2 types of Life Insurance

2009-05-27T12:52:00.001-04:00

There are 2 types of life insurance, term and whole life.

Term life only pays when the death happens during the life of the term, which can be anywhere from one year to 30 years. And term is broken down into level and decreasing term. Level pays the same amount through out the time of the policy whereas decreasing term goes down as the term gets closer to ending.

The advantage of term life is that it is cheap. The disadvantage is when the term is up you will have to sign up for insurance again. The older you get the harder and more expensive it is get life insurance.

Whole life pays no matter how old you are. Whole life insurance is broken down into three types: traditional, universal and variable.

Traditional life covers the same payment no matter what age is reached. Usually premiums are kept up so the insurance companies can use that money as an investment to cover the cost of the policy. The insurance holder has the right to cash in the amount if they decide to cancel the policy

Universal life is based on cash value. The money that is collected is invested in some type of financial index. Variable life also is based on cash value but can be invested different types of investment accounts. If the account rises in value then the payout while be greater when collected.

The advantage of whole life is that it is permanent. The disadvantage of whole life is it is more expensive.

Go safely into retirement

2009-05-24T23:01:00.001-04:00

Hopefully you have thought about retirement for many years. You have made plans and made adjustments along the way. You have diversified your money so the recent downfall of the market didn’t hurt you as bad. Of course the recent downfall hurt everyone who has any money in the stock market but you are okay? Aren’t you?

If you aren’t, there are things that you can do to make your situation better.

The first thing is to leave your 401k alone. I know that a lot of people are suggesting taking the money out. If you do that then you will be facing a hefty tax fine for early withdrawal. You may think that the market will never recover but it will eventually. You could also move it into a low risk fund that will gain very little but won’t lose that much.

Putting cash in the bank has been seen as a losing prospect in the past few decades. But now it doesn’t seem to be that bad of an idea. It is always good to have some cash that is easy to get to in a rough economy.

Start now to become a thriftier consumer. When you do retire you wouldn’t have as much money coming in so you will have to make up the difference somewhere. Start now so it wouldn’t be such a shock later. And definitely cut back using the credit card.

Repairing your credit

2009-05-21T15:17:00.002-04:00

If you feel that your credit is wrongly being damaged, there are things that you can do to correct this.

The first thing not to do is go to one of those companies that you see that advertises quick fixes to your credit problems. They can’t correct your credit report because it is illegal to remove legitimate information from your credit report.

However if you are disputing some of the claims on your report you can challenge them.

How do I get a credit report? All three consumer reporting companies are required to give a free copy of your credit report every 12 months if they are asked to. The online form is found at annualcreditreport.com or send a request at:

Annual Credit Report Request
ServiceP.O. Box 105281
Atlanta, GA 30348-5281

Send all the information that you think is applicable to your case. The consumer reporting companies have 30 days to investigate. If the dispute isn’t settled in your favor you can ask the consumer reporting company to make note of the dispute on your record.

The consumer reporting companies can keep negative information on your record for 7 years and for bankruptcy for 10 years.

If you have a problem the reporting companies you can contact your state’s consumer affair’s office or the state Attorney General.

The consumer reporting companies are:

Equifax www.equifax.com
TransUnion www.transunion.com
Experian www.Experian.com

Consumer Product Safety

2009-05-18T22:15:00.000-04:00

If you always wondered where on the web you can find information about recalls, product safety and other things related to consumer protection then look no further than the Consumer Product Safety page.

This page has information about the latest recalls (some of the latest have been Computer laptop batteries, candles and folding bicycles). Each page will give the name of the manufacturer, why it was recalled and what you can do.

From the homepage you can also report unsafe products that you may have come across and also if those products caused an accident.

There is also a link to publications about safety issues such as bicycle safety, child safety and other articles relating to safety.

A video clip area shows various clips on safety and accident prevention of products and safety in general.

There is quite a bit of information on this site and the site is also available in Spanish.

The dangers of Continuity plans

2009-05-15T17:39:00.000-04:00

A Continuity plan is where an individual joins a club that sends them merchandize or services. The ads for these clubs lure the consumer with free offers for products and services for an introductory period of time. The problem arises if the consumer doesn’t cancel the plan within the free trail period the customer has to pay the club and they become a member automatically.

Usually the club will list the terms and conditions in small print in some inconspicuous place in their ads. They will inform you of such things as minimum payments on products, how long you have to keep a product before returning it, how and when you can cancel you membership. That’s why it is very important that you read the fine print carefully before accepting any ‘free’ offers.

Of course if you have any complaints you can contact the Better Business Bureau or you can contact the Federal Trade commission.

Take precaution when making an online purchase

2009-05-14T12:43:00.000-04:00

Making online purchases has become an important part of commerce. Whether using the internet to buy books online or to buy online games or even to use an online pharmacy, you probably use a credit card. Of course there are alternatives such as paypal.com but still most transactions are done with a credit card.

There are things that you should do to secure your online purchases

Check out the website that you are making a purchase from. Is it a reputable well known company, or is it a small company that no one has ever heard from. Most websites will have some information about privacy or security on their site. If they don’t this should raise a red flag. That’s not to say every small company isn’t safe and every large company is, but definitely look for their security and privacy information.

Keep all your online purchase records and match them up with your credit card bill. Do this faithfully to ensure you aren’t over billed or charged with something you didn’t purchase.

Check the shipping policy of the company. As I stated in previous post, you have certain rights when it comes to late shipments.

Take care when you purchase anything online so you wouldn’t have any unexpected issues arise.

Have you been a victim of identity theft?

2009-05-12T22:08:00.000-04:00

It seems that nothing is safe or sacred anymore. Now days you have to be so careful about guarding your personal information such as your social security number. Someone could go through your garbage or your mail, get the number and open various types of accounts from credit cards to telephones. That has happened to my wife and it is very unnerving to think that someone would do such a thing.

Luckily there are things that you can do if it happens to you.

Contact the consumer reporting companies immediately. Put a fraud alert on each of your credit reports. There are 3 consumer reporting companies and you need to contact each one of them.

Ask for a free credit report from one the companies and look it over carefully.

If you know of a specific account that someone has altered close it as soon as possible. Contact the fraud department of each company and explain to them what happened. They will want you to send them as much information as you have. Send them copies of the records that pertain to that company.

Contact the Federal Trade Commission and file a complaint. They have a identify theft hotline.

Contact the local police about what happened. They can provide you with an Identity Theft Report which you will need to send to the 3 consumer reporting companies.

Not happy with the merchandise you ordered?

2009-05-09T21:44:00.000-04:00

Let’s say that you have purchased something over the telephone or online and it didn’t quite turn out like you wanted it to. What do you do now?

If the problem you have is that the merchandise was never received by you then you do have recourse. Unless the company specified a certain date when you will receive your merchandise your product should come to you within 30 days. If not the company needs to give you an ‘option notice’ which gives you the choice whether to accept the delay or get a full refund.

What if you received unordered merchandise? Believe it or not the government considers this a free gift to you. You can contact the company to explain the situation but you aren’t required by law to do so. You are not obliged to pay the company anything even if they send billing notices.

If there is a billing error such as an overcharge on a statement you have 60 days to write to the company explaining the error. The creditor must respond to the letter within 30 days.

If you are still having problems with businesses, there are places to go for help:

The better business bureau
Local TV stations or newspapers that have action reporters
State consumer agencies
Postal inspectors

Buying a Used Car

2009-05-07T14:49:00.000-04:00

There are many things to consider when buying a used car.

There are differences between buying a used car from an individual and buying one from a dealership. Certain guidelines apply when purchasing a car from a dealership whereas from an individual there are little or no rules.

The used car rule insures that the car dealership have a buyers guide in every used car. The buyers guide states:

Is there a warranty or is the sale as is?

If there is a warranty how much will the auto dealer pay.

Tells the consumer what are the typical problems to look for

Tells the consumer to have the car checked out by a reliable mechanic

Use a checklist of what to look for on the car. Here is a checklist from the Better Business Bureau

How to get help with mortgage problems

2009-05-02T21:44:00.000-04:00

For the past year and probably for the immediate future, mortgages will be a hot topic. So many people have lost their homes and many more are about to. If you are in this situation you are probably wondering what you can do to save your home.

The first thing you should do is talk to your home lender about what options you have as a homeowner who is behind on their payments.

If your problem is temporary and you just need a little time then consider Reinstatement. Agree with the loaner to pay off all past due amounts by a certain date that both of you agreed upon.
Change the terms of the loan such as a lower interest rate. This will make your payments more manageable.
Ask your loaner if you can suspend payments till a later date at which time you will pay a lump sum and begin your payments again.
Of course you could sell your house, right now that might not be a viable option but it is one to consider.
Nobody wants to go into bankruptcy but if all else has failed you may have no choice. There are severe consequences, but it will be a fresh start.

Just keep in mind that the bank wants you to keep your house. They don’t want to be in the real estate business.

Avoiding credit card fraud

2009-05-01T15:02:00.000-04:00

There are things you can do to avoid credit card fraud and there are things that you shouldn’t do. Most of it is common sense and a few things that you may not have considered. Credit card fraud affects millions of card holders each year.

Do:

Make ure to sign the card when you get it. Just doing this will help avoid huge potential problems if your card is stolen.
Do you know your credit card number? When it expires? Keep a hard copy of this information in a safe place.
You didn’t buy tickets to Las Vegas? Well who did? Always check your statement carefully.
Keep those receipts. They might come in handy.

Don’t:
Lend your card to someone. You wouldn’t lend your card to anyone, would you? I didn’t think so.
Give your number to shady business. I know that everybody has given their credit card number over the phone. Please make sure that you are giving it to a reputable business.
Leave your receipts where someone can find them. Don't make it that easy to get ripped off.

Take Advantage of Coupons

2009-04-30T12:44:00.000-04:00

There seems to be coupons everywhere, online, in the Sunday paper and there is always a bunch of them in the mailbox. When they come in the mail you may take a quick look at them and then toss them away. Why because you don’t see anything you like. With the Sunday paper it’s the same thing, you don’t see anything you like. And most people don’t even consider looking for them online.
Well, you need to take a better look at them.
Coupons can be a great source of saving money no matter where you find them. And if you are on a budget they can be a wonderful help. Sure you may not see anything that you can use today, but save them anyway. Of course you can sort through them because there are some that you may never use. If you don’t own a dog, dog food coupons are something that you’ll never need.
Keep them sorted by category such as cleaning products, food and anything else you can think of. It will make it easier at the store (especially the grocery store) to look through.

The web also has abundance of coupons. I did a search and here are a few (there are many more) that came up.

http://www.shopathome.com
http://www.couponcabin.com
http://www.coolsavings.com

I am not an affiliate of any of these.

Now start saving those coupons.

Starting a Budget: Part IV

2009-04-29T12:29:00.000-04:00

In part one we discussed the first step in creating a budget. In part two the analyzed the data and in part three we set up the budget form on a spreadsheet. On this post, the last in the series, we will talk about how to make the budget work for you by saving money.

After a month it should be rather clear where all your money goes if you have kept up with your budget form. Now is the time to set a number lower that what you have spent the first month of keeping track of your money.

You may think that some expenses are fixed and you can’t really change them like your mortgage or your car payment. But there are ways to change them, it takes time but it will save you money.

With a mortgage you can refinance if the mortgage rates are less than what you are paying. Or you can take the extra money that you will be saving from keeping a budget and pay down your principal.

Your car payment like your mortgage can be paid off quicker by paying the principal. In the future, you might want to reconsider buying any car that takes up a large sum of your monthly income.

As we discussed in part two various monthly bills can be reduced by applying common sense such as eating out less and conserving energy by keeping the air condition and the heat at a constant setting. Clipping coupons can be advantageous.

By having a budget you will build a resistance to wastefulness and spending excesses. And the reward will be saving money, money that you will need for unexpected expenses and retirement.

Starting a Budget: Part III

2009-04-26T17:53:00.000-04:00

In Part I, we discussed why it was so important to have a budget in order to save money and how that would make money. In Part II, you analyzed the data and begin to think how you can save money by cutting back costs. This post will be about actually setting up the budget, whether in a book or a spreadsheet.

Since you are reading this online I am going to assume that you know what a spreadsheet (Excel is one) is. You don’t have to make the spreadsheet fancy or anything. You could if you want but a one without the bells and whistles will do just fine.

Start in the second row and first column and type in the name of your major expense for the month, it is probably your rent or house payment. Go down the first column and put the name of each expense going from biggest cost to least cost.

This is where your records from part II will come in handy. If you kept good records it will be easy to copy them over to the spreadsheet. When you think that have everything typed in the first column, type Misc. as the last entry. There are always expenses that come up that you don’t expect. Whenever there is an unexpected expense type it in under Misc.

Now across the top row type in the days of month this will be your guide as to when to type in the expense. If your mortgage payment is due the 5 day of the month and you pay it on the 5th put in the expense that matches the 5th day column and the mortgage row expense.

Pretty simple, just follow that till the end of the month. And to total your expenses you will need to go to the toolbar of excel (or whatever spreadsheet you are using) and find the autosum icon. Select the whole row of numbers (except the name of the expense and drag it beyond the last day of the month. Click on autosum and the total will be given. When you finish all the rows, then drag all the numbers in the last column and you will find the grand total.

Now under the grand total type in how much income you had for the month. Do you have any money left over?

Part IV will discuss how to make the budget work for you.

Starting a Budget: Part II

2009-04-22T14:47:00.000-04:00

Part I was on why budgets are important. Part II is about analyzing the budget data that you collected.

Well you wrote down everything that you spent for 2 months and now it is time to look at the figures. Actually you probably already have looked at the numbers and it probably raised many questions. Like, do I really spend that much money on eating out? Do I spend that much on clothes each month? Is all this necessary?

The answers are yes, yes and yes. You do spend that much. That’s why you don’t save money each month.

Now get another sheet of paper (if you collected the data the old fashion way and wrote it down). Write down each category of expense as a heading, you might need another sheet of paper, or a spreadsheet would work a lot better. Under each heading write down the 2 month total, if you spent 200$ for the 2 months write it under gas.

Look at each heading and the number under it and think about how you could reduce that number. For eating out and buying clothes, that‘s pretty easy just cut back. Well maybe it won’t be that easy but it needs to be done.

Utility bills can always be reduced by conservation such as turning lights out and not wasting water. Keep the air conditioning at one temperature and the same with the heat. Good for you and good for the environment.

The grocery bill each month can be reduced by buying things on sale and by using coupons. The Sunday paper is worth the money for the coupons alone.

Part III will be on creating the budget and using it as a financial tool

Starting a Budget: Part I

2009-04-20T21:30:00.000-04:00

Most people can get by without budgets. They keep an eye on the checkbook, they know when they are going to get paid and they know when the bills are due. Just write out the checks to keep the bill collectors off the phone and everything will be all right. Right?

Wrong!

Being in control of your financial situations is more than just paying bills. Of course paying bills and paying them on time is important. But there is so much more you can do!

Do you know how much you spend on groceries every week? Yeah, you probably could give a ball park figure give or take a few dollars. How about on eating out? Probably not and I bet it is more than you think. What if you keep track of that expense and the grocery bill expense and see how you pay for food each month. You could probably do better and when I say do better I mean save some money.

Saving money is the best reason to have a budget, especially in these days and times. Saving money also equals making money. Part of any good budget is setting aside a certain amount of money each month for savings. But before you do anything you have to write a diary of all your expenses for at least a couple of months. This will give you a good indication of where the money goes. You might be surprised.

Part II will deal with how to decipher the numbers you have after that first few months.