FNTN

Archive for the ‘Money problems’ Category

Introduction.

The great thing about finding financial advisors on the internet is that it really is just so simple. However, how do you know which is the best one to pick out of all the online financial advisors you have to choose from? Needless to say you need to make a wise and careful choice on this one to either safeguard your hard earned savings and investments or to get the right advice about personal loans, mortgages or clearing debts.

Types of Financial Advisors.

An individual financial advisor advertising their services should at least be able to prove to you that they are qualified to work as at least one of the following: A Certified Financial Planner (CFP) will not only have passed the appropriate examinations but will also have at least three years experience as a personal financial planner. A Certified Financial Consultant (CFC) is very similar to a CFP, but he or she is more likely to be involved with selling insurances as a financial product. If you need advice concerning your taxes then a Certified Public Accountant (CPA) would be recommended; whereas for help with investments a Chartered Financial Analyst (CFA) will sort out your securities for you. Whilst you might find a website offering financial advisor services ‘free of charge’ the reality is that you will be paying them either some hidden form of commission or a higher flat rate/hourly fee.

Questions to ask.

So, don’t be afraid to ask them outright if they charge a flat rate or hourly fee or if they are paid according to commissions on their work for you. Some advisors might well expect payment according to ‘fee based compensation’; this is just a fancy term for charging flat rate/hourly fees and commission. You might also want to ask them who else they currently represent and look for references/testimonials from exiting clients, to check that they are bona fide. Another thing you can do to protect yourself from any likely financial charlatans is by asking to see their financial advisors ADV form. This is a form that all registered investment advisors must lodge with the SEC or their State authority. Finally, do ask them “if they accept financial fiduciary”; which simply means that they will always act solely in your best interests.

Tweet This Post 

Introduction.

You know some folk really have a gift for not being able to save money. I’m not talking about putting money into a savings account here; just saving money by thinking they’re not being wasteful. The problem is these things often end up being hair-brained schemes that end up costing them more money than they could ever save or even worse - afford.

1 - Wash day blues.

I know this one guy who had a problem with his wash-tub, all that was wrong was the seal on the door was leaking a little. Now fitting seal is fairly easy and it would only cost about $40. What! “$40 - no way” says he. Instead he’d read on the internet that you could fix leaking tub seals using a general purpose window frame caulk. Sounds fair enough eh? Caulk is easy to work with, its water-proof, when ’set’ it retains a bit of flexibility and it costs only $8 a tube, a great way to save $32. So, he finds the leak and seals it with caulk, that week-end he and his family goes off out for the day, putting a load in the wash-tub before leaving. On their return some hours later, you guessed it; the wood-floor is flooded. OK, they clear up the mess and the wife tells him to get it fixed by a plumber. So now its $40 for the seal and $40 to get it fitted, that’s $88 total now! But oh dear his woes were not over, after a few days of the heating being on all the wood panels lift and warp, net result is he has to fit a new floor costing an eye-watering $400 - the total cost to replace one $40 wash-tub seal ended up at $488!

2 - Driving on slicks.

Let’s face it running an auto is an expensive business and the number of ways people will try to save money by not spending it on their auto seems unending. After all why bother to pay auto insurance, you’re such a good driver you’ll never be in a wreck - will you! Hey - that’s against the law dumb ass - get yourself insured now! Anyway, I know this one woman, that’s a picture of her there, whose country cousin - wouldn’t you know it - told her she didn’t need to spend $500 on new tires, she could save $500 by driving on the old ones! Oh dear, he knew that racing cars have ’slick’ tires with no treads, and reasoned if no treads are good enough for racers - they sure must be good enough for driving round their roads too. Of course what he didn’t know was that ’slicks’, are made of special rubbers and stick like glue to the road - bald tires just skid along it. Net result - she hit a grease patch on the road and wrecked her $5000 auto!

3 - Drive-Fly vacation.

I know some people who live in Canada, we’ll forego all the usual jokes about Canadians as they truly are my friends. Anyway they live out at Thunder Bay and needed to get to Toronto for a flight to Europe. Its about 900 miles between the two places, a flight for the two of them would have been about $500 and taken around an hour and a half, with an eye to saving money they decided to drive. To mean to set off a day early and have a night in a motel for an extra $100, they set off in plenty of time a full 24 hours early, but it still took them nearly 20 hours; although it did only cost $125 in gas, so far so good. Problem was they were that tired when they got to the Pearson airport, they just fell asleep in the terminal and missed their call for the flight to Europe - costing them $2500 in lost air fares! So, for saving $375, they lost $2500!

4 - Who needs insurances?

Why we pay for insurance policies at all can be quite beyond some folk. The whole idea of an insurance policy is to protect you against something that might happen, so why spend all that money when it might not happen? The point is you only need to have to claim on an insurance policy to know it makes sense. Suppose you’re a keen home enthusiast, but decide not to take out the accidental damage waiver on your household insurance, after all if any thing needs fixing - you can do it yourself. Why pay an extra $100 or so on your insurance? So, said home enthusiast decides he’s going to repaint the lounge. He starts off stripping the paint off the doors with a blow-torch, gets carried away and burns the door that badly it needs replacing. Doh- there’s an extra $100 already to spend, because he can’t claim it back off the insurance. Better still, whilst painting the ceiling he falls off the ladder, upsets the paint pot and covers the floor carpet in white emulsion. Net result, one ruined carpet needing replacing at $480, even if he fits it himself! In this case, spending $100 could have saved nearly $500 more.

5 - Wear warm clothes in the winter.

Anyone living in one of the colder regions will fully appreciate having thermals to wear when it’s really icy and cold. Of course thermals aren’t the cheapest of clothing articles to buy so I wouldn’t be surprised this year to see guys wearing - mantyhose. Hideous as I might consider them to be, for anyone having to work outdoors in freezing temperatures they might just make sense to help keep your legs warm and they’ll be a darn sight cheaper than thermal leggings. Hey they’re only $7 a pair, compared to about $40 for proper thermals. The problem is of course that proper male thermals are meant to withstand some wear and tear and will last for months, whereas you could end up paying out for new mantyhose every other day or so - now that’s no way to save money guys is it? But, also think how expensive wearing mantyhose might it be for you in other ways. So, you’ve been working all day, you stop by a bar on the way home and get chatting to a pretty woman. Before you know it she’s asked you back and - well, what on earth do you think she’ll make of your mantyhose?

6 - Don’t have the heating on.

We’re all being told to turn down the thermostat on our heating systems and not have the heating on at all if it’s not really cold. Now I’m all for saving the planet and gowing green etc, and turning the heating down or off is a great way to save money - after all no heating equals no fuel bills. Even worse, what a waste of fuel, energy and your money it is to have the heating on - when you’re away on vacation. Hey - just turn it off, who’s in the house needing warming anyway? So, having turned off the heating you take off on a vacation. Problem is, when you return home there’s been a cold snap and the temperatures been below freezing for days. You walk in and the house and it’s cold as the grave, first thing you do is put the heating on full blast, all the water pipes warm too quickly and burst - flooding the whole house. Net result of trying to save money by being miserly with the heating - hundreds of dollars needing to be spent on new flooring!

7 - Eating in is the new eating out!

If you didn’t know there’s a recession on and we’re all being told that the in-word is “eating in is the new eating out”? Sounds good to me and a great way to save money; go to a decent restaurant and you’d be lucky to come away only $200 lighter - just to pay for the food and drinks and then paying another 15% on top of that for the tip, oh sorry, I mean service charge. They might as well pick-your-pocket on the way out and be done with it? Sure I can cook, so I set up eating in with my girlfriend. The food only cost $50, the girlfriend comes round, the tables ready with candles on it and I put the meal in the oven; it only needs 45 minutes. Then we start to enjoy a glass of wine, whilst the meal’s cooking we have some more wine and things get, well, amorous. Before you know it a couple of hours pass by before remembering the food - and what’s that strange burning smell form the kitchen? Opening the kitchen door to an inferno - net cost $20,000 for a new kitchen!

Tweet This Post 

Introduction.

One of the most frequently asked questions by many mortgage holders these days is whether or not they should re-finance their mortgage. Of course there is no one single answer to that question; and each case needs considering on its own merits. However, hopefully you’ll find the following information about refinancing mortgages helpful when considering whether to refinance or not.

Fixed and adjustable mortgages.

Mortgages come in a range of financial products but are essentially either at a fixed rate, where you pay one percentage interest rate throughout the life of the mortgage or an adjustable rate mortgage, where the interest rate will vary as the prime index one does. Fixed rate mortgages tend to be lower, across the life of the mortgage, but are usually only available to people with top credit scores who are unlikely to default on any payments. Conversely, if you have a poor credit score chances are you’ll have been offered an ARM, which although usually working out at an overall higher interest rate over the life of the mortgage, it will have a cap on how far it can rise at any one time and could, if the markets are right, fall below the interest rates paid on fixed mortgages. The question regarding re-financing really applies to switching ARMs, or if possible switching from an as ARM to a fixed mortgage, as with a fixed mortgage you can budget and plan ahead better for repaying it. There are a number of hybrid fixed-adjustable mortgages too, offering deals like a fixed rate for 5 years followed by a return to adjustable rates.

Is it worth it?

To decide whether or not to refinance your mortgage simply ask yourself - is it worth it or not? Determining the answer to that question isn’t just to do with whether or not your monthly mortgage repayment drops or not. You also have to find out if it will cost you anything to switch mortgage companies in application fees, loan origination fees etc. If it does then refinancing mortgages rarely pays off in the long run. However, a mortgage refinance package that would be good right now is an ARM one so you can get a lower interest rate now or better still a hybrid one - giving you a few years at the current low rates, to help you through what is generally a depressed time economically.

Tweet This Post 

Introduction.

If you’ve ever felt that you’re being ripped off over credit card payments - you’re probably correct! Many credit card users are unfairly being made to pay over the odds on their credit cards because the card companies insist that any repayments you make go to pay off low interest rate debts first, leaving the higher interest rate debts to carry on accruing more and more interest - meaning that you have to keep paying more and more to the credit card payments.

A typical credit card scam.

Everyone loves a deal and being offered 0% interest on credit card balance transfers is always a tempting one. These can be great deals - providing you don’t start to spend further money on the credit card, in which case it actually becomes somewhat of a credit card scam, perpetrated by the credit card companies! Consider this simple example; you transfer a $3000 balance to a new credit card at 0% interest, knowing you can repay that within say 6 or 12 months. But, then spend a further $2000 on it at an annual 20% interest. Every time you make a repayment you’ll only be reducing the original $3000 debt, meanwhile the new debt is rising $400 the first year, $480 the second and so on.

The government to the rescue.

 The procedure above and employed by the credit card companies is known as adverse order of payment or negative order of payment. The good news for anyone with a credit card debt problem like this - is that next year legislation will come into force in the US making credit card companies change from negative OP to positive OP; ensuring that high interest rate debts get paid off before lower ones. However, if you can’t wait until then there is another way around this credit card scam. If you do use a 0% interest rate balance transfer, do not use that credit card for other purchases; look for another low interest rate credit card for your all of your other purchases.

Tweet This Post 

Introduction.

This article is intended for both those people who are looking for someone to provide them with financial aid; as well as anyone fortunate enough to have spare funds and capable of providing financial aid to others. If you’re not already aware you don’t actually have to be a bank or licensed finance company to lend money from or apply to borrow money from.

Social lending.

Run an internet search for the term ’social lending’ and you’ll see listed several what are collectively known as social lending clubs through which you can lend or borrow money according to your means. The social lending club itself is registered with the financial authorities and completely above board; of course when selecting a social lending club do satisfy yourself that it is a 100% bona fide one. Unlike a conventional bank or finance house these websites are made up of individuals, and small groups of individuals, who are prepared to invest their money as loans to other people. These financial aid websites work the same way as any other social media website by connecting together people; those with money to lend and those seeking to borrow money.

Online loans.

Whether you’re the lender or the borrower providing or getting an online loan via social lending is simple. Everyone registers with the social lending club website and agrees to have a credit score check. The reasons for this are simple; the social lending club website needs to be sure that lenders have the funds and that borrowers are not habitual loan defaulters. After that the borrowers post how much they want to borrow and why, then the lenders make an offer according to how much they can lend and the rates available. Interets rates and repayment periods can vary according to how much is required and and the borowers credit history. Don’t worry too much if as a borrower you have a poor credit score, there’ll probably still be lenders willing to work with you on a social lending website.

International social lending.

In the news again this week is how the G20 nations are yet again dragging their feet on funding the billions of dollars promised to developing nations. If you have money to invest as loans there’s no reason at all why you can’t use at least some of it to finance overseas loans. The rates of interest and repayment periods are exactly the same as those for USA loans. However, on a dollar-for-dollar basis making an international loan to help get a business venture off the ground in Africa or Asia could be both immensely rewarding and yet be virtually a philanthropic gesture from you.

Tweet This Post 

Introduction.

Leaving aside all the controversy and politicking going on around the current federal health insurance proposals, the fact remains that buying any insurance is by and large only done begrudgingly - even when it is for something as essential as health insurance. With unemployment still rising in the USA, pension plans barely worth the paper they’re written on and the threat of mortgage foreclosure hanging over us - increasing numbers of Americans are letting their health insurances slip. For some people this will be a temporary step they’re forced into but others may well think that in the face of a future large medical bill - bankruptcy might well be a viable option.

Don’t rush into bankruptcy.

Bankruptcy will clear all your debts in one fell swoop; however, it is not an option that you should consider lightly - certainly not one you should consider without consulting a financial expert. Once you are declared bankrupt your creditors, which in this case will probably mean a hospital or medical practice, can legally claim and then have any of your assets sold in order to clear your debts. Even worse they can investigate all of you finances for the previous 5 years and, should they find any funds or resources that you thought you had ‘hidden’ away, they can appropriate those too to help clear the debt. So, especially bearing in mind that bankrupts invariably lose their homes, if they own them or are mortgage payers, bankruptcy should only be considered as a very last resort when you have literally nothing else to lose.

Individual Voluntary Arrangements.

Simply referred to as IVAs, Individual Voluntary Arrangements work in a similar way to debt consolidation loans. However, unlike in a debt consolidation loan when all your debts are re-structured into one loan by a finance company an IVA is arranged by a specialist insolvency agency who fix it for you to pay your creditors a percentage of the debt(s) you owe to them separately. IVAs usually stand for five years at the end of which, providing you have paid off the agreed amounts in full, any remaining debt is in effect cancelled.

Tweet This Post 

Introduction.

If you’re worried about the state of your finances perhaps it’s time that you thought about giving yourself a money makeover. Many people think that having a money makeover is just about cutting back on what you spend so that it doesn’t exceed your income. Whilst that is, of course, very important a money makeover should actually change your whole philosophy toward how and when you spend your money.

Take some time with your money makeover.

 Having a money makeover isn’t something you can do in half an hour. You need to be prepared to spend a day or two identifying every item of your weekly or monthly expenditure and then find alternatives to your current spending patterns. Food bills are a good place to start, if you’re in the habit of eating out several times during the week or just ordering meals to be delivered to your home - reduce this expenditure now, simply by buying your own ingredients and cooking more at home. Then of course you need to find out which stores and markets offer you the best value for money in your area. You then need to apply that approach to everything, yes everything, else that you spend money on. For example, can you get a better deal on your electric supply, what about your landline, cell phone and broadband contracts? Anything you spend money on, even getting to work, can you do it more cheaply?

Debts in money makeovers.

The one thing with the potential to derail a money makeover is any debts you might have on personal loans and credit cards. With credit card debt you should look to transfer to card with a lower interest rate than your current one or better still one offering zero interest. By saving money through your money makeover you will hopefully be able to repay outstanding loans more quickly. However, if you feel that the debt you’re in is a serious barrier to your money makeover, discuss with the finance company how a debt consolidation loan might benefit you in clearing your debts.

Tweet This Post 

Introduction.

If you’re serious about wanting to clear your debts then as the summer vacations draw to a close - now is the time to make that commitment and start the planning to clear your debts. The first thing you have to realize and/or accept is that you’re in debt because you’ve spent more money than you earn.

Why are you in debt?

Debt can come about through several reasons some of which might have been outside of your control, such as suddenly needing a new roof for your home after storm damage. Or, you might just be one of those people who doesn’t know when to stop spending money on things you want. If your only debt falls into the first category, then you’ll probably already have the discipline to avoid getting further into debt. However, if your debt has arisen simply because you’re a profligate spender, the very first thing you need to do is only buy the things you need, not what you merely want!

How to start clearing your debts.

The single factor that contributes most to the difficulty of clearing debts is the interest that you have to pay on the loan(s). Without getting into a whole pile of figures - you need to clear the debts with the highest rates of interest first. Without doing that, every time you miss a payment the interest on the loan will just keep on rising. This will be even further complicated for you if you have several high interest loans to repay. Having multiple loans to repay means you’re constantly juggling one loan repayment against another, trying to keep up with them all. The answer here is to take out a debt consolidation loan. A debt consolidation loan will bring all of the small high interest loans together into one mega-loan. You’ll still have to pay interest on it, but at least you’re only making one monthly repayment to it. You’ve then got to be really strict with yourself and not suddenly go out and buy unnecessary gifts for yourself or others. Clear your debts first, save some money yourself and then start living within your means!

Tweet This Post 

Introduction.

Not surprisingly with so many people still in serious debt following the credit crunch and foreclosures, arising mainly from the sub-prime markets, there continues to be a lot of news items on the internet offering advice about clearing debt. One I came across this week was advocating following “methods rooted in discipline, a common-sense approach and the teachings of the Bible”. I quite agree that discipline is required to clear any debt - however, the other two points made are a bit more difficult to swallow.

Can the Bible help you to clear your debt?

Now, let’s get this straight from the start; I’m not against any religion offering ideas to help people clear debts and I’m certainly not saying that the Bible won’t contain comments about debt etc. But, although I’m no Biblical scholar, I’m not too sure that there is actually anything in the Bible directly related to the issue of debt - and certainly not debt in the modern age. So looking for direct advice in the Bible about sorting out your finances might well leave you somewhat short on ideas what to do. However, in fairness and if you have the time, the Bible just might stir thoughts in you as to which might be more important - material possessions or spiritual strength.

Common-sense approaches to clearing debt.

The problem with common-sense approaches to debt is that they might well make perfect sense to someone who’s not in debt, or even better someone who is a financial advisor. However, to the person in debt they’re probably not common sense - which is why they’re in debt in the first place! Here’s a simple one, also one that relates to the point about advice from the Bible. “Know the difference between needs and wants“. A perfect common sense approach to buying anything when you’re already in debt is - do I need it? If you need it then buy it. If you don’t need it, but merely want it - don’t buy it. The important thing then is to put the money you’ve saved toward paying off your debt.

Discipline and debt.

 In the 19^th century the English author Charles Dickens wrote a novel called “David Copperfield” - nothing to do with magic! A character in that novel was somewhat obsessed with debt and money and is, adjusted for US dollars, quoted here: “Annual income twenty dollars, annual expenditure nineteen dollars ninety five cents, result happiness. Annual income twenty dollars, annual expenditure twenty dollars and five cents, result misery.” I’m sure you follow the idea, discipline in debt is that simple - don’t spend what you haven’t got, unless it is for an absolute essentiality.

Tweet This Post