General Finances

Tuesday, 21 Jan 2014

How To Save On Home Energy Costs

It’s amazing how big a chunk of your budget energy bills take each month. It seems that each time the gas and electricity bills arrive they just get bigger. Of course, you may feel that there is nothing that you can do about this – or that if you did, you would end up compromising your lifestyle. However, this just isn’t the case. There are lots of different things you can do in order to drive down your energy usage without affecting the way you live.

Image source

Let’s start with one of the big ticket items – appliances. If your appliances are old, they are using far more energy than they should do. Replacing them can cost a fair amount of money, but as investors like Stephen Dent know, you have to spend money to make money. If you do have some spare cash, then you will recover your investment in new appliances relatively quickly. If you are willing to upgrade your appliances rather than just replacing them, then you can save even more. For instance, if you put in an induction cooktop, you can make about a 12% energy saving.

However, even if you can’t afford to replace your appliances, there are lots of other ways to reduce the amount of energy you use. For example, go into the bathroom and take a look at the shower. If you have a traditional showerhead, then you are just pouring money down the drain each morning. Go down to your local hardware store and pick up a low-flow showerhead – this is relatively inexpensive and easy to install. If you do this, you will reduce the amount of hot water you use in the shower by more than 40%. You probably think that this will make your shower less enjoyable, but it won’t – modern low-flow shower heads are designed to give you a more invigorating shower than you get with a traditional showerhead.

Another key thing to look at is your heating system. Especially in the winter, heating is a significant part of your overall energy consumption. You might not want to turn the thermostat down – although dropping it just a couple of degrees can reduce your heating bills by 6% – but there are ways to make your heating system more efficient. Replacing your old boiler with a high-efficiency new boiler is one way of doing this, but it can be expensive. On the other hand, it is relatively simple to tape and insulate your ductwork in the basement. This can save you huge amounts of energy – in fact, if your ducts aren’t insulated, you can waste up to 60% of the energy you use for heating.

Image source

Finally, plug up all those gaps around your doors and windows. Drafts can really raise your heating bills in the winter – as well as your air-conditioning costs in the summer. If you add up all the gaps in an average house, they are the equivalent of having a 3’ x 3’ hole in the wall.


General Finances

Monday, 25 Nov 2013

Options for Dealing with Debt

Personal finance is a tricky business, and even the most clued up individuals can fall into traps along the way. Unfortunately, some finance companies don’t make life easy, and often speak in a language that’s difficult for those outside the financial world to understand. This lack of understanding, combined with a variety of other factors, can leave many people in debt that they can’t see a way out of.

Be brutally honest

The only way out of debt is to be brutally honest about how bad the situation is. This honesty doesn’t have to be to anyone other than yourself, as one of the main problems people face when trying to get back in the black is denial, but it’s important that you are aware of the reality of your situation. Make a list of all the amounts you owe, and find out from your creditors what the repayments are, what the interest rates are and when they need to be paid. If you think you might have forgotten something you can find all your credit details as well as your credit score from an online credit check company like Experian Credit Expert. From this list you can create a repayment schedule and negotiate with creditors for lower payments if needs be.

Don’t borrow more

Debt is a slippery slope, as it is all too tempting to borrow elsewhere to fund repayments or general life costs when your debt has gotten out of hand. This is an incredibly short-term solution and causes big problems almost immediately after the initial relief. If you can’t pay back your current creditors, then taking on any more is reckless and will only exacerbate the issue. The only exception is if you are transferring some of your existing debt to a lower interest scheme so you can tone down repayments. This might be a consolidation loan, where all your debts are then taken care of in one place, or a balance transfer on a high rate card to a lower rate. Take independent financial advice to explore your options but don’t be tempted by offers to take on more credit when you transfer, this will just take you further down the debt hole.

Don’t save

There are very few points in life when saving isn’t a good idea. After all, from childhood through to retirement, you are always taught to try and keep something by for a rainy day, or for the future. The exception to this is when you are in debt. If you are repaying credit, and, more often than not, the interest on this too, you are not in a position to put money aside. The interest rates on savings are not great at the moment, whilst APR’s on loans are still high. The amount you gain by having savings, would therefore usually be better spent paying off part or all of your debts, leaving you free to save with a clean slate once you are debt free.

Debt can be very scary, and it causes all sorts of health and stress issues if left un-tackled. The first step is to realise that you cannot manage your financial situation, and to start looking at how this might be fixed. Ask for help from professionals if the situation seems insurmountable, and don’t hide from it as it will only get worse. As bad as debt feels, the feeling of getting rid of it and being in the black once again is the same feeling in reverse – and certainly something worth striving for!


General Finances

Monday, 14 Oct 2013

How to Have a Smoother Money Conversation With Your Spouse

One of the most neglected (and potentially heated) conversations for a married couple is one concerning money or financial planning. Usually, different visions for what the future will look like emerge and create tension as both spouses try to find common ground. Though a contentious subject, personal finance is a crucial one nonetheless, and a marriage would be well served by spouses having money conversations sooner rather than later in their journey together. Below are a few tips that should help that talk happen more smoothly.

Uncertainty

One reason the money conversation is a difficult one is because of the ‘unknowns’ for which complete planning is impossible. Spouses should keep in mind that asking ‘what-if’ questions about their future could breed anxiety as either husband or wife becomes fearful of the potential adversity lying ahead. This anxiety should be dealt with gently as you and your spouse seek to bolster confidence in one another by reminding yourselves that you will face unpredictable circumstances together.

Laundry List

Once you have set the tone of the conversation, grab a pen and paper or open a new Excel spreadsheet and create an exhaustive list of everything you own that is of any value. Estimate each item’s monetary worth, including any checking, savings, CD, or IRA accounts, and then identify whose name each asset is associated with in terms of ownership (e.g. cars, bank accounts, life insurance). There may be specific reasons for maintaining separate ownership on certain assets, but it would be a tremendous help to know who contractually owns what. In the event of an emergency, either spouse should have, and know how to, access each asset in order to pay for things. By getting your asset plan on the table, you can remove some of the anxiety that comes with future uncertainties.

Necessary vs. Unnecessary Expenses

Probably the most contentious part of the money conversation for spouses, expenses have a way of diverting an otherwise healthy dialogue into a finger-pointing blame game. If you haven’t already found yourself in disagreement with your spouse over whether an expense should be considered necessary or unnecessary, rest assured that the day is nigh. One of the most helpful things you can do to avoid browbeating your spouse over the pack of gum he or she bought at the gas station is to decide upon and articulate a clearly stated financial goal. Sacrificing expenses becomes easier when you are sharing a common purpose, and can even build unity as you are encouraged to mimic your spouse each time he or she forgoes something. Cost-cutting ideas are born out of this common purpose, as well.

Tempering Your Tangents

While it is important to have the money conversation sooner than later, it is more important to pace the rate at which you have it, if you can help it. Financial discussions frequently produce tangents with no immediate (or satisfactory) ending points, which adds more tension to what can already be a frustrating activity. Instead of an all-at-once financial planning party, think about having shorter and more focused conversations and be willing to leave them open ended. The more your spouse sees that he or she can converse with you without developing a migraine (or a sense of foreboding), the better he or she will communicate with you on topics across the board.

The considerations above should help smooth the foundation for an encouraging money conversation with your spouse, and perhaps get the two of you excited about making plans together. Finances will without a doubt always be a hot-button issue in your marriage, but if and when the funds get tight, your confidence in one another, prior planning, and temperance will have a positive impact on your family in the long run, as well as your overall financial picture.

Patrick Russo writes for DepositAccounts.com, a website that strives to make it as easy as possible to find the best bank account by tracking current interest rates and other details for thousands of banks and credit unions.  It also displays thousands of bank reviews submitted by other customers and provides financial health statistics for the more than 14,000 banks and credit unions it covers.


General Finances

Saturday, 12 Oct 2013

Improve The Cash Flow Of Your Small Business

If you run a small business, then you know just how important cash flow is. It doesn’t matter how well your sales are doing – if you have more cash going out than coming in, then you are in trouble. Solving cash flow issues isn’t always easy, but there are some things you can do that will often ease the situation.

 

 Image source: http://www.wi4us.com/wp-content/uploads/2011/10/1.jpg

If you’re one of those people who likes to pay their bills as soon as they come in, then you are damaging your cash flow. You may have the money in the bank when the bill arrives, but that’s where you want it to stay. You might find the idea of not paying until the last minute a bit uncomfortable, but doing this will ensure that you have cash on hand when an emergency strikes. To make this easy, set up bank payments for all your bills online, and schedule them for a couple of days before the final due date of each bill.

If your cash flow problems are constant and not just temporary, take a look around to see what loans are available. Even if you can’t get a line of credit from your bank, there are other options – such as unsecured small business loans from lenders such as Advance Funds Network. You will typically be able to borrow a percentage of your annual sales if you go down this route, and you are likely to get a loan within a few days. While you may pay a slightly higher rate of interest than you would with a bank loan, it is still a much less expensive option than maxing out your credit card.

You want to pay as late as you can – but you want your customers to pay quickly. To encourage this, offer them an incentive such as a discount for early payment. They will almost certainly pay early if you can afford to give them 10% to 20%, but if you can’t, then even a 5% discount can make a real difference. However, if you do offer these discounts, it is important to treat the sales as though they were at the discounted price. This way, if someone doesn’t pay early, then at least you will get more than you were expecting when the payment finally comes in.

 Image source: http://www.management-accountants-australia.com.au/wp-content/uploads/2011/08/accountant-at-work.jpg

Finally, customers aren’t going to pay you if you don’t ask them to pay. Many companies wait for 30 to 60 days after they receive an invoice before they pay it – no matter when you actually provided goods or services to them. There may be lots of things going on in your business, but you need to be disciplined and get your invoices out as quickly as possible. Also, track whether your clients are paying their invoices on time, and follow up with them when they aren’t. Don’t assume that if a customer is late in paying that they have a problem – and therefore they are not going to pay no matter what you do. Often, the reason that companies don’t pay is simply that they have forgotten.


General Finances

Friday, 11 Oct 2013

Want to Save on Life Insurance? Here’s 5 Easy Ways

Millions of Americans have purchased life insurance to help protect their families’ financial futures. A good life insurance policy can help a spouse, children or other loved ones from being left behind buried in a mountain of debt and bills after the family breadwinner dies. Sure, most people would do anything for their family and other loved ones, but there’s no reason to overpay for life insurance coverage.

Here are five life insurance buying tips that can really pay off. You might be able to save money and get more life insurance coverage for less.

1: Look for Milestone Discounts

Your insurance company might offer price breaks called milestone discounts for policies that carry higher coverage amounts. This means, for example, that you might get a price break for buying $500,000,000 worth of coverage instead of $400,000.

2: Consider Payment Options

State Farm and other life insurance companies allow policy holders to pay their premiums either monthly, semi-annually or annually. Paying premiums annually, or once per year, can save policy holders money by avoiding having to pay financing or other fees which are commonly part of paying monthly. Check with your insurance company and see if you can save by paying your premiums annually or twice a year.

3: Don’t Wait: Buy While You’re Young

Most young people who are generally healthy don’t think about buying life insurance, but that’s the best (and cheapest) time to buy. Recent studies have found that Gen Xers are behind the times on buying life insurance, but life insurance premiums are usually lower when you are young than if you wait until later in life. Or, in some cases, waiting too long could prevent you from getting life insurance at any price.

4: Buy Only What You Need

Not everyone needs millions of dollars in life insurance coverage. The amount of coverage you need is based on your current and future debts, your income and other factors. Don’t make the mistake of buying too much (or too little) life insurance. Taking a good close look at your current and future financial needs and buying enough coverage to provide for those needs is a good way to avoid paying too much for life insurance.

5: Check Out Coverage With Renewal Guarantees

Renewal guarantees are part of some life insurance policies. They mean the policy holder is guaranteed at least the opportunity to renew their term life insurance policy when the current term expires without having to retake the medical exam. The premium on the renewed policy will be based on your current age, but you won’t have to start the shopping process all over again. Also, being able to skip the medical exam can help you save some money if your health has declined since you first bought coverage.

By Samantha B. Rivers

Samantha is a freelance writer based in Chicago who writes about life insurance and other finance topics online. Follow her on Twitter @SassySammyBee.


General Finances

Tuesday, 8 Oct 2013

Alternatives To Cash When You Are Traveling Overseas

One of the great opportunities that you have when you are a student is to visit other countries and experience other cultures. You may be planning on heading off to volunteer overseas this summer, or you may be thinking of backpacking across Europe or Asia. However, if you do, you need to consider carefully how you are going to take the money with you that you need. While cash may seem the simplest option, carrying large amounts of cash in many foreign countries is dangerous, and so you need to look for other options.

 

 Image source:http://www.nols.edu/images/photo/courses/rockymountain/fredrik_norrsell02_rm_md.jpg

The first and most obvious way of taking money with you is to carry one or more credit cards. This is incredibly convenient, but you can also get hit with high purchase fees and poor exchange rates. Also, many establishments in other countries do not take credit cards, and certainly not for small amounts. You may be able to pay for breakfast at McDonald’s in the US with your MasterCard or Visa, but don’t count on being able to do this everywhere you go. However, if you do decide to rely primarily on credit cards, make sure that you take at least two and keep them in different places, so that you won’t be stuck if you lose one or it is stolen.

Another popular option in the past was to use traveler’s checks. However, while you can still get these, getting a prepaid travel card is now more common. This can be loaded with the currency of the country to which you are traveling, and you can use it like a credit card to pay for purchases or get money out of a bank machine. If you do this, it is a good idea to arrange for the card online, rather than waiting until you get to the airport to purchase one. This is because the exchange rates are much worse at airports than you would get anywhere else.

You also need to think about what you would do if an emergency struck, and you needed cash in a hurry. One of the easiest ways to do this is to arrange with your family or friends to wire you money using a service such as Trans-Fast Remittance LLC. Often, these services allow you to get your money within an hour of it being wired, and provide a number of different ways that you can collect your money.

 

Image source: http://www.dw.de/image/0,,15958713_303,00.jpg

Finally, another good way of getting emergency cash if you need it is to set up what is called conditional access to your bank account. This allows your family or friends to make a deposit to your account, although they won’t be able to withdraw from it. Once they do this, you can take out the money from your account using a local bank machine in the country where you are. However, you need to arrange this conditional access before you leave, and you also need to tell your bank that you may be making withdrawals from outside the country – otherwise, they may freeze your account because they suspect fraud.


Uncategorized

Thursday, 3 Oct 2013

Which Types Of Investment Are Most Secure?

If you want to maintain a balanced financial portfolio, you need to have an appropriate balance of investments that have significant growth potential, coupled with less lucrative investments that have little or no risk associated with them. The mix between these two is going to vary over your life – you will typically be less risk-averse as you head toward retirement, but more willing to take chances when you have a long career still ahead of you.

Image source: http://ak0.picdn.net/shutterstock/videos/3705812/preview/stock-footage-jib-up-to-female-customer-conducting-business-with-a-bank-teller-over-the-shoulder-shot-from.jpg

While a part of your portfolio needs to be low risk, this does not mean that it has to have absolutely no return. There are many investment vehicles which are very secure and still offer better returns than a savings account. Let’s look at some of the most common ones.

There is nothing safer than a traditional certificate of deposit (CD). Here, you purchase a CD from a bank or credit union. You then hold onto the CD until it matures, which can range from as little as 6 months up to several years depending on which term you select. During this time, you will receive fixed payments at regular intervals which are agreed in advance of the purchase. In effect, this is like making a deposit with the financial institution and committing not to withdraw the funds for a fixed period of time. In return for making this commitment, you get a higher rate than you would from a savings account. The investment is also protected by the FDIC up to a value of $250,000 per institution, so it is as safe as investing in the US government. However, you should know that the penalties for withdrawing early can be significant, so it’s best to make sure you’re not going to need the money before the CD matures. You can find more traditional CD info on Go Banking Rates.

You can also invest directly in the US government by buying federal bonds. Probably the lowest risk of these is called a Treasury Inflation-Protected Security (TIPS). There are actually two varieties of these. The first option is to buy a bond that provides a fixed interest rate over the lifetime of the bond. The other option is to buy one that rises in line with inflation – the government guarantees to increase the value of the bond by the inflation amount each year. This can make the investment quite attractive, since even if the bond only comes with a 0.25% interest rate, the rate of inflation is added to that – so you are guaranteed to make a small profit even if inflation skyrockets.

Another option to consider is buying municipal bonds, which are issued by state or local governments when they need to raise money. The advantage of these is that they are exempt from federal tax, and most states and municipalities also exempt them – meaning that the effective return is higher than other equities with higher pretax rates of return. These aren’t insured by the federal government, but, despite lots of media coverage, it is actually very rare for a state or municipality to declare bankruptcy.


General Finances

Thursday, 19 Sep 2013

How I Bonds Can Secure Your Savings in Troubled Economic Times

Bonds might not be popular with every type of investor, mostly because the yield is normally quite small. Those who purchase bonds are not after a huge return on investment, but are more concerned about protecting their money and receiving a small return on their investment. Despite the fact that you are unlikely to receive a huge return, there are a number of reasons why you should consider purchasing some bonds to add to your portfolio.

Who Should Take Advantage of Bonds

Generally, bonds are a good option for anyone who is concerned about market volatility. The stock market is always moving and in some cases, you could lose 50 percent of your portfolio very quickly. If you are young enough, you can be fairly confident that the market will correct itself and you will eventually get your money back. If you are not comfortable with the peaks and valleys of the stock market, however, bonds are a good choice.

Even those who are heavily involved in the stock market should consider buying some bonds because they can keep investors afloat during a bear market. When the stock market goes through a down period, it causes some people to panic. These individuals start selling off stocks to avoid losing everything. At the same time, bond prices increase during this period.

Those who find their bonds increasing in value can easily sell them during a bear market and purchase stocks. Then, when the market corrects itself, they stand to make a great deal of money.

About Series I Saving Bonds

Perhaps the best bonds to purchase are called I Bonds, as they are issued by the United States Treasury. This means that these bonds are backed by the United States government, making them an incredibly safe method of investment. As long as the United States government is around, they will honor your bond.

Every United States citizen is able to purchase $10,000 worth of I Bonds per year, although you can purchase an additional $5,000 worth by using your tax return.

The reason why these bonds can keep your money safe during troubling economic times is that they are indexed to inflation. This means that the money that you invest is guaranteed to have the same purchasing power when you sell the bond.

You can choose between a fixed interest rate and a variable rate, depending on your preferences. The bond will pay interest for 30 years and it will never drop to a negative rate. Therefore, you never run the risk of losing any money by investing in bonds.

Providing Stability

It is always a good idea to have some safe investments in your portfolio, just in case a major economic downturn occurs. While you might see this as a wasted opportunity, especially if your other investments are making you more money, keeping some money in a more predictable location does have its benefits.

I Bonds are protected from inflation, are backed by the government and provide a better interest rate than any savings account, making it one of the top options for a low-risk, low-yield investment.

Aaron Walker is a financial writer who blogs about saving more and spending less to help people build up their savings, get rid of debt, and live more enjoyable (and profitable!) lives. Whether you are saving to afford college or attend 12PalmsRehab.com, he wants you to get there with change to spare.