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.


General Finances

Wednesday, 14 Aug 2013

Credit Card Debt: Financial independence is not a difficult goal to achieve

Money can be boon as well as curse but it depends on whether or not you exercise financial discipline. If you fail to manage your money, then it can be the source of more stress and worry. Therefore, inculcate a good spending habit, so that you can avoid financial stress. Well, the definition of financial discipline may vary from person to person.

If you’ve staggering debt, then you may ruin your financial situation. In this situation, you can be financially independent only after paying off your debt. If you’ve unplanned credit card debt, then it may keep you awake all night. Therefore, eliminating credit card debt is considered to be the stepping stone to achieve financial freedom. There are innumerable techniques to eliminate your financial woes.

Here are some of the constructive tips to eliminate your credit card debt to achieve financial freedom:

1) Budget- A pragmatic tool: The first step to achieve financial independence is a budget plan. Budgeting can help you avoid financial stress as it can be easier for you to pay off the debt. It is one of the effective tools to help you eliminate your credit card debt and assist you to come out of the financial stress. You can prepare a budget plan with the help of a software tool or spreadsheet. Make sure you provide separate categories for each of the expense and income to prepare your budget plan. Budget is an effective tool to track your monthly expenses. As a result, it can be easier to understand where you’re draining your money. When you’re on a budget plan, you can avoid splurging your hard earned money. You can be well aware of your financial state and you can avert overspending.

 2) Prepare a list of the owed amount: When you’re planning to pay off your debts, your primary task is to prepare a list of the owed amount. Start preparing a list of the owed amount in descending order of the interest rate. When you prepare the list, make sure you include the interest rate along with the principal balance. Start paying off the high interest debt on top of the list. In the meantime, make minimum payment on the remaining balance. Once you pay off the debt on top of the list, start paying the second high interest debt on the list. Make sure you continue the process unless you pay off the debt in full.

3) Avoid using your credit card: When you’re planning to achieve financial freedom, make sure you avoid the use of the cards. Your financial situation may complicate when you continuously use the card while you’ve staggering debt. According to the financial experts, the credit cards may tempt the consumers to spend more. Therefore, say “no” to credit cards when you’re knee deep in debt. Instead of cards you can use cash as it can help you stay with your means.

4) Use your savings: You can use your savings to pay off your current owed amount. If you don’t pay off your debts, then the accruing interest on the principal balance can make it unaffordable to pay off. Therefore, it is advisable to pay off your debts with your current savings. After you pay off the owed amount, then you can work on building your emergency fund.

5) Simple trick- Make more money: If you’re interested to build your savings and attend financial independence, then start making more money. You can start home based business without any initial investments. You can start your own home based bakery and sell the items in the local shops or among your friends and relatives. However, starting a bakery business is not a child’s play as you need to be deft in your cookery skills. Another option, you can start an online business like create a blog and get paid for promoting third party products and services in your website. You can work on your website during your spare time. Therefore, you can make extra money to pay off your debts. After that, you can use the saved amount to create emergency fund.

6) Investment- An important part of your financial life: Once you pay off your debts, start working on your investment portfolio. If you’re unable to invest on your own, then you can take assistance of a financial planner. Make sure you diversify your portfolio when you’re planning your investment. Try to incorporate high as well as low risk investments in your plan. Remember, diversifying your portfolio can help you avoid losing your hard earned money.

Therefore, you’re required to keep the above mentioned points in mind when you plan to achieve financial independence. Paying off your debt is considered to be the first step to achieve fiscal freedom and regaining control on your financial state.

About the author: Janice Burns is a writer associated with Debt Consolidation Care Community for the last three years and has written articles on finance, credit card, money saving tips, budgeting and so on. For more information you can follow us on twitter.


General Finances

Tuesday, 23 Jul 2013

Saving Money Made Easy

Saving money is important to make sure that when emergencies arise there is a way to deal with them. Many state that this is a task that is easier said than done, but there are a number of ways that costs can be cut without having to sacrifice on entertainment or eating. The savvy consumer will maintain their way of life without spending a fortune.

When seeking to save money a few simple steps can have a big effect on the pocket book. Some of these steps include:

  • refinancing mortgages
  • borrowing movies from a library
  • stopping magazine subscriptions
  • negotiate for lower interest on credit cards
  • bring lunch to work

One of the top ways that costs can be cut is through the refinancing of a mortgage. Mortgage rates have continued to go down in the past couple of years. Refinancing can be an option that will not only save on the overall mortgage amount, but also on those nasty riders that accompany a mortgage. These riders can include prime mortgage insurance. This is an insurance that is placed on the home by the mortgage company when the down payment for the home is less than 20%. If present payment amounts on the home are above 20% this insurance can be removed, saving a bunch of money.

Movie rentals are another aspect where money can be shaved from our overall costs every month. Renting movies from nightly kiosks can help to save money by renting the movie when one wants to see it, instead of holding on to it for days at a time. Many libraries also lend out movies for free which can also help to shave costs.

Along the same line are cable costs. Every now and then the subscriber should review their services. If there are channels that are not being regularly watched there is the opportunity to scope down services and lower the monthly bill. One may also be able to rent movies directly from their cable box saving money on gas to travel to the kiosk to rent.

Another way to save money that the local library can facilitate is stopping magazine subscriptions. Many times the local library will carry popular magazines that the individual can read or borrow for free. This will save on money for paying for the subscriptions, and before leaving the library one can borrow a movie for the night.

Eating out is another area where many consumers spend a lot more money than they even realize. If the average worker brought their lunch to work with them two to three times a week, they could save an average of about $20 a week. While this is not a lot of money, it does add up quickly. Bringing lunch to work can also add up to saved calories as well. Fast food restaurants are not the healthiest places in the world to eat.

Interest on credit cards are a huge drain on a monthly budget. If the individual has had their credit card for a while and has kept the balances low or paid off, many credit card companies will renegotiate to a lower interest rate for the card. It can never hurt to ask, so why not contact your credit card company and see what can be done?

As you can see there are many simple ways to cut your budget and save more money.

 This article is contributed by Madoline Hatter. Madoline is a freelance writer and blog junkie from ChangeOfAddressForm.com.


General Finances

Saturday, 15 Jun 2013

Survival Plan for Maintaining Financial Stability During Sequestration

National Foundation for Credit Counseling encourages consumers to take action

Sequestration is now in place, and along with it came a good amount of uncertainty, causing many Americans to wonder how they will be impacted. By some estimates, more than one million employees of federal agencies may receive furlough notices.

Some workers are not adequately prepared to deal with a loss of income, even a short-term one. For those living from paycheck to paycheck or without significant savings, any income interruption is likely to put them over the financial edge.

For example, consider the statistics below from the NFCC’s Financial Literacy Survey:

  • Thirty-three percent of respondents admit to not paying all bills on time;
  • Thirty-nine percent have zero non-retirement savings;
  • Thirty-nine percent carry debt over from month to month, and
  • Sixteen percent have utilized overdraft protection in the last 12 months.

Even if a person does not anticipate being impacted by sequestration, now is a good time for a comprehensive financial review. Whether due to an unplanned expense or a job loss, no one has ever regretted being financially prepared, and preparation starts with understanding where you stand today.

The NFCC advises consumers to take the following steps to put themselves in a better financial position, regardless of what the coming months may hold:

  • Assess Current Financial Situation – The NFCC’s free financial self-assessment tool, MyMoneyCheckUp™, is a good place to start. The tool provides consumers with a means of evaluating four key areas of personal finance: budgeting and credit management, saving and investing, planning for retirement, and home equity. After answering a series of topic specific questions, a personalized assessment of the individual’s overall financial health and associated behaviors is generated. With areas of concern identified, the analysis suggests changes that consumers are encouraged to implement in order to become more financially independent. The traditional green, yellow, and red traffic light colors signal whether the consumer should continue on their current money path, proceed with caution, or stop and make a change. Individuals can also complete an optional budget to further help them assess their financial health. The tool is available in English at www.MyMoneyCheckUp.org and in Spanish at https://www.miayudafinanciera.org.
  • Face the Financial Facts – After completing the financial discovery step, consumers may find the results surprising. Don’t ignore them. Financial problems rarely resolve themselves, particularly in emergency situations. Take action sooner rather than later, as delaying only makes the problem harder to resolve.
  • Take Control – Admittedly, some things are beyond a person’s financial control, but some aren’t. Control what you can by doing the following:
    • Review your credit report and score, both necessary to fully understand the current financial situation, and provide a framework for next steps.
    • Create a cash-flow calendar listing all sources of income. Next, plug in the dates all bills are due. This will ensure that bills are paid on time and protect the credit report and score from future damage.
    • Commit to paying down debt, and if necessary, suspend all charging, consistently moving toward solid financial ground.
    • Reach out to a legitimate credit counseling agency for help creating a survival plan.

If there is a quick resolution to the sequestration, nothing has been lost by implementing the above steps. If not, you’ll be better prepared to face whatever comes your way financially.


General Finances

Monday, 3 Jun 2013

Save money or pay off debt – 3 Factors to consider

If you’re one of those who has got outstanding debts and also have disposable income, then the obvious confusion you’d be facing is whether or not you should save money or pay off your debt. Now, this is indeed a tricky situation and needs to be given careful thought. With the economic crisis that’s prevalent all around, it’s definitely not a happy world all around at least as far as finances are concerned. This gives all the more reason for you to consider how exactly you’re going to balance saving money when paying off debt.

3 Crucial factors for you to consider

In the debate between whether or not you should save money or pay off debt, there are 3 crucial factors that you’ve got to take into consideration. After all, it’s only when you judge these factors and weigh the pros and cons would you be able to come to the right decision ultimately.

The concept of free money

Fact remains that the concept of free money makes saving all the more attractive. For instance, if you choose to save a certain amount in a retirement account, then it could ultimately go on to mean more money especially if the amount goes on to be saved in a 401(K) plan along with your employer making a worthwhile contribution. Moreover, there’s also the prospect of being eligible for the savers tax credit and that can go up by a considerable amount. This credit would also be available even when you choose to add the amount to an individual retirement account. All the more reason why it proves to be beneficial is the fact that it aids in reducing the cost that’s associated with funding of your retirement account. Hence, you see in your endeavor to pay off debt you can’t really ignore saving altogether.

The interest cost against the interest earned

This again happens to be a rather common decision swaying factor and it includes the cost of the debt versus the interest that you could be earning on the saved amount. Given this situation, your main objective would be to determine the net financial results of savings plus interest against the reduced interest on debt. The best idea would obviously revolve around the fact that you split your disposable income between saving and paying off debt. No need to reiterate that saving remains important at any given point of time. For it’s more than obvious that savings is essential. Without savings it’d almost be as though you’re hunting for financial salvation in the dark with no idea of which way you should go.

The necessity of rainy day fund even when paying off debt

In case it so happens that you don’t yet have a rainy day fund set aside, then well it’s high time that you worked on one. This is obvious since a rainy day fund is the only thing that can come to your aid, be it in case of an emergency or even for paying off huge debt amounts. Financial emergencies are known to take people by surprise and it’s for instances like this that you need to be prepared. For in your quest to pay off debt, if you haven’t put aside any savings, then it’s quite likely that you’re going to hit a roadblock when faced with an emergency which is going to pull you deeper in debt.

So, you see there actually can’t be any debate when it comes to saving for it’s all important and will remain so. The essential idea is to set aside proper savings that’d in turn help you pay off debt.

About the author: Janice Burns is a renouned writer associated with debtcc.com for the last three years and has written articles on several topics. She is an expert in solving money related problems of innumerable people. Some of his master pieces are based on topics such as finance, credit card, money saving tips, budgeting and so on.


General Finances

Monday, 6 May 2013

How to Increase Your Productivity When Working from Home

Working from home is great, right? You can leisurely make coffee, check the news, stay in your pajamas, and…Oh, look! Your favorite site has some updates … wait, what were we doing? Oh, right – working from home! It can be tricky to be productive when working from home, but with these tips, you are sure to be a productivity master.

  • Have a work schedule. If you don’t set aside a specific time to work every day, you will not work. Set your alarm to get in the morning and give yourself a fixed amount of time before you start working. If you tell yourself “oh, I’ll start on that later,” later is going to be tomorrow and you may not get it done. You can set your schedule in a way that works best for you. For example, you might want to do a few hours of work in the morning, maybe 8:30 to noon, then take a long afternoon break and then take another round of work from 3:00 to 7:00. Know your own rhythms, but create a solid schedule that you can hold yourself accountable to.
  • Have a dedicated work area. When working from home, you need to have a place that is designated for work. Your brain associates different places with different activities and states of mind. When you get in bed, your brain knows it’s time to sleep and your brain should also learn that when you go to your work station it is time to work. If your house or apartment doesn’t have a good work area, take up residence in a local café or library for part of the day. This has the added bonus of getting you away from household distractions like dishes or things that suddenly need to be organized when you have a lot of work to do.
  • Set goals and make to do lists. At the end of your workday, make a list of all the things you need to get done tomorrow and put it in a prominent place where you can see it (I have a whiteboard on my wall for this purpose). A list serves as a reminder of what needs to be done and can help you to not procrastinate. On your to-do list, you can also list daily and/or weekly goals for things you need to accomplish. With this system, you recognize that there are some things that are going to take more than one day. If you know you need to get a report done by Friday, make it Monday’s goal to research, Tuesday’s to organize your notes, etc.
  • Let people know you’re in work-mode. If you have family or children at home during the day, make sure they understand that you have things that have to get done. Explain to them that just like they wouldn’t drive to your work place and barge in to ask what happened to the laundry soap, they shouldn’t interrupt your at-home work. If you have friends who are available during the day, they too need to understand that you have work to do and you can’t go out for lunch/shopping/day trips to the beach whenever you feel like it.
  • Keep in touch with colleagues. Maintaining communication with your boss, coworkers, or clients is critical to the success of working at home. Establish a schedule for communication, like a morning email to the boss to make sure you’re on the right track or a weekly update for clients.

With these few guidelines, you can be sure that working from home can be en exercise in productivity. A dedicated list of things-to-do with clearly set goals can go a long way, especially when there are additional distractions that you may not experience while in an office.

Angie Picardo is a writer at Nerdwallet, a personal finance website that offers advice on topics ranging from working at home efficiently to navigating the Charlotte airport.  


General Finances

Monday, 1 Apr 2013

How to Buy Happiness

If you want to be happierspend money on experiences — say, dinner at the new Mario Batali joint or a trip to Vancouver — rather than on things. But memory-building activities can’t completely replace stuff. Objects can enable experiences, the way new outdoor furniture can inspire summer cookouts and camaraderie.

In the February/March issue of AARP The Magazine, AARP financial ambassador Jean Chatzky shares four smart ideas on how to “buy” happiness:

·         Know what you treasure most: The things in life we value usually fall into one of four categories. If you’re a personal-values person, you’re happiest spending on yourself. A wardrobe boost might do the trick. If you’re a social-values person, buying gifts for friends and family improves your spirits. If you’re driven by physical values, you enjoy getting things that engage the senses (like a new bike or a luxuriously renovated bathroom). Finally, if you’re driven by financial values, you relish money in its purest sense, from saving and investing it to getting good deals. Figure out your desires and spend accordingly.

·         Bigger isn’t better: Use your money for a variety of less expensive purchases, instead of one giant on. Sitting in the balcony of a great concert series eight times a year is better than one blowout evening where you sit in the front row.

·         Don’t go overboard: Nothing kills happiness like bouncing a check. Overspend and you’ll be trading short-term pleasure for long-term anxiety. So take care of your needs (your monthly bills and retirement-savings obligations) before you spend on anything frivolous.

·         Pay down your mortgage: If you’re still searching for joy, consider lightening what’s probably your biggest financial burden. Getting closer to kissing the bank good-bye offers tremendous psychological benefits.

http://www.aarp.org/money/budgeting-saving/info-01-2013/spending-money-on-happiness.html


General Finances

Thursday, 21 Mar 2013

Giving Your Kids the Money Skills That They Need

When it comes to raising children, teaching the money skills is one of the most valuable lessons that you can give them. Many children end up becoming financially illiterate when they become adults, and it can have a major impact on them overall. If you want your kids to understand the basics of money, here are some of the best ways that you can teach them what they need to know

1. Give Them an Allowance

If you want to help your kids understand how to handle money, you’re going to have to give them some money. Since they can’t really go out and get a job at the age of four or five, it’s up to you to help them out. You can make them do chores or help out in other ways around the house in order to earn the money that you give them. Many experts say that you should give them a dollar for each year old that they are each week. You could also cut that number in half or come up with another figure. By doing this, it allows them to accumulate more as they get older.

2. Teach Them to Budget

Once you have provided them with some money to work with, it is time to teach them how to budget. The first few times, let them blow the money on whatever they want. More often than not, they’ll simply take the money and spend it on candy or toys right away. Usually, kids will realize that they’re not going to be able to buy anything of value by doing this.

Teach them that they have to allocate their money to certain things in a budget fashion. This way, when they want to buy something big, they’ll have some money to do it. You may want to show them that there are ways to extend their budgets and save money; for example, you could show them how to get coupon codes for DogFunk.

Then once you have DogFunk coupons, you can show them how they save money when they buy something that they want. This helps them see that their budgets can be stretched a bit with careful planning.

3. Show Them Investing

In the grand scheme of things, there are only two ways that anyone can earn money. They can earn money by working or they can earn money by relying on their money to do it for them. If you want your kids to get ahead in life, it is important to show them that they can make money with their money. Many parents use a system in which they pay their kids interest when they save.

This teaches them that they can make money when they invest it. You may also want to teach them about investing in securities like stocks and bonds when they get a little bit older. You could even help them open a Roth IRA at some point. This way, they can invest and they still have the option of taking their deposits out in the future without any penalty.

4. Use Reality as a Teacher

Every parent has been in a situation where they really want to buy something for their kids when they can’t afford it themselves. While there’s nothing wrong with occasionally getting them a gift, reality can be one of the best teachers that you ever employ. Instead of just chipping in and automatically making up the difference, let your kid wait on that big thing he wants. It will show him that it takes time to accumulate money and it’s not just some limitless good.

These lessons have the potential to change your child’s life and get him off on the right foot.