FinanceIsPersonal.com

Sorry, You Didn’t Win the African National Lottery After All

2007-11-10T08:30:00.000-06:00

When it comes to the possibility of getting something for nothing, a lot of people tend to simply divorce reality. They like the possibility that they could be getting a substantial amount of free money so much that they don’t take the time to consider what the motives of the people who might potentially be giving them money are or even if they will ever actually see any of this money. One of the ways this most commonly shows up is through a variant of the classic Nigerian 419 scam and involves an alleged foreign lottery, and somehow you’re the winner. If you try to collect your ‘lottery winnings’, be prepared to go for a ride.

Here’s how it works. One day you check your email and find an unsolicited message from someone in a foreign country telling you that you (or your email address) have won in a foreign lottery that you’ve never entered. The prize money is usually quite substantial, often several million dollars. The tone of the email will be very up-beat, but often using poor grammar and spelling since the person who wrote it probably does not have English as their native tongue. They will then tell you that you should contact them right away in order to collect your winnings.

If you were to contact them back, they would probably ask for a significant amount of personal information such as names, addresses, phone numbers, and most importantly, the account and routing numbers for your checking and savings accounts so that they can ‘transfer’ your ‘lottery winnings’ into your account. This is where the scam comes in. They’ll take your personal information and use that to transfer as much money as they can out of your account under the guise of being a legitimate merchant. After they get the money from your account, you’ll never hear from them again. You will also have a very hard time getting this money back from the bank; you might be able to it in a few rare occasions, but most of the time you’re just out of luck.
There’s another variant of the scam where they’ll send you a cashier’s check and tell you to deposit it and wire them or mail them a fraction of the amount back to pay for some sort of alleged taxes or fees. In this case the cashier’s check is fraudulent, but the bank will tell you that it’s a real check and it will be several months before you find out that the check was invalid. There’s no real security for cashier’s checks in the banking industry, and even some of most authentic looking cashier’s checks could be fraudulent.

There’s an old phrase we all learned when we were young, and that if it sounds too good to be true, it probably is. There are no legitimate foreign lotteries or sweepstakes that you will ever win, especially if you didn’t enter them! If you try to claim your prize money, be prepared to get scammed.

What To Do When You’ve Got Piles of Payday Loans and It Seems There’s No Way Out

2007-11-10T08:09:00.000-06:00

When most of us find ourselves in a place where we just don’t have enough money to pay for things, we immediately turn to borrowed money. The reason for this is that we don’t want to face any interruption in our lifestyle, so we subconsciously do what we need to do to make the money show up. This might mean selling some stuff, working extra hours, but often it just means borrowing money. Some people use credit cards, others go to the pawn-shop and some people get themselves stuck in payday loans. If you find yourself in a situation where you have a number of PayDay loans it seems that the light at the end of the tunnel has been shut-off, don’t worry, there’s help.

We must first remember that debt is not the problem itself, but rather the symptom of over-spending. Why are you spending more money than you make? Is it because you lost your job and just don’t have any income? Do you just not make enough to get by with the basic necessities of life? Perhaps you just enjoy spending money and can’t seem to stop yourself from spending more than you make. You first have to alleviate whatever is causing this imbalance. It might mean job-hunting like there’s no tomorrow, it might mean picking up a part-time job, or it might just mean getting yourself on a really tight budget, but you have to put yourself in a place where you are making more than you spend on a monthly basis.

After you’ve tipped the balance of power in your income and expenses, we can start to work off those debts. Since payday loans are so much higher in interest rates than credit cards and other debts, they should be your priority after paying for some basic groceries, your utility bill, your mortgage and some gasoline for your car. To get out of them, you have to attack them like they’re the plague, take every extra dime you can have and throw it at your loans. Start with the smallest one, and pay as much on it as you can as possible, and work your way up this list. You might want to have a garage sale, take some money out of your investments if you have any, or perhaps sell some stuff on eBay to free up extra money to help clear the log jam. The point is, make them the priority in your life after taking care of basic necessities and fight to get rid of them like there’s no tomorrow.

Sick of Credit Card Debt? Pay it Off in 1/4th The Time. (No Crazy Schemes, Just Math.)

2007-11-09T09:16:00.001-06:00

Credit card is amazingly easy to get into and almost seemingly impossible to get out of. When we’re young we naively get a credit card in hopes of building our credit, purchase a few things here and there with the best intentions of paying off our balance at the end of the month. We end up charging more and more because we like our new found purchasing power and really don’t consider the debt that we’re building up. Before we know it, we have thousands of dollars in credit card debt and it seems that the light at the end of the tunnel has been shut off. Fortunately, there’s hope to be had. You can pay off your credit card debt in a 4th the time you normally would.

The problem with credit card debt is compound interest. With many credit cards you will be paying anywhere from 19% to 29% in interest, this will take you to the cleaners financially if you let it. Most of your payment will be going toward the interest and very little of it will be going toward your principal balance making it take seemingly forever to pay off your debt. Since most people are paying minimum payments or close to it on their credit card debt, it will often take them decades to get out of their credit card debt.

If you want to say goodbye to the balance on your Visa once and for all, the first thing you have to do is stop borrowing on it. You’ll never pay it off if you keep charging things up on it. Cut it up, or put it in water and freeze it so that you’ll not be tempted to use the card again. If you send in $100 a month on a credit card debt, change it so that you pay $50 every 14 days on your credit card. This is called the Eisenson method, essentially it will make it so that you’re paying extra payments without even realizing it. Over the course of the year, you’ll end up paying two extra payments which will go completely toward the principal balance of the credit card.

It’s shocking how fast you can get out of debt using this method to pay off your credit cards. Since the interest rates are so high on your debt, paying down extra on the principal will dramatically reduce the amount of interest you pay, in fact you’ll likely be able to get out of your credit card debt in 1/4th the time that it normally would.

Worried About the Real Estate Slump? Don’t Panic.

2007-11-09T08:48:00.000-06:00

If you turn on any of the sensationalist news channels, chances are it won’t take long to hear a story about some poor family who signed up for an interest-only variable rate mortgage for a home they couldn’t afford in the first place and were absolutely shocked when the rate and their monthly payments adjusted upwards and now can’t sell their home. For people who made bad decisions and bought homes they couldn’t afford with rip-off mortgages, this real estate slump is probably going to be pretty painful, but for the rest of us, we have nothing to worry about.

The number home homes sitting on the open market waiting to be sold jumped over 50% in the last 12 months, leaving many home-owners who want to sell wonder if they will ever be able to sell their home. You’re not out of luck if you want to sell your home, it can be done; it just might take a little bit of extra work. You need to make sure the price you are charging is based on what the home will actually sell for in the open market, not what you think it should be worth, or what you would like to get for it. You also need to make sure that your home is in the best shape it can be and is as clean as possible. If there are any problems with your home, take care of them. Somebody’s going to buy a house in your area sometime in the next few months; you just have to make sure it’s yours and not somebody else’s.

Many parts of the country are largely unaffected by the real estate bubble. If you live on one of the coasts, Washington DC, or in Florida, chances are the home prices in your area have been somewhat affected in the last year, but there are many parts of the country where a bubble in real estate just never really occurred. For example, South Dakota has the lowest number of sub-prime mortgages per capita in the nation, and home prices have actually been slightly on the up-tick for the last few years.

If you’re living in a home and have no plans of moving in the next few years, you will be wholly unaffected by the real estate slump. Chances are your homes’ value has shot up every year from 2002 to at least 2006 and is worth quite a bit more than when you originally paid for it. The price of your home might have recessed to 2003 prices, but it’s still likely worth more than you paid for it. And if you don’t have any plans to move or sell your home in the near future, you’ll have plenty of time for the real estate market to make a correction and even out again while you keep living in your home, doing your own thing, and making your monthly mortgage payment.

Why the US Dollar’s Decline Isn’t All Bad

2007-11-08T11:53:00.001-06:00

In the last few months there has been a lot of discussion in the financial markets about the declining value of the US dollar compared to other world currencies. Yesterday there was a big story that made the rounds about how the US Dollar has hit a 26-year low against the British Pound. Many countries are starting to use their own and other currencies instead of ours because of the dollar’s declining value, and some financial analysts have negative outlooks for the US economy because of that fact. There’s a completely other side of the story that most of the financial media isn’t talking about though. There are actually plenty of benefits of having a weak dollar.

On a macroeconomic scale, American produced goods are essentially on-sale to the rest of the countries in the world. American companies receive the same amount of dollars for each good produced, but the people paying in foreign currencies are paying a lot less in their local currency for our products. Since our products are costing them a lot less than they used to, foreign consumers are more likely to purchase American produced goods. This mean that retail sales will increase for companies with a lot of foreign customers, and the amount of exports or nation has will increase as well, thus lessening the trade deficit.

There are benefits to those of us who do business with companies in other countries as well. For example, let’s say I have an advertiser based in Britain that’s paying me 100 GBP a month to run their advertisements. Right now I get about $210 in American Dollars for that 100 GBP they send me each month. When the dollar was much stronger, I might only receive $100 in American Dollars for each 100 GBP they send over, so as far as I as a business owner am concerned, I’m getting free money each month to reinvest in the business. This is true for just about anyone with customers overseas. Not only will their general volume of sales increase, but the conversion ratio will mean they get a lot more American Dollars than they would have before.

On a long term scale, having a dollar that’s worth dramatically less than other major world currencies will certainly have some very major negative effects for the American financial markets, but so far that just hasn’t happened yet. Those forecasting an extremely negative outlook on the economy are a bit hasty; so far the dollar has only been dropping for a few years, hardly a long-term macroeconomic trend. In fact, there are actually many benefits of having a weak dollar for a certain amount of time.

Is Lending Money on Prosper.com Competitive With Other Investments?

2007-11-08T10:20:00.001-06:00

When most of us loan money to our friends, we give them $20 or $30, and they pay us back a week or two later and we think nothing of it. If the person was willing to pay a little bit in interest, you could make a little bit of money off the deal. Now what if you took the money in your savings account repeated this process this process hundreds of times to different friends around the world? This is exactly what Prosper.com is allowing people with money to do, and many people are making it part of their investment portfolios. The question arises, how does lending money through Prosper.com compare to other investments such as mutual funds, real estate, and simple savings. Let’s find out.

We know that one of the most important factors in an investment is risk. You could go down to Las Vegas, play roulette at one of its many casinos, and put your entire life savings on black. It would provide a 100% rate of return on your investment if you won, but nobody does that because it involves far too much risk. When you factor in risk, it’s just not worth it. The same is true for other investments. You might have the option to invest in some hot new tech company that could potentially double or triple your money, but you might not do it because it’s a very risky venture.

Prosper.com recently launched “portfolio plans” which automatically fund loans for you and will give you a better idea of what kind of money you might make after adjusting for non-payment by borrowers and service fees. With their balanced plan, you’ll make about 13.5% interest on the money you invest. When you adjust for risk and the servicing costs, that number ends up being 9.14%.

The rate of return you’ll get through Prosper is very comparable to what you might find when investing in a mutual fund. There are hundreds of mutual funds which will earn you anywhere from 9% to 13% year over year over a long period of time. Does this mean the investments are equal? Not exactly, you still have to consider the tax consequences of both options. If you invested $1000 in a mutual fund and earned 10% on it in one year, you would have to pay a capital gains tax of 15% of the amount of money that you gained, so you would pay 15% of $100 which ends up being $15.00. If you loaned $1,000 on prosper and earned 10% on it in on year, you would have to pay your full tax rate plus the self employment tax. Depending on you tax rate, you could be paying upwards of 30-35% when all is said and done. So instead of sending $15.00 to the government, you’re sending over twice that!

Currently Prosper.com has no options which allow you to invest money into loans through any sort of tax-beneficial retirement account, so you’re stuck paying your ordinary income tax rate on any money that you earn. It might look the same when it comes to interest rates, but when considering the investments holistically, there’s just no comparison.

Prosper.com might not be able to beat out a typical mutual fund in terms of investment, but it is several steps ahead of a savings account at an online bank such as ING Direct or HSBC Direct. You’ll only earn around 4.5% APY on your money at these places, but you know that your money is guaranteed. If you invest in conservative loans on Propser.com, you can still almost get twice that after factoring in fees and lost funds due to non-payment and have a relatively secure investment.

The only problem with that is that the money you put in Prosper.com is not liquid. You won’t get your full amount back plus the interest until the loan is paid off 3 years down the road. Prosper.com appears to be planning a means for lenders to sell their loans to other lenders based on a recent FCC filing, but that’s a bit down the road yet.

Prosper.com certainly won’t replace stocks, real estate and mutual funds that you are using to save for retirement, but it will provide a bit better rate of return than a traditional savings account.

Why College is The Best Time to Start Your Own Business

2007-11-08T08:42:00.001-06:00

Many of us have the entrepreneurial spirit deep inside of us yearning to do our own thing and start our own business, but a lot of us never get around to taking the leap because we have a job and think we need to quit it to devote ourselves to our business, or we have families that we have to provide for. Fortunately, there’s a four-to-five year period in our lives when we don’t have these obligations and have everything we need to start a business—it’s called college.

A lot of people live under the false notion that when someone attends college, they have to fully devote themselves to it and won’t have time for anything else. This is simply not the case even if you go to one of the tougher schools. You’re in class for all of 15 hours a week, and do maybe another 10 hours of studying and homework. You’ll have all sorts of free time to pursue your own interests. Most college students use this time to drink, socialize, or play ultimate Frisbee, but that doesn’t have to be you. You can use this time to get a jump on live, get involved, and even start your own business.

College can be an ideal time to start a business because your finances are probably still paid largely by your parents or through a scholarship, so you really don’t have to worry about making a ton of money right away. You will also have the resources of your university at your disposal. Chances are there are a number of business professors that would jump at the chance to help a budding entrepreneur. Some colleges, such as Dakota State University, even offer office space and funding opportunities for students who are interested in starting their own business!

If you’re majoring in anything related to business, you’ll be learning a lot about business as you go through your classes. You’ll be able to practically apply what you’ve picked up in your classes and have real world experience. Even if your business doesn’t succeed, showing that you have a strong sense for business and are willing to go out and try something is definitely something that potential employers will praise and look for.

Should you start a business and have it be relatively successful to the point that it could be your full-time job after you graduate, you’re set. You can keep working and growing your business and don’t have to consider a full-time job. If you need employees, chances are there are thousands of college students at your disposal to hire! You’ll have plenty of connections to professors and students and have no shortage of talent if you need it!

College is the perfect time to start your own business no matter how you put it. You’ve got plenty of free time, very few expenses, and plenty of resources at your disposal!

Applebees, Ruby Tuesday and Chilli’s are Less Healthy than McDonalds

2007-11-08T07:11:00.000-06:00

After the release of the documentary Super Size Me, there was not a shadow of a doubt in our nation’s collective minds that the food we eat from McDonalds on a weekly basis was any bit healthy. We spend a lot of time demonizing fast food restaurants for the unhealthy products we voluntarily purchase from them, but did you know there is are restaurants that are much less healthy for you than the major chain fast food restaurants? It turns out that many of our nation’s upscale restaurants, places such as Applebees and Chilli’s are actually a lot less healthy for you than if you were to go down to McDonalds and get your favorite meal.

Our nation’s finer eateries are much less healthy for us because they offer such substantial portions, often well more than any of us should reasonably eat for one meal. At McDonalds if you order a hamburger and fries, you’ll eat a combined 630 calories. If you go to Ruby Tuesday and order their “Ruby’s Classic Burger” and a side of fries, you’ll eat a whopping 1,372 calories! If you go to Chilli’s and order their “Oldtimer Burger” and an order of fries, you’ll be taking in 1,320 calories!

Applebees doesn’t even post their nutritional facts on their website for their regular menu. Their website claims that having so many locations and vendors would make it “extremely difficult to obtain nutritional information on our items.” It seems that all of the other major restaurants in this country were able to come up with reasonable estimates of how many calories are in their food, what makes it so much more difficult for Applebees to provide this data? Is it perhaps that their regular menu items might not be very healthy at all?

We expect burgers and fries not to be healthy for us, but what about things such as pasta’s and salads? It turns out that Ruby Tuesday’s Carolina Chicken Salad contains a whopping 1022 calories and their Club House Salad has 896 calories, and that’s without any dressing. Throw some ranch one on of those and you’re easily adding 100 additional calories. Chili’s “Crispy Chicken Salad” comes in at a 810 calories and their “Grilled Chicken Caesar Salad with dressing” comes in at 1,010 calories!

Eating out at these major chain restaurants is just not healthy any way you put it. Fortunately there are a few things you can do to make it a bit healthier. Consider only eating half of your meal and taking the rest home with you for lunch the next day. This will spread out the calories over two meals rather than gorging yourself at one sitting. You could also split a meal with the person you’re going to eat with. It will cut your bill in half and get rid of a lot of the calories. You can skip on the Soda or any other beverage besides water, that’ll save you $1.50 off your bill and save you a few hundred calories.

How to Get Your Family Prepared in The Event of a House Fire

2007-11-07T10:06:00.001-06:00

Most of us had all sorts of fire-safety instruction when we were in grade-school and middle school. The nice fireman would come and visit, show us some cool equipment, and demonstrate how to stop, drop and roll. We’d have occasional fire-drills which meant an extra recess during the day and occasionally watch a fire-safety video. After some initial instruction in grade-school, very few of us ever think about fire-safety again, but the reality is that there are thousands house fires in the United States each year and we need to make sure we’re prepared in the unlikely event a fire does occur. Here’s what to do to make sure your family is ready.

Have a Plan. Make sure you know exactly how you and your children are going to get out of your home in the event of a fire. Have at least two escape routes for each family member from their bedroom. Know who’s going to call the fire-department, what to do about pets, where the children should go, and just about anything else you can think of.

Know Your Fire Extinguisher – If you have a fire-extinguisher, it’s definitely a valuable tool. You can use it to put out small fires, but they have limitations. You’ll get 15-20 seconds of pressure out of them and be able to put out a fire the size of an oven, but not much more. Always remember to shoot at the base of the fire to have the best change of putting it out.

Have Home Fire Drills. If you have young children, under the age of 15, have fire drills twice a year to keep yourself alert. It’ll be a good chance to remind children how they’re supposed to get out in the event of a fire and make sure that everyone is prepared.

Get Smoke Detectors, Lots of Them. Most modern building codes call for a smoke detector in each room of the house. Make sure that you have plenty of smoke detectors around so that you know when a fire does occur. You should have two or three in every level of your home if not more. Check the batteries every two months and make sure they’re working properly.

If you have 2nd Story Bedrooms… - It can be a lot harder to get out of a home when you have more than one story. If you only have one stair well, you should consider coming up with some sort of rope-ladder system to get out a second story window in the event of a fire.

Need Information? Don’t Pay a Dime for 411 Service Ever Again

2007-11-07T09:28:00.000-06:00

We all make the occasional trip and find ourselves in a location we’re unfamiliar with. Sometimes we just don’t know where the local eating establishments, shopping cents and entertainment locales are at. Unless you’ve got an iPhone or another cell-phone with a web-browser, sometimes old fashioned directory assistance is the only way to get information about local businesses and organizations. Traditionally we’ve just had to suck it up and pay $1.00 or $2.00 to get the information that we want, but now we’re off the hook! There are a number of free directory assistance numbers that you can all that work nationwide meaning you never have to pay another dime for 411 service.

One service that has been around for a while is 1-800-FREE-411, which you can call, you’ll hear a 30 second advertisement, and then be able to specify what information you want. It works quite well, but there’s actually a service in which you don’t even have to listen to advertisements! Google has launched its own completely free 411 service for business listings. You can give it a try by calling 1-800-GOOG-411. It’s a great way to order pizza or get the phone number for a local business if yu don’t know it off the top of your head.

If you’ve got an internet connection wherever you’re at, usually you can just find a phone number online by going to a website such as WhitePages.com. You can also find local businesses by making use of the Google Maps service. Bring up your city on Google Maps and type in the word “Restaurant,” you’ll see just about every place there is to eat near you. This is a great tool to use when you’re off in the world and need to find a place to eat, shop, or get any other services!

Paid directory assistance is a thing of the past. There are two great free services that will provide you the same information for literally nothing, and if the internet’s available to you when you’re off in the world, you don’t even need to make a phone call.

Don’t Pay $90 for a Logo on Your Pair of Shoes

2007-11-07T08:20:00.001-06:00

When I was younger, Air Jordan’s were all the rage to be worn by the guys in school. They were the pair of shoes to have and many children hounded and begged for their parents to get a pair of Air Jordan’s for them, even though they were upwards of $100.00 and a pair of decent generic athletic shoes could have been had for $10.00 at the time. I wonder how many of us would have changed our mind about the Air Jordan’s if we were told we could either have the shoes we desired, or have a pair of generic basketball shoes and have $90.00 in cash in our pocket!

Air Jordan’s and other celebrity endorsed shoes are a great example of how we have been fooled into thinking that a specific brand should be valued more than a generic lower priced brand of pretty much the exact same product from another company. It’s amazing that we’ll be willing to pay $5.00 for a generic single color t-shirt, but as soon as the Nike logo is put on it, we’re suddenly willing to pay $15.00 for it! We’ve become extremely brand conscious, and it’s costing us a significant amount of money.

This phenomenon extends well past clothing. When we’re at the grocery store, do we buy the name brand cereal with the cartoon character on it , or do we buy the generic bag that’s a better deal? When we’re shopping for a new television, do we go with a Sony or a Panasonic, or go with an off-brand that’s a bit cheaper? These types of situations are seen in just about every division of retail America, and many of us who default to name brand items without thinking that there might be a private-labeled product that we could purchase that would serve the exact same function, yet cost us half the money.

Don’t be controlled by the items you buy and the things you purchase. Don’t think that anyone will think any less of you because you aren’t wearing clothes with the most expensive and prestigious brand on them! The brands that you purchase really don’t matter to anyone but you, and if someone makes fun of you for wearing an off-branded piece of clothing or something of the sort, chances are you don’t want them as a friend anyway! When looking at a name-brand product, there’s almost always a cheaper generic version of the same item from another company! There’s no reason to shell out extra money to subsidize a large corporation’s marketing campaign. Buy Generic.

Don’t Buy Financial Products from the AARP.

2007-11-07T08:04:00.001-06:00

The American Association of Retired People is one of the largest lobbying groups in the nation and offers a number of different deals, discounts benefits to its members, but the deals they offer are often only a deal for them! Since the membership group that makes up AARP is such a large and targeted audience, it makes sense that a number of companies that sell products for older individuals would like to market to its members. Some of the deals that the AARP has for its members are great deals, while other products offered by the AARP are actually a lot worse than what you would get if you went and visited a fee-only financial advisor. Just because something is promoted by the AARP to its members, does not mean it’s any sort of a deal.

Since the American Associated of Retired People is a lobbying group looking out for the rights and needs of the senior adults in the United States, a large majority of its members think that the organization is genuinely looking out for them and their needs. This may be true on the political landscape, but this certainly doesn’t hold over to some of the products that they market. AARP is a nonprofit organization, but they also have a for-profit division that operates under the same name. Since they’re trying to make money off of you, they really can’t be seen as any more trustworthy or reliable than any other company selling financial products.

The Los Angeles times recently did a study on the products that AARP offers to its members and found out that the products AARP is offering aren’t always the best deals, sometimes they’re not even close. The AARP isn’t trying to rip its members off, but there are a lot of times that its members could get a lot better deals elsewhere.

If you’re a senior adult looking for long-term care insurance, investments, or other financial products, you would be well served to visit two or three fee-only financial advisors and get their advice as to what financial products you would be well served to have and which you should avoid like the plague.

Why do we eat over-priced and unhealthy meals from fast food restaurants?

2007-11-06T08:55:00.001-06:00

It’s not a government secret that fast food is over priced and bad for our health, yet many of us still continue to make daily or weekly trips to our favorite fast food joints. The food at these restaurants isn’t so amazing that we absolutely can’t resist going, so what’s the deal? Why do we keep going to fast food restaurants even if they’re over-priced and bad for us?

It turns out that eating food is much more of an emotional and instinct driven experience rather than a logical and reasoned action. Our bodies tell us that we are hungry and we want food with a lot of fat and calories in it to provide us plenty of energy, and unless we have something that will fit that need right at home, we’ll often make a trip out. We know that going to a restaurant will cure our appetite in a rather short period of time and give us the high-calorie food that our body desires.

Fast food and other restaurants produce food that’s just not good for us. They’re high in calories, high in fat, and have a lot of preservatives and other chemicals that we would probably be better served to not have in our body. The price is a lot higher than what we would pay if we made a similar meal at home too, so it makes sense that we should do what we can to minimize our emotional cravings to dining out.

The best way to do this is to make sure that you’re eating your regular meals, especially breakfast. This way your body will have plenty of nourishment throughout the day and you suddenly won’t find yourself having a hunger craving. Keep some granola bars with you at work or school so that if a hunger craving does come, you can satiate it for the time being and then eat when you get home.

Another good thing to do is intentionally limit how much you go out to eat. I personally allow my self to dine out twice a week, usually once after church with some friends and then another time throughout the week. This way I can visit the restaurants that I love, yet have a good balance between healthier food I eat at home and the less healthier food I pick-up at restaurants.

If you don’t consider what you’re doing and give into all of your emotional cravings, it would be very easy to go out to eat three, four, or five times a week—and that’s just not healthy for you. It’s okay to dine out once and a while, but keep it reasonable.

How to Raise Your Credit Score by Borrowing Money Through Prosper.com

2007-11-06T08:18:00.000-06:00

Your credit score is determined if you can afford a home loan, rent an apartment, get a cell phone, and some times it even determines whether or not you’ll get a job. Fair Isaac Credit Scores (FICO Scores) are being used increasingly to determine whether or not we are financially responsible individuals, so it’s very important to make sure that your credit score is sitting at a reasonable number.
Many people will try to sell you fancy books and techniques on how you can raise your credit score and some of those techniques will work if you already have a lot of debt, but what if you’ve just never really had credit? Maybe you got a credit card in college and just never got around to using it very much an don’t have really much of any debt to speak of. In this case, the best way to raise your credit score is to borrow some money at a reasonable interest rate and then pay it off early or on time.

The idea is that you’ll borrow a small amount of money, say $500 from a bank or peer-to-peer lending site, pay it off as the loan matures, and then your credit score will be positively effected because there will be an additional type of credit on your credit report, there will be additional on-time payments, and an increased length in credit history.

Since you’re borrowing money you don’t really need to borrow, it’s best to keep the process relatively small, say $500 or $1,000.00. You can borrow money from either your local bank or one of the new person-to-person lending sites such as Prosper.com or Lending Club. Prosper is a great choice for people who want to rebuild their credit, as the company reports on-time payments and balance payoffs to the three major credit bureaus, where as some banks and credit cards only report your information to the credit bureaus if you are late on a payment.

You’ll probably have to pay an interest rate of anywhere from 6% to 8%, which isn’t the best rate in the world, but for the amount of money we’re talking about, it’s not that big of a deal, especially if you put the money from the loan in an interest bearing account while you’re paying off the loan. If you borrowed $500 at 7% and put it in a money market account at 5%, and then had the payments automatically drafted out of your money market account, you’d end up paying a mere $10.00 in interest on the loan, which is nothing compared to the amount of money you’ll save when it comes time to purchase a car or a home.

The actual tangible benefits of taking out a small person loan and then paying it off will be a bit hard to determine, but having a better credit score will definitely be worth the $10.00 you pay when it comes time to purchase an automobile or a home.

LendingClub.com Launches New Social Lending Service to Compete with Prosper

2007-11-05T09:22:00.001-06:00

Just over a year ago, Prosper.com broke down paradigms about traditional money lending practices. Instead of heading down to the local bank or credit union to get a loan, people were able to loan each other money en masse through Prosper’s lending service bypassing the banking system all together. Unfortunately Prosper’s system was not without its flaws, and the people who were turning to Prosper for credit were the people who could least afford to pay it back. One report stated that Prosper.com had a 25% rate of default for its borrowers. Other reports state that number is much closer to 3%. A new company called LendingClub.com is creating a service to compete with Prosper that will hopefully provide a better lending experience.

The major difference between Prosper and Lending Club is who will be able to borrow money. Prosper.com will let anyone with a 520 credit score above borrow money, whereas Lending Club.com will only allow people to borrow money if their credit score is 640 or above.

Lending Club.com also has a collection agency that will try to collect your money if the borrower defaults, in a fashion similar to what Prosper does. You’ll pay a collection fee on late payments which can be anywhere from 7% to 30% depending on how late the payment is. With Lending Club, they’ll go after the borrower for you. Prosper.com has a similar debt collection service which will attempt to collect debts for a reasonable amount of time. After which the debt will be labeled uncollectable and sold to another debt collection agency. Prosper specifically prevents their lenders from attempting to collect themselves because of legal and civil liabilities that would come up because of unlicensed debt collecting.

The fee structure is a bit more advantageous for lenders and borrowers on Lending Club. On lending Club, the borrower will pay an origination fee of anywhere from 0.75% to 2% depending on how good their credit is. Lending Club takes 1% of any payment given to the lender as its fee from the lender. Prosper charges a closing fee of anywhere from 1% to 2% for the borrower, and anywhere from 0 to 1% as an annual loan service fee to its lenders.

The way the actual borrowing and lending takes place is very similar to that of Prosper, and you won’t notice much difference. Lenders can have borrowers chosen for them automatically, or they can browse through the difference borrowers and choose ones they think are more likely to pay than others.

Overall Lending Club appears to be a very good competitor to Prosper.com that’s a lot better of a choice for lenders, but only time will tell if the company will be reputable and be a long-term means for investors to make decent returns on their investments!

Get the Lowest Price on Your Next New Car Purchase

2007-11-05T08:25:00.000-06:00

If you want to purchase a new vehicle, the last thing you want to do is go down to the local dealership. You’ll be put in the grind and become the target of every rip-off technique known to man. They’re professionals at manipulation and persuasion, walking into a dealership with a wad of cash is the last thing you want to do. Some dealers are professional and treat their customers right, but there’s just as many that would love to take you for a ride and get as much money as they possibly can out of you. Fortunately, there’s a better way to purchase new cars than by going down to a dealer.

The first thing you have to do is figure out what type of vehicle you want to purchase. A great way to test drive new cars is to rent them from one of the major automobile renting services. It’s really inexpensive to do, and then you can drive a model for two or three days to decide if you like it or not. If you can avoid it, don’t test drive at the automobile dealers, or they’ll start pitching to you then and there.

After you have a model picked out, it’s time to shop online. Check out every dealer within a reasonable driving distance, and ask for a quote by email from the dealer. If they’re stubborn and tell you they’ll only talk to you in person, just email them back. Don’t play their game. After you start getting bids in your inbox, reply to each one of the messages and telling them that their bid is a bit high and that will be taking them out of the running, and if they’d like to submit another bid today, you’d be happy to listen to it. Some dealers will drop out because they can’t lower their prices any more than what they’ve offered you, but the rest will provide you a much better deal than they were originally.

Don’t let them get your phone number until you’re ready to purchase a car through an agreed upon price. If you need to talk to a dealer, use the *67 feature on your phone to prevent them from getting your phone number. Alternatively, you can use something such as Skype so that they won’t get your real phone number. The last thing you need is a car dealer calling you up and pitching to you over the phone.

After you’ve gotten the best price from the different dealers you think you’re going to get, simply pick the best one and go purchase the automobile. If they try to mess with you and give you a less desirable deal than they first promised, just walk out and go to another dealer that won’t mess you around. Don’t do business with car dealers that perform such shady practices.

How to Become Wealthier Automatically

2007-11-05T08:07:00.000-06:00

Just about everyone has aspirations to be wealthy some day, but very few people ever attain their goal of becoming financially independent. They just never get around to coming up with a plan to make extra cash and invest it wisely. Making it a point to reduce your expenses and invest money on a monthly basis requires a lot of discipline, which is why so many people don’t attain their goals of becoming wealthy. Fortunately there are things that you can put into place which will make the discipline happen for you, so that you’re automatically spending less money each month and putting away money for the future without ever even thinking about it!

Before you can begin investing into mutual funds and other investments, you have to have the money to do it. Most of us don’t have time for an extra job, so we have to more effectively use the money we’re already making. The best way to automatically cut down on some of your monthly expenses is to spend less on your monthly bills, such as your cell phone, cable, and subscriptions to periodicals, day care, utility bills, and the like. You can opt for a cheaper cable or cell phone plan so that less money goes out each month. You can cancel subscriptions to magazines you probably never read anyway. You can make your home more energy efficient by installing a programmable thermostat and filling any holes in your home, saving you money off your utility bill each month. You can find a cheaper day-care to send your children to.

Just about anything where you send money out each and every month, chances are there’s a way to find a little bit cheaper way to do it. Find the most cost effective services you can, and between all the different services you’ll adjust, you’ll easily be able to come home with a few hundred dollars of savings each month.

Most people lack the discipline of intentionally investing money into their retirement accounts or other investment accounts each month, this is why you have to make it happen automatically. Fortunately, just about every mutual fund company (we recommend Vanguard or Fidelity) will make it so that you can automatically deposit a certain dollar amount each month, and the money will be transferred directly out of your checking account. You’re putting money away every month for the future, and you never have to take the time to think about it.

Don’t let a lack of discipline prevent you from being a millionaire; use methods that will save money from your monthly spending automatically and then invest it wisely.

There’s Treasure Waiting to Be Stolen in Your Trash!

2007-11-04T16:19:00.000-06:00

There’s an old saying that one man’s junk is another man’s treasure. A lot of the things we throw away have many years of perfectly good use left, but we want something bigger and better than we had before, so we toss out the old and bring in the new. We know about the big things, such as electronics and furniture that we get rid of before their times is done, but what about your old financial documents, credit card offers and other information about you? A lot of us throw this sort of information away without any concern as to where it’s going. This leaves us wide open for the theft our personal information and thus identity theft. Don’t leave treasure in your trash.

One might not think that people dumpster dive and dig in trash to steal personal information, but it happens more than you might think. Most incidents of identity theft aren’t high-tech criminals stealing your information online, but rather people you know or in your neighborhood that steal your personal information and use it to open accounts in your name. You just never know if or when someone will be snooping through your trash hoping to find some paper-treasure, so don’t take the risk!

There are a lot of different types of paper shredders, and they’re not all the same. Don’t get a traditional strip-cut shredder because it still leaves some semblance of what was on the paper. Be sure to get a cross-cut shredder or a micro-cut shredder to ensure your documents are thoroughly destroyed. Make sure that the paper shredder you buy can also shred credit cards and CD’s so that you can get rid unsolicited cards sent to you in the mail as well as any CD’s that you don’t want to be read anymore. If you have a lot to shred, make sure to get a paper shredder that will let you put in a whole bunch of pages at once to shred.

You can pick-up a decent shredder from Staples or just about any big-box store. A good paper shredder will run anywhere from $25-$50, and it’s well worth the cost! Identity theft can often cost thousands of dollars to clean up; spending a few bucks here and there to make sure it doesn’t happen is worth every penny.

Personal Finance Perspectives: 11/04/2007 Edition

2007-11-04T15:43:00.000-06:00

It's been a while since I've had the time to do a round up of some of the other personal finance writers around the web, but recently I've had a lot more time to invest in the blog, so some exciting things will be happening in the coming weeks. We're going to have a new name, a brand new design, another staff writer, a forum, and a lot of other things are in the works too, so expect some exciting changes! Anyway, here are some great articles from the personal finance world this week.

"10 Facts About Buying Or Selling a House of Horrors" - Silicon Valley Blogger wrote an interesting real estate article about owning a home that had a negative historical event happen in it at one time or another that seemingly everyone knows about it. You can get a great deal, even if their was some stigmatizing event in the distant past

"Passive Income is the Key to Freedom–and Retirement" - Meg over at All Financial Matters wrote this great article about a topic that gets a big of a bad rap. A lot of hucksters user the term "passive income" to try to sell you on their zero-down real estate program or other investment scheme, but the reality is the only way to retire is to have passive income coming your way.

"Resuming normal programming: Why Dreamhost was the frugal choice for me" - Mrs Micah moved over from blogger to a Wordpress account on dream host, something I should have done several months ago! If you're going to start a blog, don't even think about blogger!

Also, Free Money Finance is giving away a copy of Quicken 2008

Ten Simple Things You Can Do To Save Money

2007-11-04T09:53:00.000-06:00

Many people think they need to take drastic measures in their lives to save themselves financially, but this is not always the case. Sometimes you can do a lot of little things and find yourself saving hundreds of dollars per month. Here are ten simple things that you can do which will save you money.

Use Power Strips – When you’re not using appliances, they suck up a lot of juice anyway. The only way to make sure they’re drawing nothing is to un-plug them. Put all of your electronics that you use together on a power-strip, and when you’re not using them, flip off the switch and they’ll stop sucking juice.

Use the Library – Don’t go to Amazon.com every time you’re looking for something to read. The library has all sorts of free books you can read, and when you’re done with them, you can just give them back rather than having a whole bunch of books you’ll never read again take up space on a book-shelf.

Brew Your Own Coffee – This advice has been given dozens of times before, but it’s a great illustration. You can pretty easily make coffee at home for you and your spouse for $20.00 a month by buying a few bags of beans of Folgers, but you’d be spending 3 times that easily if you were stopping by Star Bucks every morning.

Cut Your Own Hair – If you’re a guy, this is definitely the way to go. Get out the electric-sheers, set it to whatever length you desire, and cut your own hair. It’s almost impossible to mess up, and saves you a trip to the barber.

Buy Compact Florescent Light Bulbs – There’s no reason not to get these anymore. You will notice a significant decrease in your power-bill each month by moving over to them, it’s definitely worth the up-front cost.

Get a Water Filter – Get a Brita or Pur water filter, they’ll cost about $20.00 and give you 3 months of water that’s just as good as Aquafina or Dasani. It’s a far better deal than buying bottled water in cases.

Cancel Your Magazine and Paper Subscriptions – Just about everything you get in paper can be had online for free or less money now, there’s no reason to keep subscribing to magazines, especially if you never really read them.

Take Your Lunch to Work – You can go out to eat once a week or so, but for the other days bring a sack lunch to work. Make something good for yourself the night before and bring it with you. You’ll save hundreds of dollars over the course of the year by doing this.

Don’t Buy Retail – Whenever you’re going to buy something over $20.00, head on over to Amazon.com and see if you can get the item from the Amazon Marketplace for less. You can get a lot of things such as books, movies, CDs, games, and the like for a fraction of what you would pay if you bought them new.

Get Fruit From the Farmer’s Market – If your locale has a farmer’s market available to you, make use of it. Chances are you’ll be able to get better fruit than you did from the grocery store and pay a lot less money for it.

You don’t need to take dramatic life changing actions such as selling your house to save money, there are plenty of little things you can do that will push you in the right direction.

Banking Reviews: FirstFedDirect’s Internet Advantage Savings Account

2007-11-04T09:35:00.001-06:00

Choosing a place to put your savings is a lot like picking out a shampoo; you have dozens of choices to choose from, and unless you really know what you’re looking for, you’re probably not going to get the best product. One of the more recent entrants into the online savings banking world is FirstFedDirect, which is the online division of First Federal Bank of California. The company is offering a 5.05% APY online savings account, but how does it stack up to the competition?

The account is fairly typical for an online savings account. There are no monthly fees to speak of, and the money in the account is FDIC insured. You’ll have online access to your account and will earn an interest rate of 5.05% APY, which is fairly competitive in today’s market. One odd facet of the account is that even though the bank is located in California, it does not accept deposits from California residents; this is likely to prevent the online division from competing with their actual branches.

FirstFedDirect offers two different methods to sign-up for their account. If you like to do things the old fashioned way, you can print out an application and send it in by mail. If you’re more technological and like to get things done fast, you can sign-up online for an account. The process they have is really quite smooth and will take you about ten minutes. Unfortunately, your initial deposit has to be made by check, but after that you are free to use electronic ACH transfers.

The one major concern with this bank is that they do not offer a customer support email address or phone number anywhere on their website. If you’re having problems getting to your money, you should be able to talk to a customer service representative. If a bank is going out of the way to hide that information, chances are their customer service isn’t the greatest.

There’s nothing terribly wrong with the FirstFedDirect online savings account, but there’s also nothing terribly right with it either. It offers a fairly competitive interest rate, but just haven’t done enough to put themselves ahead of the dozens of other online savings banks available to consumers.

Banking Reviews: KeyDirect’s 5.25% APY Money Market Savings Account

2007-11-03T17:14:00.001-05:00

When many banks begin competing in the online savings world, they offer an inordinately high interest rate for a good 6 months or so and then drop back to something less competitive once they gain a significant amount of customers. More fickle customers that are chasing the highest interest rates simply move onto the next bank offering a great deal, but a few online savings banks consistently offer interest rates well above the rest, and one of those is KeyDirect. For over a year, KeyDirect has been offering an interest rate of 5.25% APY or above on their money market savings account, even after two rate-cuts from the Federal Reserve.

The account has a minimum opening balance of just $50.00 which puts it within the realm of almost all savers. You’ll earn an interest rate of 5.25% APY on any balance up to $250,000.00. There are no monthly service charges to speak of and you’ll receive free checks to take money out of the account with.

You can apply online through their website or over the phone. If you fill out the online application, a customer service representative will call you by phone to verify your identity by asking you questions about your credit report. It’s a pretty straight-forward process compared to some other online savings banks. When opening an account, a hard-credit pull will not be confirmed so that your credit score will not be negatively affected.

The major down-side of this bank is the limitations it puts on ACH electronic transfers. KeyDirect will limit you to $2,000 in transfers per day and a total of $20,000 per month in transfers. If you have a large amount of money in other accounts you want to transfer in, it might take several days with of transfers to move all of your money over to KeyDirect. The bank does not block external ACH transfers from your outside checking or savings account.

Because of some state laws, KeyDirect only operates in 37 dates and Washington, DC. If you live in AK, CO, ID, IN, KY, ME, MI, NY, OH, OR, UT, VT, or WA, you won’t be able to open an account with them. The bank is FDIC insured and has been for the last 51 years, so chances are it’ll be around for a while.

KeyDirect is offering an excellent interest rate to its customers during a time of flux in interest rates. If you aren’t planning on depositing a very large sum of money, it’s definitely worth checking out.

How to Save a Substantial Amount of Money When Adopting a Child

2007-11-03T10:01:00.000-05:00

Going through an adoption process can be draining both financially and emotionally. Quite often the process you go through will take over a year and your entire life will be looked over with a microscope. You’ll also end up paying anywhere from $10,000 to $30,000 to make the process happen, and that’s a lot of money for most families. Fortunately there are several things that you can do to add another member to your family without going broke.

Tax Deductions – The federal tax code permits parents who adopt up to a $11,000 exclusion of taxes on any money that comes from a company as adoption assistance and up to $11,000 as a tax credit against any costs spent toward an adoption. This number increases slightly each year, so you might be able to take a greater deduction in years to come. The full exclusions can be taken for any family that has a modified adjusted gross income of up to $164,000. Families making up to $205,000 can take a portion of the tax credit. For more information on this credit, go to the IRS website and look up tax topic 607.

State Grants – This is going to very on a state by state basis, but some states provide assistance grants up to $2,000 to help you make an adoption happen. You’ll have to check into your state’s specific laws and regulations to determine if there are grants or state tax-credits available to you.

Company Adoption Assistance – Many larger companies and organizations offer employee adoption assistance as a benefit. Not every company will offer this for you, but it’s worth looking into. A website called the Adoption Friendly Workplace is offering a search tool that will tell you what companies in your area provide employee adoption assistance.

Pick the Right Adoption Agency – When choosing an agency to facilitate the adoption, don’t go with the first one you find. You’ll find a substantial price difference between the different agencies in your region, so interview them and make sure you’re paying a fair price to adopt.

Welcoming a stranger into your home and making them a member of the family is one of the most selfless things one can do, but it can be very expensive. Follow these tips to make the adoption process go much smoother.

Banking Reviews: M&T Bank’s 5.05% APY Online Savings Account

2007-11-03T09:19:00.000-05:00

Online savings accounts are increasingly becoming a commoditized market with the sheer number of banks entering into the arena. It seems that customers have no brand loyalty and will go to whichever bank offers the best interest rates, features and customer service. M&T Bank decided to that they too would like to compete for your savings dollar and recently opened its own online savings account which currently is offering an interest rate of 5.05% APY.

This bank offers an excellent interest rate given the current market. Some of the big names such as HSBC Direct and Emigrant Direct were offering 5.05% APY before the Federal Reserve dropped the short term funds rate by .75% through a series of two rate cuts this year, and now both of those banks are offering around 4.50%. 5.05% APY from M&T Bank is one of the best that you’re going to find right now.

The major down-side of this account is that there is no system to do ACH transfers from your online savings account with them. If you have another bank that allows you to do ACH transfers, you can deposit money and withdraw money from your external account, but there’s no system that allows you to do it from your M&T Bank online savings account. You can also deposit by mailing in checks or making deposits at one of their branches.

The account features no minimum balance and no monthly service fee. You’re allowed to make a maximum of 4 withdrawals per month according to federal regulations from your M&T Bank e-Money Market Account, any additional withdrawals and you’ll be slapped with a $1.00 fee for each transfer.

M&T Bank is a larger bank and has branches in New York, Pennsylvania, and Maryland, so chances are it’s going to be around for a while. The bank is also FDIC insured so your money is safe in the event that the bank were to fail.

Overall M&T Bank is providing a pretty good account, the only major down-side is that you’ll need an existing checking or savings account somewhere else that will allow you to perform electronic transfers, if that’s not an issue for you, it’s a great place to keep your money.

Banking Reviews: EverDirect’s 5.51% APY Yield Pledge Money Market Account.

2007-11-03T09:00:00.000-05:00

With the recent drop in interest rates by the Federal Reserve, it’s gotten a lot harder to find a decent rate of return on your savings. We reported that 6 different online savings banks have dropped their interest rates in the last week and a number of other banks will likely soon follow. One way to protect your interest is to switch to another bank offering a higher interest rates, and Ever Direct’s Yield Pledge Money Market Account has one of the highest rates that an online savings account will offer.

The account offers an introductory rate of 5.51% APY which is good for the first three months, after which drops to 4.51% APY. Given the current rate environment, the 5.51% APY rate is seemingly unheard of anymore. The 4.51% APY rate is still competitive, but not the best that’s out there.

It takes some work to actually get this account. Many reviewers online have complained that the process to open an account it slow and potentially a security hazard. You have to fill out a form online, print it off, and mail it in along with your opening deposit. EverBank claims that they will process your new account within 3 days of opening your account, but many individuals have stated that they have had to wait up to 3 weeks for EverBank to finally process the new account. EverBank has made a statement that they plan on reforming this process to be more secure.

The account features a 5.51% APY for the first 3 months on balances up to $50,000 for new customers and 4.51% APY on any balances after the first three month. Since it’s a money market you can write up to 3 checks per month. There’s also a $1,500 balance requirement to avoid a monthly fee of $4.95 per month. The minimum opening amount is also $1,500.00.

Many customers have complained of excessively slow ACH transfer time of anywhere from 4 to 6 days. EverBank limits ACH transfers to $10,000 per day and $50,000 per month. EverBank does not limit external ACH transfers and you can link your EverBank account to an unlimited amount of external bank accounts. Incoming wire transfers are free and outgoing wire transfers cost $25.00.

BankRate.com gives EverBank a 4 out of 5 star rating which means it’s financially stable, but that doesn’t necessarily mean you should open an account there. The rate might be appealing to many potential savers, but until EverBank gets its account setup streamlined and ACH transfer speed improved, you’re probably better off looking somewhere else.