Personal Finance Resources

In this post, I would like to present personal budget guidelines, and hopefully, point out some potential holes or problems in your budget.  The goal here is of course, to help you find ways to increase your disposable income, or the amount of money left over after all bills are paid.  After reviewing this post, I hope to ignite some ideas in your mind about ways to cut expenses, and the things that are really eating holes in your budget.  The following chart is a mixture of what other personal budget experts think, and my personal opinion of how to allocate your money:

In the above table, I have listed the expenses in order of importance (to me, anyway).  There are a couple of key things I want you to notice in reference to the above table:

Read the rest of this entry »

Bookmark, Share or Email this article.

Why contribute to an IRA?  Because the government has allowed us to contribute on a tax deferred or tax free basis to our retirement.  Anyone who is risk averse (wants to maximize return without giving up too much risk) should be involved in some type of IRA.  There are two types of IRA s, the Traditional IRA, and the Roth IRA.  In this post, I am going to show you my approach to IRA s, as well as showing you how I shop for funds within my IRA.  The contribution limits for both the Traditional IRA and the Roth IRA are as follows:

Read the rest of this entry »

Bookmark, Share or Email this article.

FHA loans were originally created for the first time home buyer as an assistance program. FHA (Federal Housing Administration) began “backing up” or insuring certain loans for mortgage companies, savings and loans institutions, banks and other lenders to convince them to lend to first time buyers. The program worked so well, that it is now widely known and available.

It is important to understand that FHA does not issue the loan itself, a typical lender actually provides the loan, FHA merely insures the loan (in part at least) against default from the borrower. Thus, if a borrower stops paying their loan, the lender has the opportunity to file a claim with FHA to recover some or all of the money. As you might guess, this made lending to first time buyers and buyers with less than perfect credit more attractive to lenders. Lenders are exposed to less risk in lending to this type of buyer, and thus approved more loans.

Although FHA provides a greater opportunity for borrowers to obtain financing, it also requires more information / documentation prior to loan approval, such as:

Read the rest of this entry »

Bookmark, Share or Email this article.

If you have been struggling to get rid of harassing creditors, then online credit counseling may be the way to go.  Online credit counseling can be purchased, but there are also free and non-profit organizations available.  You can go to a credit counselor if you like, but going in to see a counselor face to face can be embarrassing, and you may lose some confidentiality over time as people tend to get to know you and talk. Online credit counseling is a convenient and flexible way for you to to get personalized, and more importantly, completely confidential assistance.  It is important to realize the difference between credit counseling and credit repair services, as credit counseling only gives you information and helps you develop a plan on how to repair your credit, whereas credit repair services actually help you do some or all of the work.

Read the rest of this entry »

Bookmark, Share or Email this article.

An interest only mortgage can be a valuable investment tool.  However, you must be very cautious using this method.  There are many dangers surrounding the use of an interest only mortgage.  In a nutshell, an interest only mortgage is a mortgage that the borrower makes very small monthly payments (to cover interest only) and then is required to pay a fully amortizing payment at the end of the interest only option period.  Get the details on an interest only mortgage.

Typical fixed loans amortize, or pay down in increments, the principle balance of the mortgage over time.  However, paying down part of the principle balance over time increases the monthly payment.  This is the advantage of the interest only mortgage, as you only have to make small monthly payments, providing a great tool for short term real estate investments.

In my opinion, buying a house in a fast paced, quickly appreciating market is the best place for the use of an interest only mortgage.  Let’s take a look at the following *example (there will be a link at the end of the post to download the spreadsheet):

Read the rest of this entry »

Bookmark, Share or Email this article.

The interest only mortgage is a relatively new term, and not many home buyers are aware of its existence. An interest only mortgage is the only type of mortgage loan that has regular monthly payments that are only applied towards interest on the loan, and not the principal for the first years of the term of the loan. The advantage of an interest only mortgage is that your monthly payments start out considerably smaller compared to a conventional mortgage during the interest only portion of the loan. If you are wondering if an interest only mortgage is right for you, then just keep reading.

Read the rest of this entry »

Bookmark, Share or Email this article.

A Traditional IRA (Individual Retirement Arrangement) is one of the most popular methods Americans use to save for retirement since it is an extremely versatile and simple. A Traditional IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement. Taxpayers want to invest in an IRA, but when it comes to understanding which one is best for them and why, they are unsure. The information provided below will help you decide if a traditional IRA is right for you.

Tax Benefits

In the Traditional IRA,  all investments grow tax-deferred until they are removed from your account, meaning you are able to invest more of your money over the life of the IRA since they are paid with before-tax dollars.  Tax deffered means that the earnings in your Traditional IRA are not taxed until funds are withdrawn from your account.  Any IRA 401(k) contributions you  make to a Traditional IRA are typically fully deductible, but at least partially deductible, depending on your situations.  Taxable distributions may be taken without penalty starting at age 59½ and must be started by April 1st once you have reached 70½. 

Contribution Amounts

In previous years, each participant under the age of 50 in a Traditional IRA had contribution limitations of $3,000, but that amount has been increasing over the past few years. This is to help aid participants in being able to invest enough money for retirement with ever increasing costs and inflation. All participants over the age of 50 have higher contribution limitations as a ”catch up” benefit. For more information on your contribution limitations, see the chart below.

The key benefit of a Traditional IRA is tax-deferred growth.  Money invested in a Traditional IRA is pre-tax money, and therefore allows you to invest more of your hard earned money to save for retirement. You will want to review your situations before deciding if a Traditional or a Roth IRA is right for you. To compare the benefits of each, see my post on the subject, Invest in a Traditional IRA or a Roth IRA?, or my post describing the Roth IRA called, What is a Roth IRA?

Bookmark, Share or Email this article.

Guaranteed car finance companies have helped thousands of customers who have different past credit problems to finance the purchase of a new or used car. Some people need guaranteed car finance simply because they have no credit history. So, thank goodness for guaranteed car finance arrangements whereby you can find a car you like and drive it out of the showroom within minutes, right? Maybe not. You might want to look a little closer before signing those papers…

Rates

As usual, the rate you are offered will depend upon your credit history. If your credit history is bleak at best, then you can bet your quote will include an interest rate that is sky high upon “approval”, and be careful with that as well, because the rate advertised is not always the rate you will get. I’ve heard of some guaranteed car finance companies coming back with an interest rate as high as 15% and higher! That’s like credit card interest on a larger principal amount. Car finance rates are determined by the percentage or cost added onto the loan by the lender and the dealers get paid a commission on higher purchase deals and will try to charge a rate that is more beneficial to them, and not you.

Payments

Read the rest of this entry »

Bookmark, Share or Email this article.

Deciding whether to buy a new or a used car can be difficult. When considering your options, which of these three do you fall under:

1. I am looking for a particular car, and am not concerned with its depreciated value over time.
2. I am looking for a balance between investment value and features/preferences.
3. I am looking for a car that will retain the highest value possible over time.

There are distinct advantages and disadvantages no matter which way you choose to go. But let’s look at my recommendations based on the above categories. If you fall into Category 1, you should buy a new car, and drive it for years to come. The key thing here is, that you do not sell you car within the first two years, as new cars lose 60-70% of their value during this time. You should expect less maintenance costs with a new car, but I highly recommend obtaining a great warranty package as well to further reduce your maintenance costs, the point being that since you will be making a car payment, you want to have as few unforeseen costs as possible.

Read the rest of this entry »

Bookmark, Share or Email this article.

In this post, I am going to show the exact steps I take to evaluate a potential real estate investment property. The focus will be on single family residences, but this method can be applied to other types of property. Also, I am going to include the actual spreadsheet I use to input the obtained values, and work the numbers. With the knowledge and tools that you will find here, you should be able to estimate your costs for a real estate property, and consequently, the profit you should expect to make from the deal. The only thing not included in this spreadsheet are any repair costs and holding costs associated with a potential real estate investment property, as this will be covered in a future post. Ok, let’s look at each of the steps carefully:

Read the rest of this entry »

Bookmark, Share or Email this article.