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November 30, 2007

Fueling your Vehicle for Less

With the increasing costs of automobile fuel, just about everyone who owns a vehicle is interested in learning how to spend less on gas. It doesn't matter what a person's income level is, how far they drive on a day-to-day basis or what type of vehicle they have, everyone wants to save money on fueling their vehicle. With just a few simple changes in your lifestyle, there are specific ways to increase your gas mileage that will help you to spend a lot less on fuel on a regular basis.

If you commute a long distance to work, carpooling can really save a great deal of money, provided you have a friend or coworker who commutes from approximately the same area. You and potential carpoolers can make an agreement where each person will drive an even amount of days so that it won't be necessary to exchange any money to pay for gas. Carpooling can be a win-win situation for everyone by causing less wear and tear on everyone's vehicles, as well as allowing them to spend less money on gas.

Aside from allowing you to arrive at your destination a lot quicker than taking city streets, driving on the highway uses a great deal less fuel. Frequent stopping and going that driving on city streets require causes your car to work harder, necessitating the use of more gas. Many people prefer back roads or regular streets due to backups on the interstate. If you must tackle heavy traffic on the interstate where you live, then you won't save much on gas and could actually turn out costing more, so perhaps alternate routes would work out best for you.

Mechanics and automobile manufacturers urge consumers to get regular oil changes for a good reason. Standard oil changes help to prevent wear and tear on your vehicle's motor, allowing you to get better gas mileage. Driving your vehicle beyond the recommended mileage without getting oil changes can cause more serious problems aside from causing the car to burn fuel more rapidly. A good thing about oil changes is that they are reasonably priced and so convenient that if you go to one of the many quick-change oil and lube centers, you never have to leave your vehicle. You are able to sit right there and watch them perform the oil change as well as check your automobile's other vital fluids, and topping them off, if necessary. Many also check tire pressure, which also effects gas mileage as well.

There is no reason to pay astronomical prices on gas for you car. By putting these tips to use on a regular basis, you will ensure that you maximize the use of your fuel, therefore spending less money. If your car appears to be burning a greater amount of gas than it usually does, you should have it checked out by a licensed mechanic. There could be any number of things going on that could be causing the fuel to be used more quickly. Oftentimes, if there is a mechanical reason why the vehicle is using gas at a faster pace, it's usually relatively inexpensive to fix the problem, such as a clogged fuel filter, grimy motor oil, or even the pressure in your tires may simply require some attention.

November 28, 2007

The Importance of Quality Life Insurance

When many people imagine their deaths they often envision themselves being old, wrinkled, and gray. Unfortunately, not everyone lives to be old and gray because unexpected fatal accidents or terminal illnesses can occur at anytime. That is why it is imperative for you to have adequate life insurance coverage, and is especially true if you have a spouse and children that are supported by your income.

Funeral costs can sometimes exceed $10,000, and if your family is faced with your unexpected death yet you failed to provide adequate life insurance, this could put a great strain on them. Not only would they have to suffer with your loss, but they would also have to figure out how to cover the cost of a respectable burial as well as pay everyday living expenses that were previously paid for with your income. Having sufficient life insurance would totally eliminate these additional stressors that your loved ones would have to deal with following your untimely death.

Adequate life insurance means obtaining a policy that will cover your entire funeral/burial as well as provide your family with a lump sum of money to pay off a mortgage or get out of debt, no matter what the cause of your death. Many people feel comfortable with the policies provided by their employers, but oftentimes these employer-provided life insurance policies only provide benefits if you should die accidentally or are somehow dismembered. You need a good term life insurance policy in order to be adequately covered. Term life insurance policies pay death benefits no matter what the cause of death, except, of course, in the event of suicide.

If for some reason you pass away and had little or no life insurance coverage, there are non-profit agencies that can assist with funeral costs, depending on whether funds are available or not. Usually, though, the coverage is less than five hundred dollars, which will only pay an extremely small percentage of the funeral service. Many families have had to suffer the humiliation of allowing the state to bury their loved ones in simple boxed caskets with modest funeral services. Surely, this isn't the way that you would choose to be buried, but without adequate coverage, there aren't many options. There is always cremation as an option, which would certainly save your family money, but many people prefer to be buried and have a customary funeral.

Another option that your family would have in the event of your untimely death before attaining adequate coverage to pay for funeral expenses is to call around to numerous funeral homes. If the situation is explained, your loved ones may be fortunate enough to reach one of the few funeral homes that would be willing to accept some sort of payment arrangement. If they're lucky enough, your family member might even locate a funeral home director who is willing to perform the entire funeral, complete with casket and burial, absolutely free. This is not common or likely and only occurs in extreme circumstances, such as with unclaimed bodies.

So, as soon as you decide to get married and have children, it is a good idea to purchase a good term life insurance policy. Policies offered by employers are typically good to rely upon for extra coverage but should by no means be considered your primary life insurance policy. Many people, especially those in their 20s and 30s may feel like life insurance is an unnecessary expense, especially if they are in optimal health, but no one can predict when an unforeseen accident could suddenly claim your life. Therefore, you should always be prepared so that your family doesn't have to endure a financial hardship should your death occur prematurely.

November 26, 2007

Cut Your Grocery Bill By Up to Half

Let's face it, food is expensive, and for a family of four, it's not unusual to spend six or seven hundred dollars a month on groceries. If you're having financial problems, though, like many people are, this is quite a bit of money to spend on food. Despite the high cost of groceries, there is no need to deprive yourself of certain foods that you and your family enjoy. By being resourceful and seeking out ways to decrease your grocery bill, you can shave as much as half off your monthly grocery bill yet still have the same amount, if not more food.

Everyone knows that utilizing coupons can really save them money. What you need to know, though, is that there are ways to maximize the value of your coupons and save even more. First of all, make sure that you only use coupons for items that you regularly buy. Don't buy products that you don't normally buy just because you can save money on it. The food may just sit in your refrigerator and spoil, which is a total waste of money. Also, many grocery stores offer double coupons, which means that instead of saving fifty cents or $1.00 on a specific item, you'll save double the value of the coupon. Many shoppers have gotten items for pennies on the dollar or practically free by taking advantage of double coupons.

Produce has really increased in price lately. This doesn't mean that you must do without if you can't afford to pay the astronomical prices to eat fresh fruits and vegetables. One way that you can ensure that you are never without healthy produce for yourself and your family is to grow your own. Of course you can't grow a garden if you live in an apartment complex, but you still have options. Perhaps a relative or good friend with a nice sunny backyard would be willing to allow you to use their yard to grow healthy produce. You could assure them that you will plant and maintain the garden and even give them yummy, fresh produce as well.

Most grocery stores have special sections where they offer food at deep discounts because of rapidly approaching expiration dates. For instance, you may find t-bone steaks for the price of much cheaper cuts because they expire within the next day or two. As long as you cook them within a day or so, or freeze them, you won't have to worry about spoilage, and you will have saved a great deal of money. You can save money this way on more than just meat. Dairy products produce and other foods that you buy on a regular basis are treated the same way, so keep your eye out for them.

Many mass merchandisers and large discount stores like Wal-Mart and Big lots sell food items for a fraction of the cost of regular grocery stores. Even at stores like Big Lots or Family Dollar that aren't grocery stores, you are able to purchase boxes of cereal, coffee, canned items, and even bacon, eggs and milk for extremely low prices. You would be amazed at how buying these and other food items at discount stores instead of grocery stores can really cut your grocery bill.

With some research and effort, it's possible to save a great deal on your family's grocery bill. There's no reason to go without enough food or use money that you need for other bills in order to buy groceries. By becoming a smart shopper you can ensure that there is enough food available to make delicious and healthy meals on a daily basis, with as little stress and as little money spent as possible.

November 23, 2007

How to Become a Millionaire--or as Close to One as Possible

If you're like many other Americans, you have a desire to live any easy life and become prosperous. While most people may think that it's impossible for the average person to become rich, with great persistence and hard work, it is quite possible to live comfortably and possibly even become rich. It won't happen overnight unless you win the lottery, but there's no reason why you can't actively work towards becoming a millionaire, or at least quite well-off.

The first step to becoming rich is to eliminate any debt that you may have. If you owe numerous creditors you need to pay them off in order to free up that money. If not, you will never achieve the status that you're looking to achieve. Depending on the amount of debt that you have, it may take a while to pay off, but in the long run, it will be well worth the effort. After all of the debt is paid off you will be able to concentrate on making your future a fruitful one.

Many people have become self-made millionaires by investing. If you don't have a clue when it comes to investing, read a book, take a class or hire a professional to guide you. Sure, there will be some risk involved in investing, but if you invest expertly you can minimize your losses. Many long-time investors would be glad to share some of their expertise with you if you choose not to hire a professional. There are even websites that offer forums where you can communicate with others who have been successful in investing, as well as those who are in the same situation you're in.

During your quest to become a millionaire, it may be a good idea to associate yourself with others who are successful. Success breeds success, so it might prove to be very helpful. Nearly every community has a more affluent area and simply attending social functions in that particular area will put you into direct contact with those with money. Observe and talk to them so that you will learn tips that will help you to one day become as successful as they are.

Chances are that if you are working a low-paying job, you will never become a millionaire. There are exceptions, such as lottery winnings, inheritances, lawsuits, etc. If you are making a low wage and you're having difficulty making ends meet, you need to change things fast. If your desire is to be wealthy someday, then you need to be able to create a substantial cash flow. Take up a trade or go to college in order to receive proper training that will enable you to double or even triple your income. This can be done without quitting your job, because not working would be counterproductive.

If you are unable to attend school for some reason, such as because of lack of funding, then another option is to work side jobs or a second job. Everyone has a talent, whether they've discovered it or not. Try to discover what your talent is and if it could make you money. Perhaps you're talented at making crafts, furniture repair or styling hair. These types of talents can earn you a great deal of extra cash that can be saved toward your future. They can be performed in your spare time so as not to interfere with your regular job.

Not everyone is lucky enough to be born with a silver spoon in their mouth, but that doesn't mean that you will never be well-off. It may take years of hard work in order to achieve your goal, and you must stay focused and motivated until the end. You should also remember, though, that your goal is reachable, as is anything that you desire to accomplish. Once the challenging part is over and you've reached your goal, you will then realize that all of your hard work has finally paid off.

November 21, 2007

Have a Great Christmas without Going into Debt

The average American spends approximately $2000 or more on Christmas presents for family and friends each year. Payment for Christmas shopping if often completed with the use of credit cards, and many people are usually still paying for Christmas gifts six months following the holiday season. This isn't a good situation for any household, no matter what their income level is. Planning ahead, creating a budget and price comparison are great ways to eliminate or lessen the chances of going into debt due to Christmas shopping. There are also many others ways to spend as little as possible during the holiday season, or at least manage your money optimally so as not to cause a hardship.

Despite the huge crowds and early morning hours, Black Friday is a great day to shop if you wish to take advantage of huge savings. Black Friday is the first official shopping day of the year, which falls on the day following Thanksgiving every year. Millions of shoppers take advantage of the numerous items offered at rock-bottom prices by hundreds of retailers like Wal-Mart, Kmart, Sears, Big Lots, and many more. The key is to find out which stores will have which products by checking the sales papers that are usually sent to your home a few days prior to Thanksgiving. On the day of the sales, arrive at the store of your choice as early as possible. This will increase your chances of finding the product that you're looking for, since stores usually only offer a limited supply of each sale item. Another reason to arrive early is because the special one-time-only sales are usually over by 10 or 11 am.

Another way to prevent yourself from going into debt is to take advantage of layaways. Many stores have discontinued their layaway services, but there are still stores that have them. This payment option allows you to make small but consistent payments towards your gifts without causing you to go over your budget. Once the layaway is completely paid off, you simply take home your items, wrap them up and place them under the Christmas tree. There's no need to scrape up money that you need for bills or use credit cards with high interest rates in order to complete your shopping because it'll already be done.

Although many people feel that re-gifting is rude, others realize that it is a great way to get rid of unwanted gifts and make someone else happy simultaneously. Sometimes others have good intentions when giving you a gift, yet the present turns out to be something that you either can't use or don't like. Why leave the gift in your closet to collect dust when you can give it to someone who can put it to use? By re-gifting, you also free up money that can be used to buy presents for others on your list.

Many banks and credit unions offer special Christmas savings accounts that can be opened at any time of the year. The earlier you open one, the more money you can accumulate by Christmas. If you open one in January and deposit a certain amount of money from each paycheck, imagine how much money you will have by the end of the year. Even if your financial institution doesn't offer such an account, you can still open a regular savings account that you intend to use for Christmas shopping. Opening a high-interest savings account is even better because you'll earn even more money to spend on gifts.

Christmas is a marvelous, festive holiday that countless people look forward to all year long. It usually causes people to get into "the giving mood", which is fine, as long as the money is available. Most loved ones wouldn't want to accept costly gifts if they knew that you went over your spending limit to purchase them. So, do your homework before shopping so that you can take advantage of sales, and also use any other useful tactics to prevent yourself from paying for Christmas presents well into the next year.

November 19, 2007

Living Frugally: Making the Most of your Money

So, you've decided to live on as little money as possible yet still live a comfortable and fulfilling life. Maybe you've got a specific goal in mind and need extra money in order to achieve it, or you are simply tired of watching your hard-earned money disappear without knowing exactly what you've spent it on. The following tips will help you to make the most of your money for whatever reason you've decided to embark on this particular lifestyle change. These tips will enable you to save more money than you ever thought possible, without sacrificing your current lifestyle.

Learn a New Skill

One way to save a great deal of money is by making your own clothes. Buying clothes from stores is expensive, and you can make your own clothing for less than half the cost. All you need is a good, dependable sewing machine, thread, needles and fabric and you have the potential to make some really fashionable clothes for your family. If you don't know how to sew, most communities offer low cost sewing classes that would really be a great one-time investment.

Friends and family will look at you with admiration as you sport your trendy handmade clothes. The sky is the limit with what you can make, too. You can make clothes in any color, pattern, material or design, and you don't have to search numerous stores or websites for what you're looking for--all you do is get the pattern and make it. Many magazines and websites offer free patterns, so you don't have to spend much extra money on them.

Free or Low Cost Entertainment

Instead of spending large amounts of money on family entertainment like bowling, movies, etc. every weekend, there are many low cost alternatives to having a great time together. Some excellent low-cost or free activities that you can do with your family are: free movies, often offered at local libraries and community centers, picnics, recreation centers, where you can exercise and play games, as well as many other activities. You can also spend quality time with your family by designating a certain day of the week to play board or computer games together, or even watch your favorite rental movies together. Combined with your favorite foods, you and your family members will never feel deprived of having fun together.

Just because you decide not to go on pricey outings on a regular basis doesn't mean that you'll never go bowling or to a movie theatre again. Some bowling alleys have special days and times where they offer specials like dollar bowling. You should check with your favorite bowling alley to take advantage of these specials. If you frequent movie theatres, perhaps waiting a few weeks or possibly a couple months for the movie to arrive at the dollar theatre is a good idea. Going to see a new movie at the theatre can really be costly, and many families have admitted to spending as much as one hundred dollars to see a movie. Of course this price includes the theatres' high-priced refreshments, so if you do decide to splurge every now and then and see a newly released film, it might be a good idea to eat prior to going to the theatre. That way, the delicious smell of the popcorn won't be so tempting, nor will the huge boxes of candy or oversized cups of soda. Aside from their high prices, these snacks are also very unhealthy, so avoiding them will do your health a favor, too.

Use a Cookie Jar

Most people accumulate quite a bit of change on a regular basis, and placing this change into a cookie jar or similar container can really add up. After the container becomes full, simply take the change to your bank or credit union to deposit it into your savings account or convert it to dollars so that you can use the money to pay bills, get gas, or even to buy special "treats" for your children or possibly even yourself.

Cloth diapers

Families with babies or small children in diapers probably know that the cost of buying disposable diapers can really add up. Cloth diapers are a great alternative. They're better for the environment as well as your wallet. You don't have to worry about using unattractive white and outdated diapers with large, cumbersome pins. There are many colorful and decorative versions of cloth diapers that fasten with snaps or Velcro, for easy use. The only thing that you'll have to deal with if you choose this route for diapering your child is cleaning the soiled diapers. After you see how much money you're able to save, though, you're quickly realize that it's all worth it.

Be Thrifty at Second-hand Stores

There's nothing embarrassing about shopping at second-hand stores. Many well-off people shop there all the time. You would be surprised at the high quality items you can get for great prices by shopping at these types of stores. Surprisingly, some thrift store items are brand new and still have the price tags attached, yet the price may be more than half the price of the same item bought from a retailer. You sure can't beat a bargain like that. You can find great clothes, books, household items, footwear, and much more at thrift stores.

Clip Coupons

One easy way to save money on items that you buy everyday is by clipping coupons. It doesn't have to be difficult or time-consuming, and can actually be fun. Create an activity to do with your children every Sunday. Children love being helpful, and asking them to cut out coupons for you can be enjoyable for them and time-saving for you. If your local newspaper doesn't contain coupons for certain products, you can request to be sent the coupons of your choice directly from the manufacturer. This can easily be done by phone, mail, or email, and if available, they will usually send them out right away.

For whatever reason you decide to live on less money, there doesn't have to be a major lifestyle change. Just a few simple modifications and sacrifices here and there will allow you to have a more lucrative future in whatever way you desire. If you need the extra money to go on an exotic vacation or in order to purchase an expensive item, you can attain these goals before you know it. Living frugally doesn't have to mean living without or depriving yourself, but simply means re-prioritizing your money so that it better benefits you and your family.

November 16, 2007

Use Creativity to Save on your Afterlife Expenses

With funeral costs reaching astronomical proportions, many individuals are opting for alternative funerals in order to cut costs and allow their loved ones more money to pay bills and other necessities. For this reason, alternative funerals have become extremely popular in the past 15-20 years. Another reason why alternative funerals have become popular is because more and more people would rather their loved ones celebrate their life and treat the ceremony as a happy one as opposed to traditional funerals with crying and grieving.

Many people choose to have their bodies cremated without having any type of service for loved ones and friends to attend. These people often instead opt for online memorials. These types of commemorative services can actually be more meaningful than traditional ones, despite being merely a fraction of the cost of a regular funeral. This is due to the fact that online memorials offer numerous advantages over conventional ones.

First of all, a special web page/site will be created in order to commemorate the deceased. The page comes complete with yours or your family's choice of background music, colors, and other custom features. Depending on which site is chosen, there are a certain number of pictures of the deceased allowed to be uploaded to the site. The site can be short or long, although there is usually a limit. Ample space is often available, which is typically more than enough for everything desired to be included.

Another advantage of online memorials is that family members can choose to have the memorial page remain online for indefinite periods of time. It all depends on how long family and friends wish to keep the site active. If they choose to have it active for a lifetime, then this is certainly an option. As long as the nominal maintenance fee is paid, the site will be available for public viewings forever.

Many people also appreciate the convenience of online memorials. There is no need to dress up and no set time to attend a funeral service. Any time a family or friend chooses to commemorate the deceased, all they have to do is go to the appropriate website for viewing. They are able to leave comments, poems, or any other type of remark that will be viewed by those who visit the page in the future. They are able to view the site at any time of the day or night, as well as for as many times as they would like.

If you happen to be a traditionalist yet still want to save money on afterlife expenses, there are other options. Some term life insurance policies include a complimentary funeral and coffin with the package. The services and burial are usually nothing fancy, but if it can save your loved ones a great deal of money by having your afterlife arrangements prepaid, many people don't mind the lack of extravagancy. Not all life insurance companies offer this perk, so if you're interested in such an arrangement, it is important to research agencies that you may be interested in prior to purchasing a policy. Make sure that you find out all of the details prior to purchase.

In addition, many people save money on their funeral services by planning a gravesite service. This type of service eliminates the cost of funeral home usage, and if you opt to provide your own clothing, singers, and even reverend to perform the ceremony, you can save even more yet still have a wonderful, memorable service for your friends, acquaintances and loved ones.

There is no reason that you have to burden your loved ones with the high costs of traditional funeral services following your death. With a little bit of flexibility and a lot of planning, you will be able to spare your family members any worrying about costs. Many people make elaborate plans to have themselves cremated and have their ashes disposed of in unique ways when their deaths occur. The sky is the limit when it comes to making economical afterlife plans; you simply must seek them out.

November 14, 2007

Reviewing Your Investment Portfolio

Before the year end, get all your investment information together, thoroughly analyze it, and clean up your portfolio. Here are 4 main points to consider during this annual review process:

Take another look at your asset allocation plan. Do this before you review your actual investments, so you aren't influenced by your current allocation. Don't just assume your original allocation is still appropriate. You may now realize that your risk tolerance is lower or higher than you originally thought. Asset allocation does not assure a profit or protect against loss in a declining market.

Find your most recent statements. List each investment and its current value. Total your investments by category -- cash, bonds, and stocks. Then compare those percentages to your asset allocation plan. If you haven't done this review in a while, you're likely to find your current allocation is off from your desired allocation. You then need to devise strategies to get your allocation back in line.

Get rid of small accounts. It's not unusual to find you have several small accounts. Perhaps you have a bank savings account with several hundred dollars in it that you don't use anymore. Or you may have a small investment account that you received as a gift. You still have to look at the statements every month and make sure any income is included on your tax return. Take all those small accounts, cash them out, and consolidate the funds in one account.

Look for ways to simplify your investments. Do you have a variety of individual retirement accounts (IRAs) that can be consolidated in one IRA? Do you own similar stocks or other investments that aren't adding much in the way of diversification to your portfolio? While you want to be properly diversified, minimize the number of accounts and investments you own so your investments are easier to monitor.

November 12, 2007

Life After Foreclosure

If you're reading this article, chances are you've lost a home due to foreclosure, or either you know someone who has. If you have lost your home and think that you will never be a homeowner again, you are greatly mistaken. If you have the desire to buy a home following a foreclosure, then there are ways for you to achieve this goal. Many mortgage companies now have "creative" ways to get people with derogatory credit, short time on the job, and other special situations approved for mortgages. You would be surprised how easy it can be to qualify for a mortgage, even following a foreclosure, bankruptcy, divorce, etc. By following the subsequent tips, you are guaranteed to become a homeowner for a second time.

Tip # 1 - Is Home Ownership For You? - Before you begin your quest to own a home again, you need to determine whether or not home ownership is for you. Owning a home is a major responsibility that some people may not be equipped for or prepared to handle. Many people prefer not to have to deal with the responsibilities involved with owning a home and would much rather rent. If a roof needs replacing or the basement floods, many people would rather the landlord take care of the problem instead of shelling out the cash themselves to have the problems fixed. Simply creating a list of the pros and cons of homeownership can assist you in making the determination if buying another home would be a wise decision.

Tip # 2 - Get Your Finances in Order - Your previous home was foreclosed on for a reason. Obviously you were having some serious financial problems that prevented you from keeping up with your mortgage payments. Prior to applying for a new mortgage, it would probably be best for you to pay off all of your debts first. This is a good idea, not only to decrease your chances of losing another home, but also in order to ensure that you'll receive the lowest interest rate possible. Also, before looking for the perfect home, you should figure out exactly how much of a payment you can comfortably afford each month, including taxes and insurance. If the inability to pay your property taxes contributed to the loss of your first home, there is a surefire way to ensure that it doesn't happen again. Many mortgage companies will include taxes and property insurance in with your mortgage payments. If the option isn't presented to you prior to closing, be sure and ask your mortgage broker or loan officer. Simply explain that you would rather have a higher monthly payment than be required to pay a large lump some on an annual basis.

Tip # 3 - Save Up For a Down Payment - Even though there are numerous no-money-down programs out there to help people without down payments to become homeowners, it's always a good idea to save up 5 % at the absolute minimum, in addition to funds to cover closing costs. A great deal of sellers will pay all or some of the closing costs, but oftentimes there are surprise costs that may arise at the last minute. Having an adequate down payment also makes you more likely to be approved for a loan. Having a past foreclosure under your belt, as well as no money for a down payment makes you a higher risk to banks that they may not be willing to take.

Tip # 4 - Keep Your Options Open - There are many questionable mortgage companies opening all over the country that will approve anyone with an income. Don't go with the first mortgage company that says they can get you approved. Many of these companies are only out for the money and they could care less about you personally. Many will take advantage of your eagerness to own a home despite past credit problems and will charge a great deal more fees than necessary. With all of the special financing programs available, you don't have to deal with this type of treatment. Stick with reputable mortgage companies, since most of them also offer special financing programs for those in your specific credit situation. There is also the option of buying a home on a land contract or one of the popular lease-to-own programs. Buying a home using one of these methods would give you at least two or three years to improve your credit situation enough to get approved for a mortgage.

With all of the many options available when buying a home these days, there is no need for a past foreclosure to prevent you from buying a home again. You just have to ensure that you're prepared to handle the great responsibility of being a homeowner. There are taxes, insurance, lawn maintenance and repairs, just to name a few. If the idea of all of these responsibilities makes you cringe, then perhaps you should rent for a while until you feel more prepared to handle the responsibilities involved in homeownership. If you don't mind the fact that these things are all part of owning a home, then you can and will own a home again. You simply need to be persistent, resourceful and plan ahead, and you will be approved for your dream home--again--no matter if it is through a conventional mortgage, rent/lease-to-own program or a land contract.

November 9, 2007

Zero-Coupon Bonds

Zero-coupon bonds do not pay interest during the bond's life. Since most investors purchase bonds to receive periodic interest income, this may seem like a contradiction. However, some investors desire the fixed return without the periodic receipt of interest payments. Zero-coupon bonds were designed to meet that need.

What are the major characteristics of zero-coupon bonds? Zero-coupon bonds are sold at a deep discount from face value. Since the bonds do not pay interest during the bond's life, your return results from the bond's price gradually increasing from the discounted value to the face value at maturity. Maturity dates range from six months to 30 years.

The bond's interest rate is locked in at purchase, but no interest is paid until maturity. Instead of receiving semiannual interest payments, your principal earns the stated interest rate compounded over the bond's life. When the bond matures, you will receive both the principal and interest -- the bond's face value.

What types of zero-coupon bonds exist? You can purchase corporate, U.S. Treasury, or municipal zero-coupon bonds. Since you don't receive any of your investment until maturity, choose a zero-coupon bond with a high credit rating. U.S. Treasury zeros are the safest zeros, since the payment of principal and interest is guaranteed by the U.S. government if held to maturity. However, many corporate and municipal zero-coupon bonds are issued with high credit ratings.

What are the advantages of zero-coupon bonds? Zeros have several unique features that may be attractive to investors:

• Your principal earns the stated interest rate compounded over the entire period the bonds are outstanding.

• You can purchase zero-coupon bonds to mature at a specific time for the amount needed, providing a convenient way to fund known expenses.

• For a relatively small initial investment, you can purchase a bond that will pay a much larger amount at a later date.

How are zero-coupon bonds taxed? The yearly growth in the value of the zero, called accretion, is considered interest income for tax purposes, even though you don't actually receive the money. You can avoid these taxes by purchasing zero-coupon municipal bonds, whose accretion is not taxable. Or you can purchase zeros for tax-sheltered accounts, such as 401(k) plans or individual retirement accounts. Then, taxes will be deferred until the money is withdrawn.

How do interest rate changes impact the value of zero-coupon bonds? Like other fixed-income securities, a zero-coupon bond's price moves up when interest rates fall and down when interest rates rise. However, zeros are affected much more dramatically by movements in interest rates. A general rule of thumb is that a 1% movement in interest rates will adjust a zero-coupon bond's market value by approximately 1% for every year left to maturity. By holding the bond to maturity, however, you will receive the entire face value. Because of the possibility of large fluctuations, it is generally recommended that you hold zero-coupon bonds until maturity.

November 7, 2007

How to Handle Stock Price Declines

When a stock's price declines substantially, you might wonder what you should do. If you own the stock, should you sell before the stock declines more or purchase more shares at the lower price? If you are interested in the stock, should you purchase now or stay away from it? Before you decide, you need to assess the cause of the price decline. Typically, the stock's price is reacting to one of three things:

Market trends -- When the overall market is weak, individual stock prices can also be affected. Compare the performance of a stock to the overall market to see if it is moving in line with the overall market. Some stocks may move to a greater extent than the overall market, while others may move to a lesser extent. Review the beta of the stock when making this comparison. Beta, which can be found in a number of published services, is a statistical measure of how stock market movements have historically impacted a stock's price. If a stock's price is just reacting to overall market conditions, you probably don't want to sell for this reason. Whether you should purchase the stock will depend on your assessment of the future direction of the stock market.

Industry factors -- A stock's price can also be affected by industry-wide factors. Those factors could include the cyclical nature of the industry's sales, a structural change in the industry, a change in government regulation, industry liability issues, and competitor announcements. With these types of changes, you need to assess whether the industry's changes are significant enough to cause you to sell the stock.

Company-specific issues -- These changes relate solely to the company in question and can include items like earnings, management, liability questions, government regulation, competition, and fraud. With these types of changes, you need to determine what is causing the stock price decline and then assess whether the change is temporary or permanent. For instance, an earnings shortfall might be a one-quarter event or it could signal a fundamental shift in demand for the company's products. Reassess the company's fundamentals to make sure you still believe its future prospects are good, looking at things like the management team and trends in sales and net income. If, after making this assessment, you believe the change is temporary and has not affected the company's fundamentals, you probably will not want to sell the stock and may even want to add to your position.

Before you can decide whether you should sell your stock or buy additional shares, you need to assess what has caused the price change. You will then be in a better position to decide how to react.

November 5, 2007

Common Mistakes With Retirement Plan Withdrawals

During your working years, your emphasis was to accumulate as much as possible for retirement. But as you near retirement age, you need to start thinking about how to withdraw those funds to maximize your income. To help accomplish that, avoid these mistakes:

Not understanding all available options. Each retirement option, such as 401(k) plans, profit-sharing plans, and individual retirement accounts (IRAs), has different tax and plan rules regarding withdrawals. Review all your options to select the best choice for your circumstances. In many cases, your selection will be irrevocable.

Not using reasonable estimates to calculate your withdrawal amounts. The amount you should withdraw annually can be calculated based on how much principal you want remaining at the end of your life, your life expectancy, your expected long-term rate of return, and your expected long-term inflation rate. If you don't use conservative estimates, you run the risk of depleting your assets before you die. Even with conservative estimates, review these factors annually so you can adjust the withdrawal amount if necessary.

Not withdrawing funds in a tax-efficient manner. Before beginning withdrawals, review all your retirement assets, including pension plans, IRAs, and taxable investments, to determine the most tax-efficient strategy for withdrawals. This can add years to the life of your retirement funds.

Retiring early without considering the financial implications. Retiring even a few years earlier than planned can significantly impact the amount needed for retirement. Make sure you'll have sufficient funds for your entire retirement before opting to retire early.

Taking a lump-sum distribution in your name. When rolling over a lump-sum distribution from a 401(k) plan or other qualified plan, transfer the funds directly to your new account's trustee. Otherwise, your former employer will withhold 20% for taxes when the funds go directly to you. You will then have to replace the 20% from your own funds within 60 days or the 20% withholding will be considered a distribution, subject to income taxes and possibly the 10% federal tax penalty.

Not taking required minimum distributions. Once you reach age 70 ½, you must take required minimum distributions from traditional IRAs and other qualified plans or pay a 50% excise tax on the amount you should have withdrawn. If you are still working, you can delay withdrawals from qualified plans, but not from traditional IRAs, until you retire.

Not selecting proper beneficiaries. The proper selection of beneficiaries can make a significant difference in the amount of taxes owed when you die.

Not seeking advice. Determining how much to withdraw from your retirement investments and the best way to make those withdrawals can be complicated. Since the decisions are often irrevocable and can have a major impact on your retirement lifestyle, seek guidance first.

November 2, 2007

The Competing Needs of Children and Aging Parents

At a time when baby boomer couples should be saving for their own retirements, many feel squeezed by competing financial needs. Having started families later than past generations, their children may just now be entering college or still living at home. At the same time, aging parents may need financial assistance. It is a dilemma that is likely to become more common.

Caring for Parents

As life expectancies continue to rise, it becomes increasingly likely that you may need to help an aging parent. Some financial precautions you should consider now include:

• Investigate long-term-care insurance for your parents. If they can't afford the insurance, you may want to purchase it for them.

• Have your parents prepare a listing of their assets, liabilities, and income sources, including the location of important documents. This can save time if you need to take over their finances.

• Make sure your parents have legal documents in place so someone can take over their financial affairs if they become incapacitated. They may also want to delegate health care decisions.

• Understand the tax laws if you provide financial support to your parents. You may be able to claim them as dependents if you provide more than half their support. Additionally, you may be able to deduct medical expenses paid on their behalf.

• Find out of if your employer offers a flexible spending account for elder care. This may allow you to set aside pretax dollars to pay for up to $5,000 of elder-care expenses for a dependent parent.

Assisting Your Children

For many families, college costs are a significant financial cost. While you may want to pay all college costs for your children, it may not be feasible with competing needs to save for retirement and to assist your aging parents. Some strategies to consider include:

• Shift some of the burden to your children, requiring them to work part-time during college or to take out student loans.

• Understand the financial aid system, investigating all financial aid sources. Search for scholarships that are not based on need. Apply to several different colleges, looking for the best financial aid package. Negotiate with your child's preferred college to see if you can increase the financial aid package.

• Look for ways to reduce the cost of college. Your child can start at a community college, which is often cheaper than a four-year college, especially if the child commutes from home. Or consider a public university in your state, which will generally be more affordable than a private university.

Once your child graduates from college, don't assume your financial responsibilities are over. Adult children may return home for a variety of reasons -- they can't find a well-paying job, they have too much debt to live alone, or they divorce and need financial support. If your child returns home, realize there are increased costs -- additional food, phone bills, utilities, etc. Consider charging rent and imposing a deadline on how long he/she can stay.

Don't Forget Yourself

When faced with the competing needs of children and aging parents, it's easy to neglect your own need to save for retirement. But don't feel guilty about your retirement needs. One of the best gifts you can give your children is the knowledge that you will be financially independent during retirement. Consider the following:

• Calculate how much you need for retirement and how much to save on an annual basis to reach that goal. Don't give up if that amount is beyond what you're able to save now. Start out saving what you can, resolving to significantly increase your saving once your parents' or children's needs have passed. Also consider changing your retirement plans, perhaps delaying your retirement or reducing your financial needs.

• Take advantage of all retirement plans. Enroll in your company's 401(k), 403(b), or other defined-contribution plan as soon as you're eligible. Also consider investing in individual retirement accounts. All provide a tax-advantaged way to save for retirement.

• Reconsider your views about retirement. Instead of a time of total leisure, consider working at a less stressful job, starting your own business, or turning hobbies into paying jobs.


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