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January 30, 2008

Avoiding the High Costs Associated with Super Bowl Sunday

The upcoming Super Bowl Sunday will be on February 3, 2008, and many football fans are looking forward to being part of the excitement in Arizona this year. If you are among the thousands of fans who desire to attend the live game yet don't have the money for the super expensive tickets, which now can be as high as a whopping seven thousand dollars or more, there are ways for you to make the day just as special without mortgaging your house in order to obtain the money for tickets. Not only is there the cost of the actual tickets, but there are also costs for transportation, food, lodging, etc. Fortunately there are alternatives to paying all these fees, and you can still watch and enjoy the game as well.

Even though many people greatly enjoy the excitement of being at the actual Super Bowl game, there are some disadvantages to being there. First of all, many fans like to drink alcoholic beverages, which often results in verbal and physical altercations. Secondly, if you don't enjoy being around screaming and loud fans, then the Super Bowl Sunday football game is no place to be. Whether they're drinking or not, spectators are going to become excited and/or frustrated and become loud and boisterous at times. This is normal behavior at sporting events, especially something major like the Super Bowl, so if you dislike this type of behavior, then it would be best if you watched the game someplace else.

Local bars will often air the football game on Super Bowl Sunday on their huge screen televisions. This could be a great way for you to experience the excitement of the game with other fans, but without being at the actual game. Most bars have free admission and all you have to do is buy a couple of drinks. Some will charge a small cover charge, but it's nothing compared to the price of buying tickets to the actual Super Bowl. One good thing about watching the game at a local bar is that you save a great deal of money, and if someone starts to engage in behavior that you disapprove of, you can easily walk out the door and not have to worry about throwing away money spent on tickets

If you're not into the bar scene, there is always the option of throwing a Super Bowl party at your house or attending a friend's. These parties are often loads of fun, and friends and family members all pitch in to buy pizza, subs, or whatever food they agree on, purchase beer or other alcoholic (or non-alcoholic) beverages of their choice. This option not only saves you money on the extremely expensive tickets, but it also gives you the opportunity to bond with your friends and family members while enjoying the game together.

If you know that you're an avid football fan and would like to attend the Super Bowl Sunday football game, perhaps next year you can save up your money in order to be able to comfortably purchase your tickets, as well as pay for everything else that is involved in attending the Super Bowl Football game. Of course, if you can't save the money for some reason, there are other ways of enjoying the game without actually being there, even if you don't wish to spend any money at all.

January 28, 2008

Options for the Uninsured

The cost of healthcare in the United States is expensive, and is rapidly increasing. Unfortunately it's a necessity, yet many Americans are either uninsured or under-insured. This is becoming an epidemic in many areas, and many emergency rooms are refusing to treat those without health insurance, even in emergency situations. It's not a good idea to go without health insurance for any length of time, even if you are a healthy twenty-one-year old who hasn't been sick a day in your life. You can't predict when an accident may occur, requiring medical attention, or when you might suddenly develop a serious condition and need ongoing medical treatment. If an accident or illness did occur unexpectedly, you could quickly accumulate some hefty medical bills that could lower your credit rating significantly if not paid in a timely matter.

If you find yourself in a position without health insurance, there are many options available. First of all, if you've recently left a job where you had health insurance, you will be offered Cobra, which will allow you to pay the full amount of the policy out-of-pocket. Cobra premiums are often quite expensive, though, and many individuals are forced to decline it because of this. If paying for the Cobra policy won't cause a financial hardship, perhaps electing to sign up for it is a good idea, especially if it's only for a few months while you wait for medical insurance for a new job to kick in.

If you aren't eligible for Cobra or simply can't afford it, another option is to purchase your own health insurance policy. There are numerous insurance providers, such as Blue Cross Blue Shield, Humana, etc. that offer low cost policies for individuals and families, depending on the type of coverage you're seeking. One problem that you may experience, though, is if you have serious or chronic health conditions such as diabetes, high blood pressure, or suffer from obesity, you will most likely be denied coverage and will have to seek insurance elsewhere. Blue Cross Blue Shield is one of the few insurance companies that usually don't deny people based on health conditions, but they're usually more expensive.

If you are low income and your job either doesn't offer health insurance, or if participating in the plan offered by your employer would cause you financial hardship, you may want to try applying for health insurance through your local social services office. More and more states are creating special insurance programs for individuals in your situation. These special insurance plans are different from Medicaid, and if you qualify, can bring you peace of mind knowing that you have medical insurance coverage. Of course if your income is low enough, you may even qualify for Medicaid, but guidelines for Medicaid qualification have become stricter than they were years ago.

As an absolute last alternative, many communities have special clinics that provide free health services to those with no insurance. These clinics usually determine your eligibility by your income, and will even provide you with free medication to manage acute or chronic illnesses. If you would like to find out information about free clinics in your community, a good place to start is your local health department. Many health departments can provide you with this information, and if not, they should be able to direct you to a person who can.

There is absolutely no reason for you to have to go without health insurance. With the many options available to you, you should be able to find the most economical way to obtain health insurance for yourself and your family. Those without health insurance tend to neglect their health and ignore potentially dangerous symptoms because they are trying to avoid paying high medical bills. Not only is this dangerous, but it is unnecessary. Many local health departments offer low cost health screenings that allow you to obtain a comprehensive physical, including blood work and other tests, at a reduced cost. Some health departments charge fees on a sliding scale, while others charge a flat rate. So, don't get caught without health insurance, because you never know when your appendix might burst or you may experience some other medical emergency that could totally wipe out your bank account and cause serious financial difficulties for you.

January 25, 2008

Getting in Shape on a Budget

From weight loss to stress relief, exercise has many important health benefits. Despite this fact, a majority of Americans don't include enough exercise in their lives. People give many excuses for not exercising; either they claim they don't have enough time, they're too tired, they're bored with their routine, and the list goes on and on. One way to help motivate people to exercise is to have them join a gym. Most gyms offer all of the amenities that you could possibly need in order to burn fat, rid your body of stress, and even have fun. Swimming pools, saunas, in-door tracks, state-of the-art exercise equipment, aerobics classes, juice bars, are just some of what's offered at fitness centers, depending on the facility you choose. One thing that is especially convenient for some people with children is that many of the larger health clubs even offer free childcare.

Even though gyms offer a lot to those looking to get in shape, they aren't cheap. Costs can exceed three thousand dollars a year, depending on the type of facility you choose to join. Almost all gyms require you to sign a 2-year contract, where you have to pay a down payment and then make monthly payments. After you sign the contract, even if you only use the facility once, you are still required to pay the fee every month until the contract is up. Also, many facilities require that you sign up to have payments automatically drafted from your checking or savings account. If you find that your budget doesn't allow extras like expensive gym memberships, there are other options to get into shape.

One way to get into shape without joining an expensive health club is to exercise at home. While it may seem boring to workout at home, you can easily create fun routines. The use of exercise DVDs can be an excellent way to get in shape at home. Using different DVDS occasionally can give you the variety that you need to avoid becoming bored with a certain routine. The sky is the limit when it comes to DVDs, too. There are so many available that deciding on which ones would work best with your fitness level and goals shouldn't be a problem at all.

If using exercise DVDs is not your thing, then perhaps you can purchase some equipment to help you meet your exercise quota. If your budget doesn't allow you to purchase a large machine like a treadmill or elliptical, you can still reap the benefits of exercise. You can buy a jump rope for under ten dollars at most sporting goods stores, or even at Walmart, and weights aren't very expensive either. You wouldn't believe how many calories you can burn or how quickly you can get your body into shape by jumping rope. Most people think it's just for kids, but many professional athletes jump rope in order to stay in shape.

If you absolutely insist on working out at a gym, there are other options available for you besides signing a two-year contract. Many YMCAs offer exercise memberships that are somewhat lower than at gyms, and usually there are no contracts to sign. The equipment often isn't shabby, either, and with the indoor pool that most YMCAs provide, you can see that YMCAs are nearly equivalent to some health clubs. The only downside is that YMCAs aren't apt to offer free childcare, although many do provide childcare, but at an additional cost.


There is no reason to ruin your budget by joining a gym unless you're absolutely sure you can afford it. You need to make sure that you actually use the membership regularly, too. If you plan on working out at the gym at least three days a week, then you will definitely get your money's worth. If you work out more often, that's even better. Unfortunately, many people vow that they're going to workout on regular basis, but end up going only occasionally, if ever. If the gym isn't close to your home or job, then you may need to reconsider joining. The gym should be within a five to ten mile radius of your home or office, or you will probably not go like you planned, which will basically mean you're wasting your money.

By using some creativity you can enjoy exercising on a regular basis, as you watch yourself tone up while simultaneously ridding your body of the harmful effects of stress. Upbeat music can really to help motivate you, and can help you create the ideal exercise environment, no matter how much money you have. Jogging at a nearby park is also an option. It's free, and it burns nearly four hundred calories in an hour. So, as you can see, you only have to spend as much money as you want to in order to become fit. Even if you have no money whatsoever, there are still ways to add exercise into your life, as long as you use your imagination.

January 23, 2008

Pay Less for Organic Products

If you're one of the millions of people who have decided to switch from regular to organic foods and products, you're probably spending a great deal more money since making this wise decision. There is no doubt that organic products are more expensive than non organic, but the question is how can you get the most for your money when buying organic? Well, depending on the products that you choose to buy, there are several ways for you to shop wisely and benefit from healthier versions of your favorite products simultaneously.

Steer Clear of Health Food Stores

Everyone knows that prices are naturally higher at health food stores, no matter what you buy. If you're looking to get the most for your buck, then perhaps staying away from these specialty stores as much as you can could result in some savings. Just because you decide to shop at health food stores less often, though, doesn't mean that you have to sacrifice the organic products that you depend on. If you pay careful attention you'll realize that more and more regular grocery stores are beginning to sell organic, all natural and chemical-free products, and the good thing is that these items are usually cheaper than the same or similar products from health food stores. Cleaning products, food, and even personal products are now conveniently sold at many large grocery stores.

Believe it or not, the discount store giant Big Lots sells a wide array of organic foods at incredibly lower prices, often less than non-organic products. Super Wal-Mart and Super Target are beginning to carry a larger inventory of organic and all natural items as well. Since these two mass merchandisers specialize in offering products at discount prices, their organic products are often cheaper than those that you would find at other neighborhood grocery stores.


Buy in Bulk

If you use large amounts of certain products, buying in bulk could save you some cash. The larger the package that you purchase, the more of a price break you can receive. If you would like to take advantage of buying organic products in bulk, you will need to visit a large health food store, regular grocery store that sell the items in bulk that you wish to buy, or either shop online on Amazon.com. Amazon's vast website offers a huge inventory of all types of products, and you may even qualify for free shipping, provided the items that you purchase qualify.

Take Advantage of Discontinued Items

Every store at one time or another chooses to discontinue certain products that may not be selling as well as anticipated, including health food stores. These items are often far from their expiration date, and can be purchased for as much as fifty percent less than the original price. By checking your local health food stores on a regular basis, you are almost certain to find food, drinks, vitamins, supplements, and other items that you can nab for drastically less than what you would normally spend.


Farms in your Area

If you're looking for low cost organic or grass-fed meat, shopping at your neighborhood grocery stores is probably not your best bet. The prices will be too high for organic meats, and that is if organic meat is even available. Many full service local farms sell chicken, beef, turkey, and other meats for the same price or even less than meats at your local grocery stores. You will not only be feeding your family healthy antibiotic-free and grass-fed meats, but you'll be doing it the smart, cost-saving way.


Buying organic and all-natural products doesn't have to be as expensive as you may think. With a little bit of research and compromise you can maintain your healthy lifestyle without going bankrupt in attempt to maintain it. Also checking your favorite health food store's sales papers is a great idea. Many of the larger health food markets provide regular sales papers just like Kroger, Piggly Wiggly and other grocery stores. The items on sale are bound to include your favorite products at least some of the time, and you need to take advantage of this. You will still need to shop at health food stores if you only buy totally organic, since most regular grocery stores only carry some organic items, but the key is to shop smart instead of failing to pay close attention to the cost of everything that you buy. The prices add up quickly, and you don't want to rack up excessive bills that will cause you to stop buying non-organic products period.

January 21, 2008

The Best Time of Year for Economical Vacations

If you're looking to take a relaxing and spectacular trip without it having a huge impact on your bank account, now is the best time of year to take one. Most people wait until the summer months in order to vacation, and because of that, people end up paying a great deal more for transportation, lodging, etc. Vacationers who dislike the cold temperatures that winter typically brings in many parts of the United States can save a bundle while simultaneously enjoying warm and sunny destinations. You can't beat the rates, and you could end up having the time of your life on your winter vacation.

Aside from enjoying warm temperatures when things at home are artic and miserable, there is another advantage of vacationing during this time of the year. You won't have to deal with the hassle of huge crowds, because tourist season in many areas oftentimes doesn't begin until April of each year, and end in October. There won't be half as many people vacationing during this season, and almost any date that you choose to visit will most likely be available. This is often not the case during the spring and summer, and it is often necessary to book months ahead of time for vacations during the busy season.

If you're not necessarily looking to escape to a warm climate, there are many vacation destinations that you can visit during the winter months and enjoy them immensely. One extremely popular tourist area that you can enjoy during the off-season is Gatlinburg, Tennessee. Known for its short and mild winters, Gatlinburg is a beautiful and scenic area to visit during the off-season. Located in the Smoky Mountains, Gatlinburg has an abundance of activities to participate in, year-round. It all depends on what you enjoy doing, as well as if the weather permits the activity.

Many tourists will undoubtedly visit Pigeon Forge, Tennessee while vacationing in Gatlinburg. Located about ten to fifteen minutes away from Gatlinburg, Pigeon Forge is another major tourist area. From arts and crafts shows, to trolley rides, to the infamous factory outlet mall, there are numerous things to do while visiting this beautiful area. You will not only save money by purchasing reasonably priced items from the malls and shops, but your lodging will be nearly fifty percent cheaper this time of year. Gatlinburg and Pigeon Forge both offer an abundance of motels and hotels for your convenience, and even wonderfully decorated, comfortable and homelike cabins.

Not many people would even consider vacationing in January, February or March, but if you consider taking a vacation during one of these months, you could end up saving as much as fifty percent off your entire trip. It doesn't matter which destination you choose to visit, everything is cheaper during these months because airlines and hotels are desperate for business, so they drastically reduce their rates in order to entice people to take trips. By choosing to vacation this time of year instead of June or July, you could possibly save so much money that you and your family could take two splendid vacations a year, as opposed to one during the popular spring and summer months.

January 18, 2008

How to Save Loads on your Mobile Phone Bill

Cell phone usage has become more and more common over the years, making it somewhat unusual to see a person, even kids and the elderly, without a cell phone to use for emergencies, business, or simply for keeping in touch with friends and family members. Despite their convenience, cell phones can prove to be pretty expensive for a number of reasons, but thankfully there are many ways to lessen the blow to your wallet. Agreeing to a one to two year contract with the cell phone provider of your choice is often a great idea if you wish to own a cell phone, but not always. Some people manage their money and their minutes better when offered other options besides a contract.

An alternative to agreeing to a lengthy contract is to purchase a prepaid phone. Prepaid phones have come a long way from the way they used to be. In the past, people often stayed way from prepaid phones because it usually meant buying pricey cards to add minutes to the phone, which were often quickly depleted. Nowadays, there are prepaid mobile phone plans that work just like contracts, yet without the commitments. The phone choices are equivalent to those included in contracts as well, but the only downside is that you are responsible for paying for your own phone, as opposed to getting a free one when agreeing to a contract.

Prepaid phones are also a great way to control costs when getting a phone for a preteen or teenager. Children usually love to talk and send text messages to their friends, but are totally oblivious to how quickly the fees add up, making it easy for them to create huge cell phone bills. A prepaid plan can teach the child or teen how to use their phone sensibly by managing their minutes and making their phone unavailable for use after they've exhausted the month's minutes. Not only does this option teach children responsibility, but it also saves you a great deal of money as well.

Another way to save money on your cellular phone services it to refrain from wasting money by paying for plans month after month but failing to use all or most of the minutes. If you are signed up for a monthly cell phone plan with a certain amount of minutes, yet you realize that at the end of the month that you haven't used even close to the amount of minutes provided, then perhaps you need to consider a plan change. Unless you have a plan that allows rollover minutes then you are paying unnecessary fees. You could probably downgrade to a plan with less minutes and a lower monthly price.

If your problem is that you're spending a great deal on the actual cell phone unit, then one option is to buy the phone of your choice from EBay, Craigslist or Amazon, instead of purchasing it from your mobile phone provider. You can save up to fifty percent or more by purchasing the phone of your choice this way. Another way to get your new phone at a drastic reduction or even free is to enter into a contract with the provider of your choice. As long as you use your minutes reasonably without going over, a contract can be a great way for you to get a new phone without overpaying for the handset.

Many cell phone owners are notorious for allowing young children to play with their cell phones. Unfortunately, most mobile phones provide easy access to the Internet, and oftentimes only one button needs to be pressed in order to be connected. This is often purposely done by the provider, as most charge fees each time the internet is accessed. By allowing young children to play with your cell phone, you can quickly rack up hefty fees in which most mobile phone providers will not reimburse you for. If your small child cries to play with your cell phone every time he or she sees you using yours, why not buy the child a toy cell phone to play with? It will certainly save you from paying unnecessarily high mobile phone bills for service that you haven't used.

If you are frequently going over your allowed monthly minutes and are creating bills that you can't afford by paying the huge overage fees, a good option is to try using your home or office phone to make a majority of your calls. If using a landline phone is not an option, there are many creative mobile phone plans that are meant to save you money. Depending on the area you live in, there are some plans that allow unlimited everything: minutes, messages, web browsing, etc. Taking advantage of such a plan, if available, can save you a great deal of money. If there are no cellular phone companies that offer unlimited plans in your area, then another option is to seek companies that offer free incoming phone calls. Many providers offer free mobile to mobile, and if your friends, family and colleagues are on the same network it would work out well for you. Other providers even allow you to choose five people that you talk to most often and all of your calls to and from those five people are free. You simply have to check to see what's available in your area.

There is absolutely no reason why you have to pay astronomical fees in order to enjoy the convenience of having a cellular phone. All you have to do is figure out ahead of time how many minutes you think you'll be using on a regular basis, as well as how much you can comfortably afford to pay each month. If you don't need extras for your phone like internet service, Bluetooth devices, and text messaging, then eliminating them can help to reduce your costs significantly. If your credit is shaky or you for some reason don't want to enter into a contract, then one of the many prepaid phone plans will not only save you from the embarrassment of a credit check, but will also save you a great deal of money in the long run.

January 16, 2008

Rapid Refund Income Tax Loans: Are They Worth the High Fees?

With tax season right around the corner, many income tax preparation companies are getting ready for the busy season of filing taxes to begin. Well known companies like Jackson Hewitt and H & R Block have been around for years, and compared to small, privately owned tax preparers, they are unique. One thing that makes these types of companies unique is the fact that they offer quicker ways for you to receive your money.

Instead of waiting the usual time, which is approximately two - three weeks, to receive a check in the mail or have it deposited into your bank account, these companies will offer to loan you the amount of money that you're expecting to get back from the IRS, minus the fees that the tax company charges. Depending on how quickly you need cash, and how much money you're willing to pay, you will be given the option of receiving your money in one week, one - three days, or even the very same day that you file your taxes. You will then be advanced the money and when your check comes back from the IRS, the tax preparer keeps it in order to be repaid. It's a win-win situation--or is it?

Many people who have gone into debt paying for Christmas presents that they couldn't afford are desperate for ways of obtaining "fast money." To them, these types of offers from tax preparers are too good to refuse, but are they really worth the extra cost? This often depends on your personal circumstances. Also, the amount of money you're "borrowing" makes a big difference in how much you're charged. The quicker you want to receive your money, the higher the fees will be. Fees for the rapid refund loan alone can sometimes exceed $500 or more, depending on the amount of your refund, so for most people, this is way too much to pay to get money two or three weeks sooner.

If you find yourself desperate for cash and are considering agreeing to pay such high "rapid refund" fees, why not simply file sooner in the year instead. The sooner you file, the sooner the IRS is able to process your return and get your check out to you. There is no reason to pay astronomical fees in order to get your refund back quicker, because the money spent in order to get the money quicker could be used to pay off bills, go on a trip, or for some other useful reason, rather than throwing it away by giving it to H & R Block or a similar tax company.

Many people immediately regret agreeing to pay the ridiculously high fees as soon as everything has been finalized and they actually sit down and read over their tax papers in depth. Don't make a rash decision that you may regret later, but instead, take the time to consider your options. In fact, finding out what fees are associated with obtaining your money quicker in advance is a good idea. If you wait until you're actually at the location having your taxes prepared, you may feel pressured to make an immediate decision, and it may be one that you would not normally make. Unless your financial situation is dire, and you're on the verge of being evicted from your home, having your utilities disconnected, or experiencing some other type of financial crisis, it may not benefit you to pay the extremely high rapid refund fees.

If you're in a financial bind and need cash fast, rapid refund loans aren't usually the best way to obtain the money fast. Only in an absolute emergency should you even consider agreeing to such a loan, because the interest rates and fees are set extremely high, because these companies know that people will pay them because they feel that they have no choice. There are always other options, though, and it would be a lot cheaper for you to borrow the money from a friend or relative, if necessary, than paying the tax preparer the extremely costly charges. If you patiently wait two or three weeks for your refund, then you will be a lot happier to have that extra chunk of cash to use in any way necessary, instead of giving it away to the tax preparation company. Two to three weeks is not that long to wait if it means that you'll have that much more money to spend on bills or whatever else you choose to spend it on.

January 14, 2008

Advantages and Disadvantages of Paying Off Your Mortgage

Here are advantages and disadvantages to paying off your mortgage. On the positive side, any extra money sent with your mortgage payment is applied to the outstanding principal, which can significantly reduce your total interest cost. This reduces your interest expense deduction on your tax return, but you are paying most of the cost anyway. For instance, if you're in the 25% tax bracket, you save 25 cents in taxes for every dollar of interest, but you're still paying the remaining 75 cents.

When paying down principal, you are effectively earning a pretax return equal to your mortgage interest rate, which is a guaranteed return with no risk. Most mortgages allow you to add as much to the payment as you like, whenever you like, making it an easy way to use excess funds. However, check with your specific lender to determine if prepayment penalties apply.

On the other hand, instead of prepaying your mortgage, you might want to use additional funds to invest in investments with the potential to earn higher returns. Also, once you make the additional mortgage payments, the only way to access that money is to sell your home or take out a home-equity loan, usually at higher rates than the original mortgage.

Consider the following factors before prepaying your mortgage:

Are all components of your financial plan in place? Before prepaying your mortgage, make provisions for things like disability insurance, life insurance, and an emergency reserve fund.

Is all your consumer debt paid off? Consumer debt typically carries interest rates that are higher than your mortgage rate, and interest payments are not typically tax deductible, unless it's a home-equity loan. Thus, you should probably pay off your consumer debt in full before making additional payments on your mortgage.

Are you maximizing contributions to qualified retirement plans? Make sure you are contributing the maximum to your 401(k) plan, especially if your employer matches funds, or are fully funding other qualified plans and individual retirement accounts.

Have you investigated other investment alternatives? Look into other investments whose potential returns may exceed the return from prepaying your mortgage. However, make sure you actually make those investments. You don't want to just spend any money that could have gone toward your mortgage.

Are you nearing retirement? As you approach retirement age, the idea of entering retirement with no debts may make prepaying your mortgage a more attractive alternative. Or you may like the certainty of positive returns that comes from prepaying your mortgage.

If you decide to prepay your mortgage, consider these strategies:

• Switch from a 30-year to a 15-year mortgage. By paying the mortgage off 15 years sooner, you save a significant amount of interest.

• Pay half your mortgage payment every two weeks. Over the course of a year, that equals 26 payments or 13 monthly installments. Check with your lender to make sure this option is offered.

• Add additional amounts to your monthly mortgage payment. This option is the most flexible since you decide on a monthly basis how much to add to your payment.

January 11, 2008

How to Avoid Credit Problems

Most people do not realize that having a good credit rating in today's economy is very valuable. Having a bad credit rating can result in having a negative financial profile that can cause many problems when you have a legitimate need to borrow money. Consider trying to purchase a home without a mortgage. A bad credit rating can adversely affect your application for a home mortgage. It is essential that you value your credit rating in order to be able to have the necessary use of credit that will enable you to live the life your wish to enjoy. Here are a few tips to avoid getting into credit problems:

1. Avoid the need for status to overcome your common sense. It is very easy to succumb to temptations of having what the "Jones's" have. It is nice to be able to say you have that big screen T.V. with all the technological advantages offered today, but it all comes with a big price tag. Is it really necessary and affordable? How much debt do you have to go into to get these technical marvels? Consider how much interest you will be paying out by buying it on credit. Calculate the bottom line, which includes the price of the object plus the interest you will have paid when you finish paying off the item. Is it really worth that dollar amount? If you add enough items purchased on credit, will you be able to afford all the monthly payments on top of your usual monthly expenses like mortgage, water, telephone, etc? Wouldn't it be better to put aside an amount each month until you have the money to pay for each item outright?

2. Avoid raising the limits on your credit cards. If your limits are raised, this increases the temptation to buy more. Credit card companies often notify you that they are raising your credit card limit in advance. You simply need to call or write to them and refuse the increase.

3. Avoid co-signing loans for someone else. Co-signing for another person's loan can be risky in that if they default on the loan, you are the one responsible for repayment. Then if you cannot pay it reflects on your credit rating.

4. Try to pay more than the minimum requested payment on your credit cards. It is easy to be tempted to just pay the minimum payment, but this will stretch out the length of time to pay off the balance because you will be paying only the interest and not the principal amount charged. You do not want to still be paying off the item even after it has long been discarded.

5. Before getting any credit card, make sure you know what the rate of interest charged on purchased items will be and what the annual fees are. Rates can vary widely among cards. If you must have a credit card, shop around for the one with the lowest rates.

6. Use credit cards only for emergency purposes.

7. If you do find yourself in a situation where your payments become unmanageable, consider taking out a debt consolidation loan. Many banks and financial institutions offer these loans to help you get back on track. What happens in this case is that the lender pays off all your existing creditors and combines the balance amounts into one payment, which results in you having a lower monthly payment.

8. If your personal status changes, let your lender know. In other words, if you and your spouse divorce you are partially responsible for any debt that you have accumulated together. It is not wise to let your responsibility for these loans affect your credit rating.

Your good credit standing can affect the rest of your life. It can affect you in being able to get a mortgage to buy that house you have dreamed of or the car you have always wanted. It can also affect your marriage in that money worries are the cause of many marriage break-ups. Using the above tips, learn to control your credit rating wisely.

January 9, 2008

Narrowing the Gender Wage Gap

For decades, we have heard that men earn more than women for the same type of work. While that is still true, the gap between wages for men and women has narrowed significantly. In the 1960s, women earned approximately 60 cents for every dollar men earned. By 2006, that amount had increased to 81 cents (Source: Economic Letter, May 2007). More sophisticated analysis that accounts for variables such as education, work experience, occupation, and family factors, however, show even greater progress in reducing the wage gap. For instance, one study found that women between the ages of 35 and 43 earn 97.5% of what men earn (Source: Economic Letter, May 2007).

While women still lag behind men in many job-related measures, they have made substantial progress over the past two generations in several areas:

Education -- Individuals with college degrees typically earn substantially more than workers without a college degree. College graduates now make up 30% of the U.S. population over age 25. In 1950, women obtained 24% of all bachelor's degrees, but that percentage rose to 57.5% by 2004. Women in the workplace are now more educated than men -- approximately 19.8% of working women and 18.3% of working men are college graduates.

Higher-paying occupations -- Women have also shifted their job preferences to better-paying jobs. For instance, 19% of women received bachelor's degrees in business in 2004, up from 2.9% in the early 1970s. The percentage of women obtaining degrees in education, on the other hand, decreased from 36.1% to 10.4%. Currently, women earn 3/4 of all veterinary medicine degrees, 2/3 of all pharmacy degrees, 1/2 of all law degrees, 1/2 of all medical degrees, 40% of all MBAs, and 40% of all dentistry degrees. By 2004, 33% of women earned more than their husbands.

Despite these gains, a large number of women still obtain degrees in areas more compatible with family responsibilities that also tend to have lower pay. For instance, women received more than 60% of bachelor's degrees in health professions, social services, education, English, and foreign languages.

Less labor intensive work -- Women have also benefited from the economy's transformation from manufacturing to services. Men are much more likely to work in manufacturing jobs. Women have moved into formerly male-dominated occupations that typically aren't physically demanding.

Businesses -- Women have also increasingly become entrepreneurs. In 1972, women only owned 4.6% of U.S. businesses. By 2002, women owned at least a half interest in nearly 40% of all U.S. businesses. However, women-owned businesses tend to be small -- 80% of women-owned businesses had $50,000 or less in receipts and 85% employed fewer than 10 people in 2002.

Corporate executives -- Women are increasingly taking on jobs as corporate executives. In 1972, 17.6% of management jobs were occupied by women, which increased to 37.2% by 2004.

Over the past couple of decades, women have made choices that have prepared them well for the current job situation. While there is still a gender gap between wages earned by men and women, that gap has narrowed substantially.

January 7, 2008

Getting Your Adult Child to Participate in a 401(k) Plan

Your child has finally finished college and started his/her first full-time job. What is the most important financial advice you can give them at this point in their lives?

Answer: Participate in your 401(k) plan as soon as you are eligible. A recent survey by Hewitt Associates found that less than half of those in their 20's contribute to their 401(k) plan, while 40% of those who do participate don't contribute enough to receive their employer's full matching contribution.

The quality of your children's retirement will largely be determined by the amount of money they save, and a 401(k) plan is a great place for them to start. Before marriage, a new home, and other obligations consume their entire paycheck, get them into the habit of saving. Because the contributions are deducted before they even see their paycheck, it is a great way to get them into the habit of saving on a regular basis.

Having trouble convincing them this is a good strategy? Perhaps a few numbers will make the point. Assume your child starts contributing to his/her 401(k) plan at age 25, contributing $6,000 per year (substantially below the maximum contribution in 2007 of $15,500), with matching employer contributions of $3,000. If he/she earns 8% annually, he/she could have a balance of $2,331,509 at age 65, before the payment of any taxes. What if he/she waits until age 35 to start contributing? At age 65, the balance could be $1,019,549, still a substantial amount, but $1,311,960 lower than if he/she started at age 25. Contributions for the first 10 years make a substantial difference in the ending account balance. (This example is provided for illustrative purposes only and is not intended to project the performance of a specific investment vehicle.)

What if your child still isn't convinced? Consider reimbursing him/her, as part of your annual gift tax exclusion, for any 401(k) contributions. You can reimburse the entire amount or offer to make a partial reimbursement.

Don't let your child procrastinate because there are too many decisions to be made. Just encourage him/her to start contributing, reassuring him/her that none of the decisions are permanent. He/she can review contribution levels, investment choices, beneficiary designations, and other matters at a later date.

If your child has the option to contribute to a regular 401(k) plan or a Roth 410(k) plan, he/she should evaluate the Roth 401(k) plan carefully. Employer matching contributions will still be made to a regular 401(k) plan, but your child's contributions can go to the Roth 401(k). Your child won't get a current tax break for contributions made, but he/she will owe no taxes on the contributions or any earnings when withdrawals are taken. Generally, investors who are in a higher tax bracket at retirement relative to their current tax bracket while making contributions to a Roth 401(k) will benefit more than an investor who is in a lower tax bracket at retirement. There are several differences between a Roth 401(k) and a Roth IRA, so make sure your child understands the basics before he/she starts contributing. See What Are Roth 401(k) Plans? for additional information on the differences between Roth 401(k)s and Roth IRAs.


What if your child doesn't have a 401(k) plan at work? Encourage him/her to contribute to an individual retirement account (IRA). Although contributions are limited to $5,000 in 2008 compared to $15,500 for 401(k) plans, IRAs are still a good way to save for retirement. Again, suggest a Roth IRA rather than a traditional deductible IRA. While your child won't get a current-year tax deduction for contributions made, qualified withdrawals can be taken with no tax consequences.

January 4, 2008

What Is Dollar Cost Averaging

If you find it difficult to decide when to invest, consider a dollar cost averaging strategy. Dollar cost averaging involves investing a set amount of money in the same investment on a periodic basis. For instance, instead of investing $48,000 in one stock immediately, you might decide to invest $4,000 in that stock at the beginning of each of the next 12 months. Thus, you don't need to think about when to invest. You just follow your strategy and continue to invest on a periodic basis.

Dollar cost averaging is a defensive strategy that can help protect you from making a major investment when prices are high, especially during volatile periods. If the investment increases in value over that time, you still will have purchased some shares at lower prices.

Since you are investing a fixed amount of money, you purchase more shares when prices are lower and fewer shares when prices are higher. Thus, your average cost per share is typically lower than the average market price per share.

While dollar cost averaging is a good strategy for developing the habit of regular investing, it does require the discipline to invest consistently. However, it neither guarantees a profit nor protects against loss in a prolonged declining market. Because dollar cost averaging involves continuous investment regardless of fluctuating price levels, investors should carefully consider their financial ability to continue investment through periods of low prices.

January 2, 2008

How Long Should You Expect to Work

Most of us have grown up in an era when the dream is to retire as soon as possible -- age 65 or sooner. In fact, almost half of men retire at age 62 and half of women retire at age 60 (Source: Financial Planning, September 2007). But if you haven't retired yet, a whole host of trends make retiring at age 65 seem difficult:

Fewer individuals are covered by defined-benefit plans. For years, the trend has been away from defined-benefit plans, which provide a guaranteed retirement benefit paid for by your employer, to defined-contribution plans, where you are responsible for making contributions. Currently, only 21% of the work force is covered by a defined-benefit plan (Source: Fortune, June 26, 2006). But even those workers can't be assured of those benefits. While companies can't take away benefits that are earned, they can change future benefits, which could result in significantly lower benefits than expected.

The Social Security system will face increasing pressure in the future. Due to the unprecedented number of baby boomers who will be retiring in the near future, there will be fewer workers to pay the benefits for retirees. In 1950, 16 workers were paying for each retiree's benefit. Currently, there are 3.3 workers supporting each retiree, which is expected to drop to only 2 workers for each retiree in 40 years (Source: Social Security Administration, 2007). By 2041, unless changes are made to the system, benefits will need to be reduced by 25% to equal revenues collected (Source: Social Security Administration, 2007).

Life expectancies continue to increase. Average retirement ages have been declining while life expectancies have been increasing. Today, at age 65, the average life expectancy is 82 years for a man and 85 years for a woman, compared to 78 years for a man and 81 years for a woman in 1960 (Source: National Center for Health Statistics, 2007). And these are just averages, meaning 50% of 65-year-olds will live longer than this. Also, retirement ages have been decreasing. Currently, the average retirement age is 62 (Source: Center for Retirement Research, July 2006). Thus, with younger retirement ages and increased life expectancies, the average retiree has fewer years to accumulate savings, but must accumulate more savings to last a longer time period.

Health-care costs are becoming more of a burden. More and more companies are reducing or eliminating health-care insurance for retirees, and health care costs tend to increase faster than overall inflation. A recent report estimates that a 65-year-old couple will need $215,000 to cover health-care expenses in retirement, including costs for Medicare Part B and Part D and supplemental insurance. This amount does not include potential long-term-care expenses. It was also estimated that a 65-year-old earning $60,000 in the year he/she retires could spend half of pretax Social Security benefits on health care (Source: PlanSponsor.com, 2007).

Long-term inflation rates are uncertain. Inflation has been tame for a long time, so it's easy to underestimate its impact over a long retirement. For instance, while inflation has averaged 2.54% over the past 10 years, it averaged 4.31% over the past 30 years (Source: Bureau of Labor Statistics, 2007). And while overall inflation has been tame lately, the items retirees spend a significant amount of income on, including health care, housing, energy, and food, tend to increase faster than overall inflation.

Plans for retirement have changed. A common retirement planning rule of thumb is that you'll need 70% to 80% of your preretirement income after retirement. However, that guideline assumes a relatively inactive retirement lifestyle. Increasingly, retirees view retirement as a time to travel extensively or engage in expensive new hobbies. Thus, more and more retirees are finding little change in their income needs after retirement.

So how long will you have to work before you can retire? Consider this one fact. Current retirees receive close to 70% of their retirement income from Social Security and defined-benefit pensions, while today's workers will probably only receive one-third of their retirement income from those sources (Source: Ibbotson Associates, 2007). That means you'll be responsible for saving enough to provide two-thirds of your retirement income.

For most people, that is no easy task. It is typically recommended that no more than 4% of a retirement fund balance be withdrawn each year to ensure that funds last for a long retirement. That means you need to save 25 times the amount you want to withdraw annually. So, if you want $75,000 annually from your retirement assets, you need to accumulate $1,875,000 by retirement age.

On at least an intuitive level, most workers seem to understand what a challenge this presents. More and more studies report higher and higher percentages of workers saying they plan to retire later or continue working in retirement. There is some evidence that behavior is changing. A recent study found that the percentage of individuals age 55 and older in the work force increased from 29.4% in 1993 to 38.0% in 2006. The percentage of individuals from ages 65 to 69 in the labor force increased from 18.4% in 1985 to 29.0% in 2006 (Source: EBRI Notes, August 2007).

If you are working, you're not drawing down your retirement funds, and you can avoid taking early Social Security benefits at reduced levels. You can also keep making contributions to your retirement savings. Once you retire, you'll spend fewer years in retirement, so your retirement funds will need to last for a shorter period. Even if you decide to retire and only work on a part-time basis, those earnings can contribute substantially to your retirement lifestyle.

If you plan to keep working, how likely is it that you will be able to continue working? One study estimates that 15% to 20% of people in their late 50s and 60s will not be able to work due to health reasons (Source: Center for Retirement Research, March 2007). This seems reasonable compared to data on current retirees. A recent survey found that 22% of the respondents had been forced to retire an average of seven years earlier than expected. While layoffs and corporate downsizing were the most often cited reason for retiring early, other reasons included illness, injury, and family obligations. Approximately 55% of those who retired early did so before they were eligible to receive Social Security benefits. Most indicated that they were only able to save half of the amount they had wanted to save for retirement (Source: Financial Advisor, January 2007).

Thus, even if you intend to keep working well past the age of 65, don't use that as an excuse not to save significant sums for retirement. You should start saving as much as possible, as soon as possible, for retirement.

 

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