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May 30, 2008

Beautiful Landscaping for Less

Whether your home is in dire need of landscaping because it resembles a forest rather than a yard, or it only requires a few minor touch-ups in order to make it look great, you can complete the work yourself and save a great deal of money. Depending on the size of your yard, landscaping your own yard could prove to be an overwhelming task, but it doesn't have to be. By landscaping your own yard, you will not only feel proud of the huge accomplishment that you will have made, but in the end, your bank account will be a lot larger, because skilled landscapers aren't cheap, especially if you have a large project that needs to be completed.

Before you get started with landscaping your yard, the first thing you have to do is assess your entire front and back yards. This assessment should include the creation of a list of needed equipment and supplies, as well as exactly what you would like to do and where. If you want to plant daisies, daffodils and petunias in the backyard and rose bushes in the front, it's a good idea to put everything into writing so you'll have it to refer to while you're working. You don't want to go outside and start cutting, snipping and pulling without a plan, as you will work more efficiently if you know exactly what your goals are prior to starting your landscaping job.

One well-known brand of lawn products is John Deere. Selling reliable lawn equipment for the past 170 years, John Deere offers a wide variety of lawn care products for homes and businesses. If you have lots of acreage, you will definitely need a riding mower to keep your lawn looking good, and John Deere offers every type of riding mower imaginable, in several different price ranges in order to include every budget. There would be no way a regular push mower would suffice for more than 1 or 2 acres, and it could really make the job more tedious and time-consuming. Some other items that you will need besides a reliable lawnmower are: trimmers, rake, broom, aerator, gardening equipment, weed killers, flowers/seeds, and other supplies and equipment, which will depend on your landscaping goals.

Instead of attempting to transform the entire yard all at once, it might be wise to finish one job at a time. Cutting the grass should always be first, and then you can move on to more complex jobs like weeding, trimming trees, and planting flowers, bushes and shrubs, etc. It may take a week or two or even longer to get your yard like you want, depending on the size of the area you're working with and the speed at which you finish the jobs. It would probably take a professional a much shorter period of time to transform your yard, but when you receive that hefty bill you may wonder why you hired a professional instead of taking the time to perform the work yourself.

There are many advantages to being outside performing yard work. One advantage is that you'll be out in the sun, which can be healthy in small to moderate amounts. The best time to perform yard work is before 10 a.m. and after 4 p.m., in order to prevent overexposure to the sun. If you must work on the landscaping between the hours of 10 a.m. and 4 p.m., then ensuring that you are adequately protected from the sun is imperative. Sunscreen, wide-brimmed hats and sun protective clothing are excellent ways to protect your skin from the sun's harmful rays. Yard work is a great stress reliever, as well. It's relaxing, fun, and can be great exercise.

There is no reason for you to pay a professional in order to landscape your home when you can do the work yourself and save tons. Sure, a professional will undoubtedly do a wonderful, near-perfect job, but the professional may not know how to create the type of landscaping that you desire. You can describe it to him or her to the best of your ability, or even draw a diagram, but no one can create the exact kind of yard that you desire except you. And the fact that you will save a great deal of money by beautifying your yard yourself is a definite plus.

May 28, 2008

Reduce Your Prescription and Over-the-counter Analgesic Costs

If you suffer from a condition such as fibromyalgia, lupus, migraines, or other chronic conditions that cause pain, you probably spend a great deal of money on prescription and over-the-counter pain relievers. With the high cost of gas, food, and other items, it would probably help if you could reduce the amount that you pay on pain medication on a regular basis. The good news is that you can reduce your medication costs substantially by practicing natural pain-relieving techniques which are almost always free or low cost.

Sometimes hot and cold water therapy can work miracles for reducing and alleviating pain. You can benefit from this type of therapy by utilizing heating pads or bottles, applying ice, or actually immersing the painful body part in water. Jacuzzis are a good choice, too, if available, and can of course be fun as well as pain-relieving. If no Jacuzzi is available, of course a bath tub will work just as well. Water therapy may have to be used often in order to benefit from continued pain relief, but at least it's a cost effective way to reduce your medication costs.

As long as your doctor approves and you're physically able to perform it, exercise can provide excellent pain relief for some conditions. Of course you shouldn't exercise strenuously for hours on a daily basis, but light stretching, aerobics and weight lifting work wonders for relieving pain. The good thing is that you only have to exercise approximately 20 - 30 minutes a day to reap any benefits. The endorphins that are released during exercise will activate your body's natural pain killers, and also help to improve depression that many people with chronic pain conditions suffer from as well.

Everyone knows the possible effects of stress in a person's life. If left untreated, stress can really wreck havoc in a person's life by causing numerous medical conditions, including high blood pressure, heart disease, and chronic pain, among other conditions. Stress reduction is imperative, no matter what the cause, and there are many simple ways of relieving stress in your life. Sometimes something as simple as going on a weekend getaway, working less hours, or participating in something enjoyable such as sports, a new hobby or attending religious services can be just the thing that you need in order to keep your stress levels to a minimum, therefore lessening pain in the process. If you're not sure exactly what relieves stress for you, you could try experimentation to discover what works best for you.

There are numerous herbal concoctions that companies claim can naturally alleviate pain, but unless recommended by your physician, you should steer clear of them. These herbs may not only be ineffective, but can potentially cause dangerous interactions with your medications. Many people seek herbs as a way of reducing pain in order to avoid side effects, yet what many of them don't realize is that herbal pain relief supplements can cause just as many side effects as prescription medications. For this reason, it isn't a good idea to self-medicate with these types of products.

There is no need for you to spend an arm and a leg, buying pain medication that oftentimes doesn't completely take away your pain, anyway. These and other natural remedies are safe, effective and free of side effects. You'll not only save money by using natural remedies instead, but you're also likely to feel a lot better in the long run. Of course you should never discontinue medication prescribed by a doctor without your doctor's approval, but it's almost guaranteed that he will agree that if your pain has lessened then your analgesics can be decreased, changed, or discontinued. Less pain meds means more money in your pocket.

May 23, 2008

Kitchen Updates: Quickly Increase the Value of your Home

If you'd like to increase the value of your home, whether you plan to sell it or simply increase its equity, you can achieve this goal quicker and less costly than you may think. There are some improvements that you can make that are almost guaranteed to boost your home's value. As long as you focus on these areas first, you will rapidly increase the value of your home, which will increase your equity as well. One portion of the house that you should choose to focus on if you're trying to improve what your house is worth is the kitchen. In most households, the kitchen is the main area of the house where families spend a great deal of their time eating, preparing meals, baking, making snacks, etc. As much as 3-4 hours a day are spent in the kitchen performing these tasks, which is why most people want their kitchen to be attractive, convenient and functional. Even if you ignore every other part of the house, updating the kitchen is a surefire way to increase your home's value.

Whether you choose to paint them or finish them, a nice set of kitchen cabinets is imperative if you want a superb kitchen. Updating your kitchen's cabinets can prove to be one of the most expensive parts of your kitchen update project, but it doesn't have to be. To save money, you don't have to contact Sears or a comparable company to reface them for you, but you can do them yourself. It's not difficult to strip down and refinish or repaint cabinets, as long as you have a well-ventilated area to perform it in, and also the talent for painting or refinishing. Classes may be available in your community, and you can also visit DIY.com and similar websites for instructions. If you totally don't have faith in your abilities, you can always hire someone who does refinishing as a hobby in order to save money.

Many buyers don't want a kitchen with tacky, old-fashioned wallpaper on the walls or tile on the floor. If you're going to properly and thoroughly update your kitchen, then you need to remember to remove unsightly old wallpaper, which can really compromise the look you're trying to achieve. Removing old wallpaper can be a real job, but if you have the right supplies it can make the job a lot easier and almost trouble-free. Replacing the flooring doesn't have to be difficult, either, and it shouldn't cost a great deal to have a professional take care of the flooring, if you choose not to do the work yourself. Nice, attractive neutral colors for the walls and kitchen floor will enable potential buyers to envision their own décor in the kitchen, but if you have neon yellow or other unusual colors, it could make if difficult for the perspective buyer to envision themselves living in the house.

Some homeowners will totally update a kitchen but for some reason fail to replace the appliances. Old worn-out appliances are not only an eyesore, but they're also unappealing and can really cause a potential buyer to quickly lose interest in your home. You don't have to necessarily install brand new stainless steel appliances, but a nice matching white or black range, refrigerator, microwave and dishwasher can really bring out your home's full potential. Modern, shiny new appliances not only make a kitchen look great, but they can also increase the value of your home more than you could ever imagine.

The first thing that most buyers look for is a beautiful, modern, convenient kitchen. If your kitchen doesn't have enough cabinet or counter space, then create more. If the sink or garbage disposal needs replacing, then replace them. If you have no idea how to get your kitchen the way that you desire, you can visit some of the many websites based on home improvement, contact a professional contractor, or visit Lowe's, Home Depot or a similar home improvement store for some ideas. Whichever way you decide to go, whether you hire a professional to complete all of the work, or you decide to complete all or most of it yourself, you can greatly increase the worth of your home by making the kitchen as breathtaking as possible.

May 21, 2008

Rent-to-own: An Alternative Way to Purchase a Home

If you have had some credit problems in the past and have had some trouble getting approved for a traditional mortgage, you can still purchase a home with the increasingly popular rent-to-own or lease-to-own option. Buying a house on these kinds of terms doesn't work like a mortgage, but the great thing is that you still get to own a home without any bank qualifications. You more or less get the chance to "test drive" your perspective home before you decide to buy it. With a rent-to-own option you will have to eventually get the house mortgaged, usually after approximately two years. The terms may vary anywhere from one year to eighteen months, though, depending on what the seller prefers.

More often than not, when you rent-to-own a home you usually don't have to produce a sizeable down payment, and most sellers will allow you to move in by simply paying the first month's rent and a security deposit, which is often equivalent to one month's rent. The seller will usually place a portion of your monthly rent aside to actually go toward your down payment when you're ready to apply for financing. This is a great way for people who may have trouble saving for an adequate down payment, but you must keep in mind that the rental period will not be long, meaning that you will probably want to set money aside on a regular basis as well in order to add to the down payment once the renting period is over.

One thing that you must remember when purchasing a home through a rent-to-own program is that the home will not technically be yours until you actually secure financing for it. You may consider the home to be your own, which is fine, but you also must respect the seller. Most sellers will not allow you to make major changes to the home, such as renovations, updates, or have pets, etc. until the rental period is over. Until you've actually closed on the deal the home must be treated like a rental, which is essentially what it is until the sale has been finalized. If you for some reason pay a sizeable amount down in order to purchase a home with a rent-to-own option, it's quite possible that changes to the home could be negotiated. With a large down payment, it is almost certain that you will choose to purchase the home at the end of the renting period, which would make the seller more at ease about the house undergoing any major changes.

Sometimes it can be quite difficult to find the perfect rent-to-own home, but they are available and you simply have to know where to look. You can start by checking in your local newspaper's classified section. Sellers will list these types of homes in both the rental and for sale sections. You must check both if you hope to find each and every possible home to buy on these types of terms. Another place that you can check is online, on free classified websites like Craigslist and Myspace. Also, if you happen to find the perfect home to rent the owner might possibly be willing to sell the home instead. Finally, many realtors handle rent-to-own properties, so checking with the real estate agencies in your area might be a good idea.

If you need a year or two to get possible credit problems straightened out, or if you don't have the considerable down payment that is usually required to mortgage a home, buying your home with a rent-to-own agreement may be the best solution for you. Aside from not having to worry about your credit report being scrutinized, there are many other advantages to rent-to-own options. You don't have to worry about the owner selling a house rented under these terms to someone else until the renting period has ended. The seller is obligated to sell the home to you at the end of the agreed-upon period of time, and the even better thing is that if for some reason you decide that you don't want to purchase the home after all, you are free to change your mind and not obtain financing for the home and look for another house.

May 19, 2008

Renting Out Real Estate Properties: Is it Worth The Hassle?

If you're considering becoming a landlord and renting out houses or apartments that you own as a means of making money then there are some things that you need to consider before you begin. Being a property owner isn't always as easy as it appears, even if you feel you're up for the challenge. You have to screen any and all perspective tenants, maintain all of your properties, collect rent from those with payment problems, etc. Although being a landlord can supplement your regular income, or even provide a sole income, you need to decide if you're willing to deal with everything that's involved. Obviously there are pros and cons of being a landlord, so you just need to consider both sides before making a final decision.

Before you place an ad in the newspaper to advertise your rentals, you need to check with your town's city clerk's office to find out what you must do to officially become a landlord. There are often fees that must be paid, as well as inspections of the properties, etc. You want to make sure that you do everything the proper way so that you can avoid any potential problems. Every town has specific expectations of property owners, which is why it's imperative that you check out what the requirements are prior to searching for people to occupy your rental properties.

You can't predict when something may go wrong with any of your properties, so if you have people living in them you need to ensure that you have adequate financial backings in case of an emergency. If the air conditioning stops working in the middle of July, you can't tell your tenant that you'll have it repaired when you get the money. If it is in your lease that the apartment or house comes with air conditioning then you must ensure that it (and whatever else is stated in the lease) remains in working order at all times. You don't want to be taken to court by one of your tenants for failure to make necessary repairs. This is why it is imperative that you have funds available, as well as adequate insurance to cover any issues that may arise.

Many landlords obtain credit checks prior to allowing perspective renters to move into their properties. The average cost of a credit check is about $35, but some landlords choose not to perform credit checks, though. This is totally up to you, as well as exactly what type of credit you will and will not accept. Having good credit doesn't necessarily mean that you will have a good tenant, so you need to take this into consideration when deciding which screening process you will use when choosing individuals to occupy your properties. There are other ways to screen possible tenants, and you should always obtain a background check on anyone that you rent to. You don't want to be responsible for providing housing to a pedophile in a family oriented neighborhood, or a convicted drug dealer. Another thing that you absolutely want to verify on each renter is employment. Check stubs and sometimes even actually calling the employer to verify employment is a must.

Another thing that you need to take into consideration when deciding whether or not to become a landlord is to check the numbers. By comparing what the average rent for the areas that your properties are in, as well as your other costs, you'll be able to determine if renting would even be worth your while. If your mortgage is $200 higher than the average rent for your properties and neighborhood, you may need to seriously reconsider renting them out. If you try raising the rent to cover your expenses, despite the amount of other rentals in the area, you may very well be placing newspaper ads week after week, as renters will undoubtedly choose to rent elsewhere. This would cause you to lose money, not only because the property or properties will remain vacant, but because you will have spent a great deal of money on advertising.

You must beware that being a landlord can cause your credit score to drop significantly. If for some reason your tenants pay their rent late, you need to make sure that you can afford to make the payment to the mortgage company out of your pocket, otherwise it won't be your tenants' whose credit is affected, but yours. This is why it's imperative that you make sure that you rent to only responsible, preferably working adults who can comfortably pay the rent on-time each month. If your mortgage or mortgages have been paid off, then that is a definite plus, but there are still taxes, insurance, and other expenses that must be maintained on the properties, which you can pay out of the rent. So if you can't afford to pay the mortgages and/or other costs should your tenants pay late, you may need to reconsider renting out the properties. Perhaps selling would be a better choice.

Although renting out properties can prove to be quite lucrative, it can also be somewhat of a hassle as well. The necessity to evict certain tenants and take them to court can prove to be quite stressful, among the many other responsibilities that you would have as a landlord. You must ensure that you properly screen each individual before allowing them to rent from you, or you could end up dealing with a very unpleasant situation. You never know when renters might destroy your property, pay chronically late, etc. There are numerous other possible scenarios that you could have to deal with. So, if you aren't scared off with all that being a landlord entails and you still want to pursue it, then by all means, go for it, and take advantage of every bonus involved, including major tax breaks.

May 16, 2008

Sub-Prime Home Loans: Should You Get One?

Just about everyone has a difficult time financially on occasion, but unfortunately some people experience financial problems severe enough to adversely affect their credit. Problems that cause you to be late making payments, filing bankruptcy, etc. can lower your credit score significantly, making it difficult to qualify for almost any type of loan, especially a mortgage. Fortunately, many companies have made it easier for nearly anyone to own a home, regardless of their credit situation.

If you decide to purchase a home using a sub-prime loan because of credit problems, you may want to take a few things into consideration because closing on the loan. There are usually more disadvantages than advantages involved when obtaining this type of loan. Of course being able to purchase the home that you've chosen is a definite advantage, but what about all the disadvantages? You must decide if dealing with all the disadvantages is worth it before making everything final at closing.

One obvious disadvantage of sub-prime loans is the fact that your interest rate will be much higher than if your credit were A-1. This means that less of what you pay each month will go toward paying off the principal, requiring you to pay larger payments and for a longer period of time. The good thing is that you can make 12 consecutive payments on time and then your credit should have improved enough to refinance and receive a much lower rate. This will only happen, of course, if you are on time with all of your other credit obligations.

Another disadvantage of receiving financing through a sub-prime lender is the fact that you will usually need to come up with a higher down payment. If you've got a substantial amount of money saved up for a sufficient down payment then you have nothing to worry about, but if you've like many Americans, you don't have $20,000 on average saved up. This could really prove to be a problem if you don't have a hefty down payment, but there is still a chance that someone would approve you without a large down payment. You just have to shop around for the terms that work best for you and your situation.

There are a couple things that you must remember when applying for a sub-prime mortgage. First of all, don't allow multiple companies to pull up your credit report. Each time someone runs your credit your score becomes lower and lower. That's why it's imperative that you deal with as few companies as possible. The second thing that you need to do is steer clear of dishonest mortgage companies. Unfortunately there are unsavory mortgagers out there, just waiting for someone like you who they believe is desperate to be approved for a home loan. The only way that you can protect yourself from this type of scenario happening is by thoroughly checking out the company ahead of time, before even giving them any of your personal information.

So if after finding out all the facts about sub-prime mortgages you still feel that you want to apply for one then it's obviously the right thing for you. If your credit score is especially low a sub-prime mortgage would probably be more beneficial than it would be non beneficial. First of all, you'd be able to purchase the home that may not have otherwise been possible, and you'll be working toward improving your credit situation provided you pay your mortgage on time.

May 14, 2008

Asset Transfers by Nonspouse Beneficiaries

The Pension Protection Act of 2006 contained a provision allowing nonspouse beneficiaries to roll over funds from an employer pension plan to an inherited individual retirement account (IRA), starting in 2007. This was viewed as a significant development for nonspouse beneficiaries, who would be able to extend distributions from employer pension plans over their life expectancies rather than the typical five-year period imposed by most plans.

The Internal Revenue Service (IRS) then issued guidance indicating that the plan was not required to give nonspouse beneficiaries the ability to roll funds over to an inherited IRA. There is currently a bill in Congress to make these rollovers mandatory beginning in 2009, but until it is passed, it is still up to the plan to decide whether to allow rollovers by nonspouse beneficiaries.

If allowed by the plan, beneficiaries must ensure that the rollover is handled properly so that it is not considered a distribution. The rollover, which must be completed by the end of the year following the decedent's death, must be a direct trustee-to-trustee transfer to a properly titled inherited IRA that retains the decedent's name in the title. The funds cannot be transferred to an existing IRA belonging to the beneficiary. If the funds are issued to the beneficiary via check, it is considered a distribution and those funds cannot be rolled over to an IRA. If a plan won't make a trustee-to-trustee transfer, a check can be made out to the inherited IRA and still meet the requirements.

Once funds are rolled over, the distribution rules that applied when the funds were in the employer's plan continue to apply, unless the beneficiary takes the first required distribution using his/her life expectancy by the end of the year following the decedent's death. If this is not done, the beneficiary must take distributions based on the plan's rules, which generally require the entire balance to be withdrawn in five years.

May 12, 2008

The Benefits of a Roth 401(k) Plan

Although Roth 401(k) plans became effective on January 1, 2006, they are just now starting to gain momentum. Originally, Roth 401(k)s were scheduled to expire after 2010, so companies were not willing to start a plan that would expire after a few years. However, the Pension Protection Act of 2006 made Roth 401(k)s permanent.

The Roth 401(k) is patterned after the Roth individual retirement account (IRA) -- contributions are made from after-tax earnings that grow tax free, and qualified distributions are withdrawn tax free. Here are the basics, including how Roth 401(k)s differ from Roth IRAs:

Eligibility -- Employees eligible for their employer's 401(k) plan are also eligible for the Roth 401(k). There are no income limitations for contributions to a Roth 401(k). With a Roth IRA, single taxpayers with modified adjusted gross income (AGI) less than $101,000 and married taxpayers filing jointly with modified AGI less than $159,000 in 2008 can make contributions, regardless of their participation in a qualified retirement plan. Contributions are phased out for single taxpayers with modified AGI between $101,000 and $116,000 and for married taxpayers filing jointly with modified AGI between $159,000 and $169,000 in 2008.

Contributions -- The contribution limits for the Roth 401(k) are the same as for the regular 401(k) plan. In 2008, you can contribute a maximum of $15,500 plus a $5,000 catch-up contribution for those age 50 and over, if permitted by the plan. However, your employer may set lower limits to comply with nondiscrimination rules. Contributions can be split between a regular and Roth 401(k), as long as total contributions do not exceed the maximum. Funds contributed to each type must be held in separate accounts. Any matching contributions made by the employer must be held in the regular 401(k) account, so they will be taxable when withdrawn. In 2008, the contribution limits for a Roth IRA are $5,000 plus an additional $1,000 catch-up contribution for individuals age 50 and over. You can make contributions to both a Roth 401(k) and a Roth IRA, as long as you meet the income eligibility rules for the Roth IRA.

Required distributions -- With a Roth IRA, you are not required to take distributions during your lifetime. Thus, Roth IRAs are a good estate planning vehicle for individuals who want to leave tax-advantaged assets to beneficiaries, since beneficiaries can also withdraw qualified distributions without paying federal income taxes. With a Roth 401(k), annual distributions must be taken after age 70 1/2. However, funds in the Roth 401(k) can be rolled over to a Roth IRA, which would not require distributions.

Conversions -- Individuals under certain income levels can convert a regular IRA to a Roth IRA, as long as income taxes are paid on the amount that would have been taxable if withdrawn. Starting in 2010, all taxpayers, regardless of income level, can convert a regular IRA to a Roth IRA. There is no provision to convert a regular 401(k) to a Roth 401(k).

If your employer offers both a regular and Roth 401(k), which plan should you choose? Your decision will typically involve the same types of considerations as those made when deciding between a traditional deductible and Roth IRA. Two major factors include:

Your current income tax bracket versus your expected income tax bracket during retirement. If you expect your income tax bracket to be higher during retirement, a Roth 401(k) will typically result in more retirement funds. Younger workers will often find themselves in this situation. On the other hand, if you expect your tax rate to decline after retirement, you will typically want to use a regular 401(k) plan. Workers who are nearing retirement age may find themselves in this situation. If you expect your tax bracket to be the same, both alternatives will typically provide the same balance.

Whether you plan to leave assets to beneficiaries. If you are using your 401(k) plan as a vehicle to provide tax-advantaged assets to beneficiaries, you should consider the Roth 401(k). Once you retire, you can roll the balance in your Roth 401(k) to a Roth IRA, without any tax consequences. You then do not have to take any withdrawals during your life. When your beneficiaries inherit the Roth IRA after your death, they will have to take distributions over their expected life expectancies, but those distributions will be federal-income-tax free as long as the distributions are qualified.

Keep in mind that this does not have to be an either/or decision. You can split your contributions between the Roth and regular 401(k) plans.

May 9, 2008

Asset Allocation Strategy

Perhaps the most important move you can make for your investments is to properly diversify your portfolio. By investing in a mix of stocks, bonds, and cash, you'll reduce the risk of a significant loss.

How you combine your diverse mix of investments is called your asset allocation. Asset allocation is a highly individual determination that's based on your risk tolerance, financial goals, and age. Asset allocation will spread out your investments among a mix of three types:

Stocks -- Stocks tend to be the riskiest investment. However, while they have the highest potential for loss, they also offer the greatest potential for gain.

Bonds -- Bonds tend to be less risky than stocks but more risky than cash equivalents.

Cash -- Cash equivalents, such as savings accounts, certificates of deposit, and money market accounts, typically offer the lowest risk and the lowest potential returns.

The benefits of allocating your assets among the three types of investments include:

• Proper asset allocation diversifies your portfolio among the three types of investments, reducing your risk.

• Allocating your assets between the three types allows you to tailor your portfolio to your specific goals.

• You can help manage the level of risk and volatility of your returns.


To properly allocate your investments among stocks, bonds, and cash, consider this three-step approach to asset allocation:

Step 1: Be honest about your level of risk tolerance.

Some people think that investing in a relatively unknown start-up company with a great idea is a sound investment, while others prefer to stick with stable companies with household names. In other words, people's risk tolerances vary.

If you don't mind the more dramatic ups and downs associated with higher-risk investments, you may see higher return potential. But if you can't stand the thought of putting your hard-earned money in an untested company, you're probably better off sticking with relatively low risk allocations, even though you may see more modest returns.

Step 2: Write down your financial goals.

What are the purposes of your investments? Are you saving to buy your first home? Planning to send your children to college? Looking to retire early? Whatever your financial goals are, knowing them will help you determine how to allocate your assets to help you meet them.

Step 3: Consider your time horizon for meeting those goals.

How much time do you have before you need your money for your goals? Is retirement a long-term goal, with 30 years to go? Or is it a short-term goal, with only five years to go? If you're just starting a career, do you have short-term goals, like buying a house, as well as intermediate-term goals, like sending your children to college?

There's no consensus on exactly how much of your portfolio should be in any of the three investment categories at any time. However, broadly speaking, the farther away in time you are from your financial goals, the more aggressively you can be invested.

May 7, 2008

Withdrawals From Your IRA

The tax laws regarding withdrawals from individual retirement accounts (IRAs) are complex. To avoid unnecessary penalties and to ensure you withdraw the funds efficiently, here are the basics:

Before Age 59 1/2

In addition to any income taxes that may be due, withdrawals before the age of 59 1/2 are subject to a 10% federal income tax penalty. However, the 10% penalty will not be assessed in the following situations:

• Distributions are made to beneficiaries after the IRA owner's death.

• Distributions are made to the IRA owner due to his/her disability.

• Distributions equal medical expenses paid in excess of 7.5% of adjusted gross income.*

• Distributions are made to certain unemployed IRA owners to pay health insurance premiums.*

• Distributions are made for up to the $10,000 lifetime limit for qualifying first-time homebuyer expenses.

• Distributions are made to pay qualified higher-education expenses for the IRA owner, his/her spouse, children, or grandchildren.*

• Distributions are made as a series of annual withdrawals in substantially equal amounts over the owner's life expectancy or the joint life expectancy of the owner and beneficiary.*

* While distributions are exempt from the 10% federal tax penalty, these types of Roth IRA withdrawals are subject to ordinary income taxes on any earnings. The other Roth IRA withdrawals are penalty free and income-tax free.

Between Ages 59 1/2 and 70 1/2

Between these ages, you can withdraw as much or as little as you like from traditional and Roth IRAs. Both contributions and earnings withdrawn from a traditional deductible IRA and earnings from a nondeductible IRA will be subject to ordinary income taxes. As long as the first contribution was made at least five years previously, Roth IRA distributions will not be subject to federal income taxes. Generally, you should postpone withdrawals as long as possible to continue tax-advantaged growth. However, in years when income is low, you may want to take distributions from a traditional IRA to take advantage of lower income tax rates. You may also want to convert all or part of a traditional IRA to a Roth IRA during low-income years. While you will have to pay income taxes on the conversion, future earnings will accumulate tax free as long as you make qualified distributions.

After Age 70 1/2

You are not required to take distributions from a Roth IRA after age 70 1/2. You must, however, take required minimum distributions (RMDs) from your traditional IRAs every year, or you will be assessed a 50% penalty on amounts that should have been withdrawn. You can always take out more than the RMD. Your RMD is calculated by taking the account balance as of the preceding year divided by the life expectancy factor from a uniform table. The table is based on joint life expectancies and assumes your beneficiary is 10 years younger than you. If your spouse is your sole beneficiary and is more than 10 years younger, you can use either the uniform table or a table based on the actual joint life expectancy of you and your spouse.

Your first RMD must be made by the required beginning date (RBD), which is April 1 of the year after your turn 70 1/2. However, if you take the distribution in the following year, you will then take both your first and second distributions in the same year. Evaluate your tax situation before doing that. Two distributions may increase your income so you are in a higher tax bracket, lose tax deductions or credits, or Social Security benefits become taxable. In those situations, you may be better off taking your first RMD in the year you turn 70 1/2.

After Death

Heirs must generally start taking distributions by December 31 of the year after your death. Distributions by heirs are based on who your beneficiary is and whether you died before or after the RBD:

• If the account has a designated beneficiary, which includes individuals and certain trusts, the account balance can be withdrawn over the beneficiary's life expectancy, based on a single life expectancy table. This calculation is used whether you die before or after your RBD.

• A spouse can treat an inherited IRA as his/her own, but the surviving spouse has to be the sole beneficiary. However, if a spouse and other beneficiaries inherit an IRA, the account can be split so the spouse solely owns his/her portion.

• If the account does not have a designated beneficiary, which includes your estate, charitable organizations, and certain trusts, and you die after your RBD, the balance is paid out over your remaining life expectancy. If you die before your RBD, then the balance must be paid out within five years of your death.

The decisions you make regarding IRA withdrawals have important consequences for your retirement and for your beneficiaries.

May 5, 2008

How to Protect Your Blended Family

According to the Census Bureau, blended families -- families that include children from one or both spouse's previous marriages -- now outnumber nuclear families. Yet, too many people in these blended families assume that their estate will be distributed to their spouse and children when they die. Without an estate plan, that assumption may be misguided.

No estate plan? Prepare for unintended consequences

Without an up-to-date estate plan, you could end up bequeathing part of your estate to an ex-spouse, disinheriting your own children, leaving less than you intended to your current spouse, or paying too much in estate taxes. Fortunately, there are a number of estate planning tools that can help avoid these unintended consequences.

Disinherit your ex-spouse: To avoid accidentally bequeathing part of your estate to your ex-spouse, review how all assets are titled and check beneficiaries on all life insurance policies and retirement accounts. Update estate planning documents, removing your ex-spouse.

Protect your own children: Consider a trust for the benefit of your children. Even if one or more of your children predeceases your ex-spouse, their inheritance can go to their children or be split up among the trust's other beneficiaries. Nothing has to go to your ex-spouse.

Provide for your current spouse: If you leave your estate to your current spouse without explicitly providing for your own children, your estate could end up in the hands of your spouse's children when he/she dies, leaving your children out of the picture. A Qualified Terminable Interest Property (QTIP) trust can help prevent that from happening. A QTIP trust can pay income and part of the principal to your current spouse for the remainder of his/her life, and then transfer the remaining assets to your children when your spouse dies.

Minimize estate taxes: If an insurance policy is set up properly, the proceeds are distributed free of both income and estate taxes. Another benefit is that the life insurance policy can be used to pay proceeds to specific beneficiaries you designate, including your current spouse and your own children.

Protect your individual assets: If you're heading into marriage, a prenuptial agreement can detail what will happen to your individual assets in the event of divorce or death. Think carefully about holding property jointly. No matter what your estate planning documents state, property held in joint tenancy with rights of survivorship passes to the other owner.

Blending families is not an easy task. Making estate-planning decisions in a blended family environment can be complex, but it is a subject that should not be ignored.

May 2, 2008

Great Low Cost Last-minute Mother's Day Gift Ideas

If you're like many people then you have quite a busy lifestyle, juggling work, children, a spouse, as well as other things in your life. Even if you've overlooked the fact that Mother's Day is rapidly approaching and need to scramble for a last-minute gift for your mom or mother-like figure, there is no reason that the gift has to be any less special--or any more expensive. A majority of moms will appreciate just about any gift, no matter how big or small; and many just want to know that they are appreciated. Mothers often have a great deal of responsibility, and handle many of the duties that women years ago did, with the addition of working outside the home. For this fact, as well as many other reasons, you should make sure that your mother has a super Mother's Day, and believe it or not, this goal can be achieved quite inexpensively.

Good Old Fashioned Flowers

One gift that will never go out of style is flowers. With all the different varieties, you're bound to find at least one type that your mother likes. Flowers are a beautiful, and just about everyone has many that they like. One glance at a lovely flower is enough to bring a smile to anyone's face, so just think how happy your mom would feel by receiving a bouquet for Mother's Day. Although roses are usually more popular and most expensive, there are many other varieties that are just as special, yet often unrecognized. You can also save some money by choosing these other varieties. Daffodils, lilies, and daisies are just a few of the lovely flowers that could possibly bring a smile to your mother's face on Mother's Day. If your mother prefers plants, there are attractive hanging baskets, potted plants, etc. that can be purchased inexpensively at just about any flower shop or store that sells gardening supplies.

Show off your Culinary Skills

There probably isn't a mom alive who wouldn't love for her children to prepare a nice meal for her on Mother's Day. One advantage of showing mom how much you love and appreciate her by cooking for her is that you don't have to venture out into the crowded restaurants on mom's special day. Restaurants will undoubtedly be packed, and if you haven't made reservations in advance, you probably won't get a table anyway. You also get to show your mom how well you listened while she was teaching you to cook as a child. The meal doesn't have to be elaborate, and your mother is likely to enjoy it immensely just because you took the time and effort to it especially for her.

Give Mom a Break

Every mom deserves a break from the everyday tasks that she must do, so giving your mother a break would be a priceless gift that is probably just that--priceless. You don't have to spend any money to clean the house, run errands (except for gas for your car, of course) or baby-sit your younger siblings, if any exist. Taking some responsibility off mom for even one day is enough to make her day extra-special. There's no reason for the break to last for merely a day, either. Giving her the opportunity to rest for the entire week while you temporarily take over her duties would be one gift that she will never forget.

Pamper Mom for a Day

Everyone deserves to be pampered every now and then, whether it's to relieve some stress or simply for enjoyment and relaxation. While she would probably enjoy a full day at the spa, complete with massage, facials, body wraps, etc., a simple manicure would likely suffice. If you're on a budget, or simply don't have the extra money to pay for a full spa package, your mother wouldn't feel any less appreciative if you treated her to a single spa treatment, such as a massage, foot rub, or pedicure--whichever is her favorite.

As you can obviously see, there is no need to buy your mom large, extravagant gifts just to make her feel special and appreciated on Mother's Day. Of course if you can afford it, you mom would probably love a brand-new car or a trip to Spain. Unfortunately, though, the average person isn't able to purchase such expensive gifts, but that shouldn't effect how well your mother enjoys her special day. As the old saying goes, it's the thought that counts, and even a homemade gift is bound to make your mother's special annual holiday more special than it has ever been before.


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