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July 31, 2008

WaMu Online Savings Goes Up to 3.75% APY

Washington Mutual, sponsor of the WaMu Online Savings Account, raised their interest rate today to 3.75% APY. This new rate makes WaMu the highest of the 15 different online accounts that ManagingMoney.com tracks.

In this difficult economic environment, banks are looking for stable funding sources. Consumer savings accounts have traditionally been very stable money, as most people deposit funds and leave them there for years. This allows the banks to match these funds with longer term loans. Washington Mutual, by raising their rate above that of their competitors, is announcing that they are willing to aggressively compete for these funds. To find out more about the WaMu Online Savings account or other FDIC-insured online providers, visit the ManagingMoney.com Savings Account Center.

July 30, 2008

Mobile Homes: Buying a Dream Home for Less

If you think you'll never own the home of your dreams because of the costs involved, then perhaps you should reconsider. Most people who would like to become homeowners never consider purchasing a mobile home for whatever reason. What these people don't realize is that they're missing out on possibly living in a beautiful home for substantially less than a regular house. Most people associate mobile homes with run-down trailers in parks with many low-income individuals. Now while these types of homes that are in serious need of repair and updating do exist, these are not the only types of mobile homes are available. Believe it or not, there are some mobile homes that are as large as 5 bedrooms and 3 bathrooms, and come with central air, Jacuzzi tubs, game rooms, and many other luxury amenities.

By choosing to purchase a mobile home as an alternative, you don't have to necessarily live in a park with several other mobile homes. If you chose to live in a park because you don't own land to place your new home on, or it's just easier somehow, you can of course place your home in a park. If, however, you don't wish to live in a mobile home park and desire more privacy, you can purchase your land separately so that you won't have to follow the rules that the mobile home park may have. You also have the option of purchasing your mobile home with a land/home option, where the bank that you choose to finance your new mobile home would include the cost of the land in your payment as well.

Aside from a lower price for a mobile home, there are also other advantages to owning a mobile home instead of a traditional home. If for some reason you ever chose to move to a different area but didn't want to leave your home, you could always take the home with you. You could hire a service that specializes in moving relocating mobile homes and take the home wherever you wish to move, as long as you have an appropriate lot to place the home on.

If on the other hand you don't plan to move for a while, and whenever you do you will move to a new home, there are ways to set your mobile home up on a on a permanent foundation on a private lot to make it look similar to a traditional non-mobile home. Visitors are often unable to distinguish mobile homes set up in such a way from regular houses. Some mobile homeowners choose to build onto their mobile homes and add extra rooms for extra storage and space.

If you would like to own your own home someday soon yet don't have the money to pay a hefty monthly mortgage payment, why not consider a brand new, luxury mobile home? If you do decide to purchase a mobile home but choose to totally eliminate a monthly payment, you could still purchase one with cash, which would give you even more of a substantial savings. Given the right deal, you could pay less for a nice used mobile home, including renovations and updates, than you would for a down payment on a traditional home.

July 28, 2008

How To Greatly Increase Your Chances of Keeping Your Rental Units Occupied

If you have properties to rent out and are having trouble finding tenants, there are several things that you can do to increase the odds of keeping all of your units occupied, which will in turn equal more income for you. Many property owners have a difficult time keeping their units occupied and generating income, but you don't have to be one of them. By practicing a few simple tactics, you can drive more attention to your available units than you ever have in the past.

One thing that makes a successful landlord is to be somewhat flexible and understanding when it comes to problems that your renters may have. If you see that a tenant simply can't afford to pay his or her rent anymore, then graciously asking them to move might be your best bet. On the other hand, if one of your tenants pays their rent a week late for a 1 or 2 months, it's no reason to immediately evict them. As long as they are not more than a few days to a few weeks late once or twice, you should consider giving them a break. Everyone has money problems from time to time, but it doesn't mean that it will be constant, or that your tenants are irresponsible. It's certainly not wise to allow your tenants to become a month or two behind, or pay late on a consistent basis, but communicating with your renters and treating them like human beings will go a long way.

One thing that you need to remember when you're renting out properties is to ask for a reasonable security deposit, which is often referred to as a damage deposit. This deposit protects you in case there is some type of damage once your renter's move out. If there is any damage, you can simply subtract the amount of the damage from the deposit and refund the remaining amount. Asking an unusually high amount for a security deposit can really hurt your chances of renting out the properties. Most people agree that a deposit equivalent to a month's rent is reasonable, but anything more, such as separate cleaning fees, can cause perspective tenants to search elsewhere. With the economy in its current undesirable state, many people simply can't come up with a hefty security deposit in addition to the first month's rent. One thing that you could do to increase your chances of renting out the properties regardless of the amount of the deposit is to allow the tenants to pay the deposit in increments.

If you're having trouble renting out a property and you have adequate advertising, as well as plenty of responses, there may be some things that you need to check. If the unit is extremely outdated, doesn't have any amenities, or is in disrepair, you should definitely make some improvements before you can expect to rent it out. Even small and inexpensive changes can make a big difference, such as removing old, unsightly wallpaper and applying a fresh coat of paint, or removing old stain-covered carpet. Remember: if you wouldn't live in one of your rentals because of its unattractive conditions, you can't expect others to, either.

If merely having a sign in front of the units that you have for rent and/or placing an ad in your local newspaper hasn't helped to bring enough potential tenants, one way that will definitely bring many interested individuals is to post your listings on Craigslist. Just about everyone knows how popular Craiglist is, and the fact that it's free to place as many ads as you like is certainly a plus. By going this route, you're bound to get numerous responses, maybe more than you can handle, actually.

By having a rigid approval process, you could possibly enable you to locate some decent, responsible tenants to rent your properties. On the other hand, such a process may cause you to have a difficult time renting them out. Not everyone has great credit, but just because perspective tenants may have less-than-perfect credit doesn't mean that they aren't responsible or won't pay their rent on-time each month. Instead of checking credit, one thing that can be just as helpful in helping you locate the best possible tenants is to perform background, rental history, and job reference checks. These checks will still help prevent you from renting to people who have had trouble paying their rent in the past, but without the necessity to delve into interested candidates' past credit background.

There is no reason to have your rental properties sitting empty for months when you could be making a regular monthly income from each one you own. Empty units increase the likelihood of vandalism, and they also cost you more money if you are still paying a mortgage on the houses or apartments. This is why ensuring that each and every unit is occupied at all times should be your main concern. It's not difficult to locate responsible renters, and you don't even have to spend a great deal of money on advertising. As long as you have the level of determination and energy necessary to seek the appropriate tenants for your rentals, it's very unlikely that any of your units will remain unoccupied for very long.

July 25, 2008

VOIP: Money-saver or Waste of Money?

With prices for just about everything soaring, people are searching for any way possible to save money. Aside from using coupons and looking for sales to shop for needed items in order to save on your grocery bill, or limiting where you drive in order to save money on gas, there is another expense that you can choose to focus on: your home phone. Since mobile phones are so popular, and many come with unlimited talk plans for at or under $100 a month, many are opting to forego their home phones and rely on their cell phones exclusively. Others, however, don't like to be without a home phone for whatever reason, and many resort to Voip (voice over internet phone).

As you know, in order for your phone service to work with Voip, you need to have high speed internet service. If for some reason your internet service fails, such as during a storm, you will be without telephone service. If you live in an area where there are frequent storms and you rely solely on your internet phone service, then perhaps making another choice for phone service would be a better idea. If choosing another telephone provider isn't an option for you, then perhaps inexpensive mobile phone service could be used during emergency situations. Prepaid mobile phone service usually only require that you pay $20 every 90 days in order to maintain service, which would be an option for someone who only uses a mobile phone on rare occasions.

One obvious reason why people choose VOIP instead of a regular landline phone is because of the massive saving that is often involved. Consumers can save hundreds of dollars a year while enjoying free features, including voicemail. If you frequently use many of the popular phone features yet hate paying the high cost for landline service, internet phone service may actually be a good idea for you. Voice mail alone can cost as much as $10 a month with many landline phone providers, so this is evidently a great way to "have your cake and eat it too."

Surprisingly, many providers of Voip service haven't been providing the best customer service and technical support. Either customer service isn't available when consumers require assistance, or the assistance provided is substandard. Whatever the case is, Voip users haven't been too impressed with many of the internet phone providers. Of course some customers have been satisfied with their phone provider's customer service, but if a majority of customers are receiving poor service, it isn't a good thing for the consumer or the company.

Many VOIP users have complained of poor sound quality, whether they're experiencing trouble with static on the line, difficulty hearing the person they're speaking with, or the other party is unable to hear the Voip subscriber. This can be very frustrating, as well as a total waste of money. In this case, it's not worth it to pay a lower phone bill if you can't rely on the service that you're paying for. There are some of the more well-known companies like Vonage, for instance, that may be somewhat more reliable, but Voip service is notorious for problems, unfortunately. Perhaps with constant improvements Voip service will soon become as reliable as landline service, but it hasn't yet reached that point.

If you have been lucky enough to choose a Voip company that provides superior service, including technical support, and you don't have many problems, if any at all, then Voip service may very well be worth it for you. Paying approximately $20/month for unlimited calls anywhere in the United States, the ability to use free phone features, as well as voice mail, is a great deal less than paying approximately $75 a month for the same with a landline. If you can save $55 a month, then you have obviously made an excellent choice. On the other hand, if your phone service is of poor quality, whether it's the phone service itself or customer service, then you may be better off opting for an unlimited mobile phone plan or either basic phone service with minimal features, in order to keep your bill low each month.

July 23, 2008

Bank of America's "Keep the Change" Program

Everyone needs a savings account in order to put away money to use for emergencies, special occasions, and for the future. Unfortunately, many people don't have bank accounts because they feel they either don't need one or can't afford to save any extra money because of their current income. Not only do you need a savings account, but no matter how much--or how little you make, you have the ability to save more than you may think. Even a mere $5 or $10 placed into a savings account each time you receive a paycheck can add up quicker than you ever thought possible. Most likely you won't even notice $10 missing from your paycheck, as it's easy to spend this amount on fast food or other miscellaneous items, which makes it a lot smarter to save the money rather than spend it on fast foods.

In case you aren't aware, there is a bank that offers an easy way to add small amounts of money to savings account, which can really help jumpstart your savings account and motivate you to save even more. The bank that offers this unique way of saving is Bank of America, and their unique program automatically transfers money from your checking to your savings account, as long as you use your debit card to make purchases. The only qualification for the program is that you have both a checking and savings account, and you must have a debit card associated your checking account.

It's easy and exciting the way "keep the change," which is the name of Bank of America's special savings program, works. All you have to do is make purchases using your debit card and the bank will round the cents from your purchase to the next dollar amount and conveniently transfer the amount to your savings account each business day. For example, if you make a purchase for $2.67, the amount that will be transferred from your checking to your savings account will $3.00. So obviously, the more you use your debit card to make purchases, the more money you can save. There is a limit at to the amount you can save through this program, which is $250 annually. This limit should not interfere with the amount you save, though, because you could make regular deposits to your savings account in addition to participating in "keep the change" and watch your savings account grow significantly.

Most banks will only allow you to open an account if you live locally, but Bank of America isn't like many of the other financial institutions. One great thing about this particular bank is that it has locations in numerous states, which makes it more likely for you to find a location near your home or office. Another great thing about this bank is if there isn't a branch in your home state, you can still bank with Bank of America online. It's very quick and easy to open an account online. Additionally, if you have had trouble with Chexsystems and have been denied a bank account at many other financial institutions, rest assured that Bank of America does not deal with Chexsystems. They pull basic credit reports in order to approve new accounts. Even if your credit is less than perfect, in most cases this fantastic bank will allow you to open the accounts of your choice with them.

So if you want to watch your savings account grow slowly but surely, enrolling in Bank of America's special "keep the change" program may be a great choice for you. If you choose not to open the necessary accounts at Bank of America and enroll in their exclusive savings program, you can still save up money. Whether you choose to open a savings account at another bank or credit union, or you choose to place money in a cookie jar each week, as long as you're saving, you're well on your way to improving your financial future in more ways than one.

July 21, 2008

Simple Tips to Staging Bedrooms

One of the most critical aspects of selling a home is getting people to imagine themselves living in your bedroom. The idea itself sounds unattractive and uninviting, yet this is exactly what homeowners must overcome in order to sell their house. If people do not find the master bedroom appealing, they will likely turn to another house to satisfy their desires. Since the bedroom is a place of intimacy and retreat, sellers often experience difficulties in winning over prospective buyers, who become very uninterested very quickly. So here are a few tips to properly stage a bedroom and make it into a place that is inviting for everyone who visits it.

Remove any personal items. This is most important and often most neglected step in
selling a home, yet it is absolutely essential, especially in regard to a bedroom. Because bedrooms are already one of the most personal rooms in a house, it is crucial that anything of a personal nature be removed from the room. Pictures are the number one violators of this rule. If prospective buyers feel like they have witnessed a photographic history of the entire extended family by the time they leave the bedroom, there is very little chance that they will be back for a second look at the house. Pictures ranging from large posters to photo pillows to small frames absolutely must be stored away before the buyer enters the room.

In the same vein, a few everyday items should also be made scarce throughout a bedroom. Some of these items include hairbrushes, jewelry, watches, shoes, magazines, and figurines. Basically anything that will take a buyer's mind off of the room and onto personal belongings should be prohibited from the bedroom. Some people are very petty, and if they see a magazine that rubs them the wrong way, they may just write your entire house off. Prevent this issue from becoming a problem simply by removing these items. However, don't think that an easy stash-away in the closet will solve the problem, because, like or not, prospective buyers will open up closets and take a look around.

Once the personal items have been removed from the bedroom, it is time to focus on the
environment. Three simple changes can drastically enhance the feel and ambiance of any bedroom. The first of these changes is to get rid of any large furniture pieces. A giant four poster bed or an oversized armoire capture too much attention in and of themselves. Large items take the focus away from the room and turn the bedroom into a cramped space. By removing any large furniture pieces, a small bedroom can actually appear quite inviting and roomy.

The second easy change is to resituate furniture to compliment the positive traits of the bedroom. Furniture should be kept away from windows, thus encouraging buyers to walk over and enjoy the view. In addition, make sure that there is plenty of walking-room in front of closets and plenty of swing-room around any doors. Buyers should not have to walk around anything or move any of the furniture to view a closet or a window. If the buyer is able to smoothly and efficiently move around the bedroom, they will leave it in a better mood.

The final change deals with the color of the bedroom. As with any room of the house, the safest colors to go with are soft yellows or creamy whites. These light colors lend a spacious feel to the room and encourage the buyer to imagine their favorite shade on the walls. Furthermore, any colors that are traditionally associated with specific genders, such as pinks, reds, or blues, should be avoided. However, home sellers shouldn't be afraid to spice up the room with a splash of color. Bright pillowcases or warmly colored lampshades can do wonders for the atmosphere of the room. Just remember moderation.

Hopefully, the sale of any house should be entirely dependent on the state of the bedroom, but if it is, these simple tips will help tremendously. So whether it is the bedroom's color or just the placement of the furniture, an attention to details and a knack for removing any personal ones can greatly affect the buyer's opinion of a bedroom.

July 18, 2008

Questions to Ask When Refinancing Your Mortgage

Borrowers seek to refinance their home mortgages for two main reasons. Refinancing helps borrowers to reduce debt servicing costs through negotiation of better mortgage terms. This is especially true when interest rates trend downwards as they are doing now. Some borrowers also refinance to cash out their home equity. These refinancing plans are embarked upon with the intention of getting some financial relief. However, careless planning or bad advice can lead to the reverse. Consider your answers to the following questions when evaluating your refinancing options.

Are you refinancing to lower your monthly payments?

Refinancing offers an opportunity to build equity faster. This happens when your existing mortgage is replaced by one with a lower interest rate and a shorter repayment period. However, if your objective in refinancing is to lower your monthly payment, your broker may offer a longer repayment period than that on your existing mortgage. While this would reduce your monthly payment, the longer term means that you will be paying more interest over the life of the loan.

Your reason to negotiate a lower monthly payment may be prompted by a desire to switch from a fixed rate mortgage carrying a higher rate to an Adjustable Rate Mortgage (ARM) with a lower rate. On the other hand, you may be at a stage where the fixed rate period of an ARM is coming to a close and you wish to reduce the risk relating to future payments. Remember that it is not only the monthly payments of your existing and refinancing mortgage that you are comparing in this exercise.

Do you plan to move soon?

You should have a clear idea of how much longer you plan to be in your home before arranging to refinance. Check by how much your loan balance will reduce with a new mortgage during this period when compared to your existing one. Consider also the points and settlement costs relating to the new loan that are payable in cash and the interest you will lose by not investing these funds elsewhere. Another factor to consider is your tax savings on the interest and points paid on the mortgage. If the overall savings that are earned during this period exceed your closing costs, then it makes sense to refinance.

Do you really have to cash out your equity?

When funds are needed urgently, some borrowers opt to cash out part of their home equity. Doing so depletes the equity you have carefully built up by paying down your loan. If the market value of homes in your area decline, there is a risk of the new refinancing loan exceeding the upper limit of 80% of the home value set by lenders for a home mortgage. If this happens you will be required to pay mortgage insurance for your new loan.

Another fact that some borrowers fail to realize is that refinancing to cash out results in a bigger loan than the present one. Even if interest rates are low and other terms are satisfactory, paying more interest for a larger loan needs careful consideration. A better alternative may be to borrow the extra funds required by way of a second mortgage while continuing to service the existing mortgage. Compare the costs relating to both scenarios to ascertain which one is better.

Are you financing your closing costs?

Closing costs in the form of points and fees are upfront cash payments that are required when refinancing your mortgage. Some lenders agree to finance these costs by including it in the new mortgage. This increases the size of your mortgage and the interest that you will pay over the term of the loan. At times such higher amount may even result in your having to pay mortgage insurance. A careful analysis of the costs and benefits relating to such offer will indicate if it is viable.

Are you receiving good advice from your mortgage broker?

The mortgage broker or agent who offers mortgage refinancing, gains only if you actually avail of such funding. While most brokers and lenders adhere to the ethical standards set by the mortgage industry and associations they belong to, there are others who may lead you astray. Ask your broker for references and check whether your broker or lender is licensed to practice in your State. Safeguard yourself by getting a minimum of three quotations before signing a contract. The "Truth in Lending Act" requires a lender to disclose details of closing and financing costs at the time of signing the loan contract. This Act also gives you the right, under certain circumstances, to rescind your contract within three business days of signing if you do not wish to proceed with the mortgage transaction.

Get these questions clarified during the refinancing negotiations. If handled prudently, refinancing offers a way to reduce your debt burden. Do not be lured only by low interest rates or a need to cash out your mortgage. Consider also factors such as how many years you have left on your present mortgage, the type of mortgage you have and how much longer you plan to be in your home. Overall, they can lead to a wiser financial decision.

July 16, 2008

Review Your Life Insurance Regularly

Periodically, you should review your life insurance policies to ensure that they still meet your insurance needs for your current situation. A divorce, change in income, or death or illness in the family are all factors that significantly impact the amount of life insurance you need. Consider the following points during that review:

Are your policy limits still appropriate? Whether you took out the policy 20 years ago or four years ago, it makes sense to revisit the initial selections you made. You may now find that you need more or less insurance than you originally purchased. However, if you have too much coverage, don't cancel the policy without further analysis. The policy's return may make it a worthwhile investment on its own, or you may be able to convert to a smaller, paid-up policy.

Is the projected rate of return still competitive? If you have a cash-value insurance policy, ask the insurance company for an in-force illustration based on current dividends and interest rates. Even if you aren't satisfied with the projected return, don't replace the policy without careful analysis. Cash values typically accumulate at a faster rate after the first few years, and there may be tax consequences to surrendering the policy. Also, a policy change may require a medical examination and may incur fees and costs.

Is the insurance company financially sound? Check your insurance company's ratings to make sure its financial strength has not deteriorated.

Is the policy owned by the appropriate party? Changes in your estate needs may necessitate changes in the policy's ownership. For instance, you may want an irrevocable trust to own the policy so the proceeds won't be included in your taxable estate. Or business owners may find it more beneficial for the company to own the insurance policy. Consider all tax and estate factors before deciding who should own the policy.

Are your beneficiaries still appropriate? People's lives are constantly changing. Sons and daughters become adults, get married, have children. Family members die. Husbands and wives divorce. Such events have an impact on your life insurance beneficiaries, so you may want to change your beneficiaries due to changes in your personal situation. While it would seem unlikely that an insured would want his/her ex-spouse as a beneficiary, it is quite common for individuals to forget to update beneficiary designations. During your insurance policy review, make sure to review your designated beneficiaries.

July 14, 2008

Preventing Financial Problems for Your Child's Future

Compared to 25 or 30 years ago, more and more college students and those under the age of 25 are getting into debt at alarming rates. Some college students don't have the money to pay for school, forcing them to work fulltime jobs just to put themselves through school while simultaneously supporting themselves. This makes them more likely to incur debt that they often aren't able to pay, which leads to bad credit and often even bankruptcy. Many are maxing out credit cards in order to pay for living expenses and other important bills, yet they have no means of repaying them. The good news is that by being a good financial role model, you can help prevent such a dire future for your child if you work hard at it.

One way you can help prevent your child from experiencing financial disaster as an adult, especially while they are still in college, you can start a college fund as soon as possible. If your child has at least some of their college education paid for there will be less pressure on them, enabling them to make smarter financial decisions. Your child will be less likely to max out credit cards, obtain payday loans, or overdraw their bank accounts if they're not strapped for cash and can comfortably afford the necessities. The key to saving a sizeable amount of money to be used for your child's college education is to start early. Starting a special college savings account right after your child's birth may seem somewhat premature, but it can never be too soon. The sooner you start, the more money your child will have for his or her college education once they reach the age of 18. A high interest rate savings account such as a CD is a good choice, and will allow the money to gain interest as quickly as possible. If you start early enough, a growth mutual fund could also be a smart choice.

Another thing you can do to prevent your child from becoming another statistic is to start teaching him or her about the importance of credit, saving money, and spending wisely at an early age. Create ways for them to earn money by performing tasks around the house and see how they handle the money that they earn. If they spend it as soon as it's earned, teach them about the benefits of savings. Children learn by example, so if you expect for your offspring to handle their finances responsibly then you need to handle yours responsibly as well. If you're constantly bouncing checks, paying bills late and struggling to make ends meet then your kids will learn to do the same. No matter what you have to do to get your finances into order, do so if you want your child to handle their finances optimally.

Credit cards are tempting for almost any young adult, and unfortunately college students are easy targets for credit card companies. Simply by being a college student makes your son or daughter eligible for certain credit card offers. Your son or daughter needs to know about the consequences of obtaining and using credit cards, though. If you can, talk your child out of applying for a credit card until they are financially capable of paying the bill in full each month. If you can't talk him or her out of applying for credit while in college, at least advise them to only apply for one to be used for emergencies only. As long as the credit limit is low and they're able to handle the monthly payments, one card should be fine. The problems start when young adults become excited about how easy it is to obtain items without paying upfront and start spending excessively.

Despite the staggering amounts of young adults under the age of 25 that are forced to file bankruptcy because of poor money management, your children don't have to experience the same fate. With a great deal of education from you, your children can grow up to be prosperous, responsible adults who manage their money well and never have to worry about suffering from the humiliation of having a low credit score and being denied necessary loans in the future. Just about everyone will experience at least one unexpected and unavoidable financial disaster during their lifetime, but if you teach your children how to handle their finances sensibly while they're still young, chances are that they'll be able to bounce back from a financial disaster easier than if they had never been taught.

July 11, 2008

Bond Price Fluctuations

There are two primary factors that affect bond prices -- interest rate changes and credit rating changes. Interest rate changes will typically cause a bond's value to fluctuate more than will credit rating changes.

As interest rates rise, a bond's price adjusts down, while the bond's price will increase when interest rates decrease. Simply put, bond prices and interest rates move in opposite directions. Also, bonds with longer maturity dates are more vulnerable to interest rate changes, since the difference will impact the bond for a longer time period. One of the reasons longer-term bonds typically pay higher interest rates is because there is more risk that interest rates will change during the bond's life.

Credit ratings also influence a bond's price. When a bond is issued, rating agencies assign a rating to give investors an indication of the bond's investment quality and relative risk of default. Typically, higher-rated bonds pay a lower interest rate than lower-rated bonds. After the bond is issued, the rating agencies continue to monitor it, making changes if warranted. A bond's price tends to decline when a rating is downgraded and increase when a rating is upgraded. The price change brings the bond's yield in line with other bonds with a similar rating. However, these price changes are typically minor if the rating changes by only one notch. Certain downgrades are more significant, such as a downgrade that moves a bond from an investment-grade to a speculative rating, a downgrade of more than one notch, or a series of downgrades over a short period of time. In those situations, you should review whether you want to continue to hold the bond.

If you want to minimize the risk of price fluctuations, consider these tips:

• If you hold a bond to maturity, you receive the full principal value, so you won't be affected by any price fluctuations. Thus, consider purchasing bonds with maturity dates that match when you will need your principal.

• Consider investing in bonds with shorter-term maturities, which are less susceptible to interest rate changes.

• Design your bond portfolio using a ladder, so you'll have bonds coming due every year or so. This strategy typically lessens the effects of interest rate changes. Since the bonds are held to maturity, changing interest rates won't result in a gain or loss from a sale. Bonds are maturing every year or two, so your principal is reinvested over a period of time instead of in one lump sum. If interest rates rise, you have principal coming due every year or so to reinvest at higher rates. In a declining interest rate environment, you have some funds in longer-term bonds with higher interest rates. A bond ladder keeps your bond portfolio invested in a range of maturity dates, evening out your interest income over time.

• Choose bonds that match your risk tolerance. Safer bonds, such as U.S. Treasury bonds or investment-grade corporate bonds, are less susceptible to credit rating risks.

July 9, 2008

Spousal IRAs

Perhaps you are a stay-at-home parent, or your spouse is a professor on an unpaid sabbatical. Maybe your spouse decides to take time off to write a book. Even though you are not working, you still need to consider retirement plans. A spousal individual retirement account (IRA) allows a nonworking spouse to contribute to an IRA, even though the spouse has little or no earned income. Here are the basics:

• To be eligible to contribute, the couple must be legally married at tax year-end and file taxes jointly. The couple's combined earned income must equal or exceed the combined IRA contribution.

• Contributions can be made to traditional IRAs as long as the owner is under age 70 1/2, while there is no age limit for Roth IRAs.

• In 2008, the maximum contribution to an IRA is $5,000 with an additional $1,000 catch-up contribution for individuals age 50 and over.

• For traditional IRAs, if the working spouse is covered by a qualified retirement plan but the nonworking spouse is not, the contribution for the nonworking spouse is phased out once adjusted gross income (AGI) is between $159,000 and $169,000 in 2008 and totally phased out once income exceeds $169,000. If you both have earned income equal to at least the maximum IRA contribution amount and are both covered by a qualified retirement plan, your contribution is phased out at joint AGI between $85,000 and $105,000 in 2008. If neither of you is covered by a qualified plan, both of you can make a deductible contribution regardless of your AGI.

• For Roth IRAs, eligibility is phased out for AGI levels between $159,000 and $169,000 in 2008. It doesn't matter whether your spouse is covered by a qualified retirement plan at work.

Contributing to a spouse's IRA may be as beneficial to the working spouse as to the nonworking spouse, since the assets are likely to be shared during retirement.

July 7, 2008

Dealing With Long-Term Care Costs

Life expectancies have increased significantly and are expected to continue to increase in the future. As people age, however, they are more likely to develop conditions that limit their ability to live independently. Thus, as life expectancies increase, so does the need to make provisions for long-term-care costs. If you are wondering how likely it is that you will need to deal with long-term-care costs, consider the following:

• Almost 70% of those who are currently age 65 will require long-term care before they die. Care will be needed for an average of three years, with 20% requiring care for five years or more (Source: Center for Retirement Research, April 2007).

• Currently, the average annual cost for home care service is $34,000 and for a private room in a nursing home is $75,000 (Source: Center for Retirement Research, April 2007).

• Approximately half of private-pay nursing home patients run out of funds during their stay and must then use Medicaid funding (Source: Center for Retirement Research, April 2007).

• Almost 72% of nursing home patients are women (Source: Financial Planning, April 2007).

• By 2005, only 6 to 7 million people had purchased long-term-care insurance (Source: Center for Retirement Research, September 2007).

• The average age to purchase long-term-care insurance was 61 in 2005 (Source: Center for Retirement Research, September 2007).

• In 2006, approximately 20% of applications for long-term-care insurance from individuals aged 60 to 69 were declined, while 42% of those aged 70 to 79 were declined (Source: Financial Planning, April 2007).

July 4, 2008

What Is Your Investment Risk Tolerance

Your individual risk tolerance will significantly affect the look of your portfolio, so you should have a good understanding of what it means and how it is applied to your investments.

While a high-risk portfolio may look good on paper, how those investments will affect your behavior and emotional state should be taken into consideration. If high-risk investments cause you significant worry or anxiety over potential market declines, you won't be comfortable owning them.

One approach to developing an investment portfolio that reflects your individual risk tolerance is to consider your investment income needs and your attitude about the potential changes in investment values. If your standard of living is dependent on investment income, your portfolio should be concentrated in investments that provide stable and predictable income. However, if your living needs are covered through employment income, it may make more sense to take a little more risk with your investments, choosing investments with greater growth potential over the long run.

While there is no simple way to determine what risk level fits your emotional makeup and attitude, there are some questions you can ask yourself to gain a better understanding of what type of investor you are:

• Are you confused about investment basics?

• Are you more comfortable with saving than investing?

• Do market fluctuations cause you anxiety? Is that anxiety enough to disturb your day-to-day activities or your sleep?

• Do you require income from your investments?

• Are you investing for the short term?

• Is your financial situation unable to handle short-term losses?

• Are you fearful of losing your assets?

If you answered yes to most of these questions, you are likely to be a conservative investor -- someone who is better off with lower-risk investment choices. On the other hand, if you answered no to most of these questions, you may be an aggressive investor and investments with higher return potential may be a better fit for you. Higher reward potential is subject to greater risk of loss of principal.

By knowing yourself and understanding your financial needs and goals, you will be better able to gauge how you may react to market fluctuations. In turn, this will help you determine what levels of risk to assign to your portfolio to help you meet your financial goals.

July 2, 2008

E*Trade Complete Savings Rate Increases to 3.30% APY

E*Trade Financial announced today that they are increasing the rate on their Complete Savings Account from 3.15% to 3.30% APY.

Although better known for their online stock trading platform, E*Trade is actually quite competetive in the online bank savings account market. At 3.30% they are currently at 8x the average national savings rate. As the subprime crisis continues to unfold, the online banks have recently been raising their rates in order to attract deposits which is generally considered to be a more stable source of funding. To view a listing of the top national online bank savings rates visit the ManagingMoney.com Banking Center.

Checking Accounts: How to Avoid Overdraft Fees

It doesn't matter if you currently bank with a credit union or a bank, chances are your financial institution charges fees anytime you overdraw your account. These fees, which currently average around $25 - $40 per transaction, are charged to your account each time you have a check or debit card transaction post to your account yet you don't have enough funds available to cover it. As a courtesy, many financial institutions will often pay the transactions, depending on the circumstances and whether or not you overdraw your account regularly. There are ways to avoid paying these fees, especially if they occur often, to help save you from paying money unnecessarily to your bank.

If you discover that your account has been charged overdraft fees, it's a good idea to contact your bank or credit union to request all or at least some of your overdraft fees be reversed. If your financial institution has charged you overdraft fees in error then they will undoubtedly reverse the fees, no questions asked. If you've had fees reversed in the past, and it was your fault for the overdrafts, many financial centers will deny your request if you are at fault again. Even if you've had several fees reversed in the past as a courtesy, it never hurts to plead your case because you never know when a bank employee or manager will be in a good mood and reverse the fees for you.

One way to avoid being charged these hefty overdraft fees in the first place is by applying for some type of overdraft protection. If your credit rating is good enough to be approved for a credit account that can be linked to your checking account to cover items when you don't have enough money available, you should take advantage of a line of credit. You never know when an emergency might arise which would necessitate you to write a check or withdraw money that normally wouldn't be available. This is why having a line of credit as overdraft protection is a smart idea and could save you a great deal of trouble.

If for some reason you are unable to be approved for a line of credit or you don't wish to apply, there is always the option of opening a savings account and linking it to your checking account. As long as you keep your savings account funded, it can prevent you from being charged overdraft fees each time you overdraw your account. Banks usually charge a small fee to transfer the money from your savings to your checking to cover transactions, but this fee is nothing compared to overdraft fees, and is usually somewhere around $5. Some banks or credit unions require that you officially permit your savings account to be used for overdrafts, but this isn't difficult and only takes a few minutes.

Another much simpler way to manage overdraft fees is to simply balance your checkbook properly. Never write a check if you don't have the money available in your account at the time. Many people find themselves in binds and will often write a check a few days before payday to pay for necessary items. This may seem harmless at the time, but you never know when a store might electronically submit your check, which could post to your account as soon as the next day, causing your account to become overdrawn. And if your bank or credit union refuses to pay the transaction, not only will you be charged an overdraft fee by your bank, but you'll also have to pay the check that you wrote in addition to whatever returned check fee the retailer charges.

If you find that you're still incurring overdraft fees despite utilizing these helpful tips, perhaps it's a good idea for you to either close your checking account, or at the very least stop writing checks. It may seem like a drastic measure, and it is, but if you want to stop paying astronomically high fees to your bank or credit union, then something drastic obviously needs to be done. You don't have to restrict your check-writing privileges permanently, but just long enough to give yourself the opportunity to get your finances back on track and build up your bank accounts enough so that you can avoid overdrawing your account in the future.

Overdraft fees can really add up, and depending on how often they occur and in what amount, they could really hurt you financially. Bank and credit unions make a great deal of money when you and other bankers overdraw their accounts, so usually unless you overdraw your account excessively, your bank won't warn you about this behavior. This is usually not the problem, though. The problem is that you want to figure out a way to avoid being charged these annoying fees in the first place. Even if you have to sign up for electronic or mobile phone alerts that your financial institution most likely provides, it's worth it to avoid paying money that you could put toward paying more important things.


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