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Financial Planning
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Tips On Managing Your Money
No matter how rich you may be, you still have to worry about managing your money so that you will be able to send your children to college, go on nice vacations, or save money for retirement. Fortunately, you don't have to do this on your own. There are qualified professionals that are trained especially to help you with managing your money, and assist you in making the most of your income.
Diversification - An Important Term
"Succeeding is not really a life experience that does that much good. Failing is a much more sobering and enlightening experience." -Michael Eisner
Diversify! Diversify! Diversity! Diversification is the newest trend and most advised strategy in investing. Most people do not know what diversification is or why is it is so important. Below is some basic information about diversification ... Read personal finance article
Financial Planning
I recently read a financial advice column that began with the premise that putting money away for retirement was extremely difficult because "its hard to part" with money for a future need.
What's wrong with this picture?
Money saved for retirement is not separated from you as the writer suggests. It's still your money. If you want to part with your hard earned income, I suggest you visit a casino. You'll quickly realize the difference between putting dollars in a slot machine and a retirement plan.
But this column isn't about retirement plans, it's about the attitude that investing money for future needs is less important than satisfying your immediate needs.
The rate of savings in America is atrocious. The average Japanese saves twice as much as we do, and Europeans save four times that amount.
Consumer spending relative to the Gross Domestic Product (GDP) is at an all time high, much of it driven by home equity loans. Sucking out the life-blood of a home to leverage an investment has always been an iffy proposition, but spending the money for no possible return is simply a dead end.
Financial Planners have different opinions on the basic building blocks of financial security, but here are the most common:
1. Control Credit Card Debt - This comes in many forms, but credit card debt can be the most serious. There's nothing "priceless" about interest rates that exceed 20%. Current estimates are that close to 650 million credit cards have accounted for more than $1.5 trillion in spending by consumers. The average credit card debt per family is $8,000 - and growing. If payments are missed, additional fees and interest charges are tacked on. The missed payments affect the consumer's credit rating, or FICO score, which can lead to higher rates for additional loans. This can easily spiral out of control. So, rule number one - if you can't afford it, don't buy it.
2. Set up a Savings Plan - Systematically save for those unexpected needs. A cash reserve can help prevent further borrowing and, if for some reason it's not used, then it will still be there. Systematically saving on a monthly basis also teaches good financial discipline. Most people will find that they can easily adjust to their new saving habits. If you don't have it, you won't spend it. So you skip a few nights out each month - it's not going to kill you.
3. Invest in a Retirement Plan - Yes, the odds are that you will grow old and develop gray hair over the years; and, if you think you'll make ends meet with Social Security alone, then you really haven't been paying attention. With the variety of retirement plans that currently exist, there is no excuse not to get involved with at least one of them. Look, first, at 401(k) plans in which your employer stands ready to match a portion of your contribution. If that's not available, then there's always an Individual Retirement Account (IRA).
4. Build Home Equity - A home is still the biggest single asset most people will ever own. Building equity (the piece you actually own) would seem like a no brainer. Apparently others are trying to convince us differently. Here's a direct quote from a mortgage company:
"Wouldn't it be great to use this asset to reduce your monthly payment and put extra cash in your pocket?"
I'm all for reducing monthly payments, and declines in interest rates can determine whether refinancing is to your advantage. But, I just don't understand this "cash in your pocket." That isn't money you earned, it's money you borrowed and will have to be paid back with interest. Over time, you'll not only pay back all that money in your pocket, you'll also need to find another pocket with some money in it just to pay the interest. This is a good deal?
These are, of course, only some of the ways to build a solid financial future. Another good rule to live by is "always pay yourself first." Think like the squirrel who knows winter is coming and put some nuts away. Just don't scamper out in front of my car while you're doing it.
Glenn ("Chip") Dahlke, a senior contributor to the Living Trust Network, has 29 years in the investment business.
He is a Registered Representative of Linsco/Private Ledger and a principal with Dahlke Financial Group. He is licensed to transact securities with persons who are residents of the following states: CA. CT, FL, GA, IL. MA, MD. ME, MI. NC, NH, NJ, NY.OR, PA, RI, VA, VT, WY.
If you have any questions or comments, Chip would love to hear from you. You may contact him at dahlkefinancial@sbcglobal.net. You may also contact him at the Living Trust Network. Its web site is http://www.livingtrustnetwork.com
Copyright 2006. Living Trust Network, LLC. All Rights Reserved
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Buying Foreclosed Properties
Unfortunately in today's market there are many people that just can't survive the everyday expenses for many different reasons. Job loss, unexpected illness and injury or family member death are all situations that we each hope we don't have to face but are honestly uncontrollable. In these scenarios that turn over with in a short amount of time, the risk in purchasing their foreclosed properties is rather low because most likely up until whatever incident threw them for a loop they most likely did well in taking care of what they needed to in terms of repairs and household upkeep. The other situation stems from those that really did not have any intentions of maintaining the property from the beginning.
Depending how long the home was in their name and under their care should give you an idea to the extent of damage is involved in the property and what it will cost to recover.
In either situation it is important to check with a licensed construction professional to determine what is truly wrong with the structural parts of the home. With this valuable information you can weigh what the house is worth and deduct what the costs associated with its repair will be to make an informed decision on whether or not it is something you would want to delve into.
Also, it is a good idea to enlist the services of a reliable assessor for the current market value of the house. Be sure that the assessor you chose is someone who knows what your goals are because the market value of a house is so unbelievably different from one person's perspective to the next. If you and your assessor have open o communication allowing you both to be on the same page of expectations, this will help you receive an accurate quote in the best interest of your needs.
It is also important to seek out the best buyer for your situation. If you are purchasing a foreclosed home from a bank, there is less likelihood of tenants to evict, unpaid liens to take care of and past due taxes to cover. If you are interested in trying to get a better price, you might find the option of approaching a pre foreclosure homeowner about buying the house from them and taking advantage of their equity. This is not always an easy task however. Due to their situation, they are most likely not answering the phone, if they have one. They most likely don't respond to mail and may not have a steady schedule of when they could be found at home.
This option is definitely for the more experienced purchaser and you would need to be really driven. For anyone thinking about purchasing a foreclosed home, it is important to make these decisions on an informed idea of what you are getting into. With all this said, it is also a very profitable business for many contractors who can do some of the repairs themselves and flip it in a reasonable amount of time.
Gregg Hall is an author living in Navarre Florida. Find more about this as well as home foreclosure at http://www.houseandpropertyforeclosures.com
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