One of the issues facing many families' finances right now is debt. The debt loan in this country is huge. And you may be experiencing it as well. If you are serious about getting out of debt, the best way to do it is to create a plan. A debt reduction plan will help you plan a way to get rid of your debt, keep more of your own money in your pocket and create space for you to prepare for the future. Here are some tips that can help you when creating a debt reduction plan:
Change your way of thinking. Many people think of credit cards as another income source. They are considered "available" funds. Instead, view credit cards for what they are: loans. Realize that you are borrowing money, and that you will have to pay it back -- with interest. Deep down, you probably know that, but it isn't something we think about very often. Stop using your credit cards until all of your debt is paid off, your spending is under control and you can pay off the balance every single month. And even then, think twice.
Compile a list of your debts, interest rates and minimum balances. Make a complete list of all of your debts. You don't have to include your mortgage, but many people like to. Figure out an order for them. I like to list them from smallest to largest, since it provides motivation as you start paying them off. Others recommend starting with the higher interest rate debts, since those are the ones sapping more of your money in interest charges. (Note: If you include your mortgage on this list, it should pretty much always be last.)
Start paying off your debts. Since you've determined how much extra you have each month after cutting out the wasteful spending, you can put that money to good use. Apply it to the first debt on your list, on top of the minimum payment. Pay only the minimum on each of your other debts. The best way for your debt reduction plan to work is for you to concentrate the power of your formerly wasted spending on paying down your debts. If you spread the money out to all of your debts, you dilute the power of an aggressive debt reduction plan. After your first debt is paid off, transfer all the money you were putting into that debt to the next debt on your list.
Look for more ways to cut back. Saving money soon becomes a way of life. If you can find more ways to save money -- by cooking meals at home more, conserving energy, making use of the library, etc. -- you will discover that you can pay off your debt more quickly.
Put the money into savings when your debts are paid off. The great thing about this debt reduction plan is that it helps you change your habits so that when the debt is paid off, you have all this money each month that you don't need to spend. Instead, you can use it to build an emergency fund. And once that's done, you can pad your retirement or investment accounts.
Don't forget to enjoy life! Also, don't forget to enjoy life. If all you do is worry about your debt and putting money in savings, you won't enjoy life, and what's the point? But you should do so frugally. There are many enjoyable activities that do not cost very much. And if you want to enjoy a small pleasure every once in a while -- a new video game, a book, a nice dinner -- there's no reason not to. As long as you don't have to put it on a credit card to "afford" it.
About the Author: Miranda Marquit edits information on debt consolidation for DestroyDebt.com.
A bill recently introduced in California would ban the sale of energy-hogging incandescent light bulbs by 2012. Aside from changing your light bulbs, there are some other things you can do around the house to save you energy and money.
1: Take an energy audit
Your home isn't very energy efficient if you have less than six inches of insulation in your attic, if your furnace is 10 years or older, or you have lots of windows on the North side and you live in a cold climate, according to the Alliance to Save Energy.
But, there are some specific calculations you can make to determine just how energy efficient your home is. Take a free energy audit online at the Department of Energy's Web site. This tool can tell you where your home is leaking energy and what you can do about it.
2: Cut the drafts
The average house loses up to 20 percent of its heat or air-conditioning leakage from air ducts alone, according to Energy Star. Make sure you repair your leaky ducts and seal drafty doors, windows and baseboards.
An easy way to figure out where the leaks may be, is to light a candle or some incense near your windows and doors and see where the flame flickers. Reducing drafts in a home could save you up to 30 percent on your utility bill annually.
3: Replace your appliances
Replacing your appliances with Energy Star appliances is another way to benefit your wallet.
First, Energy Star products are intended to exceed energy efficiency levels of other products by 20 to 75 percent. It is estimated that the average household could save $400 a year just by using Energy Star Products.
You'll also want to get in touch with your utility company to see what tax incentives and rebates are offered for replacing water-guzzling or power-hogging appliances with eco-friendly ones. To find out more about Energy Star products, go to energystar.gov.
4: Get unplugged
You might not know it, but all those little gadgets you keep plugged in are taking a toll on your electricity bill. You know, those things like your Ipod charger, your cell phone and Blackberry charger.
Even keeping the coffee pot plugged in is wasting energy and costing you money. In fact, all these devices make up about 5 percent of your bill! Here's a tip: turn off that computer and unplug these vampire appliances, and you'll be taming the wild energy hog.
5: Think flat screen
To cut your energy bill, you may also want to consider replacing that bulky computer monitor you have in the home office. A flat panel computer screen uses a third of the electricity of regular computer monitors. The difference is that same as if you leave a 50-watt bulb on all year.
And if you're thinking about replacing that big screen TV, think about investing in an LCD - it uses half the energy of a plasma TV.
The best time for young people to consider hiring a financial professional "is when you land your first real job," says Barbara Roper, director of investor protection for the Consumer Federation of America. "At that point, you have a variety of financial issues to consider, such as your 401(k) plan and your benefits," and a financial plan will set you on an appropriate course, she says.
For savers with modest assets, Ms. Roper says, a fee-only planner is generally the best match. These planners only sell their time, at a cost of between $100 and roughly $250 an hour, depending on where they're based geographically. Because they don't pitch products tied to a particular company, "it minimizes the potential conflicts," she says.
To find local planners, consumers should ask friends, family and colleagues if they can recommend someone they trust. Several Web sites, including the National Association of Personal Financial Advisors (napfa.org), the Financial Planning Association (fpanet.org) and the Garrett Planning Network (garrettplanningnetwork.com), which emphasizes planners who charge by the hour, offer locater services to help find planners in your area. Planners with a CFP designation, for certified financial planner, have passed a comprehensive exam that typically requires multiple years of study.
Some savers want not just planning, but money-management services, as well. That adds extra charges, either through commissions or an annual fee based on a percentage of the assets under management, usually up to 1% or 1.5%. If you're a buy-and-hold type of investor, paying commissions for money-management services can make the most sense, because these can work out to be less than continually paying an annual management fee when your portfolio doesn't change.
Source: finance.yahoo.com You can find the complete article here
Facts About Checking, Savings, and Money Market Accounts
First of all, why do savings account usually have higher interest rates than checking accounts? I think most of us know that banks make money by using our cash deposits and lending it out to others via mortgages, personal loans, or credit cards. However, we also expect that if we do want to withdraw our money, it will be there. To achieve this, each country sets its own reserve requirements, essentially how much cash the bank must physically keep in a vault somewhere to meet expected withdrawal demands.
As of 2006, the required reserve ratio in the United States was 10% on transaction deposits (checking accounts), and zero on time deposits (savings accounts). Due to fractional-reserve banking, having no reserve requirement allows the banks to lend out much more than their actual deposits.
Added: A quick explanation… At a reserve ratio of 10%, let’s say I put in $100. That means the bank can lend out $90. If whoever borrows that $90 put it in a bank, then the new bank can lend out 90% of that, or $81. This could repeat forever, leading to banks lending out 100+90+81+… = $1,000 for each $100 in deposits. This is just for a checking account. For a savings account, with zero required reserves, a bank could theoretically lend out an infinite amount of money (100+100+100+…). Aren’t you glad your money is insured now? ;)
The main difference between checking and savings accounts are their transaction limitations, as outlined by Regulation D. You can only transfer funds out of your savings account up to six times per month by any pre-authorized method like online or telephone transfers, even to a checking account within the same bank. A max of three of these can be via check or debit card. You can still make unlimited withdrawals in person via a teller or ATM.
This is why it can be difficult to use your online savings account (at over 5% interest) as your sole account for paying bills and such instead of your checking account (often at 0%). Bank often charge fees for breaking this rule, and must close accounts where this transaction limit is repeatedly exceeded.
Back to the initial question - Is there a difference between a FDIC-insured “savings” account and an FDIC-insured “money market” account? From what I could find, no. They are both time deposit accounts, just with different naming conventions. Traditionally, money market accounts have a higher minimum balance requirement, and are more likely to offer checkwriting or a debit card (subject to the limits above). These both remain different from money market mutual funds, which are usually not FDIC-insured and are instead a collection of short-term debt instruments.
You can read the original MyMoneyBlog article here
Some nice points made by a columnist at Yahoo Finance. I extracted the 6 points that she has mentioned and put it in here. Hope you find them useful.
The Six Best-Kept Money Secrets by Laura Rowley
1. Understand what you can control, and what you can't.
"Too many investors spend time trying to predict what the market will do, where interest rates will go, or which fund manager will have the best year -- things that, ultimately, they have no control over," says Fran Kinniry, principal in Vanguard's Investment Counseling and Research Department.
"Meanwhile, they're not focused on the things they can control, such as keeping their investment costs down; maintaining a proper, balanced, tax-efficient portfolio; and taking maximum advantage of savings opportunities, such as an employer match in a 401(k)," Kinniry says. "Understanding and acting on the things you can control is the best way to prepare for long-term investment success."
2. You know more than you think.
"Don't believe you can't learn enough to be a savvy investor," says Karen Sheridan, founder of Money Mystique Asset Management in Lake Oswego, Ore. "You know more than you think you know. [Financial services company] State Street had an ad in the New York Times that actually compared investing to brain surgery. It says, ‘No one ever said investing was easy. Make one false move and you could start hemorrhaging money.' Ads like these are unconscionable."
3. Moonlight when you're young, and invest the income.
"Take on a second source of income and direct that income exclusively toward an investment vehicle," says Robert Manning, director of the Center for Consumer Finances at the Rochester Institute of Technology, and author of "Credit Card Nation: The Consequences of America's Addiction to Credit."
Whether it's freelance data-entry work or waiting tables once a week, invest the extra cash rather than spending it, or even paying off debt. "It's a step up psychologically to make yourself part of investor class rather than the debtor class," Manning says. "It's a huge opportunity to demonstrate that you're taking control of your financial life, even though you're not making much money."
4. Take a small step toward big success.
"Sometimes, clients are overwhelmed with financial tasks and expect perfection of themselves," says Candace Bahr, managing partner at Bahr Investment Group. "They may get ‘stuck' for months or even years, and ignore their financial lives."
Bahr says that even the smallest step can make a difference. "If someone spends just 15 minutes a day on their financial well-being, in the course of a year they'll have spent over two full work weeks improving their financial life. That's got to help!" Bahr suggests other small steps on her Money Clubs web site.
5. Consider a tax-managed fund.
The average equity mutual fund lost 1.8 percent a year to taxes over a 10-year period ending Dec. 31, 2005, according to a study conducted by Morningstar. Sound small? It's actually a difference of nearly 20 percent in terms of total annual return. Over the long haul, losing 20 percent of your gain each year to taxes can translate into a loss of tens or even hundreds of thousands of dollars.
One solution: tax-managed funds. "These funds come in various permutations -- and not all are good -- but they can be immensely useful tools for investors," says Christine Benz, Morningstar's Director of Mutual Fund Analysis.
Such funds, which come in many investment categories, employ a variety of tax-reduction techniques to avoid making income or capital-gains payouts, helping the investor keep a bigger portion of his or her return. (Don't choose these funds within a tax-advantaged vehicle like a 401(k).)
For higher-income savers who max out their company retirement plans, there aren't many other ways to shield investments from taxes. Individual Retirement Account contributions limits are low (or an investor's income may make him ineligible to contribute to a Roth IRA).
For an investor who wants to build an ultra-low-maintenance portfolio composed exclusively of tax-managed funds, Benz recommends Vanguard Tax-Managed Capital Appreciation (VMCAX), Vanguard Tax-Managed International (VTMGX), one of the firm's municipal-bond funds, and a municipal money market fund.
6. Don't shift your assets to your minor child.
"The Uniform Transfers to Minors Act (UTMA) is the newest four-letter word," says Joe Hurley, founder and CEO of Savingforcollege.com. "A small investment fund in your child's or grandchild's name is probably fine -- you may save some taxes by shifting the investment income onto your child's tax return. But put too much money into the UTMA and you are asking for trouble."
The potential savings are limited now that the kiddie tax has been expanded to children under the age of 18 (the cut-off used to be age 14). Even if the child's account stays below the $1,700 income threshold for triggering the tax, earnings beyond $850 require the headache of filing a federal income tax return.
"You might devise a strategy using tax-efficient mutual funds that keeps the kiddie tax at bay," says Hurley. "But the capital gains at some point come home to roost, and the tax hit may happen at the wrong time." Moreover, investments in a child's name are counted heavily against financial aid eligibility.
Most importantly, a parent loses custodial control over a UTMA when the child reaches age 18 or 21. "You don't have to look too hard to find parents who have regretted their children's decisions regarding the use of such newfound ‘wealth,'" Hurley says.
Make a list. We keep a piece of paper stuck to the fridge, and whenever we run low on things, we add them to the list. This list is for anything that you could buy at either a grocery store or a warehouse store like Costco.
Do some window shopping. If you’re just starting out, go to each store with the list and write down the unit prices on the items you buy regularly. Get out your calculator & compare. If you’ve got old grocery receipts laying around the house, you can save time on this step by taking the list to Costco & comparing, although your comparisons won’t be as accurate because of the differences in sizes. This takes a little time, but you only have to do it once! And the savings will be significant over time. Don’t buy ANYTHING during this step!
Evaluate. Look at the items that are cheaper per unit at Costco and decide if they are things that could be frozen or stored for long periods (such as meats, breads, or toilet paper). If they’re things that you won’t eat before they will go bad, knock them off your Costco list. We don’t buy fruits or vegetables there, for example, unless we are willing to freeze them.
Divide the list into two categories: things to buy at the regular grocery store, and things to buy at Costco. With experience you’ll know which items are always cheaper at Costco, which are a better buy at the grocery store, and which could be a better deal at either depending on sales and coupons. If you’re not used to shopping at both stores, use the comparison information you got during the window shopping step.
Fill up. Eat a full lunch or dinner, including dessert, before a trip to Costco. (Do this before getting regular groceries as well for that matter.)
Get started. Take your Costco list with you & head to Costco, leaving your spouse or children at home (unless they don’t usually ask for additional items when you shop).
Walk straight to the back of the store. Do NOT pass Go (electronics, books, DVDs, gadgets, and that giant stack of cool things you’ll see as soon as you walk in). Go directly to the back of the store. It only takes about 2 minutes of discipline to do this, and chances are you’ll have saved the cost of your $50 annual membership right there. Just concentrate on not running the other shoppers over or on people watching, and you’ll be too busy to notice the latest & greatest things you don’t need and didn’t intend to buy.
Buy the bulkiest & heaviest things first. In our store these are on the left side of the back wall: dog food, cat food, toilet paper, laundry detergents, etc. Turn around and hit the meat & bread sections next. Your cart will be so heavy at this point that you won’t have much interest in browsing. (It’s hard to browse while pushing 80 to 100 lbs of things — you’ve got to really concentrate on steering your cart & keeping it moving.) Check your list to see if there’s anything on it that you’ve missed, and go straight to those individual items. If you don’t find them in their usual spot, ask someone where they have moved to instead of searching for them yourself. The less items you see in the store, the better. If you do see something along the way that seems appealing, tell yourself that if it’s on your list NEXT time, THEN you will get it. After all, you didn’t know you “needed” it until you saw it, so chances are that you really don’t. You’ll likely forget about it as soon as you get home. Finally, head up to the pharmacy area and pick up any prescriptions, healthcare & eye care items that are on your list. In our store these are right next to the checkout, so make that your final stop.
Escape. Top up on gas, and head home to unload.*
We do this about once a month, and usually spend between $80-$120 there — on a VERY full cartload of items that would cost us significantly more at the regular grocery store. And we rarely have anything in our cart that wasn’t on the list when we walked in. The things we buy don’t spoil, get used up, and they’re things that we use every day and would have bought anyway. This cuts our normal grocery store trip down to about $80-$100 every four weeks, with a $10 once-a-week trip thrown in during the remaining weeks to pick up perishables.
(*Don’t forget about Costco’s other services as well, such as photo processing or recommending Realtors, etc.)
Never knew this but there are days when you can buy stuff when they are at their lowest price. Here are some items that fall in this category.
Airplane Tickets When to Buy: Wednesday morning. Why: "Most airfare sales are thrown out there on the weekend," says travel expert Peter Greenberg, a.k.a. The Travel Detective. Other airlines then jump into the game, discounting their own fares and prompting further changes by the first airline. The fares reach their lowest prices late Tuesday or early Wednesday.
Books When to Buy: Thursday. Why: Price compare between major chains Borders and Barnes & Noble. The former releases its weekly sales and coupons on every Thursday; the latter, every Tuesday.
Cars When to Buy: Monday. Why: "Car dealers live for the weekend, which is when they make most of their sales," says Phil Reed, consumer advice editor for Edmunds.com. "On Mondays, the low foot traffic makes it seem like the weekend will never come." That dealer desperation, paired with fewer consumers on the lot, give you more negotiating power.
Clothing When to Buy: Thursday evening. Why: That's the day when stores stock their shelves for the weekend, and when many retailers — including Ann Taylor, Banana Republic and Express — start their weekend promotions, says Kathryn Finney, author of "How to Be a Budget Fashionista." You'll find great prices and the best selection. "It's an effort to get people to shop in the middle of the week," she says.
Department-Store Wares When to Buy: Saturday evening. Why: Department stores have a lot to mark down for their Sunday circulars, so they frequently start the process on Saturday evenings before store closing, says Finney. "They're preparing for the big rush," she says. Bonus: Even if the markdowns haven't been made, many employees will honor the sale price if you ask. Print out the circular preview from the store's web site, and bring it with you when you head to the mall.
Dinner Out When to Buy: Tuesday. Why: Most restaurants do not receive food deliveries over the weekend. "Sunday is the garbage-can day of the week," says Kate Krader, senior editor at Food & Wine magazine. "No doubt, they're cleaning out their fridges. Tuesdays, they're starting fresh." Dining out on that day offers the best odds you'll get a meal worth paying for, no matter your price point, she says.
Entertainment When to Buy: Wednesday. Why: Plenty of movie theaters, amusement parks and museums offer extra discounts to consumers who visit midweek. Six Flags theme parks offer a $12 discount to AAA members — three times its usual discount of $4. AMC Theatres offers members in its free AMC Movie Watcher reward program a free small popcorn on Wednesdays. (This summer, it's also the day select theaters offer free Summer Movie Camp screenings.)
Gas When to Buy: Thursday, before 10 a.m. Why: The price of oil isn't the only factor influencing costs at your local pump. Consumer usage plays a role, too — and weekend demand is high, says Jason Toews, co-founder of GasBuddy.com, a price-monitoring site. Prices usually swing upward on Thursdays as travelers fuel up to head out the following day. By hitting the pump before 10 a.m. (when many station owners change their prices), you'll beat the rush and the price jump.
Groceries When to Buy: Sunday — or Tuesday. Why: Maximize savings by combining store sales, which run from Wednesday to Tuesday, with the latest round of coupons from your Sunday paper, says Mary Hunt, publisher of Debt-Proof Living, a money-saving newsletter. "It's a smart idea to wait until you have those in hand to match up with the week's sale items," she says.
To snag savings on items you don't need just yet, shop on Tuesday, advises Hunt. Chances are, the store will have run out of the sale items. "That means you can pick up rain checks, which allow you to buy those items later when you need them, and at the sale price," she says.
Hotel Rooms When to Buy: Sunday. Why: There are two kinds of hotel managers, and the kind that won't give you a discount on your room rate has Sundays off, says Greenberg. Call the hotel directly, and ask to speak with the manager on duty or the director of sales. These employees are open to negotiation, he says. They'd rather have a booked room at a discounted rate than an empty room. (The rest of the week, your call would get you a so-called revenue manager, who monitors profits — and is rarely willing to lower rates.)
With today's weak dollar, you need all the help you can get when traveling abroad. Here are a few tips on how to squeeze that last euro out of your greenback.
Put it on plastic Your best best is to use a credit or debit card. A typical cost of €1 after fees is $1.35 to $1.39 You generally get the wholesale exchange rate, which is the best conversion available. (Recently one euro went for $1.35.) Star players are Capital One and Discover. Both are free of exchange fees.
Hit the ATM Your next best bet is to get cash from the ATM. A typical cost of €1 after fees is $1.40. Again, you get the wholesale rate, with minimal fees - 1 percent to 3 percent, often in addition to a flat charge of $1 to $5 per withdrawal.
Check ahead to see whether your bank has affiliates at your destination; you'll pay less on those machines. Star players are Citibank because it charges no fees at its ATMs abroad; Bank of America charges no fees at some affiliated ATMs.
Do leave home without them Warning: Leave your traveler's checks and prepaid cards at home A typical cost of €1 after fees is $1.45 and up. The exchange rate on traveler's checks is 6 percent to 10 percent over wholesale; up-front fees can hit 1.5 percent. Most merchants no longer take them, so you may pay even more charges to cash them at a currency exchange.
Prepaid cards cost $5 to $15, and the exchange rate is wholesale plus 2 percent to 7 percent. They aren't always accepted, and you'll pay to use them at the ATM.
You're surprised by your bank balance or credit card statements. In today's financial world, you can't be caught napping. "Float" -- the time it takes a transaction to clear your account -- has all but disappeared, and financial services are eager to penalize any lapses, such as a bounced check or an over-limit transaction, with hefty fees. At the very least, you need online access to your financial accounts, and you need to check them often -- at least once a week, more often if you've bounced a check or incurred any other fine in the past six months.
You have no savings You don't necessarily have to keep thousands of dollars stuffed away somewhere, but you do need some kind of financial cushion to cover unpredictable expenses.
You're carrying credit card debt Don't fall for the myth that credit card debt is normal or that the average American carries huge balances. In reality, the most U.S. households have no credit card debt, according the Federal Reserve. Only one household in 14 carry more than $10,000 in credit card debt and uses cash advance on credit cards. Credit card debt not only costs you ridiculous amounts of interest, but it drastically reduces your financial flexibility, since any balance you've charged is credit you can't access in an emergency. If you've got balances on your plastic, making paying them off a priority.Take a hard look at the real choices
You have no discretionary income If every paycheck is spent before you get it, or your fixed expenses eat up most or all of your income, you need to fix the problem, now. You may have convinced yourself that you have no choices, but chances are good that you do; you just haven't been willing to really consider them yet.
You don't know what kind of mortgage you have or when the payment resets One out of three homeowners, when asked what kind of mortgage they had, confessed to pollster GfK Roper that they had no idea. Unless you have a traditional mortgage -- with a fixed rate for the life of the loan -- your ignorance could be expensive. The payment that's currently affordable could skyrocket, leaving you among the rising numbers of homeowners losing their homes to foreclosure. Call your lender now to find out whether and when your payment can change, and get an estimate of how high it can go; then consider your options. You may be able to cut other costs to compensate for the bigger payment, or you may want to explore refinancing or even moving.
You're underinsured If your job doesn't provide adequate health insurance, you need to look for another job. In the meantime, read "A survival guide for the uninsured." Also check the liability limits on your auto, home and/or renters policies. Liability coverage protects you if you get sued; if your policy limits aren't high enough, you risk losing much of what you own plus big chunks of your future income. Make sure the limits are at least equal to your net worth (what you own, minus what you owe). Finally, if you're a homeowner, adjust your coverage limits if necessary.
Your business (or rental property) is losing money As a fellow business owner, I understand how much you want your venture to succeed. But too many months of red ink will sink not only your business but your personal finances, especially if you're using your personal credit or savings to stay afloat. Come up with a plan to fix the problem and set a (relatively short) deadline; if your business or real estate isn't generating positive cash flow by that deadline, then pull the plug.
You're ignoring an elephant This catch-all refers to any big, ongoing money problem you're consciously avoiding or pretending doesn't exist. Maybe you've got a car payment you're struggling to pay. Or you've got adult kids (or parents) constantly turning to you for financial help. Or you're retired and your nest egg is shrinking faster than you'd planned.Whatever the problem, you need to assess the toll it's taking and find a solution before you're backed into a financial corner.
You're borrowing from one lender to pay another This includes using cash from one credit card to pay another, but it also includes tapping your home equity to pay off credit card debts if you don't have a plan for avoiding credit card debt in the future. You've missed a payment on any loan. Skipping a payment, or failing to pay the minimum specified, is a very big deal. Missing even a single payment can knock 100 points off your credit scores and trigger higher interest payments on your credit cards. Fall much further behind and you could face collection actions, lawsuits, repossession (if you're late on a car) and foreclosure. Don't wait until things get awful; fix them while they're still just bad.
You've taken out a payday loan The payday loan industry would love you to believe that borrowing money at triple-digit interest rates is a normal and reasonable thing to do. It's neither. If you're borrowing from payday lenders, your financial house is on fire and you need emergency help. A legitimate credit counseling agencies (one associated with the National Foundation for Credit Counseling, for example) can provide budgeting help as well as debt repayment plans.
I came across these good tips for getting the best airfares at TheStreet.com.
Be Flexible
Flexibility in your travel plans will go a long way in helping you find cheap airline tickets. Here's a look at some of the considerations:
Departure times: Most people don't like to fly in the very early morning or on "red eye" overnight flights, but sometimes airlines need to schedule these times to get their planes to a different destination. If you are willing to fly at odd hours, you may be able to save some money on your ticket.
Days: If you don't have to arrive or return on specific days, then you can usually get a better rate flying on a day that is less crowded (usually Tuesdays, Wednesdays and Saturdays). Many of the top travel sites allow you to factor in a window of a few days into the travel dates you search. If you do find a better deal on one day over another, be sure to take all factors into account. If you save $50 by flying in on a Wednesday instead of a Thursday, but then have to pay an extra $100 for a hotel room and have to rent a car for an extra day, you can actually end up losing money.
Booking windows: The earlier that you know you will need a ticket, the better chance you'll have of getting the best price. Airlines have booking windows of 21 days, 14 days and seven days in advance of a travel day. Ticket prices usually increase when these windows come and go. In addition, if you want to use frequent flier miles to get your ticket, you must reserve as far ahead as possible, since getting these seats is quite competitive.
Alternate airports: Smaller airports on the outskirts of cities often are less expensive to fly into and out of than the main airport. This is the concept the new airline Skybus, which offers ten $10 tickets on every flight, uses. Check prices at all the airports near your departure city and arrival destination to find the best fare. Again, be sure to do the cumulative calculations. If you save $50 on the ticket, but the extra travel costs to and from the smaller airport exceed this, then you really aren't saving money.
Time: If you're not on a tight schedule, sometimes flights with stopovers will be less expensive than direct flights. This will mean you'll have to spend more time traveling to your destination, in exchange for a less expensive fare. Be sure to calculate what your time is worth. If you're saving $25, but spending five extra hours getting to your destination, it probably doesn't make sense to get the lower fare. Also be aware that stopovers will increase the chances that your luggage gets lost or delayed, possibly costing you more time and money.
Let's Make a Deal
Once you have determined how flexible you can be, it's time to start hunting for the best ticket prices. Unfortunately, this will take some digging. It is worthwhile doing each of the following steps in order to find the best price.
Comparison Web sites: Your first step should be to head to the main airline comparison sites, such as Expedia, Orbitz and Travelocity. They do a good job keeping up with the latest fares, but they don't list all the airlines. Prices may even vary between these sites.
Airline aggregators: These sites look for the best deals from among all the travel sites. Some of the ones you may want to try are Booking Buddy, Cheap Flights, Fare Chase, Kayak and Mobissomo.
Airline Web sites: Once you have found the best deal from the main comparison sites and the aggregators, visit that airline's Web site directly. Since the comparison sites charge booking fees to make their money, you can often find the same ticket on the airline's site at a cheaper price. Also check the Web sites of discount airlines like Southwest Airlines and JetBlue, which are not available on the comparison sites. As mentioned above, Skybus is the newest player in the discount airline business. All flights must be booked through its Web site.
Travel Once you have found what you believe to be the best ticket price, contact a travel agency to see if they can come up with an even better one. If you find a good travel agent, it's surprising the number of times they can find something that you missed in your own searches.
Travel packages: If you are going to need a hotel and rental car once you reach your destination, be sure to compare the cost of bundling them with airfare in a travel package. Such packages often will offer a price less than you can get by securing all of these needs individually, even at the best prices.
By understanding that there is no one place that will get you the best price on a ticket and taking time to search various options, depending on your flexibility, you will greatly increase your chance of securing the best price on your airline tickets in the future.
Don't charge anything for at least 60 days before applying for a loan, Johnson said. That way it's likely that all the payments you've made to date will be reflected in your credit score by the time a lender requests it.
Pay your bill in full and mail it as soon as it arrives, or at the very least the minimum due. Set up automatic online bill payments so you'll never be late. Or, if you are late one month, be sure to pay off what you owe as soon as possible.
Consider opening another credit-card account or two, or taking out a car loan or small bank loan.
Avoid applying on your own for a lot of loans and credit cards, particularly in a short period. And avoid excessive card-hopping.
Don't close unused accounts when you transfer debt.
Order your truly free credit report to keep track of your credit history as I have mentioned in my earlier post Free Credit Check
I have moved my checking account to Bank of America and, before applying online, did a search for coupons. And its a good thing I did because this is is what I found. (coupon link at the end of the post)
Make the move to better banking and you can receive $75. Just open a new, personal checking account, and you'll enjoy access to your money on the nation's largest network of bank-owned ATMs. And the freedom to bank from your new home with our free Online Banking service with unlimited Bill Pay.
Offer does not apply to second or multiple checking accounts and/or existing checking customers. Student checking accounts are not eligible for this offer. Bank of America associates are not eligible for this offer. All accounts are subject to our normal approval process. This form must be presented at the time the account is opened if account is opened in a banking center. This minimum deposit required to open a new, personal checking account and receive the $75 offer is $100. We will make every attempt to directly deposit the $75 into your new Bank of America checking account. If for any reason we are unable to do so, a check will be issued as a replacement. We will deposit the money within 90 days of opening your new account. Limit one check per household. To the extent required by law, Bank of America will report the value of the offer to the IRS on Form 1099. Any applicable taxes are the responsibility of the account holder. For interest-bearing personal checking accounts, the Annual Percentage Yield (APY) is 0.05% as of 3/02/2007 for any account balance. The rate may change after the account is opened. Fees could reduce earnings on the account. Please consult a Banking Center, visit bankofamerica.com or see the Personal Schedule of Fees for other account fees, rates and information.
The big reason for me to move to Bank of America is that recently they have this new NO Closing Costs, NO PMI mortgage plan that I might go for, and one of the pre-requisites to apply for this mortgage is that you need to have an account with them.
Please keep in mind that this deal is only till May 31, 2007.
If you pay your credit cards off in full every month (which you do, right?), you can give yourself an interest-free loan of a month or more on major purchases simply by charging big-ticket items right after your card's closing date.
Let's say your statement typically closes around the 20th of the month. You charge your big-ticket item the day after, the 21st.
The charge doesn't show up until the next month's bill, and you typically have 10 to 15 days from the closing date to pay it, effectively giving you a 30- to 45-day interest-free loan. (You'll want to confirm the closing date, since they can change month to month, but typically that just takes a visit to your card's Web site or a call to the 800 number.)
You can take this hack a step or two further by using three credit cards.
"Make sure their statement closing dates are evenly spaced throughout the month, say on the 1st, 11th, and 21st of the month (many cards do allow you to specify your closing date if you ask). Delay major purchases until the day after a card's statement closing date, and then use that card for the purchase."
Store Financing DealsHack
Warning: This is an expert hack, recommended only for folks who have good money management skills.
"Whenever I buy a big ticket item, I make sure I have the cash to pay for it. Then I wait for store financing offers -- same-as-cash or deferred interest for an extended period. I opt for the financing, put the cash in a (certificate of deposit) that matures just before the end of the promotional period, and pay it off before the deferred interest becomes due. It's like a free loan from the stores and I can earn interest while I enjoy the item!"
Obviously, this hack works ONLY if you keep your mitts off the invested money and if you pay the bill before it comes due; otherwise, you could pay a truckload of finance charges. If you do it right, though, there are benefits, as sneakers explains:
"Circuit City recently had a special (of) no payments until January 2008. I bought a flat-screen TV, the camera I've been ogling for two years, and a bunch of other little things I needed, like printer cartridges. Total $2,500. Put $2,500 in 2-year CD earning 5.25% APY. That's $262.50 I'll earn during that time."
Organizing Receipts Hack
Receipts now go in one of three compartments in my wallet. Receipts that I probably won't need for long, such as those for routine purchases, get stuffed in with the bills; receipts that require action, such as a rebate, get put in the center section; tax-related receipts and those for big-ticket items go in the third compartment. Every week or so I clean out my wallet, taking action on the middle-compartment receipts and filing the tax-related ones.
The "short-term" receipts get put in a folder marked "This Month." At the end of the month, I move them into the folder marked "Last Month," while the receipts from that folder get moved to the "Two Months Ago" folder and the contents of THAT folder get dumped in the trash.
This system ensures I keep receipts long enough to check against my credit card statements, if I need to, and to make any returns. But I no longer have to spend valuable time sifting and sorting.
Suze Orman is one of my favorite authors and financial adviser. About 4 years ago we started watching her show on CNBC and me and wife were hooked onto it. Taking her advise, we quickly got rid of our credit card debts, created an 8 month emergency fund and started saving almost 50% of our income.
Now we have started looking for a home. So with all thats going on about subprime mortgages, here's Suze's take on it.
Look out for more such posts while we make our way through this home buying experience.
Protecting Yourself from the Wrong Mortgage by Suze Orman
Talk about being late to the game.
After the past few months of mortgage delinquency rates and home foreclosures creeping ominously upward, a lot of government attention is suddenly being focused on the "shocking" fact that many borrowers ended up with nontraditional mortgages they had little chance of affording once the alluring introductory periods expired.
From recent congressional hearings to the passage of new federal guidelines on mortgage qualification rules, Washington is playing catch-up in addressing aggressive lending practices that have led consumers into an unaffordable debt spiral.
Do-It-Yourself Protection
I suppose we should chalk it all up to "better late than never," but I'm not so sure that government intervention is the real solution. Besides, who knows if and when any meaningful legislation will be put into place to help borrowers avoid mortgage deals they can't really afford.
Instead, the real solution is for borrowers to step up to the plate and assume full responsibility for understanding what they're agreeing to when they sign their mortgage documents.
Given that we're now heading into the home-buying season, here's what I recommend that every homebuyer -- and anyone contemplating a mortgage refinance -- should consider before signing on the dotted line:
1. Focus on the "what if" factor.
If you're considering any type of mortgage that has a special-payment deal for a few years before the loan adjusts, study what your payment could rise to after the initial teaser period expires. In fact, that's exactly what the new federal guidelines are designed to help out with.
When you opt for any type of "nontraditional" mortgage that allows you to defer the repayment of principal (and even part of the interest) in the early years of the loan, the new federal guidelines -- which, alas, are just guidelines -- stipulate that the lender consider your ability to repay the loan once the loan "adjusts" and you have to start repaying the principal.
If you can't handle that fully adjusted rate, in theory the lender should be reluctant to give you the loan in the first place. Even if a lender still offers you the deal, you need to really crunch the numbers and make sure you can afford it once the adjustment kicks in. One of the big reasons for the recent rise in delinquencies and foreclosures is that borrowers who took out the interest-only or negative-amortization loans are now stuck with much higher payments because their assumptions were flawed.
Those assumptions -- pushed by the same aggressive lenders -- were that the borrower's income would increase enough in the intervening years so that they would be able to handle the higher payments. Or that the real estate boom would continue, so that there would be ample increase in equity to allow the borrower to refinance out of the loan before the adjustment hit.
Well, that's not so easy right now, as home price appreciation has stalled in many of the once hottest markets, and not too many people have seen a 20 percent or 30 percent jump in income, which is often what's needed to keep up with rising mortgage payments.
I'm not going to issue a blanket statement that you should never ever use a non-traditional loan. But you need to take full responsibility for understanding the "what if" factor: What if your assumptions don't play out and you have to make higher payments? What's your plan for handling that? That brings me to my next point.
2. Know your limits.
It's up to you to set your housing budget, and it's absolutely irrelevant what amount a lender says you can qualify for.
Lenders make more money if you borrow more money; in other words, they aren't necessarily motivated to tell you to borrow less rather than more. And the rules of their business have changed over the past decade or so. It used to be standard practice to offer loans with monthly mortgage payments that, along with borrowers' other recurring debts, wouldn't eat up more than 36 percent of gross household income. Now that percentage can be as high as 50 percent.
If you stretch yourself that far, you're leaving yourself less wiggle room if any unexpected expenses come your way, such as unforeseen medical bills, a layoff, and so on. If you're even considering a debt load that eats up half your household income, you'd better make sure you have an emergency cash fund that covers you for six to eight months. Otherwise, the slightest financial glitch could send you down the path to foreclosure.
3. Lower your price target.
I know this sounds un-American, but the best way to keep your mortgage costs in check is to start out with a smaller mortgage. Ideally, this is where I suggest you save up for a nice down payment of 20 percent or so. That's still my best advice, but I know patience isn't exactly in vogue these days.
Here's my second-best advice: buy a less expensive home. That is, a home you can easily handle the payments on, rather than a home that keeps you up at night worrying about the mortgage. That can mean rethinking where in the country you live, or what neighborhood you can afford.
Or reconsider exactly how much space you need. I find it fascinating that the typical square footage of a U.S. home has increased more than 40 percent since the mid-1970s, yet our family size has actually decreased slightly during the same period. A big reason housing is more expensive is because it's so much larger. Set your sites on a comfortable but not king-size home and you'll have a more affordable mortgage.
4. Read the ARM fine print.
The interest-only and negative-amortization loans I mentioned earlier are the riskiest deals, but you can still get in plenty of trouble with a straightforward adjustable rate mortgage (ARM) if you don't plan ahead for when the rate adjusts.
Don't plan on just refinancing before the adjustment, either. That may be your intention, but, as I said, the recent uptick in delinquencies and foreclosures is due in part to folks who had just the same intention a few years ago.
Consider that a $250,000 mortgage financed with a 3/1 ARM in 2004 will see its payment jump about $300 a month when it adjusts this year. The best way to handle an ARM is to calculate what the payment could be at the first adjustment, and start saving now so you could handle that potential increase. Check your loan document to find out the maximum annual rate increase. Typically it's 2 percentage points, but be careful -- if you have a longer-term hybrid such as a 5/1 ARM, your initial rate increase could be much higher.
While you're studying up, check for the inclusion of a prepayment penalty. This little nugget has tripped up many homeowners in the past few years. A typical penalty can be up to six months' interest if you refinance within the first three years of a loan. On a $250,000 mortgage, that's potentially more than $25,000.
This article explains the pros and cons of debit cards and credit cards...pretty good eye opener! (provided by smartmoney.com)
Just last month, 1,000 Stop & Shop customers had their credit and debit card information stolen after thieves replaced store card-reading devices with ones that captured account data.
It's the latest incident in a string of high-profile credit- and debit-card data breaches that have affected companies as varied as T.J. Maxx and Marshalls, Citibank, and payment processor CardSystems.
The lucky victims -- if such a thing can be said -- are those who got their credit-card data stolen, says Scott Bilker, founder of DebtSmart.com.
Under the Fair Credit Reporting Act, your credit-card issuer can't hold you responsible for any of those unauthorized charges. "Usually, they give you a new card, a new account number, and that's that," he explains.
But consumers whose debit-card data gets lifted are subject to a different set of rules and regulations -- ones that may well leave you unprotected.
"You're in a fundamentally weak position angling to get the grocery money put back in your checking account," says Jean Ann Fox, director of consumer protection for the Consumer Federation of America.
Best-case scenario, you're out of cash until the bank investigates your claim. And there's a very real chance you could lose some -- or all -- of that money for good.
Debit transactions are regulated under the Electronic Funds Transfer Act. Under these rules, just how much you'll be able to recover depends on how quickly you discover the problem.
If you notify your bank within two business days of learning about an unauthorized transaction, your liability is $50, maximum. Between two and 60 days, your liability is $500; after that, it's unlimited.
Banks build on these rules with their own policies. These so-called "zero liability" policies claim to free the consumer from fees and losses should unauthorized purchases be made to your debit account. In most cases, the banks promise to fully reimburse you.
"But there's no law that says they have to," says Bilker. "It's all on their terms and their interpretations." Fact is, if the theft occurred for a reason that the bank deems your own fault, you're likely out of luck.
Even if you are eligible for reimbursement, don't expect to get your missing cash back quickly, says Fox. Some banks issue temporary credits, but it's a rare concession.
In most cases, before you can be reimbursed, your bank must assess the charges to determine the extent of your liability. That investigation can take as long as a week.
So when isn't a bank likely to honor some or even all of your claims? When you fall into any of the following four loopholes:
PIN vs. ATM Transactions
If the PIN was lifted along with your account number good luck getting reimbursed, says Fox. With the exception of Bank of America, Chase, and Wells Fargo, most major banks won't cover all unauthorized charges or withdrawals completed with a PIN. Signed purchases, on the other hand, are covered because they are processed through trusted credit-card networks.
So sign away whenever possible. While it takes an extra step, it offers an extra layer of protection.
Consumer Negligence
If your bank thinks you're to blame for your account number getting stolen, you can be held liable for losses in that account. MasterCard, for example, allows banks issuing its cards to assign liability when a consumer has not "exercised reasonable care in safeguarding the card," according to the details of its liability policy.
Good luck figuring out what that means. "The language is a little bit open-ended," says Joanne Trout, vice president of worldwide communications. "At the end of the day, it's the bank's call."
Carelessness, she says, could mean anything from letting your college kid borrow the card to shopping through an unsecured Web site.
The Domino Effect
"If someone cleans out your account, it's inevitable: checks are going to bounce," warns Bilker. The resulting overdraft fees won't necessarily be reimbursed.
Also, be aware that if your account is already overdrawn or in otherwise poor standing when the theft occurs, that may be another reason for the bank not to reimburse you. The idea is that you already weren't monitoring your account diligently.
Slow on the Uptake
Major banks require you to catch the unauthorized transaction within 60 days of receiving your monthly statement to qualify for the zero liability policy. Spot it later than that and you'll need to cite extenuating circumstances -- say, a hospital stay or a long trip abroad -- to be reimbursed.
One of the issues facing many families' finances right now is debt. The debt loan in this country is huge. And you may be experiencing it as well. If you are serious about getting out of debt, the best way to do it is to create a plan. A debt reduction plan will help you plan a way to get rid of your debt, keep more of your own money in your pocket and create space for you to prepare for the future. Here are some tips that can help you when creating a debt reduction plan:
