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New Book Looks at New Ways Americans are Achieving Financial Freedom

Depending on which analyst or talking head you listen to, the “American Dream” is doomed, or at least highly endangered.

According to Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom however, there are still a lot of things that ordinary consumers can do to build their own fortunes, especially in this day and age where traditional rules of success have been thrown out the window. Below are a number of “new rules” taken from the book. Enjoy

One of the first is also the most interesting. It’s the ability to stay mobile and move wherever economic opportunity exists. Amazingly, while Americans have always been adept at moving to wherever they needed in order to find work and prosper, labor mobility in the United States has dropped to its lowest rate since the 1940s. That’s a problem because there are still a lot of areas of the country where economic opportunity exists. Indeed, there are quite a few companies in the United States that are having problems finding enough workers, meaning that the opportunity is there but the workers aren’t.

Surprisingly, one of the core American dreams, homeownership, is actually a detriment for young families because it can anchor them in place and keep them from being able to take advantage of opportunities in other areas of the country. Since the housing bust of a number of years back, home values are only rising modestly and buyers in many areas of the country are scarce. What that means is that, if an opportunity arises, it’s quite easy for a homeowner to lose money if they have to sell their home in a hurry. Also, most larger companies in the United States aren’t offering the generous relocation packages that they once used offer. What that means is that, if possible, staying mobile is your best bet. If that means renting rather than buying, so be it.

Knowing what skills will be valuable in the future is also a very big plus. With globalization and the digital revolution putting the hurt on many industries, and robots taking over human jobs, looking at your skill set and determining whether it needs to be updated is a must. If it’s possible to blend two disparate skill sets, that’s an excellent way to guard against suddenly becoming outdated. Let’s face it, if you used to be a travel agent, a clerk at Blockbuster Video, or even a print journalist, and you didn’t have any type of fallback skills, you know exactly what we’re talking about. Adding to your skill set is a must in the 21st century.

Next is simply this; work more, save more and spend less. It’s no surprise that most Americans are up to their eyeballs in debt, especially with the constant barrage of television, Internet and radio commercials telling us that we need more, more and more. The fact is, one of the biggest contributors to the financial meltdown of 2008 was excessive borrowing and use of credit and, even though it fell after that, it’s on its way back up yet again.

Many economists will tell you that the economy needs consumers to spend but the fact is that saving your money is not unpatriotic.

And there you have it, three excellent ways to achieve financial freedom that you might not have thought about previously. Being able to move when necessary to find gainful employment, have extra skills that you can fall back on just in case, and saving your money rather than spending it needlessly will all help you to become financially free, or at least help you on your way.

 

Who needs an Emergency Fund? If these things happen, you do.

If you’ve been an adult for any length of time you know that life is full of surprises, some good and some, well, not so good. Some of the “not so good” surprises include major car repairs, unforeseen illnesses and getting laid off from the job, all of which can catch you completely off-guard and leave you financially strapped.

When that happens, one of the best things that you can possibly have to help you is an Emergency Fund of cash set up to fix those repairs, pay those bills or see you through until you get your next job.

The so-called “experts” in finance will tell you that having an emergency fund of 3 months’ worth of money is a good idea, but frankly having 6 months or even 12 months’ worth of cash put aside “just in case” is much better. That means if you make $2000 a month after taxes, you need at least $6000 in your emergency fund to cover you for three months, $12,000 to cover you for six months or $24,000 to cover you for a full year. Is that a lot of money for many people? Yes. Will it save your behind if you have a financial emergency? Undoubtedly!

So what kind of emergencies are we talking about here? Let’s take a look, shall we.

First there is the loss of your job. Whether you’ve been laid off, fired or need to leave for personal reasons, your emergency fund will provide a much-needed “safety net” to help get you through until you get started working again.

Then there’s the dreaded medical emergency. The fact is, even if you already have health insurance it doesn’t cover all of the costs of care, especially if an ambulance ride is necessary or things like major surgery and physical therapy are needed. Also, don’t forget about your pets needing emergency medical help, something that can be just as costly, and just as big as a financial shocker.

If you suddenly have to move because you’re being kicked out of your apartment, your boss needs you in another state or for some other unforeseen reason, having an emergency fund will help to pay for moving expenses which, frankly, can be quite high. Not only that but if you need temporary housing, new furniture or need to put your things in storage for a few weeks or even months, having your emergency fund to pay for those extra costs will be a godsend.

Don’t even get us started about unexpected car repairs,  which always seem to come at the very worst time. An engine blows, a  timing belt goes or something else that costs hundreds, or even thousands of dollars, and insurance doesn’t pay for those things now, does it? Even worse, if you’re stuck having to purchase a new car entirely, having that emergency fund will at least take some of the sting out of your situation.

Speaking of repairs, let’s say that your refrigerator suddenly conks out, your washing machine goes on the fritz or a wind storm blows off half your roof. Sure, you might have homeowners insurance but if your deductible is really high you’re going to be left paying a lot of those repairs out-of-pocket. If you do, you’ll be glad to have the emergency fund handy to help out.

Then of course there is the last one on our list, unexpected travel. If your dear grandmother passes and she lives in California but you live in New York, going to her funeral is going to cost a pretty penny. The same thing can be said for any emergency travel that you need to make and, if your emergency fund is well-stocked, at least you’ll have the extra cash to cover the expenses.

The bottom line, dear readers, is simply this; having an emergency fund is basically “saving for a rainy day”. Since you really never know when it’s going to rain, or when a sudden financial expense is going to pop up, having that emergency fund handy and full of easy to access cash may very well be the only lifesaver you’ve got.

So do yourselves a favor and, even if it’s only 50 or $60 a week, start putting money aside into the emergency fund today. The fact is, you never know what tomorrow’s going to bring.

 

Top tips for better money management

Managing your finances can be tricky. Many people have never really got to grips with effective budgeting and sorting their cashflow so everything is always paid on time, and some end up in quite difficult situations with their money.

Below are some top tips for better money management, so read on to learn how to get your finances in better shape.

Keep spendings below earnings

Sounds simple, but most people spend more than they earn from their job thanks to credit cards, loans and overdrafts. There is nothing inherently bad about these things, but they should be used sparingly and wisely.

Stick to a monthly budget

Track all your incomings and outgoings for a few weeks and use the figures to create a monthly budget. This should include everything that you earn and everything you have to pay out for. It can be surprising to see just where your money is going.

Save for a rainy day

Even if you can only afford to put away a little bit each month, be sure to do it. This emergency fund could be a lifesaver if the washing machine breaks down or the car fails its MOT.

Give yourself spending money

Each time you get paid, put aside a little that you can use for treats for yourself. This will be your pot for takeaways, cinema visits, nights out, online shopping for new clothes and DVDs etc. If you fear it is too easy to go over this amount then change the budgeted money with a service like Ukash and use that to shop online. There are also many different budgeting mobile apps that are available that can make this process much easier.

Plan ahead

Be aware of financial commitments and requirements for the future, both in the short-term and the long-term. This means knowing when big utility bills, car insurance etc will be due, but also thinking about health insurance and a pension.

Cut back wherever you can

Saving even a few pennies here and there can add up in the long run. Take advantage of deals in the supermarket like 2-for-1 or buy one, get one free, but do not buy them if you won’t use the products. It is fine to stock up on things like toilet rolls and canned goods when they are on offer, but too often fresh food spoils when it is bought on a deal.

Make the most of thrift shops, bargain stores, charity shops etc too.

7 Keys to a Sound Retirement Part 2 of 2

Hello and welcome back for Part 2.  In Part 1 we went over the first 2 Keys to a sound retirement as outlined by the Society of Actuaries  (SOA).  In this second part will be taking a look at the remaining five and, without further ado, let’s get started. Enjoy.

The 3rd Key to a sound retirement, at least as far as the SOA is concerned, is the need to compare your expenditure needs against your anticipated income. Will the fact is, will retirement is just as filled with expenses as any other part of your life. Expenses during retirement are basically the minimum that you need to sustain your standard of living plus a bit extra for any needs that are nonrecurring and any money needed to help meet a person’s dreams. Also, these needs are definitely going to change as a person gets older.

What the SOA advises is that, in order to make your retirement finances in reality, a person first needs to take a look at them on paper and make sure that they work out. When doing this, a person needs to take a look at whether their guaranteed income will be enough to cover any essential living expenses such as housing, insurance premiums and food. Once these numbers are figured the amount needed for discretionary expenses like travel should also be looked at.

Guaranteed sources of income include Social Security (hopefully), pensions and annuities. Under the heading of ‘not exactly guaranteed’ there are any earnings that you have from work, any income that you may have from assets like capital gains, rental properties, interest and dividends.

What most people find is that, while they are going about the process of figuring out their income and expenses, they find that they are forced to revise their discretionary expenses. This happens in many cases when there are fewer guaranteed sources of income to meet the initial, and more important, essential expenses.

The 4th Key is to compare the amount of money you’re going to need in retirement against your total assets. This simply means calculating the income and expenses that you’re going to have once you reach retirement and figuring out if what you have is going to indeed last you as long as you need. In simple terms, what you need to do is calculate the net present value of all of your expenses.

This is easier said than done, especially when you consider the many factors, like the date of your retirement, inflation rates and after-tax investment returns, that can and will change during your retirement.

Once you’re done crunching the numbers, if you find that the present value of your expenses is more than the present value of any assets that you have, you’re obviously going to need to make some adjustments

Key 5 is to categorize your assets. What the SOA recommends is that you grew up your assets into the three phases of retirement including early, mid-and late. The assets that you put into the early category should, for the most part, be liquid. Mid and late-retirement assets would include intermediate term investments, TIPS, balanced investment portfolios, variable annuities, and laddered fixed interest deferred annuities.

The 6th Key is not entirely surprising, relating your investments to your investing capabilities and your portfolio size. Basically what the SOA recommends (and what we’ve been recommending all along) is that a person only invest in suitable investment opportunities that are relative to their risk tolerance, their investment knowledge and also the capacity of their portfolio to accommodate investments that are relatively volatile. “In short, a retiree should not invest beyond his investment skills, including those of his adviser,” the SOA report stated.

Finally there’s the 7th Key, keeping your plan current. This is rather straightforward advice that says that retirement income plans can and should be evaluated and changed on a regular basis. Some of the things that the SOA refers to as far as ‘changes’ are a person’s health status, their life expectancy, their investment returns and of course inflation. Employment status may also change as well as a person’s expected and actual date of retirement. The death of a loved one is a change that they noted as well as divorce and the possibility of no longer being independent.

Basically, they recommend that a person take a look at their retirement planning on a yearly basis and, the closer that a person is to retirement, the more attention they give said plans.

What we’d like to note, for the record, is that the vast majority of the advice that the Society of Actuaries gives in their report is exactly the same advice that we’ve been giving to our readers here on our blog for many months. We hope you enjoyed this 2 Part blog and that, at the very least, it was informative and interesting. Please make sure to bookmark our website and come back to visit often as we have new financial blog articles on a very regular basis. See you then.

Debunking Financial Myths

There are plenty of financial myths that are running amok, but perhaps none more than the supposed financial calamity of leasing a vehicle.  I personally ONLY lease cars, and have never purchased one.  In fact, I am on my 7th lease in the past 14 years of my life, that’s how much I am in favor of it.  Which is why I’m going to take the opportunity to lay out some common myths that you often hear about leasing vehicles.

First and foremost, you too often will hear that leasing is simply a bad deal.  Nothing could be further from the truth.  When you consider the out-of-pocket costs to fix and maintain the car when you own it, it comes out to be an additional cost above and beyond leasing.  Likewise, a lease doesn’t come with financing and interest charges like purchasing a car does.

Next, you may hear that negotiating on a lease is next to impossible, but that too is a fallacy. In fact, when I went into the dealership for my current car I simply gave them a rock bottom price I wanted.  I was truly unwilling to budge from this amount, which is something you are going to have to be firm about.  While it took far too many hours and rebuttals for my liking, inevitably the salesman hit the number I was looking for from the start.

Most people feel that you when you buy a car you always have the option of selling it and relieving yourself from the expense, whereas with a lease you are obligated to remain with that lease for the life of the contract. There is actually a lot more flexibility with leasing a vehicle than you may realize.  Many websites out there offer services for consumers to list their lease contracts to other consumers who may want to buyout that lease. Sure there is a fee to post your leased vehicle that you are trying to get rid of, but much smaller of a fee than breaking your contract!

You will typically hear about the high cost of fees for turning in your leased vehicle.  It is true that certain things like over mileage can be costly, but you also have the option of negotiating increased mileage from the get go.  Also, most leases allow for normal wear and tear, so as long as you are getting the proper oil changes and tire rotations you are most likely in the clear.

Regardless of whether or not you agree with my debunking of the myths above, I am a vehicle leaser for life.  If you have been converted then see Leasing4Business for options of what’s available to you.

The Dangers of Minimum Payments

Credit cards are treacherous. You’ve probably heard this before, from your parents or in the newspaper. But when you’re standing with that tiny piece of plastic in your hands at the mall, it’s easy to forget that every swipe equals more cash out of your pocket down the line. It’s even easy to forget when you get your bill in the mail and your eyes scan the paper looking for the magic word: minimum payment.

Of course, not every lender uses minimum payments to keep borrowers in check. Some sites offer temporary loan solutions that are meant to be paid back in their entirety at the end of a given period of time. Others don’t offer minimum payment options, and instead you’re responsible for paying a set amount of money on a regular basis. There are benefits and drawbacks to each, but too often people find themselves stuck in a minimum payment cycle, doomed to pay off their cards little by little for the rest of eternity.

Maybe that’s a little dramatic. But the fact of the matter is, minimum payments are meant to keep the consumer (that’s you) paying interest to the big guys. Minimum payments rarely cover more than the interest you’ve accrued for a billing cycle, allowing your interest to keep piling up without paying off the principal. That means that with the right interest rate you can keep paying the minimum payment for years without making the slightest dent on the money that you actually spent.

If you’re in a tight spot, maybe minimum payments are the way to go for a bit. Sudden job losses or medical bills can make it hard to survive, and that’s exactly what credit cards were made for. But if you’re ever hoping to increase your credit score so you can buy that house or car you’ve been dreaming about, there’s a couple things to keep in mind so you don’t fall victim to the minimum payment cycle.

  1. Don’t pay more than your minimum payment on all of your credit cards – This may sound counter-intuitive, but if you’re planning on getting your credit back in order, don’t try to pay off all your cards at once. If you have more than one, choose the card with the highest interest rate to put the bulk of your money towards and pay the minimum payments on the rest. You’ll be saving the most money by doing it this way and you’ll see the results much faster.
  2. Try not to spend more than you can pay back. – If you only signed up for a credit card to increase your credit rating but have the means to pay for your purchases in cash, try to only use your card to the extent that you can make one payment at the end of the month and bring your balance back to zero. If you avoid getting in debt in the first place, your life will be a whole lot simpler.
  3. Do the math. – When you get your bill in the mail, do the math to figure out how long it would take you to pay off your credit card doing only the minimum payments. Then figure out how long it would take if you added a bit more each month. When you see the amount you’ll be saving in interest, you’ll be amazed – and much less willing to stick with your previous minimum payment method.

The Pros and Cons of a Short-Term Loan

Short-term loans are unusual in the sense that if they are utilised in a sustainable way, they can be extremely helpful when it comes to your immediate financial needs. However, if you abuse this significant form of financial assistance, it can end up being a burden.

In other words, any cons involved in short-term loans will arise mostly due to your own incompetence or abuse of the loan. This article will take you through some of the advantages and disadvantages involved in short-term loans.

Pro: Instant gratification

In terms of requiring funds for emergency situations like medical situations or other calamities, short-term payday loans are perfect for your needs. If you’re a week or two shy of your wages coming in and you can’t afford to delve into your own pocket to deal with an unexpected expense, a payday loan will cover you until then, when you can repay it.

Some services offer instant cash sent to your bank account. There’s just an application form to fill in, as well as proof that you have a regular income and can afford the loan.

Con: You may have to pay higher interest fees

Bear in mind, the cons associated with short-term loans are regarded as potential disadvantages, because they very much depend on your own sense of responsibility. Similarly, if you are faced with high interest fees, this will most likely be because of your own credit history.

While some lenders calculate the interest rate on a daily basis, others apply monthly rates instead. The difference in the fees is dependent on a number of factors. There will also be differences in the cost of valuation as well as other legal fees and sometimes, early repayment charges.

Pro: Short-term loans are easy to get

Provided your credit history is sound and that you can prove that you have regular income, you can get funded by a short-term loan within a day’s time. Usually, you need to provide your name, address, mobile number, your income, bank account information and your debit card details to begin with.

After reviewing the lender’s terms and conditions, you could get approved for a short-term loan in a matter of fifteen minutes.

Con: Incurring fees for late repayment

Make sure you know what you’re getting into before you fill out your application forms and that the company you use is authorised by the FCA. If you’re not sure whether you’ll be able to pay the loan back in time, perhaps you should resort to other measures. Once again, this very much rests on your own sense of responsibility. If in doubt, seek alternative methods. If you’re sure, you can apply for a short-term loan here.

Getting an Auto Loan with Poor Credit

Everyone really needs a car if they live outside of a big city and have to make a living.  The problem that a lot of people have is that, when they have bad credit, getting a car loan is about as easy as getting to the moon. The good news is that there are some finance companies that specialize in car loans to people with less than excellent credit. You may have to pay a bit more in interest rate if you do but it’s still possible.

Before you do this however you’ll want to clean up your credit report as much as humanly possible and make sure that any debts that have been paid have been taken off and any mistakes that were made have been cleaned up and taken off too. By doing this you’ll get a better interest rate which could save you literally hundreds, if not thousands, of dollars over the life of the loan.

In order to do this first you need to go to the 3 credit reporting agencies and get a copy of your credit report from them.  All 3 are required by law to give you a free copy once a year.  TransUnion, Equifax and Experian are all together on AnnualCreditReport.com and will get you your free reports with very little hassle. (The federal government sees to that, in one of the few instances of the federal government actually helping us out.) Remember to order directly from the designated website of all 3 found on AnnualCreditReport.com because if you order on their commercial site they will charge you.

Once you have your reports you need to look them over carefully and slowly to check and see if there are any mistakes or bad debts that should have been take off. (If you paid something and/or if the statute of limitations has expired they shouldn’t be there.) Federal law allows you to dispute practically ANYTHING if it’s not correct so look for dates, numbers, addresses, names or whatever that is wrong in any way. If you find any go back to the web and fill out the dispute forms that are there for all three credit agencies, depending of course on the one where you found the mistake(s).

Once that has been done and the mistakes have been fixed it’s time to go and get that car loan. Selling your old car online to reputable companies like We Buy Cars is a great way to reduce your loan amount. If there were a lot of mistakes and your new credit score is higher you will have a much better chance of scoring a loan.  If your score didn’t change too much you may still want to go to your credit union or local bank first to try. Good luck!

How to Get the Most Out of Your Tax Return

Tax time is a stressful time of the year, no matter who you are or what you may owe. It is complicated, anxiety-inducing number crunching that everyone except for accountants dreads and tries to put off when it comes time.

 

But you can get great benefits from your tax returns, and if you know what you are doing, can see a great return on your taxes that you can put towards that big purchase you’ve been eyeing. Here are a few tips.

 

Talk To An Accountant

Instead of trying to do your taxes on your own and saving a few bucks this year, talk to an accountant. They can point you in the right direction and maximize your deductions and more, so that when it comes time, they can find a great chunk of money that can come your way in the form of a return.

 

Plus, they know their stuff inside and out, and a good accountant can ensure that you won’t miss anything on your taxes, or be penalized for any misfiling or late filings. In short, an accountant can make your life much easier for just a few hundred dollars in investment.

 

File Early

File early and get it out of the way! Don’t wait until April 15th to file your taxes. Instead, quit dreading the day and get it done early and easily with no problems in January or February.

 

Plus, when you file early and get an accountant, you can be sure they are available for work in January or February. Too many people dump their taxes all on their accountant in April and expect them to be ready then; avoid that trap by getting it out of the way, for both you and their sanity!

 

Look For Deductions Before You File

Check out what you are purchasing, spending money on, and investing in, and find out if there is something you can add to your list that will qualify you for a deduction. If you go through the year with the right mindset on taxes and deductions, it becomes much more obvious come tax time what you are allowed to deduct and what can benefit your overall tax burden.

 

Remember for Next Year

Don’t forget everything you did right this year, just to screw it up again in twelve months! If you like the service you got, use the same accountant next year. As they become more familiar with your situation, they can greatly help you with any finance-related questions that may come up through the year, and can work wonders for you come tax time when it rolls around in a few short months.

 

How You Can Save on a Rental Car

The average traveler is under the very false impression that car rental prices and car rental companies are pretty much all the same. With that false pretense they also believe that shopping around is not only unnecessary but also a waste of time.

That couldn’t be further from the truth however as rates can vary greatly from 1 company to the next depending on where you rent and where you’re going. If a rental car looms in your future then read on as we take a look at some excellent tips for saving money on your next rental.

One thing to keep in mind; generally speaking, car rental companies reward people who make it easy for them as far as the renting procedure is concerned and definitely make it hard for people that don’t.

Tip 1- Never agree to let the car rental company fill your tank when you bring it back empty.  They normally charge 20 to 30% higher for the same gas that you could pump in yourself around the corner. Instead always fill it yourself before you drop it back off unless they make an excellent offer to fill it for you for less (which rarely happens).

Tip 2- Always take a look at the ‘fine print’ and look at the additional charges before you make a decision.  A ‘great deal’ can begin to look mighty average once a ton of extra charges and taxes are tacked on.

Tip 3- Don’t rent at the airport.  The ‘airport charges’ that can and usually are tacked on can increase your rental fees by 25% or more!  Better to take a shuttle to the car rental place near the airport as most have them for free.  An extra ride in a fee shuttle bus can save you gig bucks.

Tip 4- Don’t let them hype you into taking extra insurance.  The simple fact is this; your auto insurance will cover you while you rent.  The amount of extra money you will pay for insurance is ridiculous and the odds are super slim that you’ll ever need that extra coverage.

Tip 5- Ask to rent a subcompact car. The chances that they will have one when you arrive to rent (no matter where you rent) are low because nobody likes to rent subcompacts and the rental companies know this. If they don’t have one they’re obliged to give you an upgrade to whatever they have which could mean a 1 or 2 car class upgrade for you for free.

 

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