A calculated gamble that could make your money work for you

If you feel like you spend your life making economies and trying to live on less, there comes a point when you decide you want the money you do have to start working harder for you. The big question is how to do this.

Many money-making ideas usually require having a lot of spare cash to invest in something like a buy to let property or a business. But what if you’ve only managed to put a little bit aside each month in a saving account? What difference can you make with that? With interest rates as low as they are at the moment, your savings certainly aren’t going to multiply when sitting in the bank.

What you need to do is find a way of getting a better return on the money. One way that offers that possibility is through trying your hand at trading online. If you have never traded before, you may think it is too risky as you do not know what you’re doing, and you may lose those hard-earned savings when you’re ‘having a go’. Of course, this is a sensible thought-process.

But there is a way to see what kind of talent you have for trading without any real risk. And that’s through a provider like Tradefair. You can learn spread betting with Tradefair without using real money as an account is available in simulation mode. This is where you make decisions about the different trades you want to place, but the trades are virtual – in other words you’re playing at trading or spread betting. When you get it wrong, it doesn’t matter, as it’s not real money that you’re moving around. The only downside is that when you get it right, you also won’t reap any actual rewards. However you will gain experience, and that counts for a lot in the trading world.

Spread betting can cover many different markets. The biggest trading market in the world is the foreign exchange market. You can spread bet on this in just the same way that you might choose to do so on the number of bookings, number of goals or corners in a game of football. Anyone who has been following the news stories about Greece will know that the financial problems of the country have had an adverse effect on the Euro in recent months. If you’d been able to spread bet, you might have been able to make a profit. Whatever market you’re spread betting in, it’s never possible to know all the future outcomes. But you can identify probabilities and trends and make your decisions from there.

Once you’ve tried out different trades and decisions in simulation mode and started to make some good calls, you can opt to start placing real trades whenever you feel confident to do so. Of course, you’re never guaranteed a positive outcome – you may lose money. That’s why you should invest in tiny amounts at first, testing the water and seeing which way your luck goes. But, if you do get the hang of spread betting, you could soon see a small investment multiply and soar in value.

If you happen to do really well in your first few money trades, don’t let yourself get carried away by your initial success and start to place greater value trades too quickly. It’s tempting to want to see your profits climb quickly, but you’re better off remembering the tale of the hare and the tortoise. Slow and steady progress is the key to greater investment happiness, rather than having a rush of good luck and then crashing and burning.

You may also start off your spread betting experiment but then decide that a particular market doesn’t suit you. If that’s the case, you can always try another market – Tradefair has more than 3,000 markets that its users can trade in from a single account. For example, if you don’t get on well with the foreign exchange market, you could try the commodities market instead and see if you’re any better at speculating on the future values of products such as gold, cocoa and sugar.

Money Market Account or Savings Account?

Although you won’t find them at as many banks as you will savings accounts, money market accounts are definitely an option at many of them. If you glance at both briefly, there are some similarities, including that both pay interest and offer liquidity, as well as both being protected by the FDIC, and similar check writing rules.

On the other hand, money market accounts almost always pay a higher interest rate, making them a more attractive option for most savers.

The simple truth is that, when it comes to what they can do with funds that are being saved in a savings account, most financial institutions are extremely limited. That’s one of the reasons that their interest rates on savings accounts are so low. On the other hand, money market accounts offer them a good bit more flexibility, including being able to invest that money into certificates of deposits (CDs), and other safe investments like government bonds. Because of this, most banks are able to offer interest rates on their money market accounts that are higher than savings accounts, so that they can attract savers to put their money in the former rather than the latter.

Although the differences between the two are not extremely significant, one major difference between a savings account and a money market account is that there are restrictions on how often withdrawals can be made. For example, some financial institutions will have a one-week waiting period for taking money out of your money market account, so if you take money out of your savings account regularly when you need it, a money market account might not be a good idea. On the other hand, if you want to make more money in interest and can let your money sit for a longer period of time, a money market account will definitely earn more money for you.

Now, to be sure, neither a savings account or a money market account offers a great interest rate. For example, a savings account probably will offer somewhere around .5% while money market, even though it doubles that, will usually only offer around 1% in interest. That’s not very much and, if you have a significant amount of money, and you won’t need to access it for a long period of time, there are other investment options that will definitely give you better interest rates.

Also, be sure that you don’t confuse a money market deposit accounts with money market funds, especially because money market funds are covered by the FDIC and are quite different from traditional demand deposit accounts.

How Building Wealth Changes your Life

We’ve talked about it many times here on our blogs, that saving money is extremely important for many things, including giving you financial freedom. What most people who take our advice find is that, once they actually start putting aside a large chunk of change, and building up their wealth, many new opportunities come into their life, and their outlook changes quite drastically

Interestingly, spending money on everything in sight loses its appeal. It’s not that you won’t want to buy anything, but just that accumulating wealth will actually give you the same satisfaction that purchasing things used to give. The fact is, if you measure your wealth by how large your portfolio is, and how much income your assets are generating, it means that you’re much closer to being able to not work anymore, or at least work only when you want to. For many, that reality is much more attractive than, say, the latest piece of tech or a new set of golf clubs.

Having a large amount of money in savings, an IRA, 401(k) or invested in a well diversified portfolio will also give you a taste of financial freedom before you actually become completely free financially. For example, if you have enough savings and investments, you can weather many different kinds of storms, including being able to start a new career if the one you currently have makes you want to jump in front of a bus.   Relatively small expenses like having to replace your car or get a new roof on your home won’t be nearly as stressful either.

Being able to invest more money with a financial firm will also make it less costly to grow your assets. For example, if you invest at least the minimum in a specific share class, Vanguard will offer you funds with smaller expense ratios. As your assets continue to expand you’ll find that many financial firms will offer tax preparation software and financial plans at no cost, as well as cheaper trades. Even better, if you work with a financial advisor who gets paid a percentage of assets under their management, there’s a good chance that they’ll offer you lower fees.

Lastly, when you get to the point where retirement is looming and you’re wondering whether or not you should continue working for an extra year or two, you’ll have the financial ability to make that decision with a lot less stress because you’ll know that, even if you walk away from that steady paycheck, you’ll still be able to support yourself and your lifestyle. If you do decide to work longer, the chances are much better that you‘ll be happy at work because you will have made the decision to keep working, not your bank account.

Saving Small Now Can Add Up to Big Money Later

If you’re a young consumer (and even if you’re not so young) you probably think to yourself all the time that you should be saving more money. The problem is that, on today’s starting salaries, it’s tough to put aside extra money. Add to that the fact that, as a young adults, there are a lot of temptations out there, and putting aside money might seem impossible.

The fact is however that, even if you can only save $100 a month, it’s definitely worth it.

The reason is simple; compound interest. Even a small amount of money, put aside for 20, 30, 40 years or more, can turn into quite a bit down the road. Here’s a great example; let’s say that, at 25 years old, you start saving $100.00 a month for 10 years. If you let that money sit and grow until you turn 65 years old, and have an annual return of 8%, you’ll have $174,920 waiting for you.

Wait 10 years more however, and do the same thing for 30 years, and when you hit 65 you’ll only have $135,940 in your bank account. What that means is that you’ll have contributed three times as much but will end up with $39,000 less than if you had started 10 years earlier.

That’s the power of compound interest.

In simple terms, even a small amount of money put away for a long time can add up to quite a bit and, if you put away a small amount on a regular basis and let it sit for a long time, you could end up with quite a nest egg by the time retirement comes.

And let’s face it, how many of us can’t put away $100 a month? If you consider all of the things you waste money on, like expensive coffees, going out to eat, buying more pairs of shoes then you need, getting an expensive sports car or wasting money on bad habits like smoking or drinking, you probably waste much more every month than $100

That’s not to say that you shouldn’t have fun, not enjoy yourself and not do things that are pleasurable when you’re young. Hey, most of us old folks would love to go back to our 20s and 30s and shake things up again. At the same time however, most of us would also have the hindsight to take that $100.00 a month (or even more if possible) and put into an IRA, 401(k) or other investments where it could sit and grow (and grow, and grow).

So yes, you definitely should be saving and, if you’re in your 20s or 30s, now is definitely the time to do it. Catching up later will make it a lot more difficult and won’t let compound interest turn your small amount of money into a big amount of money. So get started today. Seriously, for $25 a week, you’d be crazy not to.

Investing Doesn’t Take Genius Intelligence, Just Common Sense

A quote that’s attributed to Albert Einstein goes something like this; “Insanity is doing the same thing over and over and expecting different results.” Going by what Mr. Einstein says, it would be easy to assume that most investors are insane because of the fact that they’re constantly trying to predict when to enter and exit specific markets, pick outperforming stocks and are always on the lookout for the next “hot” fund manager to come along.

These are the same investors that rely on top mutual fund recommendations, listen to the advice of a broker who says that they have the skills to ‘beat the market’ and over-weigh their portfolio with asset classes that don’t make sense, including gold. They also rely much too heavily on financial media for information and tips on things like market direction, interest rates and stocks.

Many of these same people are also overly obsessed with every single thing that anyone has to say about investing guru Warren Buffett. The fact is, Mr. Buffett really doesn’t have any special insight into the market but simply happens to be an astute investor who studies prolifically, makes investments for the long-term and places very little focus on current market events.

In fact, a quote from Buffett really underlines his opinion about listening to pundits and trying to follow current market trends; “Forming macro opinions or listening to the macro or market predictions of others is a waste of time.” In other words, Warren Buffett is telling investors to ignore pundits and market trends, something the financial media emphasizes with abandon. In fact, much of the information you’ll find coming out of the mouths of financial media analysts comes from the comments of pundits about everything from market correction to the “best stocks to buy right now”.

Another quote by Mr. Buffett is definitely much more valuable for the everyday investor, and goes like this; “The know nothing investor who both diversifies and keeps his cost minimal is virtually certain to get satisfactory results.”

If you’re looking for investing advice the simple truth is that trying to “play” the markets, sniffing around for “stock tips” and listening to the excess of media outlets and their talking heads is probably the worst way to do it.

If someone “in the know” deigns to give you advice about how to pick stocks and tells you to do it the “same way Warren Buffett does it”, all you need to do is tell them that you are as you buy your stocks and bond index funds with low management fees and hold onto them for the long term.

Does Credit Debt Have a Statute of Limitations?

Most people realize that if they owe money, the company they owe money will try their best to collect it, oftentimes sending a collection agency after them, destroy their credit score and also, in some cases, take them to court. But here’s a question; how long exactly can add company keep trying to collect a debt?

The fact is, nothing in this life lasts forever. Nearly anything that a person does, even most (not all) criminal activity, has what’s called a “statute of limitations” that keeps it from going on forever. Debt is one of the things that definitely has a statute of limitations, meaning that after a certain amount of years there is no way for a company, or a debt collection agency, to continue to pursue a person who owes that particular debt.

Tread with Caution

Here’s the deal; every estate in United States has different laws when it comes to dealing with debt, and debt collecting. Also, every law has their particular statute of limitations. For example, if you live in Florida, debt collectors have four years to collect on what they call “open accounts”, which includes credit card debt. After this statute of limitations expires, they have very few, if any, legal remedies in order to force you to pay that debt. It doesn’t mean that they won’t stop trying, but it does mean that they can’t force you to pay in a court of law.

One situation you have to be careful about however is acknowledging that the debt exists, or making a payment on that debt, however small. If you do, the debt that you owe can be reinstated even if it was legally uncollectible. The fact is that even though the statute of limitations reduces the legal remedies that companies or debt collectors have to get that money from you, it doesn’t remove the fact that you have a  debt. You still owe that money, they simply can’t legally force you to pay it.

If you should happen to open the door just a crack however, you can rest assured that debt collectors will shove their foot in there and do everything in their power to get that money from you.

What about your Credit Report?

Most people don’t realize that the information on your credit report is determined by federal law, not state law. The “Big 3” credit reporting agencies, including Trans Union, Equifax and Experian, are obliged to remove negative information on your credit report after a period of 7 years. When it comes to bankruptcies, this information will stay on your report for 10 years or more.

What this means is that after the statute of limitations of either 7 or 10 years has passed, you can send a letter to all three of these credit reporting agencies asking them to remove these debts from your credit report, and legally they will be obliged to do so.

These are the Rules your Debt Collector is Hoping you Don’t Find Out

Millions of people around the country are in debt up to their eyeballs. We’re not here to sit in judgment of anyone, by any means, but instead to point out that, if that includes you, the debt collector hounding you about paying back your debt will sometimes take either unfair and even illegal advantage of you because you don’t fully know your rights.

While we won’t sit here and try to debate whether or not you should pay back any debts that you owe, we will admit that we don’t like unscrupulous debt collectors and want to help you avoid falling for their tricks and traps. The fact is, the FTC, and the Fair Debt Collection Practices Act that they put into law, were created to protect you from debt collectors that step over the line. Below are some facts about your rights that you definitely should know in order to protect yourself. Enjoy.

Fact 1: There is no law that says that you must communicate with debt collection agencies. If you’re being hounded by a debt collection agency, and they’re tirelessly calling you, sending them a “cease and desist” letter is the best way to get them to stop. Of course you have to realize that they can and might pursue legal action if you do this, and will send you a notification of their intent via snail mail. But it will stop those harassing phone calls.

Fact 2: Just because you paid an account in full doesn’t mean it will be erased from your credit report. Even if you pay off a debt in full it can still remain on your credit report for up to 7 years. If you wish to avoid this however, you can sometimes negotiate with the collection agency to have them remove the debt from your credit report once it’s paid. If they agree to this, you have to get it in writing to make sure it happens before you pay them a single penny. If you pay and don’t have it in writing you won’t have a leg to stand on.

Fact 3: Disclosing Personal Information is not legally necessary. Many debt collectors will insist that you give them vital information like your Social Security number and your date of birth, but the fact is that there is absolutely no law that says you have to do so.

Fact 4: Until an actual judgment is made by a court of law, none of your assets can be touched and your wages cannot be garnished. There are a few instances where this doesn’t apply however. For example, if you have federal student loan debts, the federal government can garnish your wages with or without a court order. Also, if you fall behind on your mortgage the bank can foreclose on your house without a court order. The same thing goes for a car loan.

Fact 5: Although the debt collector wants to get the largest amount of money from you as possible in your initial payment, there is no law saying that you have to pay out a huge chunk of cash up front. In many cases a payment plan can be set up in order to help you pay your debt over a longer period of time with more palatable monthly payments.

Fact 6: The best time to negotiate a deal to pay off your debt is usually at the end of any month. The reason for this is that debt collectors, who work on commission and bonuses, will be more inclined to help you reach a settlement on your debt when the end of the month is near so that they can make their bonuses and get their commissions.

Fact 7: It’s not necessary to always work with the debt collector. In many cases you can work with the original creditor who might be able to give you better repayment options. On the other hand, if that creditor has already sold your account to a third-party debt collector you don’t really have any other option but to work with them.

Fact 8: Once the statute of limitations on your debt has lapsed, you don’t have to pay that debt. It doesn’t mean that debt collectors will stop trying to collect their money but, luckily for you, they can’t do anything legally in order to force you to pay.

Hopefully these 8 Facts have opened your eyes to some of the legal options that you have available when the debt collector calls. Our advice is that, once you have gotten out from under your debt and everything is paid off (no matter how it’s done), you remember how difficult it was and keep from going into debt again in the future.

Financial Support for Single Parents

If you are a single parent, you already know how difficult it can be to make ends meet with just one income coming into the home. If you are struggling financially, it is important for you to know that there is financial support available for single parents. Below is a look at various place single parents can turn for financial assistance, including child support, governmental benefits, and local organizations.

 

Household Income

There are three basic ways that you can bring income into your home if you are a single parent, including wages, child support and income support payments from Centrelink.

 

  • Employment. If you are not currently employed the government offer special workshops that are designed to help you find a job. In addition, you can use the Australian Job Search website to apply to different jobs in your specific area. You can also choose to go back to school and gain some additional skills to find a better paying job. You could qualify for Jobs, Education, and Training Child Care Fee Assistance to help pay for child care while you are looking for a job or attending training.

 

  • Child Support. If you have not already done so, it is vital that you contact the Department of Human Services to receive child support from the other parent. You will be asked to complete a child support assessment and based on that information a determination will be made about how much the other parent must pay to help cover some of the costs of raising your child.

 

  • Centrelink. If you are not working, or not making enough money, and you have a child under the age of 8 years old, you may be eligible for the Parenting Payment benefit. This benefits pays up to $713.20 per fortnight based on your specific situation. If your children are over the age of 8 years old, or once they have reached 8 years old, you will then be eligible for the Newstart Allowance benefit, until you are able to find a job. This payment is for up to $552.40 per fortnight.

 

Centrelink

In addition to income support, you may be eligible for other payments through the Centrelink office.

 

  • Family Tax Benefit. This benefit includes a Part A and a Part B. Part A is designed to help offset the cost of raising your children. Part B provides assistance to family who are facing a financial hardship due to having only one income. The amount you will receive for Part A is dependent on your income, number of children, and the age of the children. Eligibility for Part B depends on the age of your youngest child.

 

  • Rent Assistance. This benefit will help offset a portion of your monthly rent payment, so you do not have to pay as much out-of-the-pocket expense. The amount you receive will depend on your family size, income, and where you live.

 

  • School Kids Bonus. This bonus is paid out twice a year, once in January and once in July. It is to be used to offset some of the costs associated with buying school supplies. It is for a set payment of $205 twice a year per child in primary school and $410 twice a year for students in the secondary school.

 

  • Pensioner Concession Card. If you are receiving Parenting Payments or Newstart Allowance, you will be eligible for this concessions card. This card will provide a reduction in some medications and doctor visits for you and your children. Depending on your state or territory, you may also be eligible for a reduction in energy costs, water rates, public transport, property rates, and motor vehicle registration fees.

 

Non-Profit Organizations

There are also several charities throughout the country that are there to provide financial support for single parents. Below is the top three charities in the country.

 

  • The Salvation Army. This organisation is well-known throughout the world and can help with a wide array of supportive services like financial assistance, help for those facing domestic violence, housing assistance, and help finding employment.

 

  • The Smith Foundation. This program helps to ensure that all children in Australia obtain a good education. They provide special tutoring services, as well as, mentoring services to young people in the country.

 

  • St. Vincent de Paul Society. This organisation helps those in need by providing food and food vouchers, clothing, household goods, help with utility bills, back to school supplies, housing and much more.

Help with Child Care

Child care is a huge expense for all single parents who need to work outside of the home. The government does provide help to offset some of these costs.

 

  • Child Care Benefit. This benefit will pay up to $205 per week per child to help offset your childcare cost on a weekly basis. This lowers the out-of-pocket costs you need to pay.

 

  • Child Care Rebate. This benefit gives families a rebate of up to 50 per cent of the amount of money they paid for child care services during the year. This benefit has a maximum rebate amount of $7,500 per year.

How to Implement a Debt Reduction Plan

Is your unpaid debt wreaking havoc on your finances? Does the amount of debt you owe prevent you from meeting your financial goals? If you answered yes to either of these questions, it is time to take control of your debt and start the path to financial freedom. The best way to eliminate your debt problem once and for all is to create a viable debt reduction plan. If done correctly, a debt reduction plan will eliminate your debt slowly overtime and give you the freedom to start working on your own personal financial goals, like a new car, special, holiday, a new home, or your retirement.

Create a Budget

The first step to creating any type of debt reduction plan is to create a household budget. You must have a clear picture of all the income you have coming into the house and all the expenses and bills you are paying each month. If you have never had a budget before, you may want to start by tracking your spending for a few weeks by writing down everything you pay for. This will give you an idea of where your money is going and if you are overspending in a certain area, such as food or entertainment. Do your best to cut back on your spending, so you have more money available to pay off your debts.

Check Benefits

If when making your budget, you realize that your income is not enough to cover all your bills for the month, or you are not left with extra money to pay towards your debt, you should make sure you are receiving all the governmental benefits you are eligible for. These specialised benefits can help by reducing some of your monthly bills like your rent or utility bills, or it can bring additional income into the household.  Either way it will reduce the amount of out-of-pocket expenses you have to pay and will leave you more money that you can use towards paying off your debt.

Call Creditors

Once you have your household budget in place and know how much money you have available to spend towards paying off your debt, you need to call each of the creditors you owe money to. Based on the funds you have available, work with you creditors to create a payment plan that the creditor will agree to and you can afford. Most creditors will be willing to work with you if you are honest with them and have a debt reduction plan in place.

Consolidate Loans

If you credit is still good and you are eligible for a low-interest loan through a bank or credit union, consolidating all your debt into one loan could be a good alternative. It would only require you to make one monthly payment, which may be more manageable, and it may save you money by charging a lower interest rate. However, if you cannot get a loan with a low-interest rate there would be no real benefit to this plan. An alternative to a bank loan, could be a low-interest credit card that would allow you to transfer all your debt to. However, be very leery of credit card that offers a low-interest rate only for an introductory period. In this case, it may up costing you more in interest in the end if you are not careful.

Set Up Debt Reduction Plan

There are several different methods you can use to set up a debt reduction plan. The first method requires you to pay the minimum balance required on all of your debts, and pay any extra funds you have available on your debt with the highest interest rate. You need to keep paying the extra on the debt with the highest interest until it paid in full. Then you can start paying off the debt with the next highest interest rate. This plan continues until all of your debt is paid off. Another plan is very similar, but instead of paying the debt with the highest interest first, you pay off the smallest debt first until they are all paid off.

It does not matter which plan you use, the most important thing is to create a debt reduction plan that you will be able to stick with. It is advisable to always seek the advice of a financial counsellor who can help you determine what type of debt reduction plan is right for you. Over time, you will be able to pay off all your debt and find the financial freedom you want. Then you can start setting long-term financial goals to help you get the things you really want.

Is waiting to get your Social Security payments a good idea?

Understanding the basics of Social Security, even if your retirement is still decades away, is extremely vital. You simply must have a good understanding of not just when you can take out your funds but, more importantly, when you should.  If you’re already in the process of planning for retirement (and you should be, no matter how old you are) knowing this information can help you to determine how much money you actually need to  save.

In its simplest terms, during your working years you paid into Social Security through taxes, and built up benefits that you will receive once you reach retirement. While this may seem simple, effective that retirement age varies based on a number of things, including your birthday. Also, the amount of benefits that you get either increases or decreases based on when you actually start receiving them.

Specifically, each month past the specific retirement date that is assigned to you based on your birthday, the funds in your Social Security will grow, until you reach the age of 70.

Calculating your lifetime earnings

When Social Security is determining how much your monthly benefit checks will be, the first thing they consider is what they call your “lifetime earnings”. They also take into account your average life expectancy and the actual date that you begin to collect. Even though how long you live affects the best time for you to start collecting, since it can’t be predicted with certainty it’s very difficult to say.

Keep in mind is that, for every year that you wait until you reach the age of 70, your retirement monies from Social Security will increase by 8%.

What are the tax implications?

Another reason to delay getting your Social Security benefits is to avoid taxation. Some people that withdraw Social Security right away also withdraw money from their IRAs, 401(k)s and 403(b)s in order to have enough to cover their monthly expenses. These withdrawals however can actually push you into a higher tax bracket and cause more of your Social Security benefits to be taxed.

What are the drawbacks of waiting?

If you have a family history of early death, or perhaps are suffering from a disease process that may end your life sooner, then there’s really more of an incentive to take out your Social Security as fast as you can. You may also need the money to pay for basic needs like housing and food, in which case taking it out only makes sense.

The fact is that the decision rests on your shoulders as to when is the best time to start taking your Social Security payments but, whenever possible, it’s best to leave them alone as long as possible in order to build your funds higher.

Of course one of the smartest things that you can do is talk to a financial expert who has your best interests in mind and find out what their opinion happens to be. Everyone has different situations and circumstances and these will definitely play a role in whether to take your Social Security funds out quickly or leave them in longer.

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