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.

Best Tips for Increasing your Social Security Checks Part 2

Hello and welcome back for Part 2 of our 2 part blog series on the best tips for increasing your Social Security payments. In Part 1 we went over quite a few different tips that you can use to make sure that your Social Security check will be as high as possible and that you get the most benefit out of all those years you put in the workforce. Part 2 is more of the same and should help you to maximize your checks and minimize any chance that Uncle Sam takes too much. Enjoy.

Just like practically any income that you’ll make as an American today, your Social Security checks are taxable if you make too much income during your retirement years. For example if you’re an individual and you make between $25,000 and $34,000 a year in adjusted gross income, you will be subject to paying taxes on up to 50% of your Social Security benefits. (For couples the number is $32,000-$44,000.) If you make over $34,000 as an individual or, as a couple, $44,000, up to 85% of your check may become taxable. The point here is to make sure that, if you want to pay less taxes on your Social Security checks, you don’t earn too much during your retirement years.  Another option is to take the savings from social security and put them into a tax free savings account.  Let your social security earnings grow tax free, and you will have the ability to withdraw and deposit as you please.

Since widows and widowers are eligible for survivor benefits, waiting until you reach the age of 70 to start collecting your Social Security checks if you are the higher earner is a good idea. Doing this will help you to maximize any benefits that you are spouse will receive from Social Security after you pass on.

If you’d like to save on trips to the bank and avoid processing fees, signing up for direct deposit is your best bet. Once you do your Social Security payments will be deposited directly into your bank account or your credit union account. Keep in mind that Social Security no longer sends out paper checks through the mail. Instead, direct deposit is now needed or you can also get a Direct Express Debit MasterCard and have your funds loaded onto that every month.

On May 1 of 2013 the Social Security Administration started offering online statements to people wanting to keep track of their Social Security statement. Doing just that is quite important, especially if you want to make sure that the Social Security taxes  you paid into the program during your working life were recorded correctly. If you have your current tax information handy you can surf to the Social Security website, find your online statement and compare the two, making sure that there aren’t any errors or omissions. This is one of the best ways to make sure that you get complete credit for all of the taxes you paid into Social Security while you were working.

If you are part of a married couple who both worked and both of you have reached your full retirement age, it’s possible that you will be able to claim spousal benefits first and then, once you reach 70, switch back to your own record and increase the amount of your checks. For couples who wish to do this and wait until at least one of them reaches 70, it’s the best way to get some Social Security benefits between the time they turn 66 and then 70 years old while still maximizing the benefits of at one.

In the last 2 to 3 decades people have been waiting longer and longer to start a family and, if you find that you’re claiming Social Security while you still have dependent children living at home, it’s possible that you may be able to receive additional payments for those children. In order to do this your dependent child must be 19 years of age or younger and unmarried or, and lieu of those two, somehow disabled. Any biological children that you have, stepchildren or adopted children who fits that criteria will be qualified to get monthly payments of up to one half of whatever your full retirement benefits are (with a number of limits depending on the situation).

Lastly, even if you didn’t make it to retirement as a married person because of a divorce, if you were married for 10 years or more you can actually claim some Social Security benefits based on your ex-spouses work record. This certainly may not enamor you to them but hey, you’re already divorced so what the heck.

We hope that this 2 Part series was not only informative but give you some valuable information and insight into how to maximize the amount of money that you get through Social Security. If you have any questions about planning for your retirement or financial planning in general, please let us know and we’ll get back to you with advice, answers and solutions.

Best Tips for Increasing your Social Security Checks Part 1

Okay, let’s all take a minute and honestly look at where Social Security is going. Chances are that, if you are in your 30s or 40s, it might not even be around by the time you retire. Don’t get us wrong, we certainly hope that it is, but the fact is that it’s getting decimated every year and our lovely federal government is doing to decimating. Hopefully this will change but, frankly, not going to hold our collective breath.

Now that we’ve got that little bit of negativity out of the way we like to share with you some of the best ways that we know of to increase your retirement payments from Social Security as best as you can. For anyone that’s going to be retiring in the next few years, these tips and advice may well increase your checks by a substantial amount. Enjoy.

First a little history. The Social Security program continues to be one of the biggest sources of retirement income for many Americans and it recently turned 76 years old. Depending on what you made throughout your career and when you decide to start receiving your Social Security checks, the amount of money that you actually receive may vary greatly. There’s also a chance that you may be able to actually get additional Social Security payments for your spouse, any dependent children that you have and, after you pass on, you’re surviving relatives.

One of the best ways to maximize the amount of money you receive from Social Security is to work for at least 35 years, including making sure that you file taxes during those years as well. (If you don’t file taxes the feds consider that you didn’t work.) The reason that this is so important is that for any years that you haven’t worked the federal government will calculate zero dollars into the equation, something that will lower your payouts substantially.

Another excellent way to increase your payments is to substitute or replace your zero years or lower earning years with higher earning years that you have had later in your career, according to Jim Blankenship, the author of A Social Security Owner’s Manual and a certified financial planner for Blankenship Financial Planning in the city of New Berlin, Illinois.

Earning more money during your working life will not only increase the spending power that you have now but will also increase the amount of your payments from Social Security once you hit retirement. In many cases that might mean switching jobs to get better pay or taking on more than one job at a time. The fact is, your benefits will increase for any year where you have more income than a year prior. The more you make during your working years the more you will receive during your retirement years.

Waiting until you reach your full retirement age is another brilliant way to increase your Social Security payments. For the average baby boomer the magic number is 66 and, for people born in 1960 or later, the number is 67. The reason that this is so important is simply that, if you sign up to start receiving benefits before you hit your full retirement age, the amount of money you receive from Social Security will be reduced permanently from then on. What this means is that claiming Social Security right away after you retire, if you haven’t reached your full retirement age, is a bad idea. A better one would be to make sure you have enough money reserves to get by until you reach 66 or 67 so that you don’t need to claim your Social Security benefits right away and thus maximize your payments.

Waiting until you reach the age of 70 to start collecting your Social Security payments is even better as, between your full retirement age and 70, your Social Security payments will increase by 8 percent per year. That’s a very high rate of return that most people will not be able to find with any other kind of investment. After age 70 however there are no additional benefits and so waiting longer doesn’t make any sense, at least financially.

You can also claim spousal payments based on the work record of whichever spouse has been the higher earner. You can do this based on your own work record or up to 50% of whichever of you had higher earnings, using whichever number is the highest. Keep in mind that spousal benefits will be reduced if you start claiming them before you reach your full retirement age.

Hopefully these excellent tips have already given you some valuable information on how to increase your Social Security checks. In Part 2 we’re going to be looking at some more strategies that you can use do the same so please make sure to come back and join us for that very soon. In the meantime, if you have any questions, comments or problems that need an answer, let us know and will get back to you with helpful advice ASAP.

The Snobbish Roundup – September 7th

Welcome back to the Snobbish Roundup.  We highlight the best blogs of the week, along with the generous carnivals inclusions as well.

Thanks to the carnivals below for liking us enough to include our posts:

Carnival of MoneyPros hosted by Rather Be Shopping
Yakezie Carnival hosted by Frugal Rules
Finance Carnival For Young Adults hosted by Mom And Dad Money


Check out Life and my Finances for advice on shortening your term loan.  I recently went from a 20 year mortgage to a 30 year mortgage…probably not my finest moment, but with interest rates coming down, I actually think lengthening your term loan might be best.

Wealth Informatics ask us “how do people survive on minimum wage?”  My answer, not very well!  But I still think it’s up to many of them to improve their situation.

Save money now with these Home Improvement Tips

No matter the economy or what a person’s income is, saving money has those been a passion of many people and one of the best places to save money is by improving your home. When it comes to one’s home, seeing as how it’s most likely your largest investment, you don’t want to be a cheapskate here. Whether it’s adding insulation to the attic to save on energy bills or adding a deck out back to increase the home’s value, home improvement is an excellent way to save money immediately and in the future.  There are some remodeling and home improvement jobs that are DIY but many of the big ones that can really increase your homes value like a whole room remodel. These next few tips should help you to do just that. Enjoy.

Adding anything that’s ‘low flow’ to your home will instantly start saving you money on water. Not only will low flow fixtures save water, which is good for the planet, they will definitely save you money in the long run on your water bills. Not only that but they’re inexpensive and easy to install and most can reduce your water consumption by as much as 50%, something I can easily add up to over $150 per year. The fact that most low flow shower heads cost less than $50 means that it’s an excellent low-cost investment as well.

Adding extra insulation is definitely a no-brainer. Simply put, your home’s insulation will keep your house warmer in the winter and cooler in the summer and the more you have the better. Not only will they conserve on energy but you’ll immediately see a decrease in your energy bills no matter what season it is. A well-insulated attic is a definite must and one of the easiest areas of the home to add extra insulation yourself. If you’re having a home built, make sure that your builder is using the highest rated insulation possible, especially if you are in an area of the country that sees extremes in temperature.

Switching to the new, compact fluorescent light bulbs is a great way to save on energy. These new bulbs are purported to last from 42 10 times longer than ordinary incandescent bulbs and for each bulbs replaced you’ll save about six dollars a year on your electric bills. One caveat; the new bulbs are quite expensive meaning that you’ll probably want to change them one or two at a time rather than replacing all of the bulbs in your home at the same time.

Replacing your dishwasher if it’s more than 10 years old can immediately save you money on electricity and water. Today’s modern dishwasher uses a little less than 6 gallons of water, compared to older models that to typically use 10 gallons or more. If you have a dishwasher that’s relatively new, keeping it well cleaned and maintained is a must and can save you a few bucks as well.

Most homeowners don’t give a second thought to their thermostat but, if it’s not programmable, you’re probably wasting money. The new, programmable thermostats are much more accurate than traditional thermostats and, in most cases, can save a homeowner upwards of $150 per year. The reason is that they can be programmed to turn on and off at very specific times. For example, they can be programmed to turn on when energy costs are lower and turn off when there’s no one at home.

Placing weather-stripping on all of the windows and doors in your home is a definite must. The fact is, that drafty front door or bedroom window could be costing you big bucks due to air leaks that let out your cooled or heated air. Since weather stripping is quite cheap, it’s a quick, low-cost investment that could immediately cut down on the 30 to 40% heating and cooling lost that most air leaks create.

Long used in Europe because of their energy and water conserving features, tankless water heaters not only can reduce water bills by up to 20% but generally last up to 10 years longer than hot water tanks. Even better, tankless heaters never run out of water because they heat the water as it’s being used. Another great reason to get a tankless water heater is that the federal government has some excellent rebates for homeowners that purchase them.

Finally, unless you live in an area of the country where it’s brutally hot, ceiling fans are an excellent way to cut down on your energy bills. Opening a few windows and turning on a few well-placed ceiling fans can reduce your energy consumption, especially in the summer, by up to 5%. Most can be easily installed by the homeowner as well.

Making all of the changes suggested above could easily save you up to 30% or more on your energy bills and, since most of the changes will last for a number of years, you’ll keep getting the savings now and into the future.

Why many good people have problems following sound financial advice

You’ve no doubt heard it all before. Don’t overspend. Save as much money as possible. Start saving for retirement early. Put as much money as you can into your 401K. These sound simple, but for those of your learning to how to survive on minimum wage it isn’t all that easy.

These are some of the hallmarks of successful money management and, in all but the worst of cases, most people should easily have more money than they need. The fact is however that many people don’t follow these rules and that has led to some of the most difficult financial times that we’ve seen in generations.

So the question is simply this; why don’t people follow good financial advice?

There are certainly plenty of factors that explain why many people have difficulty in their financial lives, including the fact that life is certainly expensive, not all people have 6-figure incomes and sometimes circumstances can arise that even the most financially astute person will have trouble surviving. Still and all, the question about why many people still make bad financial choices is a good one and the reasons below, while they might not actually help someone financially, will certainly give some insight into the mindset of many and may just help you to handle your finances better. Enjoy.

One of the first factors is psychological. Simply put, many of us think that buying things will ‘make us happy’. Of course there’s the opposite side of that coin that’s best put in the old adage about money not being able to buy happiness. The trouble is, most people don’t pay much attention to old adages anymore and, to add to that problem, many people use purchasing things as a way to improve their mood, including food, gadgets, clothing and so forth. Then there’s the fact that humans are inherently jealous of their family, friends and neighbors and, like the other old adage goes, are always trying to ‘keep up with the Joneses’.

Another reason is that bad money choices can become habitual. While most people who purchase ridiculous amounts of lottery tickets, shoes or electronic items actually know that their actions will make things worse, they do it out of habit and, in some cases, these habits can become quite addictive. Like an alcoholic searching for their next drink, a person who has a bad spending habits is always looking for new ways to spend their money, even if they don’t actually have any.

While it’s easy to blame one’s parents for some of their faults, it seems that many parents are actually to blame for their children’s lousy financial habits. While there are certainly many who are prudent with their finances, spend less than they earn and save or invest the rest of their money, many people grew up watching their parents make purchases that they couldn’t afford to, save practically nothing and go through up and down financial cycles that had more effect on them than they thought. This, in many cases, least of these children becoming adults who have bad financial habits as well.

Many of us are simply trying to make a good impression with our family and friends, something that induces us to spend more than we have. Many times it’s a parent who is trying to make their child happy and, in the process, spends much more money than they can afford in order to do it. This is something that seems to be happening more and more today as we become a society of ‘people pleasers’ who believe that the more things we purchase for our loved ones the happier they will be.

Indeed, much of the research that has been done in the last few decades shows that, when offered an immediate reward, most people tend to take it and overspend even if they fully realize that it means a delayed punishment later. The fact is, if immediate rewards weren’t incredibly enticing to us humans, there would be fewer drug addicts and alcoholics, unprotected sex would be practically nonexistent, the obesity problem wouldn’t be a problem and hangovers would be a thing of the past.

Now that we’ve played devil’s advocate, would like to give you some good news before signing off. The fact is, most people can learn how to have restraint when it comes to their finances, especially when shown the upside to saving and investing. The fact is, as much comfort as a new tablet computer may give, having a large amount of money in the bank is equally comforting.

In the end, good spending and financial habits can be learned and bad ones unlearned. It just takes a little bit of time, diligence and practice. If you have financial problems, questions or concerns please let us know and we’ll get back to you with advice, suggestions and answers ASAP.


Easy Ways to Start Saving

Today we live world where being a big spender is a symbol of status and is seen as positive, but saving money and frugality were once considered great virtues. Today, they are cultural oddities. Those who can save money, however, in most instances will have a much easier life than those who are reckless spenders. Saving money can be done in two ways. The first is the traditional idea of saving money that involves stashing funds away in a sock or a bank account. The other way that people can save money is through finding ways to cut spending. 

Credit card debt is a major problem for many. The average UK household has about $54,000 in debt. Many of these households will have their debt spread over several different cards, each requiring a monthly minimum payment.

Consolidate Credit Card Debt 

Debt management companies exist to help consumers find ways to cut their expenses, and one of the easiest ways that they will recommend to save some money each month is by consolidating this credit card debt. Those who are able to qualify for 0 percent balance transfer offers and consolidation plans can move some of their credit card payments into one monthly payment that will have a minimal finance charge that will be much better than the 10 to 20 percent rate that most credit cards charge. Consolidating cards through debt management is a great way to achieve financial stability for those who can work it out. Companies like Consolidated Credit can help with debt management greatly, as well as credit counseling.

Use Coupons

Another great way to save money is by using coupons. These little strips of paper that give a discount on the purchase price of an item were once considered mainly the domain of older ladies who lived through the Great Depression. With the Great Recession, many people lost a substantial amount of income and are now taking advantage of coupons. People who are able to watch for sales and combine the lower sale price with a coupon can get name-brand items for a fraction of the normal retail price. In areas that have stores that offer double coupons, it is sometimes possible to get quality items for free. Buying a Sunday paper will usually cost about £2 and most of these papers will have a coupon insert or two that can lead to big savings. Additionally, there are several internet coupon sites like Coupon Sherpa that allow thrifty users to save money as well. 

Buy Used

Name brand clothing can cost a very sizable amount of money. Many people that have quite a bit of money are always trying to get the newest fashion. They will then donate older clothes that might not fit as well to a thrift store or put them on sale at a consignment shop. While these stores will sell them for more than they actually paid for them, used clothing items will sell for a fraction of the regular retail price at a consignment shop. Most stores will be fairly thorough in checking the quality of their merchandise so the clothing doesn’t look like it is ten years old.

Buying used clothing can save a substantial amount of money, but it is not the only area in which used items will make financial sense. Another option in the realm of buying used that can save people money is related to transportation. Getting a slightly used car can save thousands on the purchase price. One of the best ways to get a vehicle that still has quite a bit of useful life left is by visiting a dealer and looking for cars that were a part of a fleet or that were previously leased out. These cars will generally have some of the initial manufacturer’s warranty left to fix any bugs or faulty parts. They will also tend to be several thousand dollars cheaper than a new vehicle and the savings will go to the consumer. 

Use Cash Only 

Many people are able to save money by moving to an all-cash method of payment. The goal in this instance is to avoid making any purchases unless there is cash in the wallet or the cheque book. Avoiding credit card buys will ensure that there is no interest cost associated with purchases. Additionally, buying an item only when cash is available will cut down on impulse spending that can eat up a large chunk of a monthly budget. Those who want a big-ticket item might decide they do not really need it if they have to wait until they have cash to pay for it. 

Reckless spending can become a problem for anyone. The recent recession has shown people that the old proverb about money not growing on trees is accurate. Saving money and debt management has taken on a new importance for many people. These quick tips will help those who are struggling with saving money to start cutting expenses. Less money going out will allow for more in the way of savings and a better financial future.

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.

7 Keys to a Sound Retirement Part 1 of 2

Did you know that there are 7 Keys to many different things in this life? For example, we all know that effective leaders have seven habits, that there are seven different types of intelligence and that there are even seven steps to get to heaven.

Now, courtesy of the Society of Actuaries, we have the 7 tips for a sound retirement.  They just released her a new 64 page report entitled ‘Segmenting the Middle Market: Retirement Risks and Solutions Phase 2 Report’. Not the most inspiring of titles, we’ll admit, but then again these people are actuaries.

In their report they say that financial planning for retirement requires a methodical approach. (Does that sound familiar?) They say with this approach you need to identify and quantify all of the important components that will affect your asset accumulation, investment decisions, income management and so forth. They also noted that this approach is increasingly important for Americans who make middle incomes and more than likely have accumulated less than $100,000 for their retirement. The 1st 2 steps that the day espouse are here in part one of this two-part blog and the others, obviously, are going to be in the 2nd. Enjoy.

The 1st Key that they talk about is quantifying your assets and your net worth. Basically this is a complete tally of all of the things that you won’t including your home, cell phone businesses and so forth. It also includes everything that you owe. Since your home is more than likely your largest asset it’s likely that it will play an important part in any of your retirement plans.

Their recommendation is that you try and create as much income as possible from your home. This can be in the form of selling it, renting it, taking out a home equity loan, getting yourself reverse mortgage, paying off the mortgage completely and also taking out a home equity loan.

Another suggestion, and something that unfortunately is overlooked quite frequently, is converting assets and income and, while you’re at it, converting income streams into assets. The simple fact is, in retirement there are many assets that can possibly be converted into monthly income and generate more spending power. Similarly, income streams like a pension should also be seen as comparable in value to an asset.

A problem that the SOA identified is the interesting fact that many people aren’t able to fully realize or think about their assets and income as having equal value and, because of this, have a difficult time translating between the two.

The 2nd Key is to quantify your risk coverage. What you’re doing here is taking stock of all of the insurance that you already have and all that you’re going to need, including health, disability, homeowners, life, auto and so forth. Considering the need for long-term care insurance is also vitally important, especially when you consider that the cost for long-term care is extremely high and there is a very real possibility that, at some point in your future, you may need some type of medical assistance.

The report noted that households with ‘limited assets’ of less than $200,000 will probably need to spend down their assets and then rely on Medicaid. Those households with an excess of $2 million in financial assets should be able to cover the cost of long-term care out of their pockets. For those households that are in between these two numbers, long-term care insurance should be included into any financial plans and should be purchased in the last few years before retirement.

Another note that the SOA gave in their report is that, in most cases, the need for life insurance is high. Indeed, the death benefit associated with any life insurance plan can be used for bequests and also to provide valuable income to the surviving spouse, if necessary. Since the premiums for life insurance get more expensive as a person gets older, they also suggest that a person continue “existing preretirement coverages during the retirement period.”. One interesting note that you need to know about is that, in the near future, policies that combine long-term care insurance with life insurance and annuities will be available.

Those are just the first two keys to the seven that were outlined by the SOA.  If you’re keen on finding out what the other five are, you’re going to have to come back and visit us very soon for Part 2. In the meantime, we hope that this important information was interesting and relatively helpful. See you back here soon.

Personal Finance Tips you really should Avoid

Okay, we’ll admit it, there are literally thousands of blogs online giving personal finance advice these days. Not only that but your neighbors, your family and even the mailman seem to have personal finance tips that they think are ‘the best’. The problem is figuring out  which of their tips is good and, conversely, bad.

The fact is, what sounds like sensible advice can sometimes turn out to be the worst advice you’ve ever gotten, at least financially. Sometimes what is considered to be the best conventional wisdom is nothing of the sort and, when wide held beliefs turn out to be bad ideas, it’s sometimes good to know what they are  so that you can avoid them. The following 4 personal finance tips that you might already have heard about (and maybe even have used our for that matter) should be completely avoided because they aren’t nearly as good as they might sound.

  1. Using a debt settlement company to pay off your debts. If you are struggling under heavy debt any advice might seem like good advice. Indeed, many debt settlement firms will give you what appears to be a very appealing  pitch: sign up with us and we’ll  cut down your debts greatly.  All you need to do is send them your monthly payments (instead of sending them to your creditors) and they’ll battle those creditors and also banks and credit cards on your behalf.


The fact is, while settling debts is an excellent option for those people who are delinquent on their payments and to have access to a large lump sum of money that they can offer as a settlement, very few people actually fit this criteria. In fact, if this is you then you hardly need a debt settlement company at all.


Even worse, most of debt settlement companies will actually hold onto your payments for several months in some cases before they actually start your settlement process. What this means for you, as the consumer, is that you’re going to have to endure a few months more phone calls from annoying and sometimes rude bill collectors.


  1.  Paying whatever you can pay. Many consumers are under the false assumption that they can pay any amount that they like on a debt that they owe and that this show of ‘good faith’ will oblige their creditors to work with them. The fact is, there’s no such thing as getting ‘extra credit’ for your effort when it comes to debts that are delinquent.


The mistake that people make is that they rationalize that any payment is better than no payment. The fact is, unless you’ve actually worked out an agreement with your creditor to pay a lesser amount than what you should, you’ll find that there’s no automatic agreement that will kick in and protect you if you just send in whatever amount of money that you can orient you want to.


At the end of the day, no matter what arrangement that you’ve made with your creditor you’d best to have it in writing.


  1. Carrying a credit card balance with the hopes of improving your credit score. One of the biggest misconceptions that many consumers have is that carrying a balance on their credit cards and only paying the minimum payment will be helpful in terms of their credit history. While it is definitely a good idea to regularly use your credit cards for small purchases  so that your timely payment history is recorded on your credit report, it’s much better to carry a low or zero balance from month to month.


Carrying a balance doesn’t particularly hurt your credit but, because you’re going to be paying interest on that borrowed money every month, it can actually end up being quite an expensive mistake. Not only that but, if you carry a balance that’s greater than 30% of your credit limit on any single card, your credit may well suffer due to the fact that your utilization ratio is too high.


  1. Using your 401(k) to pay off your debt. We saved the worst for last as using your 401(k) or 403(b)  or, for that matter, any retirement savings to pay off debts is a very bad idea. Indeed, this should be the choice of last resort, even after bankruptcy.


The problem is that all too often many consumers are shocked to find that the taxes they need to pay because of their early withdrawals are very high. Not only that but, once a retirement fund is drained, it could take anywhere from 15 to 30 years to get it back to where it was and, in many cases, a consumer just doesn’t have this luxury of time.

These four personal finance mistakes are repeated on a daily basis all over the United States because, in most cases, the people who are making these mistakes believe that they’re doing the right thing because they’ve been advised to do it by a well-meaning friend, family member or grocery store clerk. (Okay, that last one is a stretch.)  If you’re contemplating following any of the four relatively awful tips above, we urge you to reconsider and talk to a real financial expert before you move forward.

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