Mortgage mistakes to watch out for

In the world of mortgages there are some pitfalls. First of all, the top priority for anyone looking to buy a home is to repair credit. Order copies of all three of your credit reports and read them thoroughly. A good time frame to order them is six months prior to buying. That way you can challenge any errors and have sufficient time to get them fixed. It also gives you time to pay down your credit balance on any credit card. You want your open-credit-to-available-credit ratio to be as low as possible. This can increase your credit score considerably.

Next, you want to get pre-approved for a loan. There is a difference between being pre-qualified and pre-approved. Being pre-qualified doesn’t mean a whole lot. All it means is that a lender tells you how much you most likely could qualify for in terms of a loan. If you read the fine print on your pre-qualification letter, you most likely will find some wording that tells you that the amounts are “estimates only.” On the other hand, a pre-approval is when you submit your information and have a lender tell you exactly how much you can get. It’s a thorough investigation into your finances that is a perfect gauge of what your loan will look like.

Additional costs you should think about

You also should consider the money it is going to cost to move in. Sure you are going to have closing costs and a down payment, but there are additional costs every potential homeowner should think about. Moving costs, storage costs and repair costs are all additional expenses that some homeowners don’t budget for. Short term loans can come in handy to have a little extra cash for unforeseen costs. Ted Grose, president of the California Association of Mortgage Brokers, stated, “It costs so much just to move in, and then the water heater breaks. Some people are so stretched that they may not be able to make their first mortgage payment on time.”

Borrowing what you need

Another issue to be aware of is making the mistake of borrowing too much money. A lot of people get duped into accepting a loan that is way more than they actually need for the home they want. Just because you can get a loan for $400, 000 doesn’t mean you should. Think about the size of home you really need, and then decide how big a loan you want to repay. Grose added, “Mortgage money is way too easy to get. People tend to overbuy and that can really stress family life. It’s also a formula for foreclosure trouble in the future.”

Buying the home should be fun

Buying a home should be one of the most fun activities of anyone’s life. You are moving onto the next stage of life in new surroundings, and that should afford a lot of good times and build some happy memories. Be sure to fix your credit score, get pre-approved, build up a cash surplus, via short term loans if needed, and target exactly how much you want to borrow. By doing research, you can rest easy as you move into your next dream home.

Start your short term loan application HERE!

The old model of legal service billing

Charles Rodgers, business analyst in Chicago, said, “The old model of attorneys submitting itemized lists of hours spent fixing problems is outdated because clients know that there is padding. Who needs 15 minutes to leave a voicemail for a defendant in a case? Clients are questioning practices.” In addition, attorneys are seeing the problem and confirming that they are more than willing to devise alternative billing methods. Rodgers added, “Alternative billing arrangements will remain a valuable tool for companies looking to reduce legal costs and gain cost certainty without sacrificing results.” (http://www.entrepreneur.com/management/legalcenter/legalcolumnistmichaeljlotito/article204584.html)

How to value legal services

The question remains: How do you effectively value legal services? This has proven to be a big challenge for attorneys and clients. Lawyers don’t want to be undervalued or underpaid for the actual time it takes to complete a project, and clients don’t want to work with fixed-prices that are then performed by less experienced legal assistants. The problem is difficult, but it has created a good amount of dialogue on the issue and more options are entering the market.

One industry that has managed the topic well is the field of labor and employment law. The reason this sector of law can estimate a flat-fee is because legal matters are relatively predictable and efficient lawyers can normally handle things like wage, hours, benefits and disability discrimination law with the same project management outline. It makes the time needed easily estimated and in turn, the fees close in range.

The alternative fee structure

Alternative fee structures can be endlessly created, but some examples of the kinds that are gaining popularity in the market are:

• The flat of capped fee for specific projects. This is the most common way to bill in today’s market. Clients were vocal about their fear that attorneys would up their hours and take advantage of them. Emergency money was quickly used up in the old model of billing. Now, clients and attorneys are working together to create flat fees for various litigation tasks such as drafting letters, contacting defendants, appearing in court and reviewing documents. Under this type of arrangement, the client pays a certain amount regardless of actual hourly billings. If billings are below the capped amount, the client keeps the money. It’s a great way for clients to understand the fees up front and know how much they are going to have to invest in litigation.
• National employment counsel models. According to Rodgers, “Under this model, one firm handles all single-plaintiff litigation and other matters in a specific region for a predetermined yearly flat fee. Single-provider relationships can provide tremendous value to corporate clients because attorneys become increasingly efficient as they gain knowledge about the company and its practices.” This is a great way to forge a long-term relationship between an attorney and corporate client. (http://www.entrepreneur.com/management/legalcenter/legalcolumnistmichaeljlotito/article204584.html)
• Results-based fees. This is one of the most common ways of billing in today’s market. This model is designed to incentivize attorneys to work their best at solving intricate legal issues. Things like winning a motion or setting a case before expected are things that would trigger a result bonus. It’s a great way of paying for quality.

Working together for solutions

In today’s post-recessionary economy, clients are more concerned with building up emergency money funds than paying high legal costs. The bottom line is that the old model of paying for billable hours is no longer a viable option with clients. By working together to create a more feasible pay structure, attorneys and clients alike can walk away more satisfied and with better results.

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Mismatched Money Styles

It’s one of the oldest recipes for romantic comedies out there – spendthrift girl falls in love with penny-pinching boy and the two spend the rest of the movie bickering over their conflicting money management styles. In real life, though, this situation isn’t nearly as funny. A mismatch in financial personalities can lead to serious conflict – even divorce – if the parties aren’t willing to work with each other on their shared financial future.

Of course, this doesn’t mean that you’re doomed to eternal marital strife if you find yourself in this situation. With a little practice, it is possible to overcome these differences and create a healthier, happier future – at least as far as your money’s concerned. Here’s how to get started:

Lesson #1 – Practice Good Communication Skills

Unfortunately, money is one of those things that no one ever talks about, so it can be difficult to begin an open and honest dialogue with your partner about your financial situation. However, you’ve got to start somewhere, so focus on speaking in “I” phrases (for example, “I feel” rather than “You make me feel”) and listening to everything your partner shares with an open mind. Be patient with one another and respect that it might take some time to work through months – or even years – of differences.

Lesson #2 – Discuss Your Financial Goals

Instead of focusing on your differences, concentrate on the things that bring you together as a couple – your shared financial goals. For example, if you have shared credit card debt that needs to be paid off, focus your energy on eliminating the debt, instead of on what each person is or isn’t doing right. If you’re saving for the down payment on a new home, discuss the steps that each of you can take to ensure that you reach your goals together. By teaming up to strive for your common goals, you place yourselves on the same side of the argument – instead of fighting one another’s natural spending habits.

Lesson #3 – Set a Budget Together

Once you have your financial goals in mind, it’s time to lay out a concrete plan for reaching them together. The best budgets require both parties to make sacrifices and compromises, while still leaving some room for error. A plan that requires one partner to change completely to match the other – for example, a plan where the free-wheeling party is required to cut all extraneous expenditures – will only lead to resentment in the long run.

After you’ve put together your joint budget, support each other as you make progress towards your goals. And, although it can be difficult, try not to chastise each other for small mistakes – whether from the spender who falls out of line and makes an extra purchase or the saver who diverts funds away from the shared goals. Keep your final goals in mind and you’ll find that it’s easy to work together as a team – no matter how different your usual money management styles may be.

Installment loans can help save credit scores. In the market today, there are many changes in the world of credit. It used to be that credit cards were reliable options when consumers were faced with emergencies. Many people had that one credit card they kept in the kitchen drawer. It wasn’t for daily use, or even monthly use. Rather, it was solely for emergency occasions when cash was needed but not on hand.

The recession changed the way consumers can use their credit cards. Cards that formerly sat dormant for months, sometimes years, for emergencies were canceled. Not due to any mistakes on the part of the owners, but rather because credit companies did research and noted stagnant cards as “risky.” Credit lenders theorized that if their emergency funds were needed, then the consumer may not be able to pay back the debt. It is akin to that age-old adage, “You can get all the credit you want, when you don’t need it.”

What to remember when dealing with credit cards

There are some things to be aware of in the credit card world. First of all, remember that working on your credit, when you are still unable to pay your current bills, is pointless. The last thing you want to do is put time and money into paying back debt, only to have new debt bring your score even lower. You can’t work on your past credit history until any financial crisis you were in is over and you have some extra money to start paying down debts.

Secondly, remember that you don’t necessarily have to pay credit card interest to improve your score. In fact, holding a balance on your cards can be a detriment to a good credit score. The best way to manage a credit card is to pay off your debt. Remember that holding a balance is expensive, bad for your finances and usually not necessary. Make sure you pay off the full balance, even if you have to use savings or installment loans.

Thirdly, it’s important to note that credit repair is a long-term activity. Nothing will change overnight regarding your credit. Look at it this way: It took you years to get bad credit, and it will take you years to fix it. Studies have showed that it takes three times longer to fix credit than to ruin it. For larger items like foreclosures or bankruptcies, you may need to just wait for them to drop off your credit report before you can bring your score up significantly.

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

How to act wisely in the future with credit

Once you know how to deal with your credit cards, you need to know what to look out for when watching your credit score. Your credit score is based solely on the information Equifax, TransUnion and Experian collects regarding your payment activity on your credit cards. It benefits you to request your credit report once a year via AnnualCreditReport.com. You should file a dispute if you see any of the following:

• Late payments that are inaccurate
• Accounts that don’t belong to you
• Negative information that is more than seven years old
• Bankruptcies older than 10 years
• Incorrect information regarding where you have lived
• Aliases

These are all important to dispute, and the process isn’t difficult. Just write to each credit reporting agency, tell them the problem and request that they remove the misinformation. Always keep a copy of whatever you send to them and don’t send more than you need to. If they need specific information, they will request it.

The benefit of credit cards

Overall, the benefit of credit is great. It allows you to purchase things that you normally wouldn’t be able to afford. But it takes some time and effort to monitor your credit habits to assure that they are benefiting you. Always be aware of how much you owe and pay it down. Even if you have to use savings, installment loans or family borrowing, be sure that you have as low a balance as possible. It will only bring your credit score higher and allow you the freedom of more credit in the future.

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Managing retirement cash now that layoffs are common can be tricky. Being laid off is not an employee’s fault. The economy is creating more and more issues for businesses and often the only option is to let go of good employees when finances get too tight. If you are laid off, there are some ways you can protect your retirement assets. It’s important to take the necessary steps to safeguard savings.

Cashing out

Many workers choose to cash out when they are laid off. Though this may be an immediate solution, it isn’t always the right decision. Cashing out is expensive and involves taking on a big tax liability. The reasoning is different for a consumer, though. They believe that taking a small unemployment check combined with a long period of job searching is just too much to deal with. In today’s market, the average unemployed American has been looking for work for 14 to 17 months. That’s a long time and many consumers are considering taking as much emergency money as they can upfront to make it through as many months of bills as they can.

If you are laid off and are considering cashing out, remember that you will be penalized. You may have a good chunk of money to make it through the time of unemployment, but your retirement savings will be gone. There are some other options to consider before cashing out.

Evaluate the other options

If your company downsizes and lays you off, there are normally three things to do with your retirement money:

1. You can leave it in the existing account
2. You can take the lump-sum
3. You can transfer the money to another retirement account

If you choose to stay with your existing play, it normally means your balance is over $5,000. This is the best way to avoid taxes and continue compounding interest without interruption. You won’t be able to contribute to the plan, but you still have a say in how the money is invested. The good news is that keeping it live means that you keep reaping the benefits of what cash now is saved.

The other option is to cash out the retirement account. Though this may seem like a good idea to have some cash to fall back on, it isn’t always the best long-term option due to the repercussions. There is a 20% withholding on the pre-tax contributions and earnings portion of the eligible rollover distribution. The rollover distribution is what the plan has to pay the IRS to cover the federal taxes. There is also a 10% withdrawal penalty for the cash out.

Finally, there is the roll-over option. You can move your retirement plan to another account using a “direct” or “indirect” rollover. With the direct rollover, the money goes directly from the current employer’s retirement plan to the new one. With the indirect rollover, you’ll get the cash distribution, less a 20% withholding fee, but you have to redeposit the qualified plan assets to another IRA within a 60-day time period. When the money is invested into the new IRA, you’ll have to replace the 20% withholding with an out-of-pocket deposit.

Decide what is best

Managing cash now is difficult, but when you add a lay-off to the mix, it can be twice as hard. There are options with retirement funds and each one comes with strict rules. Be sure to assess your individual situation and decide which option is best for you.

Need cash now? Apply HERE!

Managing cash now is taking on a new hi-tech face. The UK just announced a new “chip and PIN” system for credit cards. Currently when consumers use credit cards, they have to swipe its magnetic strip and sign a receipt. The new system has a card reader that scans a tiny chip that’s activated by a PIN, or personal identification number. Though the technology is available, the US is still hesitant to adopt the new chip and PIN.

The first reason the US is holding off on the new card system is the cost. The new technology comes along with a hefty price tag and companies are still doing the numbers in terms of ROI. The UK version is pricey, but they believe that the technology is worth the investment due to its added security features.

The cost of security

The main reason the UK developers worked with the new chip and PIN system for credit cards was to thwart criminals and credit card fraud. The magnetic strip of old cards is able to be duplicated. Criminals already have mock readers that they attach to various ATM machines that copy cards and note PIN numbers. When the criminal collects their readers, they can retrieve information and get directly into a consumer’s attached bank account. The chip and PIN system aims to make it much more difficult for thieves to attack information. It’s difficult (if not impossible) to duplicate the chip inside the new UK cards and without the PIN, there is no way to gain access to the account. The UK reported a decline in losses from credit card fraud by 218.8 million pounds in 2004 to 98.5 million pounds in 2009.

The current security system

The current method of checking out a customer includes swiping the magnetic strip on a card and then asking the customer to sign the electronic box at the check-out stand. Though retail outlets are supposed to ask for identification when any credit purchase is made over $25, studies have shown that rarely do they. Instead, they rely on a customer having a card-any card. That opens the door for fraud and theft that the new UK card developers claim they can stop.

Managing cash now for consumers and retailers is a top priority. Financial institutions are being courted for the new system because it cuts down on the amount of cash receipts. That means smaller processing costs for banks and retailers, and faster transactions. Faster transactions mean more purchases can be managed throughout a work day and that means more money for the business.

Banks’ liability

Currently banks are liable for purchases that are made fraudulently. If the customer can prove that they didn’t make a purchase, they can contact their credit card company and let them investigate. With the chip and PIN system, there is no longer a need for the liability to rest with the financial institution. The customer will be liable for any charge because that means the PIN was given out to the purchaser. Banks can claim that customers were negligent in protecting their PIN number and that alone makes them responsible for the charge.

The future of credit cards

Watching cash now is more important than ever as the economy is recovering from the recession. US financial institutions and retail outlets are still contemplating the change to the chip and PIN system of credit cards. Only time will tell if they make the investment to change their ways of operating.

Need cash now? Apply HERE!

When it comes to having more payday cash, it’s important to look thoroughly at your monthly bills. One area where people frequently find savings is in the area of car insurance. Everyone needs car insurance, but the cost varies greatly among companies. When making the decision of whether or not to look elsewhere, there are some key things to look at.

What to look at before jumping ship

For those who have changes in their lives, shopping around for new auto insurance can be a sure-fire way to lower monthly payments. Here are some reasons why you should look for new quotes:

• You were laid off or are self-employed. If the miles on your vehicle are significantly changed, that could mean a drop in premium. Many rates are based on to-and-fro miles of commuting from home to work. Those who are laid off or work out of their homes can find rates cut down due to the slashed mileage.
• Your credit score has changed. Many auto insurance providers base your premium on your credit score. If yours has improved over the past few months, you may be eligible for a break when it comes to payments. On the other hand, if your credit score has declined, there are insurance companies that weigh other things, like driving records, more heavily when deciding on a premium.
• You have a long-term car lease or loan. One of the repercussions of lowered credit scores and higher payments is lenders extending loans’ life spans. It’s not uncommon for car leases and loans to extend out 72 or even 96 months. Although the payments are lowered, the consumer ends up having to finance most of the vehicle’s cost. As time goes by, the vehicle’s value declines and many owners end up with an “upside down” loan, which means they owe more than the car is worth. One accident could mean the insurance company pays out the car’s market value and the owner owes more than that to the finance company. That could mean all payday cash has to go directly to the lender. A good solution is for consumers to look into getting gap insurance. This bridges the gap between the insurance company payout and what is owed on the loan.
• Children start driving. An insurance company that has traditionally offered reasonable rates can increase the premium once an additional driver is added to the policy. If your children have reached the driving age, it’s a good time to search around and find some insurance options. You may not switch, but you may find a better price elsewhere.
• You become a homeowner. Buying a home makes you more responsible in the eyes of many insurers. If you buy, be sure to talk to your agent and find out if they have different rates once you move from the renter to owner classification. You could end up saving money not only due to a lowered auto insurance premium, but also due to combining premiums for home and auto, for example.

Maximizing revenue

It’s the little things that add up to savings for consumers these days. Having more payday cash comes from examining small expenses. For example, it is more likely to be able to cut down on an automobile insurance bill than it is to totally refinance a home loan. Consumers looking for more money at the end of the month should start small and hope for the best.

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More and more workers are concerned about their payday cash. It’s not just a matter of money, though; they are also worried about moving into a new job position and their new boss. With the number of unemployed in America reaching the millions, that leaves people in a precarious situation. The unknown of a new employer and a new boss makes it touchy for any new hire.

One of the biggest concerns workers have today is blending back into the workplace after a long period of unemployment. It is good news to get the job, but there are concerns once workers return to the office that go beyond just daily routines. Having the right boss can make or break a new employee, and knowing what to look for is crucial for any worker.

Questions to ask when reviewing a boss

There are some things to think about when taking a new job. First of all, does your new boss showcase what you can do? Every employee wants recognition and a good boss will let you shine. Carter Michaelson, career coach in Louisville, Louisiana, said, “A good boss isn’t insecure. In fact, good bosses hire people who are smarter than they are and then channel their talents to better the company. Managing good and qualified people is their forte.”

Another question to ask is whether or not your new boss has problem solving abilities of their own. The ideal boss is one who is able to work with lateral managers and fix problems, not just postpone them. When you talk to your boss about an issue, you want to feel like they are on the same page and going to put their efforts into changing the situation. A good boss should also be able to go to bat for you and your issues. Change may not happen immediately, but there should be some effort to correct unmanageable conditions.

Thirdly, find out if your boss lets you complete tasks from start to finish. Anyone working for payday cash should have the responsibilities to warrant it. A good boss knows when to take a step back and give full ownership to a worker for tasks and projects. You may have to ask questions for clarification and meet with your supervisor for updates, but overall, the project should be yours.

Finally, see if your boss listens to your suggestions. No one wants to be ignored, and if you have good ideas, it can be frustrating to never see them brought to fruition. A good boss will take an idea and let you develop it. He or she will encourage you along the way. Michaelson added, “A good boss knows that if you look good, they look good, so they’ll support your good ideas.”

A good boss can make a huge difference

Moving back into the workplace after a long period of unemployment can be difficult. Though workers are excited to be bringing in payday cash again, there are still other concerns to think about. Namely, finding the right boss can be the best asset a new worker finds. It may be difficult to find, but for those employees who do find the perfect boss, work life can be that much simpler.

Start your payday cash loan application HERE!

A new concern in the post-recessionary market is financial procrastination. Many consumers had a difficult time managing their budgets during the economic downturn of 2008/2009. Mary Casey, housewife in Los Angeles, California, said, “We were aggressive savers, but once my husband lost his job, we had to use every last resource we had to cover our expenses… it was either do that, or lose everything.” Casey is not alone, because many consumers found themselves having to forgo saving for their survival.

The recession is over

Now that the recession is over, studies are showing many consumers fell into the category of abandoning their savings plan. Though it is understandable, financial experts are saying that there are serious repercussions of ending a savings initiative, even if it is only for a few months.

There is also another group of consumers who never began saving. They put off saving for retirement altogether due to a number of other issues. Some claim that they never had enough of a reserve to start saving, while others claim that they prioritized more immediate financial needs over retirement. Regardless of the reason for financial procrastination, the result can be devastating. Here are some problems with financial procrastination.

Financial procrastination’s results

One of the biggest issues of financial procrastination is delaying investing. Delays in investing can end up costing consumers a lot of money. For example, consider Mr. A and Mr. B who each began investing $2,000 annually at 30 and 40 years old, respectively, in an IRA. If the long-term average annual rate of return earned by both was 5%, when they turn 60, their financial outlooks will be drastically different. Mr. A would have about $132,800 saved, whereas Mr. B would only have $66,100. The difference is a startling $66,700. Of course part of the added return was the additional decade Mr. A had to invest, but the point is that procrastinating costs.

Another issue when it comes to financial procrastination is avoiding looking at personal finances. When a person has a savings plan, he or she most likely did some research to set it up. A financial planner will do an intake interview for any investor. They will ask what goals the customer has, what their expenses are, what their revenues are, and delve into their long-term financial goals. Martin Laurel, financial planner in Dallas, Texas, said, “Some consumers are surprised at their financial position when they really take an honest look at it. It may be difficult, but it’s critical to creating a workable plan and sticking to it.”

Finally, people who procrastinate with their financial planning tend to also procrastinate with filing taxes. This is a critical mistake that can cost a consumer dearly. The IRS charges a monthly penalty of 5% of the tax payable for failure to file income tax returns by their due date, up to a maximum of 25%. That means that if someone has a tax balance of $5,000 and fails to pay it on time, the penalty would be $1,250, plus other interest and fees tacked on.

Commit to a financial plan

Though it’s easy to fall into financial procrastination, it is also dangerous. For consumers who have agendas and goals, even a small lag in saving can throw their plans off and they may never fully recover. For anyone who wants a healthy financial future, it’s best to come up with a plan and then stick to it, regardless of the fluctuations in the market.

Many new homeowners end up having to borrow money when trying to set up their new purchase. They already have a hefty mortgage to contend with, but failed to plan for additional costs associated with owning a new home. If you are in the market for a new home or will be any time soon, take a few minutes to do some research on the following items so you don’t fall into financial disaster.

Furniture and remodeling

Everyone loves buying new furniture and remodeling a house to customize it—both are part of the fun of moving in. For anyone who has just closed on a house though, budgets are probably still tight. Research shows that not only are savings gone for new homeowners, but their monthly expenses have most likely grown considerably since the move. New buyers are cautioned to think clearly. Is the beauty of a new granite countertop really going to make up for having to budget other areas strictly? Is a remodeled bathroom really going to pay for itself? Though it may sound nice, remember that there is plenty of time to plan for remodeling a few months, even years, down the road. Not every upgrade needs to happen in the first year.

When it comes to furniture, the same wisdom holds true. Think before you buy. White leather furniture may look great in a showroom, but imagine what it look like after children and animals have used it for a few months. Going overboard with furniture is one of the biggest unnecessary drains on new homeowners’ savings. The best thing to do is set a strict budget and commit to sticking with it.

Don’t ignore repairs

Sometimes it is easy to ignore a leaky roof or a noisy water heater, but ignoring them won’t fix them. It’s best to have a budget set aside for unplanned expenses and use it to cover the cost of routine maintenance. It’s a much better option to spend $65 twice a year for a licensed contractor to check a heating system than to have to replace it for thousands of dollars.

Another tip is to always work with qualified contractors when repairing things around your house. Though a homeowner may have to borrow money to cover the higher cost, it is worth it in the end because the repairman is a trained professional. He or she can fix the problem rather than give you a temporary solution.

Use a tax professional

Although many new homeowners have likely done their own taxes for years, now that a home is in the mix it’s best to get a professional to step in. Owning a home brings significant changes to taxes and the deductions that are allowed. A tax professional can help any new homeowner maximize their refund. It’s a good idea to let a tax preparer at least do the first year of paperwork and then follow his or her template for years to come.

Homeownership is an accomplishment

Owning a home is a huge accomplishment to anyone who manages the purchase successfully. The deal is not over after the closing. In a lot of ways, it just begins because that is when a homeowner is expected to take full responsibility for their property as a house and an investment. Careful planning can help first-time buyers avoid having to borrow money, dip into savings or accumulate credit card debt to manage.

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The new chronic problem with about 25% of US homeowners is having an “underwater” mortgage. The term means homeowners who owe more than their houses are worth. Due to the decline in home values as a result of the recession many homeowners are finding themselves in this position. Recent studies are showing that before the recession makes a marked change for the better, about 50% of homeowners will find themselves with “underwater” mortgages.

The good mortgage news

There is good news though, when it comes to the overall state of mortgages today. Despite the number of underwater mortgages steadily projected to grow, there is another group of homeowners who are surprisingly safe. A study by First American CoreLogic, is showing that about 23 million homeowners have 20% or more equity in their properties, and about 1 million more own their houses outright. Owners in this position are faced with the question of what to do with their equity. Although it’s great to have a good amount of equity in a property, there are two concerns that every homeowner needs to face:

1. If homeowners borrow against their equity and home prices continue to fall, they could end up in the “underwater” position.
2. If homeowners don’t borrow against equity, the cash that could have been taken out may disappear.

The general rule of thumb is to never borrow more than 80% of the value of a house. That way even if there is a decline in value, owners still have some cushion to protect them from losing too much equity.

What to do with equity

When it comes to figuring out what to do with equity, there are some options that homeowners look into. Debt consolidation, home remodeling and car purchasing are three things that many homeowners use home equity funds for. Though this may be a convenient option, looking at each deeper reveals how little advantage there really is to each one of them.

Debt consolidation. It’s no secret that many Americans are mired in debt. A lot of homeowners make the quick move to consolidate when they have high-interest credit. This may sound like a good idea, but in reality there is more to the equation. Once a consumer turns their debt around by putting their home on the line, they have transferred their problem into a secured debt. A better move may be to file bankruptcy because that eliminates debt altogether. The only time it’s a good idea to convert equity to a loan for bills is if the total sum owed is moderately low and the reason for the debt has been identified. Homeowners should realize what brought about the debt in the first place and commit to changing their spending habits.

Home remodeling. Another thing people with high equity look into is home remodeling. Many homeowners believe that remodeling automatically adds value to a house, but that is not necessarily true. There are some changes that will add value, but not all remodeling brings an automatic return. A rule of thumb when it comes to home remodeling is to pay with it for cash, rather than take equity out of the house. The most popular renovations are bathroom and kitchen remodeling. Each one can bring a return on investment if they are done cautiously, kept within a strict budget, and paid for predominantly with cash.

Car purchasing. Some homeowners use home equity to fund their new cars. One-hundred percent of the time this is a bad idea. Why? Because cars lose value the minute they are purchased. A general rule of thumb is to make a purchase funded by home equity only if that purchase appreciates in value. Cars definitely don’t fall under that category. If a car is a necessity and the only option is using a home equity loan, then the car needs to be paid off as quickly as possible.

Equity should not be taken lightly

Due to the high number of “underwater” mortgages out there, anyone who has equity in their property should guard it cautiously. Things like debt consolidation, home remodeling and car purchasing may sound like good ideas, but according to experts, they aren’t. It’s better to leave equity where it is than risk losing it with an unwise move.

Throughout the recession many consumers have been using personal loans to fund their health care. There may be some relief on the way as a new health care bill is said to be on the verge of completion. Senate Majority Leader Harry Reid is confident that the bill will be passed. In a statement released earlier this week, he stated that the new revised bill should be ready for review by next week.

Part of the hold-up on the legislation came in the form of opposition mainly from Ben Nelson, the Senate’s most conservative Democrat. With his vote, the landmark health care reform bill would have the 60 votes needed for it to pass. Because his vote was so crucial, it gave him quite a bit of leverage as he met with other members of the Senate to sort through the proposed bill.

The health care bill

President Obama is hoping to insure the millions of Americans who are currently living without health care insurance. Many of them are unemployed, but not as many as was first projected by experts. Clancy Parks, analysts for MoneyMaker.com said, “It was thought that the employment rate would skyrocket the group without health care, and it did, but research has shown that there was a huge pool of uninsured prior to the recession and job loss.” Many people lived without insurance due to health care costs. When they were unable to afford health care, they cut it out of their expenses altogether. The recession caused people to scale back on all bills that were not immediately necessary, and unfortunately health care was viewed as one of them.

A reduction in the need for credit and personal loans

The health care bill is supposed to help consumers fund their health care without the use of credit or personal loans. In essence it is supposed to extend coverage to those who don’t have any health care, prohibit the industry from denying insurance due to pre-existing conditions and slow the rate of growth of medical spending throughout the US. The bill will cost about $1 trillion over the next decade and much of the funds will be spent on lowering the dollars Americans would otherwise have to come up with out of their own pockets for health care.

Legislators are working overtime

Due to the large number of uninsured in America, it’s no wonder the Senate is working aggressively to restructure health care into a workable plan. Senator Mitch McConnel said, “This massive piece of legislation that seeks to restructure one-sixth of our economy is being written behind closed doors without input from anyone in an effort to jam it past not only the Senate but the American people before Christmas.”

The future of health care

In the future, health care is hoped to be available for all insurable Americans. President Obama is working to push the legislation through quickly and see 2010 as a year when health care is available to all. It’s necessary to find a solution because thus far consumers have had to manage their own health care by whatever means necessary. Many are uninsured, many use personal loans and many use savings to fund health care costs. The President’s initiative should be ready by early 2010 and time will tell how effective it really is.

Installment loans are still popular, but surveys are showing that Americans are getting better at managing their credit. TransUnion made a prediction recently that credit card delinquencies should continue to fall throughout 2010, but at a much slower rate. Their studies showed that people want to pay off credit and realize how important a good credit rating is, but the unemployment rate is going to hamper their efforts. Still, TransUnion is estimating that the delinquencies on MasterCards and Visas should both drop to 1.04% by the end of the year.

How the numbers are calculated

TransUnion uses a calculation to predict how people will handle their future credit and it involves former payment habits of customers. The common belief is that the past three months’ payment habits are indicative of how a borrower will deal with credit in the future. For example, the chances of a consumer catching up on payments after just missed deadline is 86%, however if they miss two payment deadlines, that percentage drops to 62%. After three missed payment dates, the percentage is under 20%.

Numbers like this give analysts the ability to project what the future of lending will hold. Though TransUnion is making predictions that numbers of non-delinquent payments are on the rise, that rise is said to be just a fraction of how sharply it declined in past months. Full recovery is still a long way off.

Where the lending industry is headed

Director of consulting and strategy at TransUnion, Ezra Becker said that “delinquencies lag behind other statistics, like the jobless rate. Until more people are back at work, there will not be any dramatic improvements in payments being made on time.” The number of new unemployment claims has been lower in recent months than the year-long norm and that’s good news for economists. They are studying the economy looking for nascent signs of relief. They are also trying to forecast the future by combining research on mortgage, car and installment loans. Combining all forms of lending is enabling them to formulate what to expect in coming months.

One of the most closely watched states is Arizona. In the recession, Arizona was one of the hardest-hit and its turnaround is much anticipated. It is the only state where industry analysts are predicting credit card delinquencies will still rise throughout the beginning of 2010. Becker added, “Credit card reforms that take effect in February will have a material impact on the credit card industry next year.” He believes that lenders will be tight-fisted still, but will come up with new lending options for those without premiere credit histories. “The industry will adapt to new rules and a customer base with new credit requirements. Lenders will be forced to be more innovative in the products that they offer and how they manage their customers,” he added.

Consumers need to be smart

Though there are fresh products coming to the market, it’s important for consumers to be as vigilant as ever regarding their credit. New reforms are slated to aid people with all types of credit, but that does not mean that the lending process will be any simpler. For anyone needing credit, mortgage loans, car loans, or installment loans, it will be very important to have relatively good credit. Becker added, “People with very low credit scores may have to wait longer for the door of credit to open for them, but they still need to be fixing their credit now.”

Want to save a little green for both your wallet and the environment? Take a look around your house! Simple fixes, like repairing leaky faucets or stopping a running toilet, can help save water and reduce your water bill.

Look for leaks

A dripping faucet isn’t just wasting you water – it’s draining the money right out of your pocket! Fortunately, this is a relatively easy fix that you can do in under an hour, with a few simple parts from the hardware store.

If you notice a leaky faucet in your bathroom or kitchen, start by shutting off the water to the faucet and then run out any water that’s left in the pipes. Once all of the water has flushed away, plug the drain in the sink – faucets have plenty of small pieces and the last thing you want is to lose one down the drain!

Next, use a screwdriver to remove the faucet handles and inspect the washer that was located behind the handle. These washers, which may degrade or rust over time, are the most common source of faucet leaks in the home. Once you’ve removed the washer, take it to your local hardware store to find a replacement.

When you get home, place the new washer in the position of the old washer and replace the handle. Use the screwdriver to tighten the handle and turn the water back on to the faucet. Finally, turn the water on and inspect your set up for leaks. If everything has gone according to plan, your faucet should be water tight!

Fix a running toilet

You flush the toilet, only to come back hours later and find it still running. Don’t call a plumber: Take a look inside and fix the problem yourself! To start, you need to catch the toilet in the act, while it’s still running. First, remove the lid and look inside. One of the first things you’ll see – and the most likely culprit of a running toilet – is the flapper, the large rubber plug that keeps the water in your toilet bowl.

The flapper works in tandem with the lever and chain – the pieces that cause the flapper to rise and fall when the toilet handle is flushed. Inspect this entire system first. Is the chain tangled or catching on something? Is the flapper properly aligned or is starting to degrade and fall apart?

In many cases, a few minor adjustments to this system are enough to get your toilet back up and running. You should be able to adjust the shape or angle of the lever with your hands or shorten the length of the chain with a pair of needle-nose pliers. You can even purchase replacement parts for this system at the hardware store and replace the entire thing yourself.

Or hire a plumber

Of course, if any of these simple repairs don’t solve your leaky faucets or running toilets – or if you don’t feel comfortable making the repairs yourself – consider hiring a plumber to make them for you. Although it’s more expensive in the short-term, you’ll save much more over the long-run in the form of a smaller water bill.

Many people are using payday loans to cover bills. In the post-recession economy people are still struggling to make ends meet. A lot are getting creative with alternative loan options, taking second jobs and extreme budgeting. Despite strategic management of bills, sometimes due to bad luck or bad planning, you may be unable to cover all of the bills. Here are some tips on what to do if that happens.

What to do if there isn’t enough

If you find yourself at the end of the month with not enough to cover bills, there are still some things you can do. First of all, don’t ignore them. This is the single worst thing anyone can do. Ignoring bills is what leads to declining credit scores, late fees and consequences. One of the most important things to do is prioritize. For example, if a rent payment is missed, eviction proceedings can begin within a few weeks.

On the other hand, if you miss an electric bill payment, you may be able to easily negotiate with the provider. Once you note the bills you are potentially going to miss payments on, set out a list of consequences for missing each. Things like shelter, utilities, food, car payments and child care are essential. Most other bills are in the miscellaneous category and can be dealt with on an individual basis.

Contacting key lenders individually

If you can’t pay your bills the next thing to do is to contact your high priority lenders and find out if payment plans are available. The good news is that in today’s recession many lenders have become more willing to negotiate.

Your mortgage. Most mortgage companies have loss mitigation departments whose job is to deal with late payments and financial issues their clients have. The reality is that your mortgage company does not want your home, so they most likely will do what is necessary to help you get back on track.

Your car loan. Next there are your car payments to think about. If you need a car to get to work, then it is imperative that you work out any lag in payments. Again the best strategy is to call your lender and tell them the situation. They are going to be more receptive if you call them as soon as you have problems and have some plan to catch up on accounts in arrears. This is where payday loans may come in handy. These types of loans are specifically built to serve immediate and urgent financial needs.

Your utilities bills. When it comes to utilities, you still have time to negotiate if you act right away. The worst thing to do is to wait. Once you fall far behind your providers are not going to be as willing to work with you. Talk to them right away because most companies have payment plan options. For example, some electric companies have the option to allow you to spread your missed payment over the course of the next twelve months of payments.

Dealing with other lenders

When it comes to other bills, there are other strategies to employ. For student loans, the good news is that the government is on your side. Starting in July of 2009 the government created a program that allows struggling graduates to sign up for payments on up to 15% of their annual discretionary income. Discretionary income is defined as the gross income above 150% of the federal poverty level. You can also call your lender and request a forbearance or deferral. These plans give you the opportunity to put off payments and catch up.

Finally, there are the credit card companies. These are where most Americans fall into trouble with their payments. Overcharging is the single most detrimental thing anyone can do with credit. If you find yourself unable to make a payment, call your credit card company and see what your minimum payment is. You can also use a payday loan here. The fee attached to a payday loan paid off on time is nothing compared to the late fees and bad credit marks you’ll get if you cheat out your lender.

Managing without cash

If you find yourself at risk of missing payments do whatever you can to find a way to negotiate with the lender right away. Most lenders know the difficulties their clients are under and have some plan to help out struggling consumers. Small payday loans, unsecured loans and family borrowing should be enough to get you out of your situation and back on track if you act quickly.

Apply for a Payday Loan HERE!

Financial experts today recommend having at least six months of living expenses squirreled away in a savings account to help you cope with an unexpected change in your financial situation. However, if you’re already pinching pennies just to make ends meet, coming up with that much money may seem impossible. It will take time and financial discipline, but you can do it. Consider some of following tips to help get you started.

Coupons, coupons, coupons

For years, coupon-clipping moms were mocked in the media for their penny-pinching ways. Today, though, the media have come flocking back, asking for their money saving tips! You too can take a page from their books and start saving money with the coupons that you find online or in local publications. Just remember the golden rule of coupon clipping – only clip coupons for items that you’ll actually use. Saving $10 on a case of baby food isn’t a great deal if you don’t have any children!

Switch to home brew

You’ve probably heard this one before — trading the Starbucks habit for a home-brewed cup of Joe — but for some reason, it’s a budgetary step that few people are willing to take. Consider it this way, though. A cup of coffee from Starbucks can cost upwards of $4– over $1,000 a year if you drink 5 cups a week. Coffee brewed at home or at the office costs just a fraction of this, which means more money in your pocket.

Take advantage of free events

Just because you’re on a budget doesn’t mean you have to cut all of the fun out of your life. Plenty of museums, colleges, and other organizations offer free events that are open to the public, including everything from art gallery openings to free cake-tastings to book readings. Check your local newspaper or community website to find out more about free events in your area.

Split an entrée

When you go out to eat, opt to share an entrée with your dining companion instead of ordering separate dishes. The portions served in most restaurants these days are ample enough to feed two people comfortably, saving you both money and calories.

Round down at the bank

Some banks offer a service that rounds deposits down to the nearest dollar and re-routes the remaining change into a separate checking account. For example, if you deposit a check for $85.12 into a qualified account, your bank would deposit $85 into your checking account and the remaining $.12 into your savings account. Even if your bank doesn’t offer this service, you can follow this practice yourself by dividing your checks into separate checking and saving amounts.

Right-size your service bills

When was the last time you looked at your monthly cell phone bill? Have you even looked at all since you set up the account? If you haven’t, it’s time to take a peek – you could be overpaying for a plan that includes more minutes than you need. Take a similar critical look at your cable and internet bills. If you’re paying for premium services that you don’t really need, cut them out and redirect the extra money to your savings account.

Rather than wait for a break in the recession, many people are getting second jobs to find debt relief. More and more households are resorting to moonlighting to fend off unemployment woes, high expenses, wage cuts, and layoffs. The unemployment rate as 10.2% in October, and full-time employees are averaging a record low 33-hour work week. It’s estimated that 7.5 million people now hold multiple jobs.

14-hour work days

Kelli Conway, a graduate of University of Louisiana, works as a junior publicist by day and a restaurant hostess by night. Her average workday is from 10am to 4pm, and then 5pm to 11pm. She told her daytime boss about her second job when she was hired. “The founder of the company was great about it from the get-go,” she said, “he completely understood that I need two jobs to be able to survive in the city.”

Depressing survey statistics

In a recent Yahoo! Survey, almost 15% of respondents had taken a second job because of the recession. The survey also found that almost 30% of workers feel “less satisfied in their jobs” than they did a year ago and 68% are not making as much as they would like. The most telling statistic is that 42% were concerned about job security and worried they would soon suffer a lay-off or furlough.

Second-job remorse

Experts warn that people should be careful about taking on second job. Andrea Kay, a career consultant in Cincinnati, said, “If the second job detracts from time with your family, will you be creating new problems in your life? Who do you need to have a conversation with about that? How will it affect your health? People can get easily overwhelmed when they take on second roles.”
There are also financial issues to consider in taking on a second job. Commuting, daycare, taxes on extra income, and necessary equipment purchases add up. For example, some call centers employ at-home agents at around $8 an hour, but workers have to pay out-of-pocket for a landline that averages $25 to $30 a month. Employees with small children may also still need some type of babysitting care to handle children while they answer calls. If consumers are taking on a second job to find debt relief, they need to be aware of all additional costs involved and make sure the net earnings are worth it.

What are the motivations?

Career counselors warn that if extra funds are the only motivation for taking on a second job, then other options should be explored first. Kay thinks it may be more advantageous to look for ways to increase pay at a first job: “Is there something you can do on the side — education, training — that would enhance your value so you’ll be paid more at your current job or at another one? Or help you build toward that goal in the future?” Like many experts, Kay believes people should figure out what they’d like to learn and what gets them excited as a part of their career goals, rather than simply running after more money.

Focus on building a better career

The bottom line is that consumers should do what they need to do to handle their budgets wisely. A second job can be a healthy alternative if strategized the right way, but there are other options to handling debt relief. It may be wiser to increase marketability and education because this is the kind of action that will contribute to bettering careers, rather than just temporarily bringing in extra cash.

There’s never been a better time to buy a home than right now – real estate prices are at an all-time low and the government has sweetened the deal with new incentives for first-time homebuyers. But before you start attending open houses and planning how you’ll arrange the furniture in your new living room, you need to take the first step in the home-buying process: getting pre-approved for a mortgage.

So why bother to get pre-approved? Shouldn’t you find the house you want to buy first? Mortgage pre-approval has a number of benefits. First, the pre-approval process may uncover errors on your credit report that you hadn’t noticed before, errors that may be hindering your ability to qualify for credit. In addition, mortgage pre-approval will show you exactly how much house you can afford, so that you don’t fall in love with a home and then find yourself unable to get a mortgage.

Choosing a lender

Your lender will be your ally throughout the process of purchasing a home, so it’s important to choose the banker and the lending institution that are right for you. Typically, most people start with their own banks or credit unions, although there are plenty of other options out there. If you aren’t able to get the best loan terms at your own bank, a private mortgage lender may be able to help. These companies exist for the sole purpose of making mortgage loans, so they often have access to more specialized lending programs that you may qualify for.

Meeting with the lender

When you call to schedule a meeting with your chosen lender, the office will let you know what kind of documentation you’ll need to bring in. Depending on the lender’s requirements, you may need to bring in pay stubs, tax returns, and other evidence of income such as child support or investment returns. In addition to the documentation you provide, your lender will obtain a copy of your credit report. In most cases, the meeting will conclude with the lender giving you an estimate of how much mortgage debt you qualify for.

Taking the next steps

If you’re satisfied with the mortgage amount your lender prequalifies you for, your next step is to start looking at houses. Your realtor will use your pre-approval to identify houses that you can afford and as a negotiating tool with sellers and listing agents.

If, on the other hand, you feel that you should qualify for a larger mortgage, ask the lender what you can do to improve your financial position. It could be that your low credit score is holding you back from getting a mortgage in the amount you want. If this is the case, paying down the balances on some of your credit cards could improve your score enough that you qualify for a larger mortgage. Or, if the credit report your lender obtains has errors, you may want to get them corrected before proceeding with your search for a home.

The Department of Education is beginning a program to help students with debt relief. The department is allowing consumers to apply for a program that will cap monthly student loan payments based on income and forgive balances still remaining after 25 years. If students are working in the public service sector, their loans could be forgiven after just 10 years.

The program is called the IBR (Income-Based Repayment) program. It is determined by two things: the person’s income and the amount of his or her loans. The Department of Education is setting up a website, www.ibrinfo.org, to answer questions and help borrowers with the application process. The website should be available and fully functional in coming weeks. Lauren Asher, president of the Institute for College Access and Success, stated, “It’s a way to borrow for college without going to the poor house.”

The beginning of the program

This new Department of Education program comes from the Education Department’s College Cost Reduction and Access Act of 2007, which authorized a program catering to the incomes of borrowers at FFEL, (Federal Family Education Loan), and Stafford loan levels. In this new program, monthly payments are capped at approximately 10% of the borrower’s income and never exceed more than 15% of any annual income above $16,000. People earning under $16,000 are not required to make monthly payments.

The goal of the program

The goal of this program is to provide debt relief for people who have student loans and modest to low incomes. The IBR program stretches the payments over a longer period of time, thus bringing payments down. Although consumers won’t see savings throughout the course of the loan’s lifetime, they will have smaller payments to manage monthly without hurting their credit scores. Asher added, “IBR can lower costs and provide light at the end of the tunnel for such borrowers. It gives them a greater flexibility to save for retirement, buy a home or even pay for their own children’s education.”

Consumers must choose wisely

It’s up to consumers to do some homework, however, to see if this program is right for them. In some instances, the IBR program could push the cost of the loan to more than it would have been on the original payment plan. There are some accounts in which accruing interest increase the overall cost of the loan substantially. Also, since almost all student loans should be paid off before 25 years, this aspect of the program may not be beneficial to everyone.

Mark Kantrowitz, publisher of FinAid.org, stated that people can “save on interest costs more effectively by paying off loans faster.” Kantrowitz also stated that using the FinAid.org website can help consumers track their financial aid industry data to see if their payments are comparable to the current standard.

After approval

One additional note: If consumers have salary increases that disqualifies them for the program, they will be responsible for the cost of the loan and the additional interest accrued up to that point. But even then, the monthly payments could not exceed what they would have been under a standard repayment plan and consumers always have the option of paying off their loans faster.

The Department of Education is working hard to help consumers with student loans find some debt relief. The IBR program may be a good solution for consumers with unmanageable student loan payments. Some research and wise decision-making can help consumers bring their finances under control and find debt relief.

The financial collapse that began in 2008 stimulated Americans to begin saving more, with national saving rates going up significantly over the last year. However, this increase in savings also coincided with a dramatic drop in interest rates, meaning that most interest-bearing savings instruments are now earning minimal returns. The low rates of interest from most traditional savings accounts have led many people to ask where they should put their savings in order to get a decent return and what sort of savings strategy they should adopt.

Forget about the rate

Basically all of the primary savings instruments – bank savings accounts, certificates of deposit, money market funds, and so on – are offering minimum interest rates for the time being, making any choice about as good as the other. Instead of focusing on the current interest rate, at present you should consider the safety of your savings first and foremost. That is, deposit your money in a FDIC-insured account, regardless of the current interest rate. This guarantees that you will not lose anything beyond inflationary devaluation.

Interest rates are likely to increase

Despite the effect it may have on efforts to mitigate the recession, the fact of the matter is that the Federal Reserve is going to have to increase interest rates at some point to offset the decline of the dollar and to encourage increased foreign investment. With much of the rest of the world already going into active recovery, new investment opportunities are wooing away foreign investors from the United States. In order to remain competitive and balance out the effects of declining dollar value, the Federal Reserve has little choice in the matter.

What an interest rate hike will mean

For people in debt, an increase in the interest rate will have a detrimental effect as the interest levied on the debt will also go up; however, for savers the current low rates of return should also rise. Once interest rates begin to increase, it will be prudent for savers to shop around for better deals. For the time being, you should avoid putting your savings in any sort of account that limits your immediate access to it. If the interest rate goes up over the next few months, then there will be much better opportunities than anything available now.

The continuing credit crunch

Although the worst effects of the credit crunch seem to be over, the banks are still wary of lending to anyone without a good credit score and sound financial situation. This mean not only that are many banks are being cautious about lending to private customers, but that they are also being careful about lending to each other. Eventually, many banks, especially local banks with sizable commercial real estate holdings, will be working hard to attract cash investors. Looking into savings with these banks might be worth the time and effort.

Basic advice for right now

Right now you are not likely to find any secure savings options that are paying decent interest, but this is bound to change in the foreseeable future. Therefore, the best idea is to keep your savings liquid and do not lock them into anything. Once interest rates go up, many more opportunities will present themselves and at that point it would be worth the effort to shop around for the best rates you can find. Further, since rates are bound to go up, if you have much variable debt, perhaps you should consider using your savings to pay it off before interest rates go up.