What Happens To My First Mortgage If I Don't Pay My Second Mortgage?

Image by Katy Levinson via FlickrToday many people are carrying both a first and second mortgage on their home. They started with a first mortgage when the home was purchased and later added a second mortgage to do a home remodel or a debt consolidation. Now through a reduction in income or a job loss, they are no longer able to make the payment on the second mortgage. They do earn enough to make the primary mortgage but paying the second mortgage is impossible. What will the second mortgage holder do and how will it effect the first mortgage?

All mortgages are foreclosable. But the question is will they foreclose. When the mortgage company writes a mortgage, they put a lien on the home. Liens on a home when there are two mortgages are applied in order. If the second mortgage holder attempts to foreclose, the primary mortgage holder gets first crack at the house in trying to recover it's money. They must be satisfied first. If any money is left over, the second mortgage holder gets any money that is left. In most cases there is no money left and they are left with nothing.

The second mortgage company knows they may get nothing if they foreclose. Even though you are paying the first mortgage faithfully, the first mortgage holder may begin the foreclosure process if they learn the second mortgage wants to foreclose. In most mortgage documents this stipulation appears.

The result is foreclosure will occur if you stop paying either mortgage note. But the second mortgage holder doesn't necessarily have to foreclose. Their alternative is to sue the homeowners. It's bad for the homeowner because the mortgage company will easily win the suit. They will get a judgment and either get a judge to take your assets or garnish your wages. This kind of judgment is open ended and they will persist trying to collect for many years to come.

In todays mortgage environment, many people are having problems with making their mortgage payments. There is a silver lining to this problem and it is that mortgage holders are more inclined to help out people who are having trouble paying. It's a lose-lose situation for all parties involved, the mortgage company and the mortgage payers. The way out of this is all parties working together to make the payment more affordable, so there is no foreclosure. Start to contact both mortgae holders and try to get the loans modified. It's better if the two loans are with the same company but even if they are not it is possible to still make it happen. It takes a lot of persistence and patience. 

Budgeting for Your Pension

This is a guest post by our friends over at www.debtadvisorycentre.co.uk, I recommend you visit their website for solutions to your financial problems.

Saving for your retirement is an important thing to think about for the future. The basic State Pension for a single person currently stands at £102.15 per week, which you may qualify for when you reach retirement age.

If you want to have more than that when you retire, it's important you start putting money aside as soon as possible - if you haven't done so already - which may mean making changes to your monthly budget.

As with any kind of saving, putting money aside for your retirement can be a lot easier if you increase your disposable income every month: that is, the amount of money you have left over after you've covered your essential expenses (such as mortgage/rent payments, utility bills, etc.).

Your disposable income is what you have left to repay your unsecured debts and, if there is any left over every month, to spend on non-essential 'luxuries' - or save for the future.

If you'd like to save more for the future, you could try to maximise your disposable income by cutting back on non-essential spending and/or increasing your total income (all the money your household earns/receives).

How could I maximise my disposable income?

There are two main ways of increasing your disposable income every month:

1. Increase your income. Check that you're receiving all the benefits you're entitled to, or look into working extra hours if it's reasonable to do so. Some people decide to take in a lodger and charge for rent/bills, for example, which could considerably raise your income every month.
2. Reduce your expenditure. Find out if you're entitled to any tax reductions/exemptions, or if you could switch to a cheaper utility supplier to save on your monthly gas and electricity bills. You may decide to cut back on your main yearly holiday or other luxuries you feel you could live without for the time being.

However, if you're also repaying unsecured debts every month, trying to save up for retirement isn't always easy, as some of your disposable income will go towards covering your repayments every month. How could you budget for this while still keeping on top of your debts?

Saving and repaying debt

When saving for the future, it's important to make sure you can still afford your repayments every month to your unsecured lenders. The sooner you can pay your debts off in full, the more money you'll have every month for savings.

This could mean a change in the way you manage your debts, or, if you already have savings, it may actually be worth using part of them to repay your existing unsecured debts first, then starting to save more for your retirement after you've paid them off.

If you can't afford to save anything at all because of your unsecured debts, you might want to get some professional advice - at www.debtadvisorycentre.co.uk, for example - to find the best approach for your circumstances.  

BrightScope.com - An Easy Way To Check Up On Your Financial Advisor

Image via WikipediaIn the wake of the Madoff scandal it's always in the back of your mind the integrity of your financial advisor. For the most part, our financial advisors are upstanding and honest people. It's the bad apples that we hear about in the news, not the good ones. But it's always best to do due diligence on the people we trust with our money.

Checking out our advisor doesn't require costly investigators or large amounts of time. There are sources online to get plenty of information.

BrightScope.com. This site offers an easy interface to check out an advisor. Just enter your advisors name. You will be shown a page to narrow down to your specific advisor if there are multiple people by that name. Once you arrive at the page of your specific advisor, you will see a short summary of the firm, location, address, phone # and assets managed. Followed by metrics on the advisers qualifications, experience, and conduct. The types of clients the firm handles in a pie chart .

I especially like the listing of the advisors previous employers, licenses held, and industry exams passed. For a quick and easy way to check out an advisor, BrightScope.com is the way to go.

Finra.org. Is the Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. FINRA’s mission is to protect investors by making sure the securities industry operates fairly and honestly. All told, FINRA oversees nearly 4,535 brokerage firms, about 163,620 branch offices and approximately 631,640 registered securities representatives. FINRA has approximately 3,000 employees and operates from Washington, DC, and New York, NY, with 20 regional offices around the country. Here you can look up a brokerage firm or individual broker to see their status with FINRA.

Nasaa.org. The North American Securities Administrators Association (NASAA) is the oldest international organization devoted to investor protection. NASAA is a voluntary association whose membership consists of 67 state, provincial, and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico. From here you can go to your states Office of Financial Regulation to check out the advisors license status.

Adviserinfo.sec.gov. Investment Adviser Public Disclosure (IAPD) provides information about current and former Investment Adviser Representatives (IARs) and Investment Adviser firms registered with the SEC and/or state securities regulators. Here you can check on the your advisors status.


Learning a little information about your advisor will reveal any red flags or show you that everything is fine and you can relax a little.

New July PowerPerks At PerkStreet Financial

Summers here and PerkStreet Financial PowerPerks took the fun path this month. Thinking you deserved a little relaxation for the hot summer months PerkStreet is going to give you back 5% when you purchase these cool summer treats. 

This months Powerperks that will give you 5% back in rewards are:

1. Ben & Jerry’s
2. Diary Queen
3. Cold Stone Creamery
4. Old Navy
5. Movie Tickets

Remember even if you don't get to use these PowerPerk companies you still receive 1% to 2% cash back rewards (depending on your balance) on all your regular purchases. I like using the PerkStreet Mastercard because unlike a credit card there is never an interest charge or a late fee. You get all the benefits of a credit card without all the negatives.

PerkStreet customers can earn 2% cash back on all non-PIN debit card purchases when they have a daily opening balance of at least $5,000 in their checking account. Customers will continue to earn PerkStreet’s standard 1 percent cash back on all non-PIN debit card purchases even when their account balance is less than $5,000.

PerkStreet has calculated you will get back at least $600 per year by using their account. There are no fees or long list of exceptions to gaining rewards.

Though the amount you can earn via regular rewards (1% or 2% depending on your account balance) is unlimited, the amount you can earn at the 5% cash back bonus rate is limited to $250 per household annually (starting on the day your account was opened). The total amount of cash back you can earn remains unlimited.

Sign up today for PerkStreet Financial and start earning rewards today!

Related articles

• Why Does Dave Ramsey Recommend PerkStreet Financial For Checking and Rewards Debit Card? (50plusfinance.com)
• PerkStreet Financial & Ally Bank: Who's Got The Better Checking Account (50plusfinance.com)
• Goodby ING Direct, Hello Perkstreet Financial (50plusfinance.com)
• PerkStreet Financial Review - 2% Cash Back Debit Card with Free Checking (50plusfinance.com)
• Why Use an Online Bank Instead of a Brick and Mortar Bank (50plusfinance.com)

Do You Have Coupon Etiquette ? - 5 Rules For Easy Coupon Shopping

Image via WikipediaAre you one of those out of control coupon clippers like those found on the TLC show "Extreme Couponing"? Recently many stores have changed or updated their coupon rules to clear up any questions of how the coupons are to be used. Our local supermarket has published a new use of coupon rules in each store because things have gotten out of hand. The problem is some shoppers are abusing the use of coupons and this may make it harder for the average couponer to shop.

If you are an avid coupon user there are a few simple rules to follow to make the whole experience a little less stressful for the cashier and the people in line behind you.

Rule #1. Don't clear off the shelves when you make purchases. It's bad form for you and keeps other shoppers from cashing in on the great deals. Also the store may not know the shelves are emptied out, so its better to only purchase a small amount. If you must make a large purchase either call ahead to the store so they can arrange to put aside enough items for your purchase and not have bare shelves. Also make your large purchase not just in one store, but spread it over a couple of stores.

Rule #2. Be organized at check out. When checking out have all your coupons organized and not just in a messy pile facing all different ways. It shows respect for the cashier and the people waiting in line behind you. Also make sure the coupons are not expired and that you are following the rules of the store in their use.

Rule #3. Try to plan your shopping at a slow time of the day. Holding up the line with coupon redemption at the peak shopping times shows bad form and is inconsiderate of other people. It irritates other customers when you are trying to use so many coupons, so go when you know its the slowest time of the day.

Rule #4. Be polite to the cashier and other customers. You may know more about coupons than the cashier but it's no excuse to be rude or impatient. Use your manners and stay calm if there is a problem. Ask to speak to the head cashier if extra help is needed. Also alert customers behind you that you have coupons and that there may be a delay. Let people behind you in line go ahead if they only have a couple of items.

Rule #5. Follow the rules. Know the rules of the store your shopping at. Don't be pushy with your coupons. If you are having a problem with the use of the coupon just skip that particular one. It's not worth arguing over something like that, it's better to not be known as the neighborhood coupon freak. It's better to build a friendship with the store and the cashiers that work there. Also make sure you have the correct item for that coupon and that the coupon is not expired.

Shopping with coupons will save you a lot of money. Following these few rules will make the experience pleasant for all.

What's A Construction Loan and How Does it Work?

Image via WikipediaConstruction loans can sometimes seem confusing to the first time, do it yourself home builder. But in reality they are a simple tool for borrowing the money to build a home. A construction loan is a simple loan used to finance the construction of a home. When the home is completed the loan is due. So a mortgage loan must already be set up and take affect at that time. Traditionally, you apply for both loans at the same time and it's a good idea to lock down the mortgage interest rate at this time.

At the beginning of home construction, the borrowed money from the construction loan is placed in a bank account and checks are written, drawing on this money. You only pay interest to the bank on the money used. You do not pay principle, that happens when it converts to a mortgage, after the home is built.

Just as there are different kind of mortgages, there are variety of construction loans with different variables.

• Construction loans are short term loans that can last between 6 months and 2 years depending on terms from your lender.
• Some loans are construction only or construction to mortgage loan.
• The credit score of the borrower determines the amount of funds that the banks will lend, it's not open ended.
• Construction loans are usually variable-rate loans priced at a spread to the prime rate or some other short-term interest rate.

The construction loan funds are dispersed on a predetermined schedule or upon stages of completion. According to completion and inspections more money is released. At the end of construction a certificate of occupancy is issued by the municipality allowing occupancy of the home. This triggers the end of the construction loan.

Why Does Dave Ramsey Recommend PerkStreet Financial For Checking and Rewards Debit Card?

Dave Ramsey the king of the debt free life recommends PerkStreet Financial. Dave Ramsey hates debt and on his radio show and many books he preaches the debt free life. Dave is adverse to debt because when he was a young real estate investor he lost everything and went bankrupt. He learned the way to prosper with your finances is to stay away from debt and live on what you make.


He has gone on to write several books about his experiences and all he has learned on his debt free journey. He has a website called DaveRamsey.com and has taught millions his money program "Financial Peace University". He is most famous for his "7 Baby Steps".

"7 Baby Steps"

1. $1,000 to start an emergency fund
2. Pay off all debt using the Debt Snowball
3. 3 to 6 months of expenses in savings
4. Invest 15% of household income in Roth IRAs and pre-tax retirement
5. College funding for children
6. Pay off home early
7. Build wealth and give!

While using these steps, Dave recommends creating a budget and using the envelope system. The envelope system is where you have envelopes for groceries, gas, eating out, clothes, entertainment, etc. Once that cash is gone, you have no more money to spend on that category. It’s a great way to force yourself to stick to a budget. But you can't use that system when you need to buy something and can't use cash. You may not be able to use cash in a situation so credit cards are not allowed anymore, but a debit card is. You would need one to rent a car or make a purchase online. For these types of purchases Dave Ramsey rcommends using the PerkStreet Financial Rewards Debit Card.


Why Use PerkStreet Financial?

PerkStreet is one of the few rewards debit cards on the market, and is available to virtually anyone who wants to open a new checking account. PerkStreet is currently offering 2% cash back on all purchases, and up to 5% cash back on purchases in popular categories. This makes the rewards program better than many rewards credit cards.

How Does the Cash Back Work?

To receive 2% cash back, you need to have a minimum balance of $5,000 on the day you make the purchase. If your balance drops below $5,000 your cash back reward drops to 1%. The max cash rewards of 5% is for select spending categories and stores, which changes on a scheduled basis. You can redeem your rewards for cash, or for gift cards from popular retailers such as Amazon, Target, Best Buy, or a gift card.

How Can PerkStreet Afford To Give You So Much Cash Back?

Every year, banks spend $80 billion on branches. That equals nearly $1,000 for every family in the United States. You probably only walk into a branch to use the ATM or to talk to someone when you have a question. At PerkStreet, there are better ways to spend that money — like having even more ATMs and even better service.

Additional PerkStreet Financial benefits:

• PerkStreet Financial is a FREE online checking account
• No cap on the amount of perks you can earn
• Nation’s Largest Surcharge-Free ATM Network
• No Minimum Balance Requirement
• No monthly fees when you use your account
• Sign-Up In Just 5 Minutes
• Free online banking and bill pay
• FDIC Insured Up to $250,000 and Protected from Fraud
• PerkStreet Financial Debit MasterCard® gives you up to 5% cash back

Sign up today for one of the most rewarding checking accounts and get the PerkStreet Financial Debit MasterCard® - the debit card that helps you get debt free. It gives you 5% cash back on certain categories and 2% on everything else.

Simplee.com Helps Manage Your Health Care Expenses

If your financially able to pay for health care, managing and understanding it is a difficult task. When you go to the doctor you may not be sure how much the doctor will charge, how much your insurance coverage will pay, and if your deductible is met yet. Juggling and keeping up with all these factors of your health care plan is a lot a work. Even if you wait till your explanation of benefits letter arrives in the mail , it can be still very confusing. You need an easy way to keep track of all these numbers.

Today we have Simplee.com to help. Simplee.com is an online personal health care management website. It's the Mint.com for health care. The way Simplee works is you simply let Simplee link to your health care providers website and it accesses the data and then it presents it to you in a simple and manageable way. The website will show you how much you were billed for a procedure, how much the insurance company will pay and what you are expected to pay. You don't have to enter any information because you allow the Simplee website to use your log on information for the health care providers website and Simplee just accesses the information itself.

You can use the information for multiple accounts and family members. It will keep track of your deductibles and even let you know what services your policy covers.


Simplee lets you drill down to individual claims to see what your insurance paid, the negotiated discount, and what you owe. It’s like a statement of benefits that actually makes sense. 

Simplee currently supports eight of the largest health plans in the U.S (including Aetna, United Healthcare, Cigna, Empire BlueCross BlueShield, and BlueCross BlueShield of California), and is adding more every week.

Why America Is Exceptional - Fourth of July

Image via WikipediaAsk yourself how it's possible, a group of men could sign a document 235 years ago, resulting in a country that eventually would dominate a world culturally, economically, societally, and militarily. Even though other nations had a 1000 year head start and they still couldn't attain the same result.

Is America exceptional or as President Obama stated in April 2009, "America was not any more exceptional than any other country."

The beginning of American exceptionalism started with the revolution. The founders wanted to write a Constitution that would not fail man as past documents have. They believed the rule of law was the basic foundation of a people who's success or failure depended on their own efforts. They believed government could not guarantee or provide anyones basic needs. They started with the premise that all men were created equal. This gave all men an even starting point in their lives. It would be up to them to make it work. It was the being of the American tradition of self reliance.

The founders new then that government was not the solution but the problem. Even today men still think government can cure all of the people problems. The founders knew that government needed to get out of the way of it's citizens because the people had it with in them to make their lives work. Anything the government touched would not be as efficient as men and women taking care of their own lives. Governments job was not help all citizens succeed, it was supposed to make the playing field level, giving all the opportunity to succeed, not guaranteeing success.

No government is like America. Most revolutions seek to destroy the existing class order and use all-powerful government to mandate an equality of result rather than of opportunity. The Founders were convinced that constitutionally protected freedom would allow the individual to create wealth apart from government. Such enlightened self-interest would then enrich society at large far more effectively that could an all-powerful state.

In America we trust in the common man, not the government. In other lands, the government is the nanny of the people. There is an innate distrust in the government and the elite bureaucracy it creates. Confidence in the common man is the backbone of our success in the past and the only way to a prosperous future.

6 Signs That Indicate Your Headed For A Financial Collision

Image via WikipediaGetting into trouble financially doesn't happen all of a sudden. It happens little by little. Dollar by dollar you increase the amount you owe on your credit cards. An emergency comes along and your savings doesn't cover the bill. You use your credit card like a piggy bank. You don't mean for it to happen but you are forced into a corner.

Being aware of the warning signs of trouble may help you avoid the trouble so here are 6 indicators that you may be on your way to financial ruin.

1. Using your home as a source of money. One of the causes of the financial crisis was homeowners borrowing on the equity in their home. They used the money for consumables like TVs, cars and vacations. Some used their home to pay off credit card and other debt. Doing this takes short term debt and makes it long term debt. It is like borrowing money for a car and taking 30 years to pay it of. If you are about to do this, find another way to borrow the money for your debts. Try negotiating a lower interest rate with your credit card company.

2. Using or borrowing from retirement accounts. If you borrowed from you 401(k) this is a sign of future financial problems. Most people use this as a last resort and it shows that you are having trouble with cash flow. It is only a patch on a problem. Doing this just exposes the serious financial problem you have. Using your retirement savings sets up future tax problems, you have to pay the loan back if you lose your job, and you lose the compounding that makes retirement savings grow. A better way would be to cut back in lifestyle and sell everything that's not nailed down.

3. Your paying overdraft fees and getting Non-sufficient funds notices from your bank. Another sign you are living on the financial edge and ready to go over. This is a big red flag that you have too little income and to many debts to pay. Your monthly bills are more than you make and just one more emergency and you will be underwater. Now is the time to seek professional credit counseling.

4. Fighting with your spouse about money. Nothing can end a relationship faster than money problems. An occasional fight now and then is fine but if you are having continual, never ending fights you are showing all the signs of an impending financial disaster. It's time to get to a marriage and financial counselor.

5. Credit Card Roulette. If you are juggling several credit card balance transfer offers and just moving balances from one to another card, this is a sign of impending financial trouble. You are not paying down your debts and you may be just increasing them. Here again a drastic reduction in lifestyle is the answer. You spending more than you make and it will never end unless you do something drastic and change your behaviors.

6. Paying late fees and juggling due dates. Timing your bills due dates shows you just don't have the money for what your spending money on. It's very hard to time your bills due dates. You may get some bills there on time but others like credit card companies sometimes hold back your payments and credit your account after due dates just to churn late fees. Late fees also trigger interest rate increases, just making the your minimum payments even higher.

If your tired of living with these kinds of behaviors and never having enough money to pay your bills maybe your sick and tired enough to do something about it today.

Goodby ING Direct, Hello Perkstreet Financial

Image via CrunchBaseLike a lot of ING Direct customers I am very disappointed in the decision to sell the company to Capital One. Capital One is acquiring one of the finest banking companies on the web. I believe that Capital One will not keep the fine customer service and great fee structure that ING Direct delivered for so many years. It may be premature to abandon ship at so early a time but am not going to wait around and see what happens.

Without ING what are my alternatives. I need a bank with free checking and a free ATM. The ATM card must also let me use it for making charges. It also has to have a reward program.

The only bank that suits all those requirements is PerkStreet Financial. I have been using PerkStreet  Financial for a while and have found that it lives up to its claims.

What I like about PerkStreet is they have a 2% unlimited cash rebate on purchases for your first 3 months (and longer, if you maintain more than a $5,000 balance). If you keep less than $5,000 on hand, they will still give you 1% cash back after the initial offering.

The rest of the year they offer 5% (with a $250 annual limit) on various categories and retailers. Not bad for a checking account.

I also use the Chase Amazon Card which gives me 1% back on purchases and 3% when used at Amazon. Now I use the PerkStreet Debit MasterCard for more and more bill payments so I can add to my reward total.

I don't have direct deposit, so I use my other bank to transfer the cash to PerkStreet, all at no charge. I like to pay my utilities and repeating monthly bills through PerkStreet to also add to my cash back total.

It's very easy to apply for an account online and you can fund your account through your current bank account. You can sign up for an account today with the details below.


Improve your financial life with the PerkStreet Financial^SM Debit MasterCard®. Save money, have fun and stay on budget with the only unlimited 2% cash back debit card. Don't miss out. Sign up today.

Backlash to Capital One's Acquisition of ING Still Raging

Image via WikipediaMany people may have not heard that Capital One has purchased online bank ING Direct for $9 billion . 

Under the terms of the deal, Netherlands-based ING Groep will receive $6.2 billion in cash and $2.8 billion in the form of Capital One shares. That will make ING the largest single shareholder in Capital One after the deal closes.

ING will also have the right to be represented by a member of Capital One's board of directors.

Capital One is best known for its portfolio of credit cards. But the company also has about 1,000 branches, mostly in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia.

Acquisitions like this happen all the time but the reaction because of it has rarely been seen. Many social media sites like Facebook have seen the backlash first hand of customer complaints of this sale. In chat rooms, forums, and blogs ING customers are venting their frustration. Their reactions are almost like they have lost heir best friend. The amount of emotion and dejection is almost unheard of in this type of news. It only goes to show of how a company can find the needs of it's customers and successfully fulfill them. Thus creating happy customers and a prosperous company.

The reason for the sale of the company is European regulators, as a condition of financial assistance given to ING's Dutch parent company during the bank crisis, demanded that they sell off the ING Direct division of the company. ING Direct, headquartered in Wilmington, Del., offers savings accounts, checking accounts, mortgages and brokerage services to 7.7 million customers.

The problem many people have with the sale is that they are worried that ING's reputation, low fees, low maintenance, and great customer service would be thrown to the wayside because of the new ownership.

ING is so popular because they offer a basic savings account with no minimum balance and great interest rates. Combined with no monthly fee, customers have flocked to the bank and made it one of the most popular online banks. It has become the gold standard of online banks.

Thus lies the problem people have. Capital One's dismal reputation proceeds it. Capital One has a reputation of a terrible fee structure and poor customer support. ING customers know this and are rightly upset. They have enjoyed a great banking experience and now are worried it will all disappear. How many ING customers will leave the online bank, will be determined as time goes by.

Is Financial Literacy Out of Reach For The Ordinary Person?

Many college students have just recently completed college and have graduated. They have gained a vast knowledge of their chosen realm of study and are about to start their first job. They will be making more money than they ever have before in their young lives. Yet, for the most part will be completely ignorant about financial matters. 

These new graduates will be starting at their new jobs confused which investments are good for their 401(k) or how they should be paying back their student loans. After all that education they will be lost in all thing financial. So much time and money is spent on their chosen subject of study but almost no time is put into educating them about financial subjects.

It matters so much more these days that you know what your doing financially. Having to juggle credit card debt, student loan debt, and participation in a 401(k) can make someones head spin. Statistics show that this lack of knowledge has made them wholly unprepared for the future retirement.

Are financial subjects to complicated for us to be knowledgeable about? Yes, it is complicated for beginners, but it's something that can be learned over time. It is your responsibility to educate yourself. There can be no excuse to not learn how money works. There are many professionals who can help walk you through your financial life. Or if you are a do-it-yourself type you can educate yourself with many online services, books, and knowledgeable websites.

To get started on the financial journey I can recommend financial guru Dave Ramsey. He has a daily radio show and has written many books on financial success. He has created a plan for the average person he calls the "Baby Steps". These baby steps walk you through the process on step at a time. If done in order and correctly you will enjoy a great financial life.

Dave Ramsey’s 7 Baby Steps

• Step 1 – $1,000 to start an Emergency Fund: Before you even get started on the rest of the plan, you need to save up a little bit of cash just in case small emergencies happen.
• Step 2 – Pay off all debt using the Debt Snowball: You list your debts from smallest to largest. Pay the minimums on all of your debts. With any leftover money you may have you pay extra on your smallest debt until it is paid off. You then roll that amount over to the next smallest debt.
• Step 3 – 3 to 6 months of expenses in savings: Save up 3-6 months of expenses in case of extreme misfortune like a job loss, illness or other long term problem.
• Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement: Save for your retirement.
• Step 5 - College funding for children: After saving for retirement you can save for your children’s education and college expenses.
• Step 6 – Pay off home early: Make extra payments on the mortgage to pay it off early.
• Step 7 – Build wealth and give! (Invest in mutual funds and real estate): Continue building wealth through mutual funds and real estate, and give, give give!

These steps are the culmination of Dave Ramsey's 20 years experience in financial counseling. He has written many books on this subject, I recommend you read them.

The TV is Broken Should I Repair or Replace?

Image via WikipediaThe picture on our TV went out the other day. The sound is OK, but no picture. The repair man came over and said it was a bad X-Sustain board. It would be only $350 to fix it. We spent $1100 for the 42" plasma TV 5 years ago. The question in my head is should we repair or replace the TV.

A new TV the same size could be purchased for $500 today. With the $150 difference from repairing it, I have decided to buy a new one. This decision was pretty easy to make because of the age of the TV and the probability of other things breaking on the set in the years to come.

Sometimes the decision to repair or replace is not so clear. I did have to give this one a little thought and a trip to the store convinced me that the TV's today cost 50% less than when I purchased my TV and the high cost of repair was not encouraging.

A few years ago My roof was in question. Should I repair a 30 year old roof or replace? The repair cost was 25% of the new roof cost. Also the maintenance on the old roof was high compared to the new roof which is negligible.

So how do you decide?

I put together a check list of common things that could be repaired or replace around your home.

Your Roof: 

There is a time in every roof’s life when it needs to be replaced. But, do you really need that new roof now? It’s a difficult decision given that a new roof can be costly. Just because the roof is leaking a bit does not necessary mean it needs a full replacement.

Replace it if:

• It is 20 years old or more. The average roof life is 15 years.
• There 1/3 or more of the shingles are damage, missing, cracked or curling.
• You see sagging roof boards or mold in your attic.
• It was significantly damaged by a storm. Your insurance may cover this

Repair it if:

• You see minimal water damage in your home. Most water leaks can be repaired.
• You are only missing a few shingles. Repairing a few shingles may only cost $75 – $250.

Your TV: 

It’s a sad day when the tube stops working. It’s usually very high on the list of priorities, but a decision has to be made to fix or replace first

Replace it if:

• There is a recall for a defective TV. Sony is replacing certain models of their TVs for a great discount because they have defective parts.
• It’s old. New technology is better than ever and has become more affordable. You will likely get a better TV at a lower price than your previous one.
• The repair will cost more than half the price of a new TV.

Repair it if:

• You bought the extended warranty.
• It’s a really big expensive TV. It will not be easy to afford to replace this and will be worth the cost of a repair.

Your Business Copier:

 An office copier can be an expensive investment. What do you do when you your copy machine isn’t working properly.

Replace it if:

• The cost of repairs over the last six months adds up to more than fifty percent of the cost of the copier.
• It’s not reliable and you are losing money on your business without it.
• Leasing a copier is cheaper than your monthly repair bills.

Repair it if:

• Your warranty has not expired.
• You can purchase the broken part on the cheap and replace it yourself.
• It doesn’t break down very often.

Your Gutter System:

 Gutters carry out an important function for your home: Carrying water away. It’s important that they are functioning properly, so action needs to be taken when you notice something is wrong.

Replace it if:

• You notice that the system is rusting out or the nails are pulling away from your home.
• Water is pouring over even when the gutters are clear of debris. The system may be too small for your home.

Repair it if:

• They simply need to be cleaned. Some gutters leak because they are full of leaves. Gutter cleaning only costs $150 to $300 per day.
• Less than 2 or 3 sections are damaged.

Your Hardwood Floors:

 A hardwood floor can hold up for more than 100 years! Refinishing your hardwood floors can make them look like new again in most cases, but there are a few exceptions when you will need to replace them.

Replace them if:

• You want a different grain or much lighter color.
• There isn’t enough material left to refinish it again. It has been sanded many times and the nail heads are showing at the seams.
• Water damage has caused the floors to warp or buckle.
• They have very deep holes or cracks.

Repair (or refinish) them if:

• There are scratches or traffic wear, but plenty of material left to sand.
• You found them underneath your old carpet or vinyl floor. Old hardwood is very valuable and a refinish will take off any material left from the carpet or vinyl.

Why Use an Online Bank Instead of a Brick and Mortar Bank

Image via WikipediaThe main reason people don't use an online bank is that they are afraid of losing control of their money. This is simply wrong. An online bank will give you the same or added control of you money. If you have made a purchase online you have used the same process that online banks use. 


A credit transaction is basically a money transfer you are responsible for. You trust your credit card company to complete the transfer of money to the online store so you will receive your purchase through the mail. The online banking system uses the same transfers and safety protocols that the credit card companies use.

Everyday when I go to work I pass by my bank. The only time I stop by is to use the ATM. My income is directly deposited into the bank weekly. I never go in the bank. Over the last 15 years I have used this bank I have gone in 3 times. It's not necessary. All my transactions are done by computer. I check my balance, deposits, and my online billpay on my computer at home. If I need checks, I order them online and they are delivered by mail. There is no reason to go to the bank for anything but my ATM use.

Benefits to Online Banking.
Interest on your account balance. The bulk of brick and mortar banks give little or no interest. Online banks give over 1% interest and even more on their CD's. When you don't have a physical building to maintain and pay for you have more money to pay interest and give rewards on checking accounts.

Automation for your finances.
Automation of your finances means using the banks online billpay services. These free services allow you to pay your bills with a few clicks of your mouse. Billpay does all the work when paying your bills online. It's easy to set up. You can set up billpay to pay your bills for any day or any month way in advance. You can even set up billpay to pay your bills a year in advance if you wish.

Automation of your saving.
Just like setting up your bills to be paid online, you can set up your saving to be automatic. Set a weekly, bi-weekly, or monthly transfer of money to your savings account. You can even set up transfers to your stock and mutual fund accounts.

How to find an Online bank.

Google has an online comparison site that shows the details on different banking an saving accounts. Got to Google Comparison Savings Accounts to see what's available.

An online bank I use is PerkStreet Financial. PerkStreet Financial is the only checking account that has rewards for using your debit card. Customers have the choice of cash back, music downloads, or a free coffee. PerkStreets claim to fame is that just by using your debit card on just your normal purchases, you can easily earn $600 cash back every year.

Improve your financial life with the PerkStreet Financial^SM Debit MasterCard®. Save money, have fun and stay on budget with the only unlimited 2% cash back debit card. Don't miss out. Sign up today.

5 Ways To Fight Those Overspending Bad Habits

Image by Food Thinkers via FlickrYou have made up your mind to get out of debt. All your spending and expenses are laid out in you new budget. You are going to be different from almost half of all Americans who don't even have a budget. You have a plan.

The problem is old habits are hard to break. You used to be unorganized and didn't even know where all your money went. The reason for that was you were a splurger. You saw something you liked and you bought it. You didn't care about a budget or saving, you wanted it and you wanted it now.

The budget process is a lot like being on a weight loss plan. You plan to eat less and work out at the gym but that chocolate cake sure looks good. The temptation is very strong and it takes a consistent effort to not eat the cake. The same is true for your budget. Old temptations to buy something you know is not on the budget is an old habit that is hard to break. It is possible that you may never be free from the old habits, so you need to understand how and when these temptations come up and form a plan to avoid them.

Human behavior is a hard thing to change, so we have to set up roadblocks to this bad behavior. If we were on a diet we would not have a chocolate cake on the kitchen table, so also we must remove items that cause us to spend to much.

1. When making a large purchase, talk it over.
Before you go out and spend money on something talk it over with someone you respect. After talking it over with someone you may realize that you don't need to buy the item you want. You may see another or cheaper alternative to your need. Plus this delaying of the purchase may just put you off to it altogether.

2. Put an item in your budget for these splurge purchases.
It's you emergency cushion for slip-ups in your spending. Planning on your future mistakes will allow the mistake to not mess up the rest of your budget. If you don't mess up use this money as a reward for getting through he month successfully.

3. Stash your savings in penalty rich accounts.
Penalty rich accounts are accounts like Ira's or 401(K)'s where withdrawing from them trips a penalty and income tax payable. When you think about the money you will be losing upon withdrawal you will think twice about using it.

4. In your mind pretend you already own the item.
When in the store shopping you may see something you want to splurge on. You know you shouldn't, but you are going to anyway. Trick yourself by holding the item as you walk around the store. Soon the need to purchase the item will pass and you will put the item down.

5. Leave your money and credit cards at home when you are shopping.
When shopping just bring the cash you need to get the job done. You have physical removed the most important thing from the purchasing equation, your money. No money, no splurging. It may seem childish, but you are in a financial mess and drastic steps need to be taken.

Learn from your mistakes.
More people than ever are filing bankruptcies, don't be a part of that statistic. Be creative about fighting your spending issues. It's hard, but in the end it will be worth it.

The Best Place For You To Work May Just Be Under Your Own Roof

Image by Let Ideas Compete via FlickrThe traditional job market is expected to have slow growth for many years to come. This has forced many people to find work in the most unlikely place, their own home. There are indications that business are hiring, but they are hiring workers on a contract basis.

Let's face it,our slow economy is going to be slow for quite a while longer. Businesses are not hiring because they just don't have the work or just don't have the money to hire full time employees. Their only option is to hire part time, contract based employees.

The benefits of part time or contract workers to the employer are many. They don't have to pay for the usual expenses like health care, social security, 401(K)'s, and actual office space. Hiring outside help, is a big savings for the company.

The facts.
The facts are online employment middleman Elance is showing tremendous growth. The increase is 50% higher than last year. They have had over 48,000 jobs posted in the last 30 days.

There has been a reboot of the way companies hire people to do their work. The Bureau of Labor Statistics states that 68% of hiring in 2010 was in the form of contract based freelancers.

This kind of freelance work is the bread and butter of the younger generation just entering the workforce. The freedom of working from home for multiple employers is highly appreciated.

Many people have pounded the pavement, sent out resumes, and have gone interviews only to be disappointed. Many of them should have stayed home and started a freelance business.

Many online sources can get you the work you have been looking for. With the expansion of the information age and telecomputing, you will never have to leave your home to go to work, again.

There are many sites to find work, but the biggest is Elance.com. There you will find work consisting of programming, designing, writing, marketing, administration, consulting, and finance. There are othe websites so search around to find the perfect job for yourself.

Some key skills are needed to make working from home a good experience:

• Enjoy your work. If you don't love it, it will show.
• Sure working from home has a lot of perks. But make sure you like the work you are doing. Do the thing that you are most qualified for otherwise you may tend to lose interest. 
• Make sure you are educated with home tech. Like computers, fax machines, and printers

To make working at home easier you must have a basic knowledge of your computer and it's peripherals. Getting online and being able to cure a sick computer or business machine is a must.

Are you a self starter?
You have to be a self motivated person to work at home. You won't have someone looking over your shoulder every day.

Give your best effort.
You must always over deliver on your freelance work. Many times your work is given a score on free lance websites. A bad review may make you unhireable in the future.

The bad economy has caused a shifting in the standard job. The new norm is independent contractors and free lancers.

Top 10 Ways To Get Ready For Retirement

Image via WikipediaAccording to the United States Department of Labor, less than half of all Americans have figured out how much they need to save for retirement. In 2009, 13 percent of private industry workers with access to a defined contribution plan (such as a 401(k) plan) did not participate. The average American spends 20 years in retirement.

1. Save early and often.
If your saving for retirement already, don't stop. If you haven't started yet, what are you waiting for, get going. The fundamental reason to start early is that it will have time to grow. Just putting money in an account isn't enough, the miracle of compounding will transform your weekly deposit into a large amount when it comes time to retire. It only works if you start early.

2. Know the amount you need to live on in retirement.
Retirement is not cheap. Experts say that you will need 70% of your pre-retirement income to maintain the same standard of living you enjoy now.

3. Participate in your retirement plan at work.
If your place of work has a matching 401(k), make sure you contribute all you can to it. The matching is free money in your pocket. Your taxes will be lower, your company may kick in more, and automatic deductions make it easy. Over time, compound interest and tax deferrals make a big difference in the amount you will accumulate.

4. Look into your employers pension plan at work.
If your employer has a traditional pension plan, check to see if you are covered by the plan and understand how it works. Ask for an individual benefit statement to see what your benefit is worth. Before you change jobs, find out what will happen to your pension benefit. Learn what benefits you may have from a previous employer. Find out if you will be entitled to benefits from your spouse’s plan.

5. Educate yourself about basic investment knowledge.
Educate yourself about the different ways to save your money. Put your savings into different kinds of investments. Learn how diversification and why investing in different places helps your overall rate of savings. Learn about your plan’s investment options and ask questions. Financial security and knowledge go hand in hand.

6. Do not touch your retirement savings.
If you withdraw from your savings early you will lose your principle, interest, and it's compounding power. You may even incur tax penalties for an early withdrawal.

7. Put money into an Individual Retirement Plan.
You can put up to $5000 per year into an IRA, when you are 50 or older you can put even more. When you open an IRA, you have two options – a traditional IRA or a Roth IRA. The tax treatment of your contributions and withdrawals will depend on which option you select. Also, the after-tax value of your withdrawal will depend on inflation and the type of IRA you choose. IRAs can provide an easy way to save. You can set it up so that an amount is automatically deducted from your checking or savings account and deposited in the IRA.

8. Find out about your future Social Security benefits.
Social Security pays benefits that are on average equal to about 40 percent of what you earned before retirement. You should receive a Social Security Statement each year that gives you an estimate of how much your benefit will be and when you can receive it. For more information, visit the Social Security Administration’s Web site or call 1.800.772.1213.

9. Ask lots of questions.
While these tips are meant to point you in the right direction, you’ll need more information. Talk to your employer, your bank, your union, or a financial adviser. Ask questions and make sure you understand the answers.

10. Check out these web sites for more information.

AARP
American Savings Education Council
Certified Financial Planner Board of Standards
Consumer Federation of America
The Investor’s Clearinghouse
U.S. Securities and Exchange Commission

 

Do You Tip For A Job Well Done Or Out Of Guilt?

Image via WikipediaWhen you leave a tip are you doing it for good service? Do you leave the same amount of tip even for bad service? I know I have. I have been told servers are paid a meager wage and the bulk of their income is depending on tips. I know it makes me feel a little guilty that I may be, short changing my server.

Even if I have gotten lousy service I can never work up the notion to stiff someone or leave a small tip. I guess some people are neurotic and need approval by leaving a decent tip. We don't want to be thought of as cheap. So out comes the cash.

Cornell professor Michael Lynn has found in 20 years of research, the main reason people tip is to avoid social disapproval.

What was a shocking fact was that the level of service has little to do with the amount of tip. He found out that the level of satisfaction was influencing only four percent on the decision of how much to tip. Also that our willingness to tip regardless of service was because of a sense that the customer is in a better position financially than the server and wishes to avoid the servers envy. Thus a tip is a payment to reduce that envy, says Professor Lynn. Also that the tip is a way to say, sorry that you have to serve me.

Tipping is a cost of being served

If you think about the pay structure of service people, you will see that tipping is sometimes their only payment for services. Tipping is expected. If restaurants paid the servers a living wage, then the restaurant owner would pass that expense down to you. You would be paying the tip in another form.

Tipping experts say that you should pay a server 15 percent for adequate service and 20 percent for very good service. For poor service you still pay ten percent. Remember that the servers have to pass on some of their tips to the busboys, bartenders, and hostess. Punishing the server, only punishes the others to.

You might think of the waitress, too. It's possible, just possible, the poor service you received was not really her fault. Maybe the kitchen was backed up or she was given too many tables to cover.

If you want to help cure bad service, rather than skip the tip, speak to the manager about the server's behavior or about what was wrong with your dinner.

What about the tip jar?

When you see a tip jar you can feel free not put anything in it. The tip jar is just a way to make you feel guilty by putting it in the open and everyone watch what you put in it. Starbucks, day care, convenience stores, and ice cream stands are not supposed to be tipped. It is optional, if you feel so motivated, put something in.

Fathers Day Is About Family

Today Is the day we take the time to recognize the fathers in our lives. According to the U.S. Census, almost one out of every three children in our country grow up without their father. When dads are not around to support, families and children can be impacted as a result.

Being a father is about making a conscious decision to be a part of your child's life. Easier said than done.

How do you be a good father? The easiest way to answer that question for me is to look at my own father. He is my role model for a good father. He went to work everyday, he supported our financial needs, and he was there when we laughed and when we cryed. If you can do that, your a good father.

Today's fathers have a lot more to deal with concerning their children and todays issues. But the basics still hold true. Being in your child's life when the tough times come won't cure every woe, but your child needs someone to count and lean on when times are tough.

Fathers Day is the day we take the time to show appreciation and gratitude for our fathers. But as a father, inside my heart, I will be feeling appreciation and gratitude for my family. I am the lucky one.

5 Reasons To Stay Put For Retirement

This is a guest post by Claes Bell who writes for Bankrate.com

It's an idea firmly enshrined in American culture: No retirement is complete without a move to a sunny local primarily inhabited by fellow retirees. After years of work, the thinking goes, retired folks deserve a permanent vacation in a glamorous, sunny locale, preferably near a beach or golf course.

According to a survey commissioned by Del Webb, a retirement community builder, 42 percent of those who turned 50 in 2010 planned on moving for retirement.

But as a Florida resident, I can say with some certainty that when it comes to retirement paradise, reality often comes up short. Years of reading newspaper articles about retired transplants being abused in crooked retirement homes, targeted by fraudsters and trapped in their condos for days on end after hurricanes have left me jaded on the idea of a retirement paradise.

Don't get me wrong. It's not that I believe South Florida is a particularly bad place to retire. Every place presents its challenges for the elderly. What I find fault with is the idea of picking up and moving away for retirement in the first place. Here are five reasons why.

1. What's good for a 65-year-old isn't always great for an 80-year-old. A lot of the problem with the idea of an ideal retirement community comes down to the fact that retirement lasts a long time and so encompasses a lot of physical and financial changes. A place that's awesome for an active, fit 65-year-old who can mow the yard and drive can sometimes be terrible for a 75- or 80-year-old who finds themselves unable to do either.

2. Moving doesn't guarantee a better cost of living over time. It seems like for a lot of folks, the idea behind making the big move is to find a place with a lower cost of living to help stretch your retirement dollars. The problem is, you get enough retirees moving in to an area, and suddenly, the cost of living can rise sharply. Take South Florida, for instance. Between 2002 and 2010, the Consumer Price Index for the U.S. rose 21 percent; in Miami/Ft. Lauderdale, it rose more than 27 percent.

3. Real estate is tricky. For many years, the general consensus was selling your home and buying a cheaper place in a retirement haven in the Sun Belt was a financially savvy move. Not only could you cash out the equity in your old place to fund your retirement, you could also buy a new property with a good chance of appreciating. But as we saw during the housing bubble, housing prices in retirement destinations can be especially volatile. Having my retirement plans hinge on selling my home and having cash to spare no longer seems like a great idea, but even worse is the prospect of buying a dream retirement home only to see the value tank and my net worth crumble.

4. Retirement is a terrible time to leave your support network. A change of scenery may sound appealing for a lot of people who've spent the last few decades living and working around the same old friends and family. But the physical limitations and medical issues that come with old age seem likely to make people more in need of support from able-bodied friends and family, not less. This fact was underscored for me recently, when my wife's grandmother suffered through some serious medical issues lately. The fact that she has a strong support network hasn't just made taking care of her home and getting to doctor's appointments easier, it's also probably saved her life on a couple of occasions.

5. "It's a nice place to visit, but I wouldn't want to live there." Just because I love visiting a place doesn't mean I'll get the same enjoyment out of it after five or 10 years. If I like a place, I'll consider making an annual vacation of it, rather than trying to live there permanently. That way, if I get sick of it, I can just stop going; no real estate agents, movers or mortgage brokers required.

Maybe by the time I'm up for retirement, I'll feel differently. But If I do end up moving, I'll try to target a small, easy-to-maintain condo in a city with really good public transportation, preferably well north of the Sun Belt. That way, being able to maintain a house or drive a car won't be preconditions for me to be able to live on my own. Sunshine may be sweet, but independent living for as long as possible is sweeter.

Claes Bell has covered banking, autos and a variety of personal finance topics for Bankrate.com since 2006. He blogs on autos, banking and CD rates. Contact Claes on twitter, his handle is @claesBell.