Top 4 Tips To Save For Retirement

No matter what part of your life you are currently in, eventually you will want to retire, even if it seems a long way off. These tips on retirement saving will do the most for you when you do them in order, so we’ll start with number one, and you've already half completed it. 

Tip #1: Make a Plan
Think about retirement savings and make a plan. By far, the most frequent cause of poor financial retirement outcome is failure to even contemplate it. Without a plan there is no action, not even partial action, no triggers to step up efforts, and no measure to gauge progress.

To make your plan, there are a number of retirement calculators available online to help you decide approximately how much money you’ll want to have and when. Armed with this target, you can see if you are able to save enough or whether you need to reduce your current spending to make up the difference. The calculators will help you factor in adjustments to the saving strategy such as interest rates and employer matching. Once you have this ballpark target, you can start to apply the next tips.

Tip #2: Save Early
Don’t wait until you have the more comfortable job you’re seeking at your next promotion. Don’t wait until the kids are out of daycare. Don’t wait until the car is paid off. All of these other demands on your budget are essentially ever-present. As soon as you can cross off daycare fees, you’ll start paying sport team fees and other school fees, and the end-point of those expenses will never really arrive. Instead, start saving now, despite those other budget items and make time do the heavy lifting. Each additional ten years you save gives you a chance to let time double your money if you are earning a 7% return.

Tip #3: Save Regularly and Before Counting the Money in Your Budget
Money that you set aside automatically and outside of your household budget is easier to part with and easier to sustain. If you find yourself making retirement savings after you have paid the electric and the shopping bills, you’ve created a competition for resources and the far-off retirement will always seem like a good payment to delay. It’s best to make your transfers to your retirement account as early in your compensation path as possible. A transfer directly through payroll into a retirement account is the best, or your bank can divert some of your funds as they receive a direct deposit. If you take a physical check, you can make your retirement deposit the first thing that you do at the bank window. Make it a bill that you pay to yourself as soon as you receive your pay.

Tip #4: Exploit Add-ons and Extenders
After your own savings, the largest contributor to your bottom line is employer matching. If your employer offers matching funds to your retirement savings account, you should maximize this benefit and let your employer build your retirement with you; it is a better and more secure return than any interest rate. Look also for ways to increase your pension benefit if you have one and take advantage of tax-deferral in IRA accounts to build your nest-egg faster than savings alone.

There are many other avenues to help improve your retirement outlook, including downsizing earlier, working a little later, deferring Social Security payments from the minimum of age 62 to the maximum of 70 as a start-date, and optimizing Medicare insurance strategies. But saving remains the area you can best control to provide the retirement you want to enjoy. These tips will help you make the most of that segment of your portfolio and provide the foundation to a secure and comfortable retirement.

Sam M. is a financial blogger who has recently begun his retirement savings and writes from his experience. He also writes about other topics that may be of interest including how to go about getting Medicare supplement insurance and how to find life insurance that’s affordable.

Long Term Care Insurance: When Should I Buy It?

Image via WikipediaI am finally old enough to worry that I may need long term care insurance. I worry if I get sick and need long term care that it will probably bankrupt me. Still with kids in college and a 11 year old to raise maybe it's time to take the plunge.

The facts are if you obtain a policy at age 50 it will be cheaper than if I start one at age 60. Tempting the fates and waiting till 60 seems like a good idea because according to the Long Term Care Industry statistics, 90% of long term care claims do not occur untill the person is over age 70. So if your feeling lucky, maybe you should play the odds and wait.

The only problem with that decision is your health may decline before this time arrives, causing you to pay higher premiums or just being declined any insurance. You have to juggle this decision with the odds of you getting sick before then. The question also is does your family have any history of debilitating diseases that you probably will get. If you are looking at this future, the decision is almost made for you to get long term care insurance.

What if your healthy and your parents are in their 90's and completely healthy, will that effect your decision? 

I checked for some answers on this decision by going to DaveRamsey.com. Dave Ramsey has held the position that you should wait till 60 to purchase long term care insurance. He is totally against buying it early only to get a better deal. Dave came up with a good example of how to make the decision:

"The average LTC premium for a healthy 50-year-old man is $1,340 per year. If the policy remains in effect until this person is 95, he will spend $60,300 in LTC premiums. For a healthy 60-year-old, the average premium is $2,170; it will cost him $75,950 to keep the policy until he is 95. So buying LTC at age 50 is $15,650 cheaper than buying it at age 60."

Dave Ramsey suggested to invest the $1,340 each year from age 50 to 60.

"If his investment averages just 5% growth per year, he will have $17,412 when he turns 60—that’s all it takes to beat the “savings” on premiums for buying LTC at age 50. If he keeps that money invested until age 95, and never added anything to it, he’d have nearly $100,000 at 5% growth, and that is the low end of how he can expect his 35-year investment to perform."

It's a big decision and not knowing when to make the move just complicates it. These types of decisions have to be made using the math first but later the true reason is to decide is will the decision make you lose sleep or will you rest better because you know everything is taken care of for you and your family. Always seek professional counsel on important decisions.

A New Way to Lend Money To Family and Friends

Loans (Photo credit: jferzoco)You just got asked to lend a family member some money for a car repair. It's a legitimate request and the person asking for it is really a responsible person. The odds of getting paid back are quite high. Should you do it?

When circumstances like this happen you have to be careful and examine the situation. What would happen if the person lost their job or fell sick with major medical bills. Would you still get paid back?

Personal loans between family and friends occur because the person has tried all their other sources and are desperate. Desperate means broke. You should do your best to try and get out the situation. But if your trapped there are a few new ways to make the money lending process go a little easier.

Put the lending agreement in writing with specific terms as interest, length of loan, and payment due dates. You can do this yourself and hope for the best or try something new. There are two websites that will draw up the paperwork and give you and your borrower legally binding documents. At LendingKarma.com and LoanBack.com you can have legally binding loans set up, including payment schedules, record keeping and e-mail reminders. Each site charges a $30 fee to do this for you.

Another way is at Prosper.com, a borrower could take out a Friends and Family Loan from just you or from multiple people. The site arranges automatic bank-account withdrawals free and charges a closing fee as a percentage of the loan.

By using these services you will have your loan process and servicing done professionally. This could mean the difference between you being stuck and being paid back. It's possible by using these services your prospective borrower may be scared away and you can avoid the whole ordeal.

Fixed Rates as low as 6.59% APR from Prosper - Peer to Peer Online Borrower & Lending

I Can't Pay My Taxes - What Should I Do

Image via WikipediaIf this year’s tax filing deadline will be a “pay” day for you and you cannot pay the full amount that you owe, you should still file your return by the due date and pay as much as you can. The IRS may allow you to pay any remaining balance over time in monthly installments through an Installment Agreement or possibly even settle for less than the full amount owed through its Offer in Compromise program.

If you find that you cannot pay the full amount by the filing deadline, you should file your return and pay as much as you can by the due date. To see if you qualify for an installment payment plan, attach a Form 9465, “Installment Agreement Request,” to the front of your tax return. The IRS has streamlined the approval process if the amount owed is not more than $25,000 and can be paid off within a five-year period. Be sure to show the amount of your proposed monthly payment and the date you wish to make your payment each month.

The IRS charges a $43 fee for setting up an installment agreement and you will also be required to pay interest plus a late payment penalty on the unpaid balance. This penalty, usually 0.5 percent of the balance due per month, drops to a 0.25 percent rate when the IRS approves the installment agreement if your return was filed on time and you did not receive a levy notice from the IRS.

Besides possibly qualifying for the reduced late payment penalty, you have another reason for filing your return by the due date — you avoid the late filing penalty, 5 percent per month of the balance due. Paying as much as you can when you file your return will reduce interest and penalty charges.

If you find that you cannot possibly come up with the money to pay your taxes, even through an installment plan, you may apply for an “offer in compromise” to settle your tax debt for less than the full amount owed. The IRS will review your financial situation and future income potential to determine whether your offer is appropriate. Send Form 656, “Offer in Compromise,” and Form 433A, “Collection Information Statement,” to the IRS to determine your eligibility.

The IRS Web site at www.irs.gov has interactive sections to help you determine your eligibility for an installment plan or an offer in compromise. You can also download all the necessary forms from that site. The forms are also available by calling toll free 1-800-TAX-FORM (1-800-829-3676).

Lower Your Home Insurance Costs

Image via WikipediaIn my state, we are bracing ourselves for the next round of home insurance premium increases. It seems that even though we haven't been hit by any major weather events over the last several years, the insurance companies fund to cover such things is highly underfunded. 


Price increases for home insurance are not the kind of expenses you can cut back on, they have to be paid.

Finding ways to reduce or slow the increase of your home insurance bills are possible. It will take some effort, but it is possible to save yourself some money.

Raise Your Deductible.

A deductible is the amount of money you are going to pay toward the loss before the insurance company begins to pay a claim. Presently, most insurance companies recommend a deductible of at least $1000. Why not increase the deductible to $1500 or $2000. See how much you will be saving and with the two options. If it will save you a substantial amount, why not change it. Try it for a year, if your fearful it's to high, change it back. The insurance company will gladly take your money.

Improve Your Homes Resistance to Damage.

Insurance companies are very helpful in offering discounts for a smoke and fire alarm. Ask for a list of these discounts. A burglar alarm with central station monitoring will reduce your insurance costs. Check to see if your insurance company will give you a discount for new dead bolts and other security monitoring.

If you live in areas with major weather events and natural disasters, you may be able to save on premiums by adding storm shutters, strengthening your roof or replacing it completely. Finding ways to make your home more modern and up to the newer building codes for your heating, plumbing and electrical systems to reduce the risk of fire or water damage will reduce insurance costs.

Shop Around.

Always remember you are not tied to one insurance company. Seek out several home insurance companies for a quote. Check consumers reports, independent insurance agents, and online insurance quote websites. Be sure to weigh the best price with the quality of the company. Go online and search for complaints against your insurance company. Make sure your insurance company is rated well by the state and has the financial capacity to be able to pay when the time comes.

Combine Home and Auto Policies With The Same Insurer.

Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies.

Make Sure Your Credit Report is Good.

It may seem to not be fair to link the amount of your home insurance premium with your credit score but it is a regular practice of insurance companies. When you apply for credit, a low credit score is punished by paying a higher rate on borrowing money. So it is with insurance companies, you will be judged a higher risk and charged more for your premium.

Finally, review the cost of rebuilding your home and make sure you are paying the right amount of insurance for it to be replaced. A newer home will sometimes have a lower premium because the age of the house makes a difference. The quality of you fire department is taken into consideration. If you live in a urban or rural community, it will affect the price of your premium.

There are many ways to save money on your home insurance costs, it just takes working closely with your insurance agent to make sure every discount is taken.

In Rough Times, Cash For Structured Settlements Can Be A Life Saver

Image via WikipediaWe all have times in our lives where we experience hard economic problems. It can be loss of a job, your home in foreclosure, medical bills or any need for cash. You may have already borrowed from your credit cards, family and friends. You may have no other place to turn. If you are receiving structured settlement payments and they just aren't enough to cover your expenses, there still is a way out.

What Is a Structured Settlement?

A structured settlement is an agreement where you are compensated, in monthly payments, for a release of your claim of liability. It usually is the result of a personal injury lawsuit.

These payments are initiated through the purchase of an annuity from a life insurance company. The insurance company pays the settlement over period of installments. This can be monthly, yearly or other time frame.

How Can Selling Your Structured Settlement Help?

Selling your structured settlement payments can help you get the cash you need when your financial emergency occurs. A company will give you a lump sum for your settlement payments. The company will continue to receive your distribution and you will walk away with your money. No more waiting for that monthly check to come in. You can have the cash you need to fulfill your financial need. Even if there is no problem, you can use the cash to buy a home or start a business.

Issues To Watch Out For When Contacting A Company.

When you are ready to make the move of selling your structured settlement, the first thing you should do is contact a financial adviser. Many states have regulations and rules governing the sale of structured settlements. You may even have to go before a judge who will rule on your sale. Many companies are in the business of structured settlement purchasing. Many do a fine job for their clients, yet their are some that do not. There are companies like stone street capitol that could of done a better job.

Be sure to thoroughly check out the reputation of the company you are using. Even call several companies to get a feel of their professionalism and interest. Seeking the offers of a few companies, will help you to be sure your getting the maximum amount for your structured settlement. 

Prosper.com Now Offering IRAs and Other Tax Deferred Accounts

Prosper.com is the website that believes in the power of peer-to-peer lending, cutting out the middleman. Prosper.com puts together creditworthy borrowers who want to borrow money with lenders seeking consistent and predictable high-yield returns. At Prosper.com you can expect seasoned returns of up to 10.46%. Borrowers can apply for unsecured loans at rates starting at 6.59%.

With 1,250,000 members and over $311,000,000 in personal loans funded, Prosper.com has attracted much attention. The loan process and forms are all done online. Easy and quick for the borrower. The lenders see a high rate of return and the advantage of diversifying over several loans. There is relatively low risk associated with a peer to peer loan because lenders invest a small amount (as low as $25) in many different loans, there’s always some risk but you get to spread it around many loans.

Now, to make investing even sweeter at Prosper.com they are offering Traditional, Roth, SEP and 401(k) rollovers in a Prosper IRA. The minimum investment requirement is $5,000. The federal deadline to fund a Prosper.com IRA is Tuesday, April 17, 2012.

Benefits of a Prosper IRA are:

• Tax advantages: returns grow faster tax-deferred with the Traditional IRA, and tax-free with a Roth IRA.
• No fees: all fees for accounts with balances of at least $10,000 are paid by Prosper.com.
• Broad diversification: a portfolio of consumer loans helps reduce an investor's portfolio volatility.
• Easy reinvestment: Prosper.com’s Automated Quick Invest tool reinvests earnings so that returns compound over time.
• Personalized service: To ensure the best service, Prosper.com has partnered with Sterling Trust3, the self-directed IRA custodian with over $10 billion under custodial and retirement administration.

For more information, Prosper.com is hosting a free webinar on Thursday, March 15 at 7 p.m. ET / 4 p.m. PT. Prosper.com’s Chief Investment Officer, Joseph Toms, and Mike Kurka, Institutional Sales Executive at Sterling Trust will lead the conversation: “Boost Your Retirement Savings: The Advantages of a Self-Directed IRA for Your Peer-to-Peer Lending Investment.” Register here.

Personal loans at rates as low as 6.59% APR. No hidden fees. No pre-payment penalties

How Long Does A Foreclosure Remain On My Credit Report?

Foreclosure auction signs (Photo credit: niallkennedy)
Foreclosures are one of the worst things any family can go through. They not only turn your life upside down, they damage your credit for years to come. But as the years pass and by following the guidelines from the FHA, Fannie Mae, and Freddie Mac, you can become a homeowner again.

All the major government entities that have influence over the foreclosure rules in the U.S. wield a lot of power over banks. Though they are not direct lenders what they say is what the banks and credit lenders must do.

Many people don't even realize that the guidelines used in making their mortgage have been set down by the FHA, Fannie Mae, and Freddie Mac.

Here are the guidelines for your ability to apply for a new mortgage after foreclosure:

FHA Guidelines

Foreclosure.

• 3-year wait. 
• Reduced wait if borrower has re-established good credit and can show extenuating circumstances.

Short Sale

• No wait if not in default. 
• 3-year wait if in default at closing of short sale.
• Reduced wait if borrower has re-established good credit and can show extenuating circumstances.
• Deed in lieu of foreclosure
• Same as FHA’s foreclosure policy.

Bankruptcy

Chapter 7 (liquidation):

• 2-year wait from the discharge date of the bankruptcy.
• 1-2 year wait if borrower can show extenuating circumstances.

Chapter 13 (repayment plan):

• 1-year wait from the discharge date of the bankruptcy.Fannie Mae

Fannie Mae Guidelines

Foreclosure

• 7-year wait from the completed foreclosure sale date.
• 3-year wait if borrower can show extenuating circumstances (additional underwriting requirements apply for 4 years after 3-year waiting period).
• 7-year wait for a second home, investment opportunity, or cash-out refinancing.

Short Sale

• 2-year wait if the borrower puts 20% or more down.
• 4-year wait if the borrower puts 10-20% down.
• 7-year wait if the borrower puts less than 10% down.
• 2-year wait time if borrower can show extenuating circumstances and puts 10% or more down.

Deed in lieu of foreclosure

• Same as Fannie’s short sale policy.

Bankruptcy

Chapter 7 or Chapter 11 (reorganization, usually involving corporations or partnerships):

• 4-year wait from the discharge or dismissal date of the bankruptcy.
• 2-year wait from the discharge or dismissal date may be accepted if borrower can show extenuating circumstances.

Chapter 13:

• 2-year wait from the discharge date or 4-year wait from the dismissal date.
• 2-year wait for a dismissal if borrower can show extenuating circumstances.

Multiple bankruptcies:

• 5-year wait if the borrower has filed more than one bankruptcy petition in the past 7 years.
• 3-year wait if borrower can show extenuating circumstances.

Freddie Mac

Foreclosure

• 5-year wait from the completed foreclosure sale date.
• 3-year wait if borrower can show extenuating circumstances.

Short Sale

• 4-year wait.
• 2-year wait if borrower can show extenuating circumstances.

Deed in lieu of foreclosure

• Same as Freddie’s short sale policy.

Bankruptcy

Chapter 7 or Chapter 11:

• Same as Fannie’s bankruptcy policy.

Chapter 13:

• 2-year wait from the discharge date of the bankruptcy.
• 2-year wait from the discharge or dismissal date of the bankruptcy if borrower can show extenuating circumstances.

Multiple bankruptcies:

• Same as Fannie Mae’s policy for multiple bankruptcies.

Source: FHA Handbook, Fannie Mae Selling Guide, Freddie Mac Selling Guide

Before taking any steps to rebuild your credit make the decision to seek out professional assistance. Look to professionals, such as a bankruptcy lawyer and a CPA specializing in bankruptcy provisions, before making major financial decisions.  

For HUD-approved counselors, go to: http://www.hud.gov/offices/hsg/sfh/hcc/fc/index.cfm. 

You can also call 1-888-995-HOPE for help from the Homeownership Preservation Foundation.

How to Amend Your IRS Tax Return

It's great to do your taxes early. All the stress and aggravation is long passed and your enjoying that nice fat refund check. But in the mail today came an additional W-2 income form. You completely forgot about it, what are you going to do now? The I.R.S. has just the solution to your problem. It's called form 1040X. With this form you can amend your incorrect tax return and satisfy your obligation to Uncle Sam.

Here are a few tips to help you with your 1040X:

1. When to amend a return You should file an amended return if your filing status, your dependents, your total income or your deductions or credits were reported incorrectly.
2. When NOT to amend a return In some cases, you do not need to amend your tax return. The IRS usually corrects math errors or requests missing forms – such as W-2s or schedules – when processing an original return. In these instances, do not amend your return.
3. Form to use Use Form 1040X, Amended U.S. Individual Income Tax Return, to amend a previously filed Form 1040, 1040A or 1040EZ. Make sure you check the box for the year of the return you are amending on the Form 1040X. Amended tax returns cannot be filed electronically.
4. Multiple amended returns If you are amending more than one year’s tax return, prepare a 1040X for each return and mail them in separate envelopes to the appropriate IRS processing center.
5. Form 1040X The Form 1040X has three columns. Column A shows original figures from the original return (if however, the return was previously amended or adjusted by IRS, use the adjusted figures). Column C shows the corrected figures. The difference between Column A and C is shown in Column B. There is an area on the back of the form to explain the specific changes and the reason for the change.
6. Other forms or schedules If the changes involve other schedules or forms, attach them to the Form 1040X.
7. Additional refund If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund.
8. Additional tax If you owe additional tax, you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges.
9. When to file Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.
10. Processing time Normal processing time for amended returns is 8 to 12 weeks.

Links:

Form 1040X, Amended U.S. Individual Income Tax Return
Instructions for Form 1040X

Grants for Adults Returning to College

NRC Chairman Klein Presents Grant Money to University of Illinois (Photo credit: NRCgov)

For 2016 an up-to-date list of current active scholarships and grant programs at the end of this post.

Many adults have never finished their college degrees or even started them. Through the many twists and turns of life we just don't do it. Either family needs take precedent or we just don't have the money. Today many adults are returning to college to start or finish a degree. 

They now have the time or have changed jobs forcing the question of returning to school to the forefront. They never have realized that there are many grants available, specifically for adults returning to school.

A grant is money given to a student that does not need to be paid back when they complete their degree. Some grants are one time events, while others are renewed yearly, as you progress through school. Usually grants are given based on your financial needs or provided when you chose a specific path of study.

Even though you are working full time, this doesn't keep you from obtaining money for college tuition. For adult students you don't have to sign up as a full-time student to receive grant money. Adult grants understand that you still have work and family obligations to juggle while going to school.

Federal Education Grants.

The largest government grant option is called Pell Grants. This money is given to you and does not have to be paid back. For the 2010-2011 school year, the value of the federal Pell grant was $5,550. In order to qualify annually for a Pell grant, you must be working toward a degree.

To apply for Pell Grants you must complete the Free Application for Federal Student Aid (FAFSA) forms. The FAFSA forms must be completed annually to continue to receive government grants. Income information is necessary for completing FAFSA forms, so it is helpful to submit your tax forms early and have your most recent tax return documentation available when you complete the forms.

You must apply before June 30th, but if you submit in early February you will get a quicker response and more grant money than those that wait till June. There is a limited amount of money and the sooner you apply the better. FAFSA forms and information can be found here: Fafsa.Gov.

Federal Supplemental Education Opportunity Grant (FSEOG).

This other federal grant is offered by the government for people with a greater financial need. Also there are grants offered based on gender, race, nationality, and other specific groups. To find other government grants, visit Students.Gov

State School Grants.

Even some states offer grants to students who attend their state college or choose a specific career path. Some states are in need of teachers so they offer specific grants for that vocation. Check your states government website, education and grants section, for more information.

College Grant Providers.

Colleges themselves often have grant monies available for students. Some colleges have separate programs for adult students, and corresponding grant programs to assist the students with tuition costs. Whether the college has a separate program for adults or not, the financial aid officers at the college should be able to direct adult students to specific grant and scholarship programs that can assist them.

Employer Grants.

Many larger companies offer grants or tuition reimbursement programs for employees that want to continue their education. Check your companies human resources department for more information.

Community Grants.

Many cities have organizations that offer grants and scholarships to adults students going back to school. Many scholarships are available by a variety of clubs, organizations, civic groups, and religious organizations. The only problem is there is no one source to track down these services. You will have to use the phone and Internet and search for these organizations one by one.

Though many grants and scholarships are generous in the amount of money they offer, remember they will not cover the totality of your education costs. You still need to have some money saved for uncovered expenses. You could fill in your need for money by taking loans, but it may be better to pay for education when you have the cash available.

Update for 2016. Here is an up-to-date list of current active scholarships. 

• Visine Students with Vision Scholarship Program
• National Hispanic Health Foundation Scholarship Program
• College Scholarships and Grants Available for Veterans
• American Psychological Association Scholarships, Grants and Awards
• State Farm Grants and Scholarships
• The Rover College Scholarship
• NSHSS Foundation STEM Scholarships
• Scholarships and Fellowships | UNCF Merck Science Initiative
• Green Home Improvement Scholarship
• Microsoft College Scholarships

List courtesy of educatorlabs.org

A few more Scholarships to update the current list.

• Global Scholarships (globalscholarship.com), a scholarship search engine
• Awareness of Smoking Essay Contest Scholarship
• Verne LaMarr Lyons Memorial Social Work Graduate Student Scholarship
• Veterans Make Great Technology and Engineering/STEM Teachers Scholarship
• The Mary Blake Single Parent Nursing Scholarship
• Kosciuszko Foundation Tuition Scholarships for Polish-American Students
• James & Patricia Sood Education Studies Scholarship
• Boom & Bucket is offering a scholarship of $1,000 to be awarded each year to a student pursuing a heavy machinery-themed program
• Student Financial Aid Search Engine: Find & Apply for Financial Aid to Pay for College
• Geneseo Migrant Center Scholarships for Migrant Students
• Print and Graphics Scholarship Foundation Scholarships
• Society of Women Engineers Scholarship Program
• ENTELEC’s Wayne V. Black Scholarship
• VFW Auxiliary’s Young American Patriotic Art Contest
• NOAA’s Ernest F. Hollings Undergraduate Scholarship
• Jeannette Rankin Women’s Scholarship Fund
• Diabetes Scholars Foundation
• Common Knowledge Scholarship Competition

List courtesy of outsidescholarships.org

How To Find The Best Mortgage Rates

If you own a home your biggest expense is your mortgage. Over the years I have lived in many homes, in many different places and finding the top mortgage deals is so important to an affordable house payment. One of the problems of my home building business is finding the lowest mortgage rates for my buyers.

When selling real estate you usually have to guide the buyers to a mortgage broker you work closely with so they will have the greatest chance of qualifying for a mortgage. But your best effort will amount to nothing if the buyers credit is bad.

If your planning to purchase a home someday it would pay to plan ahead and check your credit score long before you make any decisions. It's of ultimate importance to have a good credit score so you will be able to qualify for the lowest interest rates. You may think you have a great credit score because you always paid your bills on time. But there are occasions when an error, through no fault of your own, appears on your credit report. Many errors on credit reports are caused by you being blamed for a bad debt by someone, with the same name as yours. Human error and mistaken information can cause your credit report to be 100 points lower than it should be. It pays to check beforehand.

Finding the best mortgage rates.

1. Online. 

There are many sources available to you to find and apply for a mortgage. There are many online sources that can show what's available. Those websites can let you search for nationwide interest rates through several companies. You can narrow your search by length of loan, interest rate, points, or type of mortgage.

2. Mortgage Brokers. 

If you like the personal touch, a local mortgage broker may be what you need. I like to work with mortgage brokers because of the time saving advantage. If time is at a premium, walking into a mortgage brokers office may shorten the time of the entire process. 

You can apply and possibly be approved all within the same visit. Mortgage brokers work on commission and this puts the pressure on the broker to make sure you get approved. I have seen how a good mortgage broker can work out solutions, to tough and complicated transaction better than their online counterparts. 

This flexibility is important because local mortgage brokers have multiple sources of money available for lending much more than boiler plate online sources.

Of course, compare and compare again, do not be in a hurry. No matter who you chose to write your mortgage, there will be sales pressure. Don't let that shake your plan of taking it slow. Also be aware of new home sellers that say you must use their mortgage source. This is not set in stone and you are able to bring in your own mortgage source. But if your cornered into using a specific company then use the leverage you have to get some freebies thrown in to sweeten the deal, for using their broker.

Words of wisdom. 

At the closing be sure read your mortgage papers thoroughly before signing. Maybe even spend a few bucks and let your lawyer check it out. I have seen mortgage documents with errors in them, it doesn't happen often so read thoroughly.

The Child Tax Credit Explained

Tax (Photo credit: 401K)A very important tax money saver for families is the Child Tax Credit. It's one the most beneficial components on a tax return because it gives an actual credit of $1000 for every child you have under 17. But to be eligible for the credit your child must qualify and there is income restrictions. According to Publication 972 there are 11 things you must consider.

1. Amount. With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under age 17.
2. Qualification. A qualifying child for this credit is someone who meets the qualifying criteria of seven tests: age, relationship, support, dependent, joint return, citizenship and residence.
3. Age test. To qualify, a child must have been under age 17 – age 16 or younger – at the end of 2011.
4. Relationship test. To claim a child for purposes of the Child Tax Credit, the child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.
5. Support test. In order to claim a child for this credit, the child must not have provided more than half of his/her own support.
6. Dependent test. You must claim the child as a dependent on your federal tax return.
7. Joint return test. The qualifying child can not file a joint return for the year (or files it only as a claim for refund).
8. Citizenship test. To meet the citizenship test, the child must be a U.S. citizen, U.S. national or U.S. resident alien.
9. Residence test. The child must have lived with you for more than half of 2011. There are some exceptions to the residence test, found in IRS Publication 972, Child Tax Credit.
10. Limitations. The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies by filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax and any alternative minimum tax you owe.
11. Additional Child Tax Credit. If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

For more information go here for a .PDF of Publication 972, Child Tax Credit.

How To Effectively Complain Online

Image via WikipediaBefore the option of the Internet the only way to complain to big companies was to write letters, go to the Better Business Bureau, or just tell everyone you know. You may have gotten really mad and wrote your state agency or even Washington.

Good news, those haphazard days of complaining are over, we now have the Internet to do our work. Consumer Reports, the consumer review magazine, says "Whether it's a slap happy review of your new flat-screen TV on Amazon or a scathing critique of a car dealer on Yelp or Facebook, there are plenty of online outlets where you can post your opinions. And companies are paying attention."

Today most websites have sections where customers can leave reviews of their products or services. Companies are hoping you will share your wonderful experience with them, but many people are writing about their dissatisfaction. Companies closely monitor these feedback pages and usually contact the dissatisfied customer to try to make things right. If you ever bought something on Ebay.com or Amazon.com and noticed the ever so important feedback comments, you can see how an online reputation is more important than a real world one.

Use Good Practices.

When complaining online whether it be a companies website or a consumers rights forum, the key to success is to be business like and not emotional. If you want to get results you should state your issue in a clear and succinct way. Using profanity and slurs to ridicule a company will not gain you any constructive attention. Convey your problem in a way where the company sees you as a valuable customer with a reasonable complaint. Companies don't want to look bad in front of other companies or potential customers. These companies know that your complaint is becoming part of the Internet record and will be available by anyone that does a search of the company in question.

When you post your complaint on the Internet and the business sees the unfavorable comments, it is possible for them to file lawsuits against the complaining parties. Even Consumer Reports has been sued for unfavorable reviews from company Sharper Image. Sharper Image lost the law suit. Consumer Reports said, " The suit was in response to a critical review of the company's Ionic Breeze Quadra air cleaner that appeared in the magazine. Sharper Image was required to pay $525,000 to cover Consumers Union's legal costs."

In many states, there are laws banning such lawsuits to protect the rights of the complaining parties. Mark Goldowitz, founder and president of the Public Participation Project and a lawyer who defends clients against SLAPP suits in California says, "No matter what the laws are in your state, consider the potential repercussions before you post critical or embarrassing comments."

Bottom line, get it right when complaining online. Remember whatever you post online will probably always be online.

Best Places to Get Started with Online Complaining

1. Try the biggest sites first to get the most exposure. Social media websites like Facebook or Twitter are good places to start. Most companies have a web presence and that's where you should start you effort. Mention the companies name and a brief comment about the problem.

2. Companies websites. Most all companies have a customer service or consumer section specifically for customer complaints. There you will find a place, either a comment section or a forum, where you're able to enter a description of your problem. Be polite, business like, and respectful when leaving comments. There is no faster way to get deleted than when a slur or profanity is present. Remember you are trying to get help, not make it worse.

3. Forums and Consumer Help Websites. Search online for your specific complaint. You may find many others have the same problem as you do. As you search you will find specific websites that deal with your special complaint. Try searching for terms like "-company- problems", "-company- lawsuits", or " -company- complaints".

Many places are available to start your online complaints.

• AirlineComplaints.org - Airline-related complaints or suggestions for improvement. Includes airline contacts.
• Amazon.com - Reviews and ratings of products and Amazon merchants.
• Angie's List - Reviews and ratings of local services and health professionals. Pay site, though nonmembers can submit reports free.
• ApartmentRatings.com - More than 1 million apartment reviews and ratings.
• Avvo.com - Reviews and ratings of lawyers and doctors. Includes library of legal and medical topics.
• Charity Navigator - Charity watchdog organization with user reviews and ratings of nonprofit organizations. Includes tips and donor resources.
• CNET.com - Discussions of electronic products, services, and companies.
• Complaints.com - Complaints about products, services, companies, and professionals.
• ComplaintsBoard.com - Complaints about products, services, companies, and professionals. Includes news and resources.
• ConsumerAffairs.com - Reviews of products, services, companies, and professionals. Includes news and resources.
• The Consumerist - Reviews and complaints about products, services, and companies. Includes news and consumer tips. Site owned by Consumers Union, publisher of Consumer Reports.
• Edmunds.com - Reviews and discussions of cars and car-related products and services. Includes dozens of subject-specific message boards.
• Epinions.com - Ratings and reviews of products and services.
• MeasuredUp.com - Reviews of companies and professionals. Includes tips and contacts.
• My3cents.com - Reviews and complaints about products, services, and companies. Includes consumer tips.
• PissedConsumer.com - Reviews and complaints about products, services, companies, and professionals. Includes consumer tips.
• RateMDs.com - Reviews and ratings of doctors and dentists. Includes access to medical-board records and top 10 lists.
• RipoffReport.com - Complaints about services, companies, and professionals. Includes consumer tips.
• TripAdvisor.com - More than 45 million reviews and ratings of hotels, restaurants, attractions, vacation rentals, cities and towns, and more.
• TrustLink.org - A Better Business Bureau site with reviews and ratings of companies and professionals. Includes scam alerts.
• Yelp.com - Reviews and ratings of local companies and professionals.

Remember your trying to accomplish something with your complaining, don't use the resources of the Internet to just blow off steam. If the business responds to your efforts and contacts you, be sure to reply. The company would not reply if it did not care about the customer. If things are worked out in a amicable way be sure to got back online and use the same effort you used in complaining to note that your issues have been addressed and are now satisfied.

3 Solutions To Reduce Your Money Stress

Image via WikipediaLife gives us an abundant amount of things to worry about. We worry about our kids, jobs, spouses, families, and just about everything else. According to the American Psychological Association, Americans number one worry is money. We think way to much about our debts, budgets, and especially our investments.

Stressing and worrying about your money causes you to make mistakes when you need to plan and supervise your finances. You need to find ways to reduce this worry.

1. Budget

The number 1 reason for money stress is you don't know how to handle your finances. You don't know how much money is coming in and also where it's all going. To fix this you first have to set up some structure of organization. It's no shame to be unorganized, most people are and it shows with their poor financial actions.

You need to set aside some time in a quiet place with all your bills, statements, check stubs, and pen & paper. At the top of the sheet write monthly budget. That's right we are going to make the dreaded budget for the month. At the top of the page list your total income for the month. Then list down the page all your expenses that you need to pay for the month. Don't forget to list expenses that you need to pay like once a year bills. List home insurance, property taxes, etc. Divide the bill by 12 and list the amount you need to save each month to meet the future payment.

Sit back and go through the list. You will see how much you make and where it is all going. Doing this process every month gives you a road map to ease any anxiety about your money. Any problems or issues will become apparent and then you will be able to address them. Worrying about your finances will cease to be a cause for concern.

2. Retirement  

Retirement is the number two cause of financial stress. When worrying about retirement do you picture yourself living in your children's garage surviving on cashing in aluminum cans. As we get older this worry seems to increase. Also when the stock market takes a nose dive and we see are portfolios drop by half the stress levels go through the roof.

Investing in general is a risky business at best. Appreciation of your portfolio is never guaranteed and if you like roller coasters you are a perfect candidate for the stock market. The first move to worrying less about retirement is having some money saved in the first place. That's why part of your budget has to include a monthly contribution to a 401k or IRA.

The other part of reducing the stress of retirement is having your investments diversified according to you risk tolerance. Having all your money in a narrow choice of investments only will lead to you losing money and causing worry. You need to find a balance between stocks and bonds. Also being very diversified in these to groups is important. With bonds you need long term, medium term, and short term. With stocks you need to diversify with international, small cap, large cap, etc. A great source for building a low stress, well diversified portfolio is financial advisor Paul Merriman. Check out his website at www.fundadvice.com.

3. Life

The last thing to do if you want to reduce stress is to take a break from your finances. After you set them up and become organized put them aside and live your life. Seek out new friends and experiences. Money isn't everything. Life is passing you by if you keep on the worrying track.

How To Save Money On Your Coffee Habit

Image via WikipediaAmericans love their coffee. According to Coffee-Stastics.com , the United States is the foremost coffee-drinking country in the world. Americans are responsible for drinking down over 400 million cups a day. Sometimes I think I'm to blame for at least half that.

Coffee lovers listen up: It may be time to re-evaluate your morning jolt. Time Moneyland recently reported that Starbucks is raising prices because of increased costs for fuel and coffee beans. A "tall" (Starbucks version of a small) order of numerous coffee drinks now costs 10 cents more than last year in many parts of the U.S., including Atlanta, Boston, Dallas, Washington D.C., and New York. Not a lot as a percentage but it can add up over a year. This news comes on top of price increases instituted in 2011 by many other coffee shops.

Is their a way to tone down your coffee habit while still getting your caffeine fix?

Let's take a look.

Stop Ordering Specialty Drinks.

Those with a latte addiction should read over at Yahoo Finance that a daily $4 latte adds up to roughly $28 a week, which is the equivalent of about $120 a month and $1,460 a year. Think of all the things you could do with that cash. Making the switch to a simple cup of brewed coffee can cut your spending by nearly half.

Order a Smaller Size.

Reduce your spending further by ordering a smaller serving size. You'll still get your caffeine fix but save roughly 50 to 75 cents a day, depending on prices at your local coffee shop.

Use Your Own Cup.

Many coffee shops, from large chains to local independents, are trying to save money and reduce costs. And cutting down on disposable cups is a good way to reduce waste. Starbucks , for one, encourages customers to use their own travel mug by offering a 10-cent discount -- an easy way to offset that 10-cent price hike.

Make Your Own.

Making coffee at home is an even better way to save money. Need proof? An analysis conducted by Daily Finance that pitted a $2.29 Starbucks "grande" (medium) regular coffee against the (approximate) 17-cent cost of brewing a cup at home found the annual savings amounted to $835.85. This doesn't take into account the newest method in home brewing -- the pod, which makes quick, convenient single-serving cups but raises the per cup cost by 40 to 50 cents. Still, that's cheaper than stopping by the coffee shop every morning, although the pods aren't particularly environmentally friendly.

If you're looking to start making your own cup o' Joe, you'll have to make an upfront investment in a coffee maker. Not to worry - the expense is recouped many times over in the first year alone.

Stop the Habit Altogether.

If you're really serious about saving, forget all these suggestions on how to cut coffee costs. The best way to curb spending is to quit coffee for good. Granted, it's not easy -- if it were, no frugal consumer would be stuck with a coffee habit. The best way to quit while minimizing or avoiding withdrawal symptoms is to wean yourself gradually. Sip from smaller cups each week or try going half regular and half decaf until you can go without entirely. Once you break the habit, you might try green, black, and red rooibos teas, which all offer the same richness as coffee with much less (or no) caffeine.

I won't be doing that.

Social Security May Fail Sooner Than We Think

Image via Wikipedia

Every year the Social Security Trustees Report gives a status of the fiscal state of our Social Security system. Last year it was reported that the trust fund would likely run out of money in 2036. Dailyfinance.com says this years report offers a much worse picture at "Social Security Is Failing Even Faster Than We Thought"

The current report states by the end of the decade the trust fund would be $800 billion dollars smaller than last years projections. This adjustment means Social Security would run out of money in 2034, two years sooner.

The table shows the difference between the SSA projections and this years Congressional Budgets Office projection.

The chart shows the trend over the last 5 years:

When the Trust Fund runs out of cash in 22 years, benefit payments are expected to decline. At that point it is assumed by many experts we will see a reduction of the average Social Security check to 75% of its original amount.

What to do about a reduction in Social Security?

It all depends on your age and how far away you are from receiving your 1st check. You still have 22 years to prepare for this event. It's time to start saving if you haven't already or increase saving to accumulate a bigger nest egg. 

We are receiving more and more data concerning the inevitable demise of Social Security.  The press and others have been saying the sky is falling for many years. But now the problem is really just around the corner and will be here soon for those in their 40's and 50's. They will be the first to experience the reduction in payments by Social Security Trust fund, yet there is still time to prepare.

Essential Tips to Saving for Retirement

retirement (Photo credit: 401K)The severe economic downturn of 2008 saw millions of hard-working people lose their jobs and unfortunately much of their 401K savings. The effects of the unexpected crash have changed the way people live in the present and plan for their future. Here are some tips for seniors thinking about retirement on how to prepare:

Make realistic goals and stick to them

It is important that you set very attainable, tangible goals about your financial future. Think long and hard about what you want your senior retirement to look like. What are your needs going to be? What do you want to be able to do? Where do you want to live? After you’ve figured out the answer to these questions make a structured month by month plan about how you will save the money that you need to make your goal possible. Talk to a professional about mutual funds, savings accounts, IRAs and other instruments that you can use to safely invest your money.

Join your employer’s retirement plan

Many employers offer a retirement plan for employees that allow you to start a 401k plan. Take advantage of it! Not only will it lower your taxes and increase your deductions, your employer might even contribute money to it. This allows you to save for retirement in a very organized and comfortable fashion. You can even choose to invest the funds for your 401k to maximize your savings. Even if your employer does not offer any 401k plan, don’t be afraid to ask them if they would be willing to do so. While this may seem unnecessary during working years, you will be happy that you did it when you start thinking about calling it quits.

Have Discipline 

Once you have decided what your retirement goals are and have made efforts to prepare for it via a 401k plan, IRA, as well as other kinds of investment instruments, it is important that you have discipline. This means not digging into your retirement account, especially if you can manage without doing so. It means staying committed to your goal by consistently putting money away. It also means asking the proper questions and making sure at every turn that you have your investments under control. Far too often people start thinking about retirement, but lack the proper attitude to follow through.

Make sure that you stay the course and don’t give up. Your future depends on it.