Don't Wait For Occupy Wall Street To Fix Your Finances

Image by Mathew Knott via FlickrWith the ongoing coverage of Occupy Wall Street you may be thinking that finally someone is standing up to the big greedy financial institutions. The protesters are angry because they don't feel like they are not in control or have the power to change the terrible state of their own financial problems much less that of our entire country.







For the rest of this article go to Austin Personal Finance Examiner Shabana Shiliwala's article 'Why wait for Occupy Wall Street to fix your finances?'.  

When Is the Right Time To Buy A Home?

Someday, my 27-year-old daughter would like to own her own home. But right now, she’s happy sharing a rented townhouse with a friend. She says, “I am trying to make sure I can afford it before making that leap”. “I don’t want to be house poor.” 

There’s no question that owning a home is a desirable goal, and low interest rates in recent years have made it possible for millions of Americans to buy their first houses, invest in income property or trade up to a larger home. For many others, though, there are good reasons to continue to rent. You really need to assess your overall expenditures, not just your housing expenditures, and ask yourself if you really can afford to buy.

Home buying is not for everyone and certainly not for everyone at every point in their lives. For young people like my daughter, it’s not a bad strategy to get one’s financial life in order before taking on the kind of debt required to buy even a modest condominium or starter house. My daughter, who works at a local hospital, said she is focusing on paying off her college debt, then will turn her attention to accumulating money for a down payment on a house. She said that she’s wary of moving too fast because she’s seen friends struggle when they were financially unprepared to buy.

“Some have had trouble keeping up with their mortgage payments,” she said. “Or a condo association will raise fees and they can’t afford their place anymore. Home prices are still so high and rents are so low that many find it advantageous to rent. “But, of course, renters are missing out on the appreciation of a home,” she said. “There are renters who say they could put money aside, invest it smart and get that kind of appreciation — but most people don’t do that.”

There are also times when it doesn’t make sense to own. We see older people who have large houses that they’re selling. In some cases, given their age and lifestyle, it doesn’t pay to for them to buy a smaller house. But buying can also be a problem for young people who think they’ll have to move frequently for their jobs.

Residential real estate has relatively huge transaction costs like brokers’ fees, closing costs, registration fees and other expenses associated with the purchase of a home. To buy and later resell, figure it at about 15 percent of the home’s value. That’s huge, and it means you have to stay put, ideally for at least five years, to recoup that 15 percent.”

The key to making the move from renting to buying is cash flow. People need to make sure they have the money not only for the mortgage but for other expenses that come with ownership including real estate taxes, insurance, and repair and maintenance costs.

Most people need to buy property at some point in their lives. It gives you your own little piece of the American dream,it’s something that’s all yours. And, from a financial point of view, it’s also a good long-term investment. It’s an appreciating asset that will behave very differently from stocks and bonds, especially over a 30-year window.

How to Tell When you’re looking at a Bad Investment Property

When you’re researching any investment property, it’s critically important to be able to spot trouble before it happens. One of the most difficult, and most dangerous, problems for property investors is the occasional risk of acquiring a bad investment property. These things can cost a fortune, and can do serious damage to other financial interests as money has to be moved around to cover costs and losses. The only way to avoid these problems is to ensure that you’re able to instantly identify bad risks.

Being able to identify a bad risk easily also creates a very reliable quality control for your investment options. You can discard inferior options quickly, saving a lot of time, and often a lot of money.

Defining a bad investment property

The best way to ensure that you avoid bad risks is to use a set of characteristics which will instantly identify bad or even substandard properties. You’ll literally be able to recognize a bad risk on sight.

The definition of a bad investment property is:

Any indication of over valuation- Indications include high valuations for obviously low grade premises, and a price that really doesn’t stack up against comparable properties. The vendor may have put a high price on the property for negotiation purposes, but the property is still seriously overvalued and priced for unwary buyers, not a good sign under any conditions. Avoid like the plague.

Any sign of poor maintenance- Lazy and unscrupulous sellers don’t put a cent into maintenance, and signs of covering up defects like paint jobs and tacky internal or external work are another sure giveaway. Real costs of upgrades and maintenance are likely to be very high. These properties are real sucker bait, whatever their price. Don't touch any property if you’re not 100% certain of its condition.

Sales pitches- Ironically, one of the most certain signs of a truly lousy investment property is the overdone sales spiel. A typical sales pitch for a bad investment property is usually along the lines of “great first investment opportunity” “bargain investment in a great location” or similar clichés. In practice, the investment opportunity is for the seller, not the buyer. Location is irrelevant if you’re stuck with a high cost property. You can do a lot better for much less outlay.

Fittings- Very reliable indicators of a bad investment property are the fittings, usually overlooked by sellers. Ancient wiring and plumbing is a guarantee of major problems. The old wiring is likely to be a major fire hazard and will need replacing. The plumbing can cause serious issues, particularly in terms of property structure and in apartments, the risk of causing damage to other apartments is a virtual guarantee of lawsuits.

To put the real costs of buying a bad investment property into perspective- You can buy a top quality investment property off the plan that has no defects and is brand new for less the real cost of buying one of these awful, black hole investment properties. Your capital gain will be a lot better; your rental revenue will be much higher and you won’t need to practically rebuild the place.

Minimizing costs means making more money. Avoid the bad risks and focus on the high quality properties.

Apple Founder Steve Jobs Dead At 56 - Modern Day Edison

Apple founder Steve Jobs died today. Some of us use his products and love them. They have made a big impact on computer users and enthusiasts around the world. People love their Apple computers. Only Steve Jobs could get you to love a box of wires.

He was the type of person who was larger than life. His focus was laser sharp. He knew what he wanted and always set out to get it, everyday. He was so interested in making wonderful products that he came across as arrogant and impatient. But as the visionary maybe he knew time was short. He accomplished much in his life, but you always looked forward to what else he had to give us. We will never feel that way again.

He brought the computer industry from the days of stone knives and bear skins to elegant, machined, works of art. They do amazing things for us that were only the dreams so few years ago. But his dreams were built and are now in the homes of millions.

To some people computers are just tools to do an assigned task. To many they are a ways and a means to make dreams come true. Steve Jobs wasn't the only one to build computers that do work. But he made computers and electronics that changed lives. That changed the world.

You may think I am stepping out there, in my title, by comparing him to Edison. I don't think so. Like Edison, who's invention of the light bulb, changed the course of human kind. Job's contribution to software and hardware has set a path that will be followed for many years to come. His ideas are now foundational for all computer hardware and software. Just like Edison's invention is still basically the same idea 100 years later, so will Jobs be.

With the passing of Steve Jobs, a life cut short in it's prime, we will never see what Steve's next big idea would have been. It's one of the saddest things for the world to have such a great mind cut off and not be able to give more amazing things to the world.

Bank of America, Your New $5 Fee Doesn't Scare Me

Image via WikipediaBank of America is initiating a $5 monthly fee on people who want to use their debit cards for purchases. Customers using their card just at the ATM will not have to pay the fee. Already Wells Fargo, the other giant mega bank, has said it plans to test a $3 fee, which they say is because of new federal rules that made the cards less profitable for banks.

Out of all the banks, Bank of America has the most financial problems. It has more problems with bad mortgages, fallout from the sales of bonds made from those loans and questions about how it serviced its home mortgages. So it was inevitable they would be the first bank to try and recoup some of those losses.

The only way around not paying the fee is to have your mortgage with them or have more than $20,000 in account balances. So for the average customer, the fee will have an impact.

What should you do?

You can change banks and find one that doesn't have the fees. Many people are looking not to other banks but to an alternative thats been under the radar for many years, credit unions. These institutions main purpose is to serve the community. They are mostly local and sometimes regional. They are run under a non-profit business plan. So the fees are low or non-existent. The interest rates charged on loans and mortgages are lower than normal. Also the interest rates they pay are higher. They run the business totally for the benefit of the customer. In the U.S. you have the choice of many credit unions.

Go to CULookUp.com to find a credit union near you

Why not just pay the $5 fee?

If you have been at a bank for many years the hassle of finding and moving to another bank is just not worth the hassle over $5. I spend that much on one Starbucks coffee. Many people already have a bank they are happy with. They know where every branch is, the hours of operation, the ATM's, etc. It's not like they are charging you a exorbitant fee. For the price of a movie rental, you have the convenience you are already use to.

How Bloomingdale's Ruined My Weekend

Image via WikipediaYou never know how a trip to the mall could go so wrong. Well, one weekend my wife and I were planning a trip to the mall. My wife's goal was to go over Bloomingdale's. She had been wanting to buy a watch for quite a while. She is very careful how she spends her money so planning is step one in any purchase. She saw in the Bloomingdale's Sunday ad a watch that look very nice. She did some Internet research and concluded with the sale they were having, the price was right. Also the gift card she received from her boss along with a previous credit would make the purchase even more desirable.

The day of the sale came and we went down to the store to make the purchase. She has a Bloomingdale's store charge account and if she used it she would receive another 10 percent discount on the sale. The stars were aligning for the glorious purchase. But little did we know all would soon go very bad.

Credit cards are not you friend. 

The watch was selected, checked over, and ready to purchase. The discounts were in place and the price was the bargain of the decade. As the clerk rang up the sale she mentioned my wife's card is not being accepted as an open account. We were informed that the account was closed for inactivity. This was hard to believe because we still received advertising monthly from them in the mail. If it was closed why weren't we informed.

Things were looking very bad, we were informed, after a phone call to the company, that it was true; the account was really closed. But no worries the clerk said, just open a new one. And with the new one you will receive a new card discount on your first purchase. The clouds parted and the sun shone through again. Immediately, she filled out a new application. All vital information went into the clerks register and the process continued. The clerk had been happily chatting with my wife throughout the whole process until a look of disbelief fell on the clerks face. She exclaimed in horror, " You have been denied new credit." Well I can tell you this didn't go over very well with my wife. She is very protective and proud of her credit and credit score. She was mortified and quite upset.

Help! Get me out of here!

How would we get out of this situation and how could I get out of this mall as soon as possible? The clerk came up with the bright idea that I use myself as the Guinea pig and apply for the card under my credit. My wife agreed that there was no other choice for this problem. As she was hyperventilating I handed over the necessary information for the application. The whirring, clicking and flashing lights of the cash register soon produced a positive response. I passed, credit would soon be mine. The purchase was completed and we started to leave when the clerk said, "For being a new Bloomingdale's customer we would be receiving a $25 gift card in out first bill. My wife was strong and didn't go back to slap the clerk.

You may think the whole adventure was over then, it wasn't, my wife saw there was no reason to deny her credit so she was going to get to the bottom of this situation. She made calls to the Bloomingdale's credit card 800 number but never heard a satisfactory explanation. She was told that she would be receiving a letter in the mail from Experian explaining the reason why.

The letter soon came and indicated that she had "an excessive amount owed on accounts" nothing more. We went online, got her Experian credit report. There were no bad marks. All accounts paid on time and up to date. Besides a leased car, only $8000 in credit being used. Still no red flags.

Was all this hassle worth it? For me, I take it all in stride. But for my wife it was a problem. Was saving more than 60% on the watch worth all this hassle? It was for my wife.

Credit cards make you jump through a lot of hoops sometimes to save money. Their use can save you money, when not abused. We may feel we are using them to our advantage. But, whether it's reward points, purchase discounts, or other incentives it feels like we are slaves to them anyway. See you at the mall.