The 30 Year Mortgage Is The Biggest Financial Mistake You Will Ever Make

What makes the standard 30 year mortgage the norm for purchasing a home? The answer is if we didn't have the 30 year mortgage most people would not be able to afford the home they are in. The 30 year mortgage allows them to qualify and have an affordable payment. Affordable being a relative term. 

How it normally goes is that you find your dream house, you need to apply for a mortgage of $200,000. The rates are at 5%. You look into the payment on a 15 year mortgage and it is $1581 a month. You could probably swing it, but your hesitant. Your mortgage broker says you can get a 30 year mortgage and the payment would be only $1073. Yes, a $500 savings. You could really use that $500 for a lot of other things. It's temping and you decide on the 30 year. Bam. You just made the biggest mistake of your life.

By taking the 30 year mortgage, over the 30 years, you will of paid $100,000 more to the bank in interest. For that $200,000 house you will have given the bank $386,511. If you had a 15 year mortgage, you will only have to give the bank $284,685 over a 15 year period. What could you do with that $100,000 if you could of kept it in your pocket. What things were you not able to do because you gave all that money away? I have an alternative.

The 30 Year Home and Retirement Plan.

Start with the same $200,000 house purchase. Apply for the 15 year mortgage. Make the payments and pay off your house in 15 years. It's doable. Fifteen years will fly by and you will have a paid off house. Now your living in a paid off house, right? Take the same house payment and invest it every month. Put it in a stock and bond mutual fund or ETF's. Do this monthly investment for 15 years. Your writing checks as if you were paying on a 30 year mortgage. But now you are paying yourself.

If your investments grow at a rate of only 8%, which is a conservative percentage, at the end of 15 years your investment balance will be $547,089. Next step quit your job and retire. Your house is paid off and you have more than a half million dollars in the bank. If you wish to continue working 5 more years, continue with the plan and continue to make the monthly investment. At the end of the 20th year your balance will be $931,246. Almost one million dollars, now please retire.

"The 30 Year Home and Retirement Plan" will take planning and discipline on your part. It's a long term plan that will take good budgeting and sharp planning. The heart of the plan is the 15 year mortgage. The hardest part will be your determination to have a 15 year mortgage. It's so tempting to get a 30 year mortgage. I can hear the reasons for having a 30 year. I have heard all the excuses. With a 30 you have a lower payment and more cash flow to do other things in life. You may claim you will pay of the 30 off in 15 years. You just want the leeway in case some trouble comes down the road. The best thing about a 15 year mortgage is that it always pays off in 15 years.

The ground rules for this plan to work is you need to purchase a home that is affordable to you. It must not be so pricey that the payment makes you house poor. What is an affordable payment? The rule of thumb is only purchase a home where the payment is 25% of your income. If you earn $4000 a month, then largest house payment you can afford is $1000.

It's your choice. Make payments for 30 years to the bank or make payments for your home and to your future.

Betterment Review: Making Investing Easy For The Rest Of Us.

Image via CrunchBaseBetterment is an easy way for the new investor to get started saving for retirement. All of us know that investing in equities is one of the best ways to prepare for retirement and future goals like college or purchasing a home. The problem is, it's hard to get started investing because you don't know what investments are the right ones. Your choices consist of stocks, bonds, mutual funds, and ETF's. Who knows what to pick? Even if you knew what to invest in, what percentages in each investment is appropriate.

Betterment solves all those problems. You pick how much you want to invest in stocks and how much you want to invest in Treasury bonds. If you don't know what to pick, Betterment helps you choose with recommendations depending on your goals and age. Signing up is quit and easy. You have a dashboard where you can set up automatic deposits. You link your Betterment account with your bank. Transferring money in or out of your account is available at any time with no fees involved.


Click Here to open an account at Betterment

What does Betterment invest my money in?

Your money is invested in a stock market portfolio made up of ETFs that reflect the broad US market, which allows you to invest in literally thousands of companies all at once. Currently the Stock Market basket is made up of the following of ETFs:

• 20% Vanguard Total Stock Market 
• 20% iShares S&P 500 Value Index 
• 20% iShares S&P 1000 Value Index 
• 15% iShares Russell 2000 Value Index 
• 15% iShares Russell Midcap Value Index 
• 10% DIAMONDS Trust Series 1 

Why these investments?

Individual stocks are very risky, but they deliver a higher overall return. Some stocks don't do so well. The trick is picking the winners. Most professional stock pickers don't always get it right. For the new investor, it's extremely difficult to be successful. Over the last 80 years the US stock market has returned about 9.4% per year on average. The key to long term stock investing is diversification. Betterment's portfolio represents the total US stock market, so it's like owning a little piece of every company in America. This spreads risk and reward over a broad number of companies.

Betterment also invests your money in Treasury bond ETFs that are lower-risk and steadier-earning than most other investments. They consist of:

• 50% iShares Barclays TIPS Bond Fund 
• 50% iShares Barclays 1-3 Year Treasury Bond Fund

With this simple combination of stocks and bonds your portfolio is ready to go. With these few investments Betterment gives you abroad diversification.

What's this going to cost me?

The fee structure is very simple. There is an annual 0.95 fee prorated over the four quarters of the year, 0.225% a quarter. There is no other charges. There are no transaction fees, no deposit fees, no withdrawal fees, no rebalance fees, no maintenance fees, and no other hidden fees.


Why do I like Betterment?

• They pick all the investments.
• The fee structure is dead simple.
• You can move your money in and out when ever you like. It's linked to you checking account.
• Your account is automatically rebalanced when it drifts by 5%.
• Betterment is a Registered Investment Advisor with the SEC and they’re SIPC insured.
• No minimum balance to sign up.

Here is a link to the free Betterment Demo Page.

Why trust my money to Betterment?

Betterment is an SEC Registered Investment Advisor, and Betterment Securities is a broker-dealer regulated by FINRA and the SEC. The securities in your account are protected up to $500,000 by SIPC. Betterment is simple and transparent. Your money is invested in well-established funds, chosen for their good management, efficiency, and long track records.

Who will benefit from Betterment?

If you are brand new to investing, without a clue of what to do, or where to get started, this is for you. They take care of it all. At Betterment you will finally have an easy way to get your feet wet in investing.

Click Here to open an account at Betterment

It's Time To Cut Costs And Save Money, Here's How

Image by LividFiction via FlickrIt's getting tough out there. Most all my bills are going up. My car insurance bill has been sneaking up. I just changed companies and will be saving $50 per month, locked in for a year. It's a challenge to find ways to save that hard earned dollar.

Save Electric

• Boil your water in the microwave instead of on the stove. If you use the stove make sure to cover the pots to not lose the heat and use the appropriate size burners. Your saving 60 percent of your energy using a microwave.
• Pack your freezer with food because it's easier to keep it frozen when there are more items in there. If you don't have the items, using a bag of ice will do the same thing. Your freezer will run less and save electric.
• In the winter lower the thermostat. Each degree lower you set it will save you 3 percent on your heating bills. Water filled air retains heat better so place pans of water near the heat registers to add moisture to the air.

Save Water

• Save water on every flush by adding a gallon or half gallon container of water to the flush tank. The savings can really add up the more toilets you have.
• Collect your rain water to water your garden. You can make your own with a plastic garbage can.
• Fix that leaky faucet or toilet. Just six drops per minute will waste over 6,428 gallons of water per year.
• Shower faster. A 15 minute shower per day costs $310 per year. Cut that shower by 5 minutes and save an easy $100 per year.

Save In the garden

• At your home improvement store buy torn or ripped bag goods. They always mark down damaged mulch and fertilizer bags. Go at the end of the weekend to find the greatest selection.
• Also wilted or mishapped plants can be picked up for a song here also.

Save With Your computer

• Save on printer ink by using the Century Gothic Font which consumes 1/3 less ink when printed. That could save up to the cost of one printer cartridge per year.
• Have your computer plugged into a electrical strip and switch it off when you shut down. It's sucking that phantom power even when it's off. Set your monitor to shut off after 5 minutes of being idle. It's easily wakes up when move your mouse.

Get organized

• Organized homes go hand in hand with saving money. Extra books or text books will fetch a few dollars. Sell them on Ebay.com or Amazon.com. Or try cash4books.net or sellbackyourbook.com
• Sell your old furniture on Craigslist.com or give it away to Freecycle.org.
• Donate your your unused household item to Goodwill or other worthy services. Make sure to get that donation receipt to use on next years taxes. Keep track of those donations at Itsdeductible.com.

There are many ways to save and earn a little money. We need it more than ever in this economy.

What ways can you add to this list ?

Basic Social Security Questions Answered

Image via WikipediaI am still in my mid-fifties but like always continually researching and planning for the future. Social Security being a big part of that I dug up some basic questions that needed answers.

1. I am about to turn 62 and plan to file for Social Security. How do I get started?

You should apply three months before you want to start collecting. Sign up online or call 1-800-772-1213. Here are some documents you may have to produce: your Social Security card or a record of the number; your birth certificate; proof of U.S. citizenship or lawful alien status; military discharge papers if you served before 1968; and last year's W-2 tax form or tax return if you're self-employed.

2. How is my Social Security benefit calculated?

Benefits are based on the amount of money you earned during your lifetime – with an emphasis on the 35 years in which you earned the most. Plus, lower-paid workers get a bigger percentage of their preretirement income than higher-paid workers. In 2010, the average monthly benefit for retirees is $1,172.

3. If I remarry, can I still collect Social Security benefits based on my deceased first husband's record?

You can — subject to several rules. In general, you cannot receive survivor benefits if you remarry before age 60 unless that marriage ends, too, whether by annulment, divorce or death of your new husband. If you remarry after age 60 (50 if disabled), you can still collect benefits on your former spouse's record. After you reach 62, you may get retirement benefits on the record of your new spouse if they are higher.

4. Why won't retirees get a cost-of-living adjustment for 2011? Many of us count on this for food, medicine and other bills.

COLAs are based on the consumer price index, which tracks inflation. Because inflation has been flat, according to the CPI, there will be no benefit increase — for the second year in a row.

5. I am 56 and receive Social Security disability benefits. At what point will I switch to regular Social Security? Will the monthly amount change?

When you reach full retirement age, your disability benefits will automatically convert to retirement benefits. The amount will remain the same.

6. My husband and I are getting a divorce. He wants the settlement agreement to say I will not get his Social Security benefits. Can he do that?

No, he has no control over your future benefits. You can qualify for a divorced spouse's benefits if you were married at least 10 years, are now unmarried, are 62 or older, and if any benefit from your own work record would be less than the divorced spouse's benefit.

7. I have a pension from the Army. Will that affect my Social Security benefits?

It will not. You can get both your Social Security benefits and your military pension. If you served in the military before 1957, you did not pay Social Security taxes, but you will receive special credit for some of that service. Special credits also are available to people who served from 1957 to 1967 and from 1968 to 2001.

8. I didn't work enough to qualify for Social Security. My husband gets it, but he is ill and may not live much longer. Will I be able to collect benefits?

Yes, but your benefit will depend on your age and situation: If you are at full retirement age or older, you'll get 100 percent of your deceased husband's benefit. A widow or widower between 60 and full retirement age receives a reduced benefit.

9. Is it true that some people are collecting Social Security benefits who never paid into the system?

Social Security is an earned benefit. In order to collect a retirement benefit, a worker must pay into the system for at least 10 years. In some cases, nonworking family members, such as a spouse, may be eligible for benefits based on the worker's record. Tough rules in place assure that only legal residents can collect Social Security benefits.

10. I filed for Chapter 13 bankruptcy after being laid off. Do Social Security benefits count as income in bankruptcy, or are they protected?

Your benefits are protected. Social Security is excluded from the calculation of disposable income when setting up a debtor repayment plan.

11. My husband died recently. Can I choose between my own benefit and that as a widow? Can I collect both?

Eligibility for a widow's benefit begins at age 60, or 50 if you are disabled. If you are full retirement age, your survivor benefit will be 100 percent of his benefit; if you take it early, the amount will be reduced. You can switch to your own benefit as early as 62. In any event, you can only get one benefit, whichever is higher.

12. My husband died recently. Can I choose between my own benefit and that as a widow? Can I collect both?

Eligibility for a widow's benefit begins at age 60, or 50 if you are disabled. If you are full retirement age, your survivor benefit will be 100 percent of his benefit; if you take it early, the amount will be reduced. You can switch to your own benefit as early as 62. In any event, you can only get one benefit, whichever is higher.

13. I began drawing Social Security at age 62 in 2006, but I'm still working. Since I'm still paying Social Security taxes, will my benefits increase?

If your latest work years are among your highest-earning years, the SSA refigures your benefit and pays you any increase due. This is automatic, with new benefits starting in December of the following year.

14. My wife is 62 and collects Social Security based on her own work record. Can she receive spousal benefits based on my record when I retire in a few years?

If she is eligible for both benefits, yours and hers, Social Security will pay her own benefits first. If she is due additional benefits, she will get a combination of benefits equaling the higher spousal benefit.

15. If I retire to a foreign country, can I have my Social Security benefits sent there?
If you are a U.S. citizen, you may receive your benefits in most foreign countries, usually by check or direct deposit. If you are not a U.S. citizen, the answer is more complicated, with certain rules applying to certain countries. For specifics, see the Social Security publication "Your Payments While You Are Outside the United States."

16. I started collecting Social Security at 62. I heard that if I changed my mind, I could pay back the amount I'd collected and get a higher payment. Is that possible?

That used to be true, but the Social Security Administration just published new regulations that curtail this option. Now, if you want to suspend your benefits, you must do so within 12 months after first receiving them. According to Social Security, 85 to 90 percent of beneficiaries who withdraw their applications do so within this time frame anyway. The new rules, which became effective Dec. 8, also specify that beneficiaries are limited to one refiling in a lifetime.

17. Can I collect Social Security and unemployment compensation at the same time?

Yes. Unemployment benefits aren't counted as wages under Social Security's annual earnings test, so you'd still receive your benefit. However, the amount of your unemployment benefit could be cut if you receive a pension or other retirement income, including Social Security and railroad retirement benefits. Contact your state unemployment office for information on whether your state applies a reduction.

18. I am 63 and collecting Social Security. If I work, will my benefit be cut?

It depends on your income. Between age 62 and the start of the year when you reach full retirement age, $1 in benefits is withheld for every $2 you earn above a limit, which is $14,160 in 2010. In the year you reach full retirement age, $1 is withheld for every $3 above another limit, $37,680 in 2010. In your birthday month, the limits go away — and your benefit will be recalculated upward to compensate for the money that was withheld.

19. I know I can start collecting Social Security at age 62. But should I?

That depends. If you're healthy and can afford it, you should consider waiting until you reach your full retirement age of 66, or even 70. Here's why.

By law, the age when workers can qualify for full benefits is gradually increasing, from 65 to 67. (It will be 67 for anyone born after 1960.) If you claim benefits before reaching full retirement age, they'll be reduced. That's because the goal set by Congress is to pay the same lifetime benefits to an individual regardless of when they're initially claimed.

So let's say you claim benefits at age 62 and get $1,000 a month. If you can wait until you're 66, you'll get at least 33 percent more ($1,333). And if you can wait until you're 70, you'll get at least 75 percent more ($1,750).

Social Security determines the amount of your benefits based, in part, on your highest 35 years of earnings. So you may get a larger monthly benefit if your extra years of work are your top earning years.

Kids And Having A Rational Easter

Image via WikipediaAre you concerned about the blatant commercialism of Easter? In stores I have noticed that right after our last commercialized holiday of Valentines Day out came the Easter candy and decorations. This concerns me from the view point of children. Even though we send our daughter to a Christian school she still asks about the existence of the Easter Bunny. "Is the Easter bunny real Dad?" she asks me. I see that she has her doubts so I finally let her know there is no Easter bunny. It's quite easy to discredit the notion of an Easter bunny traveling the world distributing Easter baskets to all little children. I bring up the fact the Easter bunny has no way to manufacture or purchase so many Easter baskets. He has no known way of traveling the world to deliver them. And finally has no opposing thumb to even hold a Easter basket. She accepts the explanation, happily.

It's easy for my daughter to accept the misguided Easter bunny story as just a way to get parents to buy candy gifts for their children. I still am not ready to discredit her belief in Santa Claus,yet. I'll be working on that eventually. But I am sure she will figure that one out on her own, I hope.

We have these wonderful religious holidays and they get so cluttered up with the commercialism aspect. We as adults, have the capacity to distinguish the the real from the false. Yet the children don't. It's our job as parents to guide them through this maze of misinformation. On one hand they are not able to comprehend the holidays true meaning but can easily understand the holiday's false meaning. As parents we love to see the child enjoy the false meaning, for the short time as they are growing up. But the day comes when it's time to burst that bubble.

Where is the line of raising your kids to value our religious holidays for their true meaning versus their commercialize meaning? Who do we blame for all this false direction. Maybe we blame the companies who make all this high priced chocolate and candy. What about the stores who sell the candy and decorations. I don't see it as their fault because they are just wanting to take your money for providing a product that you demand.

The answer lies somewhere in the middle. Why is it the chocolate Easter egg or hollow chocolate bunny tastes better during Easter time? It's made of the same ingredients you can have in any Hersey bar all year round. I believe it's all about the experience. As parents we can use the Easter basket traditions as a way to teach our children about the experience of gift giving and gift receiving. There is a certain sense of enjoyment by the receiver of said gift and the good feeling of giving by the giver.

So it's not all about the chocolate after all, and although you may be paying twice the price, many would argue it's a price worth paying. In the years the children are aware of the bunny aspect of Easter we teach our children about giving and receiving. When they grow up we use that lesson to explain the true meaning of Easter. That one person gave his life so that all people could receive eternal life.

Giving and receiving is a foundation of any altruistic society. I think of our society as such. So passing on these traits, to our children, is of utmost importance. Have a Happy and Rational Easter.

25 Tips To Celebrate Earth Day

Image via WikipediaThis is the 40th anniversary of our annual Earth Day. A day where we promote the sustainability of our land, water, and air through individual and collective efforts. If you remember forty years ago the notion of an Earth Day was thought of as silly. Not today, Earth Day has grown to a worldwide effort to educate and take action on everything concerning the environment.

Earth Day was created as a response to the systematic pollution and disregard for the environment. It was founded by U.S. Senator Gaylord Nelson as an environmental teach-in held on April 22, 1970. Earth Day is celebrated in spring in the Northern Hemisphere and autumn in the Southern Hemisphere. Earth Day Network, a group that wishes to become the coordinator of Earth Day globally, asserts that Earth Day is now observed on April 22 in virtually every country on Earth. World Environment Day, celebrated on June 5 in a different nation every year, is the principal United Nations environmental observance.

The idea behind "Earth Day" is totally a Baby Boomer concept. It's maturity is tied to the generation that brought it to life. As baby boomers age they start to be comfortable with Earth Day's competing values. Earth Day, in effect, also is Boomer Day. It shows the essential conflict between self interest and the public interest. The day reflects Baby Boomer’s conviction that we can have it all if we just tweak and adjust and think much differently about how we integrate manmade and natural systems. Now that it’s completely plain, that the more sensitively we treat the earth, the better off we’ll be in every aspect of our lives. Baby Boomers have the satisfaction of knowing that they were right.

The beauty of being responsible with the environment is that it's so easy to do. It doesn't cost much, it's just an adjustment to your behaviors. Here's a list of things you can do to make an impact on Earth Day and all year.

25 Tips To Do On Earth Day And All Year Round

1. Lower your thermostat. Buy a programmable thermostat.
2. Reuse your water bottle. Avoid buying bottled water. In fact, reuse everything at least once, especially plastics.
3. Check out your bathroom. Use low-flow faucets, showerheads, and toilets.
4. Start a compost in your back yard.
5. Buy compact fluorescent light bulbs. You'll find more on energy-efficient products and practices at Energy Star.
6. Recycle your newspapers.
7. Car pool.
8. Go to your local library instead of buying new books.
9. Get off junk mail lists. GreenDimes can get you started. They’ll even plant a tree for you!
10. Buy products that use recyclable materials whenever possible.
11. If you use plastic grocery bags, recycle them for doggie poop bags or for small trashcan liners.
12. Bring your own bags to the grocery store. Given a choice between plastic and paper, opt for paper.
13. If you have a baby, consider using cloth diapers. To sign up for a diaper service to do the dirty work, check out the National Association of Diaper Services.
14. Consider buying a fuel-efficient car or a hybrid.
15. Go paperless. Consider reading your newspaper and magazine subscriptions online. Switch to electronic banking and credit card payment, too.
16. Turn your car off if you’re going to be idle for more than one minute.
17. Do full loads of laundry and set the rinse cycle to “cold.”
18. Reuse. Plastic food containers make good crayon and marker holders. Use padded envelops more than once. Buy your toddler or preschooler’s clothes from a thrift shop and give away those that don’t fit to friends. Goodwill or the Salvation Army can help.
19. Limit the length of your showers. Even better, take a “navy shower,” shutting off the water while soaping up and shampooing.
20. Don’t run the water when brushing your teeth.
21. Wash towels after several uses. 
22. Give away your goods and find new ones at FreeCycle.
23. Build a greener home.
24. Go paperless at work. Distribute company information and post company material online.
25. Eliminate junk mail at work. For no fee, the EcoLogical Mail Coalition will eliminate the junk mail that former employees receive at work.

Today, it's easier than ever to recycle. Many city's distribute recycle bins and have weekly pick up. In your town or county there is a bulk waste disposal site. There are now companies and county sites to bring electronics, computers and TVs to be recycled. Even places for toxic items like paints, chemicals and fluorescent bulbs. We have no excuse anymore for not recycling. Do your part on Earth Day and all year round.