I was browsing Free Money Finance and I came across this article that gives his opinion about getting a “no money down” home mortgage. Read that article, because I share the same opinion as free money finance. I just bought my first home 8 months ago, and it was a nerve racking experience. You feel like you are signing your life away with all of the paper work. We were able to get a conventional 30 year mortgage with 20% down. We paid some of the down payment and my wife’s parents paid some as a loan. Even though I normally advise to shy away from family loans, this works out for both parties. They will get their money back when we sell the condo in a year, and they have the satisfaction of knowing they helped their kids get their feet off the ground. It helped us, because we were able to avoid private mortgage insurance which can increase your monthly payment by $40 to $75 per month. Most conventional loan lenders will make you purchase PMI if you do not put down 20%, because it protects them if you default on your loan.
I don’t think I have ever talked about CDs on this blog in the psat, and that is for a reason. I don’t like them. With the advent of online savings accounts and well-performing mutual funds, CDs do not offer many advantages over other financial products. Basically, they are a financial product that banks use in order to keep your money for longer than you want. They may have been a good short-term financial investment product before the internet and the rise in popularity of mutual funds, but now they are outdated, in my mind.
By Erik Folgate
Good Morning America has been running a series called “Take More Control of Your Life” and this morning’s feature was starting a home-based business for $200 or less. You have heard me talk about it before, and it is a reality that you can become an entrepreneur for very little money. You don’t need thousands in venture capital or a huge small business loan from the bank to get started.
Many of you like to disagree and mock my disgust for credit cards. I will face the facts that I am still well in the minority of people who think that credit cards are a horrible financial tool and they only do more harm than good. But, I’m okay with being in the minority on this one. The first time that you get screwed over by Capital One or Chase, you’ll come back to my site and say, “maybe you were right”.
I was reading the local newspaperr, the Gainesville Sun, and it showed a poll given to teens about how many of them thought that they would be wealthy when they were older. Their biggest dreams were to be rich as the number one reason, famous as the number two answer, and then helping others in need came after that. This is what our culture helps our young people believe. They force the youth to be believe that every one of them can or will be rich and famous. However, what our culture fails to do is teach them how to do it. Kids don’t understand the hard work that goes into building wealth. They don’t realize that 99% of millionaires are self-made millionaires who worked very hard to get where they are today.
I started investing in my 401(k) plan about 14 months ago. In 2006, my portfolio earned about 11% which is outstanding, well, good enough for me to be happy. Some of you might think that’s a waste. But, this is a retirement account, so if it averages 11%, i’ll be very happy. I invest in 5 different mutual funds. They are listed below:
Around this time of year, I usually hear people boasting about how much money they are going to get back from their tax refund. The problem with this is that you shouldn’t be getting back a huge refund if you are properly withholding your federal taxes. Do you really want to give Uncle Sam a free loan on your money for an entire year? Because that is what you are doing if you are letting the government take more taxes than are owed. If you are getting back a big refund this year, make sure you readjust your W-4 with your HR department. It’s much better to have that money go into your pocket every paycheck than let the government hold it for a year. I understand that some credits and deductions aren’t factored into the W-4 deductions which allow you to receive a refund back, but if you’re getting a couple grand back from your refund this year, there is a problem.
By Erik Folgate
If you’ve read enough personal finance blogs, then you’ve probably read enough scenarios about giving up your grande mocha-chino in order to save more money. I understand the reasoning for being more conscious about controlling the spending on life’s smaller luxuries. I tend to think in bigger terms when it comes to saving money. There are a handful of large purchases that you will make many times in your lifetime, and you can save a chunk of money if you control these expenditures rather than how many times you rent a movie in a month.
I’m sure that most of you have seen the show on MTV, “Pimp My Ride”. It’s a great show. Some of the stuff they do to those cars is sick. Some of my personal favorites were the waterfall/river running through the middle of the interior of the car, and another car where they turned the entire trunk into a sweet karaoke machine. Tricking out a car has become wildly popular over the past decade. Honda Civics with 22″ rims, and Eldorados with LCD monitors and playstations installed. Young people love to pour money into their cars, but is it worth it?
A good habit to get into is to check out your retirement account two or three times per year to evaluate your fund’s performance. Some geeky investors might think I am in idiot for thinking that checking your retirement account only a few times per year is a good thing. The reason that I think you should leave your retirement account alone is because I don’t want people to think they can time the market. Unless you are an expert on the market and you stay up on the countless information about the stock market, you’ll never be able to time it. In fact, most good financial professionals will tell you that you lose most of your returns when trying to time the market. If you keep shifting around your money from account to account, then you’ll hurt your investments greatly.
A good habit to establish is reviewing your credit reports at the beginning of each year. The best part is that it is now free to review your credit report from Experian, Transunion, and Equifax one time per year for free! Go to AnnualCreditReport.com to view all three of your credit reports for free. Be aware of other sites with similar domain names that claim to give you your credit report for free, but rather it is a free trial that will charge you money after 30 days if you don’t cancel the membership. The most notorious site doing this is FreeCreditReport.com. Here are three things to do when reviewing your credit report:
This week, I am going to write a five part series about organizing your finances. Many people get on the New Year’s resolution kick at the beginning of the year, so I thought this would be a good series to help people get their money in order to achieve their financial goals. In order for a goal to be achieved, there has to be a strategy. Strategies must be well-planned and organized or else the strategy is nothing but a theory. You want to start saving more money, pay down debt, invest wisely, but what is the first step? The first step is organizing your money.
Christmas is one week away, and you have probably been so busy buying gifts and going to parties that you have not had a chance to sit down and reflect on the past year. Whether you are celebrating Christmas or any other holiday, this season is all about giving. Giving gifts and giving of yourself is what matters the most for the next two weeks.
- Shop online, especially if you are buying electronics. Online retailers have less overhead, more rebate promotions, and Google Checkout will give you $20 off on your first time using Google Checkout with every purchase over $50. Many retailers offer free shipping this year as well.
- Pay Cash for your gifts. I’m talking about paying with cold, hard cash. Studies have shown a correlation with increased spending when using plastic, even if it’s your debit card. Plus, if you’re in an environment where you can negotiate price, cash speaks louder than words.
By Erik Folgate
My wife and I sat down today and mapped out our expenses for the next 6 weeks based on my pay periods. We figured out which bills needed to be paid during which pay period, and took the remaining amount of money after all the bills were paid and figured out where that money needed to go. We are going skiiing in a week, then the mayhem of Christmas, and then my best friend is getting married, so we will have a busy next three weeks. Sitting down and communicating about where the money needs to go and how much we have to spend on each category will save about 10 or 12 arguments in the next three weeks. We are both on the same page now, and there will be no surprises when we are spending our money.