Personal finance and budgeting
Free budgeting tool
Here is a simple Zero based budgeting tool created in Excel for your personal finances that we created for your use. It is based on Dave Ramsey’s “zero based budget”. The idea is that whatever money you bring in per pay period gets 100% allocated to a particular category. If you have excess dollars once you’ve allocated to all the categories then you need to adjust where your money is going. Continue reading ‘Free Budgeting Tool’
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Here’s an article worth mentioning off Bankrate via MSN. (Confused)
Anyways, it contains some good “not to do’s” regarding your money. In a nutshell you shouldn’t do the following…
Spending without a budget.
Carrying a balance on credit cards.
Ignoring interest rates.
Not investigating disability insurance.
Failing to see how little purchases add up.
Not matching employer’s contribution to retirement.
Waiting until the last minute to fund IRA.
Paying everyone else, saving “what’s left.”
Not managing your investments.
Getting emotional about your investments.
The article describes each no-no in depth so go check it out.
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Many of you have already heard the news, Subprime loans are going to be the death of many a lender. Many subprime borrowers are beginning to default on their loans and there too many defaults for the market to absorb.
Other reasons are rising interest rates and declining home prices. This makes it difficult for those with ARM’s that need to refinance to do so.
Here’s a short article from MSN that summarizes it all pretty well…
Subprime lenders, or lenders to people with poor credit ratings, were slammed Monday, with the top five each losing more than 25 percent. Recently, major financial institutions such as HSBC Holdings PLC have been taking writedowns on mortgage loans as a growing number of subprime borrowers are delinquent or in default…. full article
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There is a whole lot of “noise” about real estate investing. Will it make you rich? Will it make you bankrupt? How about, “Will it help you just barely get by?” Believe it or not, it will do all these things. You can take my word for it, I’m a full-time real estate investor. Yes, that’s what I do for a living aside from make periodic posts in this blog and invest some time in some other web ventures. And I’ve made a fair amount of money doing it.
Quickly, let me break down what I’m saying:
Will it make me rich?
It can. If you make the right decisions. (which I will outline below) This is the most promoted aspect of a life of real estate investing. I don’t, however, think this is the reality for most people who get into real estate. We’ve all heard stories of the family member or friend who purchased a home and sold it six months later for significantly more money than they paid for it. We’ve seen Donald Trump’s - ahem, gaudy - penthouse and the bevy of buildings named after him. We believe the mythos of the “rich as king Midas” real estate investor who wipes his rear with the hoards of cash he generates from every flick-of-the-wrist deal he does. This is all part of the average person’s understanding of what real estate means to us. But don’t get me wrong! I’ve never seen so many people get “rich” so quick as they do in real estate. But here’s the rub: It’s just not (and I mean this) as easy at it might seem. It is a real business that needs to be run like a real business! Most people will become real estate agents to get into the game. Did you know that in one of the hottest real estate markets in the history of the universe (Phoenix, AZ) over the last five years, that the average agent’s commission actually went down? Yes, it’s true. A plaque on the wall does not a rich person make. (The average commission in 2005 for an agent with two years of experience was approximately $13,000!)
Will it make me bankrupt?
Well, maybe. But don’t focus too much on obvious downside of being entrepreneurial. Here’s a typical bankruptcy scenario: Joe goes to a real estate seminar. Joe learns that rental properties make people rich. Joe buys 5 properties at market value assuming they are going to appreciate in value. (He’s even willing to lose $50 per month per home) Joe’s interest only loans adjust up or one of his properties needs a new roof but he’s completely leveraged out. Joe goes bankrupt.
There are, of course, numerous ways to lose your shirt in real estate but that’s the most common.
I’m going to skip the “will it help me just barely get by” to outline my secrets (wink, wink) to real estate success.
They are very simple:
PAY NO MORE THAN 65% OF TODAYS REALISTIC VALUE FOR THE PROPERTY
This means that if a property is worth $100,000 to everyone else you’re only going to pay $65,000
Sounds impossible doesn’t it? People usually give me a blank look at this point.
ESTABLISH DEMAND EVEN IF YOU GET THAT KILLER PRICE
It doesn’t matter if you can get something for 65% of the marketable value if there’s no one to buy it. Another important parameter is “absorbtion rate”. For example: If 100 homes sell a year in an area and there are 300 on the market in that same area, I’m probably not going to add to the mess by putting another home on the market.
HAVE A SOURCE OF PATIENT FINANCING
If you can find those 65% deals you should have no problem at all lining up financing. But here’s the important point: Try to ensure that they’re not going to come knocking if the deal goes long or the market changes on you. You want a financial partner instead of a pure play lender. (Even if all the contracts and documents suggest that they are just a lender.)
I have made a lot of money following these basic rules. Successful ventures should not be mysteries. They are usually a product of following some basic rules like those outlined above.
I’m going to offer an hour or two of free consulting to the first 3 people that respond to this post with a comment.
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I know this is a sensitive question, but why are you in debt? More specifically why are you in debt with credit cards and other non-mortgage debt? I know why I was in debt. I wanted more than I could pay for. And once I had more than I could pay for I found myself making payments on my debt with more debt. A death spiral and one that many, many people find themselves in.
Here’s the great things that consumer debt can do for you:
1. Take away options - When you’d rather (fill in the blank), you have to work instead to keep your head above water.
2. Increases stress in your life and the life of your friends and family.
3. Create all sorts of headaches (and heartburn) when you finally can’t make a payment or two and the creditors start calling you.
4. It can cost you everything: your home, your possessions, your marriage, and in very extreme situations, your life.
5. It can keep you from getting a great job. Employers are increasingly checking credit reports before hiring.
6. Steal your retirement - Every dollar in interest paid is potentially one less day of retirement.
The negatives of consumer debt could go on and on. But the question is a very valid one because it tells us about financial motivations. Once again, why are you in debt? And, do you want out?
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Selena Maranjian wrote an article on Fool.com that is a very clear description of a possible (and likely) impending mortgage crisis. Of course most of us have heard this warning time and time again but it’s worth revisiting if not for the simple fact that the more we understand about the ARM crisis the quicker we may be able to help ourselves, families, and friends recover from bad mortgages.
…and rates are rising, there’s the potential for a lot of heartache. So says a report from ACORN, the national community advocacy group, titled “The Impending Rate Shock.” It pointed out that about 75% of subprime home loans were ARMs. Folks who likely aren’t flush with funds face steeper housing bills in the near future, according to the report: “Rate shock could mean a sharp increase in foreclosures in some of the urban and minority communities that most need to build wealth through homeownership….” Plenty of others are affected, too — roughly 24% of all home loans nationwide are ARMs.
Technorati Tags: Budgeting, Debt, Mortgages, Real Estate
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Part of ultimately being financially successful is both being a good saver and a good worker. Being an independent businessman man myself I’m always fascinated by individuals (and couples) who succeed in their entrepreneurial ventures. Once such example is the couple who started the POM Wonderful group of beverages. It turns out that they also purchased the Franklin Mint back in the 80’s, FUJI Water recently, and a ton of land in California two decades ago. Anyways, their story is interesting and inspiring.
Story
A Juicy Empire
Technorati Tags: Finance, Investing
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Because we actually care about your financial future - and believe it or not, we do - we’d like to know what financial subjects our reading public are most curious about. Is it budgeting? Saving? Retirement? Mortgages? Something else?
Please take a few moments to sound off on what you want to know the most about. We’ll do our best to provide you with relevant information you can actually use.
Technorati Tags: Budgeting, Credit, Debt, Finance, Finance Tools, Investing, Mortgages, Real Estate, Retirement
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The concept of saving money is very simple: Don’t spend everything you make. Put some away into savings. Actually doing savings is much more difficult. Right? However, there is one common theme I keep hearing no matter which financial guru I happen to see on t.v. or read from. Here it is: PAY YOURSELF 10% OF YOUR INCOME BEFORE YOU PAY ANYONE OR ANYTHING ELSE! (this includes creditors, collection agents, the grocery store, your mp3 habit, Bob’s Steak and Rib Pub, etc, etc, etc.)
Now before you lose patience with me because you either think this is too simple to work, too dumb to work, or simply not worth it let me assure you - It is the best possible way to start on your path to financial prosperity. Having been hugely in debt and low on cash flow a mere 5 years ago I can attest to the effectiveness of using this method. It’s absolutely amazing how quickly a nice little cash cushion can add up and be there for you in case of a real emergency or an opportunity to pay off debt. It can also be rolled over into investments if your debt is paid off. The key is that you have to give it shot, work it consistently, and be rewarded with the gratification of not being a part of the status-quo who don’t have a pot to “you know what” in.
I recommend using an ING Direct account to put your savings in. ING is currently paying over 5% interest (which is about 4.75% more than your bank will likely pay you in your savings account.) and it’s easy to set up and use. One nice feature is that is takes a couple of days to transfer money back and forth. This can keep you from spending your money on impulse but won’t keep you from using it in emergencies.
Technorati Tags: Budgeting, Debt, Finance, Finance Tools, Investing, Retirement
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You’ve probably heard the old adage “a penny saved is a penny earned” right? How about this modern twist - “A penny saved is $200 (if invested wisely and compounded over 20 years)” Well, I’m not exactly sure how much compounding it takes to turn a penny into $200 but I’m very sure that saving money leads to wealth. There’s absolutely no doubt about that! The Motley Fool just published a great article about how cutting corners on things like eating out and expensive coffee drinks can help you retire much sooner.
Are you fretting about your lack of savings and the amount you’re putting away for retirement? Well, me too. I always do. Today I want to tell you the best way I’ve found to accumulate money beyond setting aside part of your paycheck each month. It’s fairly easy and fairly painless, and it could add up to hundreds of thousands of dollars by the time you retire. - Rex Moore via The Motley Fool
How To Retire Faster via the Motley Fool
Here’s another quick and easy idea! The Orange Savings Account. Earn 4.35%. Great rates, no fees, no minimums
Technorati Tags: Budgeting, Finance, Investing, Retirement
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