5 Student Loan Secrets You Should Know

5 Student Loan Secrets You Should Know
If you’re still paying off student loans and expect to do so for a long time to come, then you might think that you know everything there is to know about them. However, there are some concepts associated with student loans that many college graduates don’t know about.

Here are 5 student loan secrets you should know.

1. Co-Signer Releases Aren’t That Simple

You might have secured a loan with the aid of a co-signer. Maybe a parent or some other generous relative co-signed for the loan as a way to help you further your education.

However, the co-signer might have been reluctant to sign on the proverbial dotted line. As a result, you offered some reassurance that your generous co-signer could be released from the loan in as little as a year if he or she started to get cold feet.

So everything’s cool, right?

Not necessarily. It’s at the discretion of the lender to allow the release. That means your generous relative could be stuck worrying about the loan if you lose your job or suddenly have trouble making ends meet.

2. Don’t Count on Public Service Forgiveness

You might think that if you’re in a bind and have trouble paying off the loan, you can get out of it by going down the public service forgiveness road. That’s when you work for the government for 10 years and your debt is completely forgiven.

As with so many other things in life, there is a “rest of the story.” For example, the fine print (which you may or may not have read) indicates that your years of payments won’t count towards forgiveness. That could be a harsh reality you might have to face if you want to try the public service forgiveness option about halfway through the life of your loan.

3. Customer Service is a Joke

If you’ve opted for a federal loan program as opposed to one of the many private student loans that are available, then you’ll likely be working with Sallie Mae or Navient at some point. Unfortunately, customer service at those organizations is known to be sub-par.

You might call the hotline asking for assistance or information about your student loan and will find that the desired help is not forthcoming. Sometimes, you might get the wrong answer from the customer service rep. It can be a mess.

The good news is that there are steps being taken to hold Sallie Mae and Navient more accountable. For now, though, you might have to brace yourself every time you call in for help.

4. You Have Repayment Options

It may be the case that you’re paying down your loan using the default, 10-year schedule. If so, then you’ve selected the highest monthly payment plan.

You have other options.

Take out your student loan payoff calculator and run some numbers. Find your optimal monthly payment for a payoff period. Then, find an option that suits your current income stream. You might even find something with a lower interest rate so that you can pay off the loan in the same period of time (10 years) but still pay less every month.

5. A Forgiven Loan Could Cost You in Taxes

If, for whatever reason, your loan is forgiven, the IRS might declare the balance of your forgiven loan to be income. In that case, you’ll likely owe taxes on it.

Check with your tax adviser about how much you’ll owe in taxes if your loan is forgiven. You might find that it’s better to just find a way to pay it off.

Student loans can be complicated. There’s a great deal of fine print and no shortage of paperwork associated with them. Still, you stand to benefit if you understand some of the secrets associated with the student loan program.

7 Amazing Tax Breaks Every Parent Should Know About

7 Amazing Tax Breaks Every Parent Should Know About
As a parent, you’re probably looking for as many ways to save money as you can find. Fortunately, the IRS offers some generous tax breaks to people who have dependent children living at home.
Here are 7 amazing tax breaks that every parent should know about.

1. The Dependent Exemption

As soon as you and your spouse welcome a new child into your home, you’ve earned a nice tax break from Uncle Sam. As of this writing, you get a tax exemption of $4,000 per child. That means if you have three children living at home, then you’ve earned a $12,000 exemption.

That exemption could set you up for a sizable refund in April. Be sure that you work the additional income into your monthly budget calculator.

Keep in mind, though, that this tax break doesn’t apply to people who have a high income. If you’re single and your adjusted gross income (AGI) is more than $258,250 or you file joint and your AGI is more than $432,400, you won’t be able to claim the benefit.

2. Child Tax Credit

You also get a $1,000 tax credit for each child. That’s money that comes right off of your taxes instead of being subtracted from your income.

To qualify, your AGI must be $110,000 if you’re filing joint, below $75,000 if you’re filing head of household, or below $55,000 if you’re married but filing separately.

3. Child Care Credit

You might be eligible for child care credit if you paid for child care last year while either working or searching for a job. Uncle Sam is willing to give you a credit of as much as 35% of your child care costs, with a hard stop at $3,000 per child or $6,000 for more than one child.

The credit applies to children under the age of 13.

4. You Can Hire Your Kid

One especially sneaky way to lower your tax bill is by hiring your own child. You can pay the child as an employee and claim the payment to the child as a tax deduction. You won’t have to worry about withholding FICA, Medicare, and federal taxes from your child’s paycheck if he or she is under 18.

5. Tax Credits for College Kids

If you have a child who’s in college, you might qualify for a tax credit. Uncle Sam offers a credit of up to $2,500 per student. To qualify, your AGI must not be higher than $80,000 if you’re single or $160,000 if you’re married and filing joint.

6. Dependent Care FSA

The federal government also offers a dependent care flexible spending account. That lets you set aside as much as $5,000 of pre-tax money towards child-care costs. You can’t claim this benefit if you’re using the child care tax credit described above, though.

7. Adoption Pays

Believe it or not, you can get a tax credit of $13,400 for adopting a child. That’s the government’s way of helping you out with adoption expenses.

Parenting is the toughest job that you’ll ever love. Fortunately, the federal government offers a variety of tax breaks to cash-strapped parents to help make the financial burden a little more bearable.

6 Smart Money Moves to Make in Your 20s

6 Smart Money Moves to Make in Your 20s
When you’re in your 20s, you’re likely in charge of your personal finances for the first time in your life. If that’s the case then you stand to benefit (sometimes significantly) by making wise choices about what you do with your hard-earned income.

Here are 6 smart money moves to make in your 20s.

1. Set up a Budget

One of the best things you can do early on when it comes to handling your own finances is to set up a budget. That’s because a budget will teach you the discipline to live within your means and not spend frivolously. It’s also a great way to ensure that you’re saving (because that should be an item in your budget).

To set up a budget, collect your monthly expenses and income. Then, plug it all into a spreadsheet and allocate a certain amount for each item.

Keep in mind that, if you’re having trouble making ends meet, you’ll need to do one of two things: increase your income or decrease your expenses. Since it’s usually much harder to decrease your expenses, it’s best to look for additional income.

2. Buy Insurance

Unless you’re a young adult covered by military insurance or your company is providing insurance for you, then you’ll need to buy own insurance. That includes health insurance, life insurance, car insurance, and homeowners or renters insurance.

If you avoid loading up on insurance and you’re hit with a massive expense item like a medical emergency, car accident or house fire, you could end up owing a lot of money that you’ll be paying for the rest of your life.

3. Have a Debt Relief Plan

Chances are pretty good that you’ve got some level of debt. If that’s the case, you should set up a debt repayment plan so that you can get out of it. Make sure that debt repayment is an expense item in your budget and that you’re fully aware of how long it will take to pay down the debt based on the amount you’ve budgeted for debt relief.

4. Take Advantage of Your 401K

If you’re working for a company that offers retirement benefits, you should take advantage of that plan to prepare for your sunset years.

For example, if you work for Safeway, then you should contribute part of your income to the Safeway 401K. That’s money you’re putting away for retirement that will multiply over the long haul.

5. Have an Emergency Fund

It’s often the case that young people don’t bother setting up any kind of savings plan. Avoid following their example.

You should always have some money set aside for “a rainy day.” That way, if an unexpected expense comes your way, you’ll be ready.

6. Have Your Financial Documents Handy

As you get older, you’ll find that certain pieces of paper are very important. As a result, you should have them in a fireproof box in your own house or apartment so that you can access them when you need to.

At a minimum, you’ll need your birth certificate, your Social Security card, and any other official IDs. Also, keep your tax returns handy because you’ll need them in the future if you want to get a mortgage or other hefty loan.

You have your whole adult life ahead of you. Be sure that you make smart decisions about your money while you’re in your 20s, and you’ll reap the rewards for decades.

10 Easy Ways to Save Money in College


10 Easy Ways to Save Money in College
If you’re a college student who’s looking for a few ways to save a buck (or more), then rest easy. There are several simple steps you can take to reduce your cash out flow.

Here are 10 easy ways to save money in college.

1. Get More Roommates

There’s not a whole lot you can do to reduce the amount of rent that your landlord demands every month. However, you can reduce the amount of money that you pay every month.

Share your space and get yourself a couple of additional roommates.

2. Chop up Those Credit Cards

If you really want to put a dent on your interest expense, get rid of the plastic. Many college student credit cards have onerously high interest rates. Even the ones that don’t have 20% interest rates still charge some interest, and that’s more than you should be paying.

Also, you don’t want to be saddled with a great deal of debt when you get your degree, since jobs for recent grads are hard to come by.

3. Become a Chef

Quit paying someone else to buy and prepare your food for you. It’s amazing how much money you can save when you buy groceries and cook your own meals.

4. Compare Prices

Become a comparison shopper. Look around for the best deals instead of always buying an item where you first see it offered for sale. This is an especially good rule to follow when it comes time to a make major purchase, such as a television set or a car.

5. Avoid School-Hopping

Once you’ve settled on a school and landed there for your freshman year, stay put until you graduate. If you bounce around from place to place, you’re adding expenses with moving costs and could add an extra semester of tuition payments too.
6. Carpool

If you’re working for a place that hires college students, odds are pretty good that somebody else from your school works there, too. Make a new friend and share the ride back and forth to work. You’ll reduce your fuel costs.

7. Take Advantage of Student Discounts

Lots of retail outlets and even some movie theaters have student discounts. Don’t steal from yourself by neglecting to take advantage of those money saving opportunities.

8. Avoid Changing Your Major

If you really have to change your major for a bona fide market-driven or economic reason, go ahead. Just be advised that if you jump from major to major, you might stay in school longer than you had originally planned. That could cost you big bucks.

9. Avoid Excessive Partying

Bad news: partying can be very expensive. If it’s your turn to buy the keg or bring the food, you could dish out a lot of cash for just one night of fun. Have a good time during your college years, but don’t overdo it or you could struggle financially.

10. Buy Used Textbooks

As much as possible, never pay full price for a textbook. There are people who have already taken the classes that you’re enrolled in and they probably have no future need for the textbooks they were required to buy for those classes. Touch base with them and save literally hundreds of dollars during your college years by buying used textbooks.

College is a great experience. However, it can also be expensive if you don’t mind your budget. Follow some simple money-saving rules and you can avoid the “starving student” stereotype.

5 Common Amateur Investing Mistakes to Avoid

5 Common Amateur Investing Mistakes to Avoid
So you’re a new investor? Congratulations on making a good move that’s likely to improve your financial health over time. However, investing is just like anything else: it’s easy to make mistakes when your first start out.

Here are 5 common amateur investing mistakes to avoid.

1. Following the Herd

Sometimes, the majority isn’t right. In fact, sometimes, “everybody” is wrong.

When you see people piling into an investment just because “everybody else is doing it,” then it’s time to run, not walk, away from that opportunity.

Why? Because when people flock to a particular stock or investment option, then they’re creating what knowledgeable investors call a “bubble.” They’re inflating the price of the asset.

Bad news: bubbles burst.

You don’t want to be left holding the bag when the bubble on that investment opportunity breaks. Just stay away from it all together and let other investors rush to their ruin.

Sometimes, it’s best to follow the advice of expert investor Warren Buffet. When other people get greedy, you get fearful and when other people get fearful, you get greedy.

2. Following “Tips”

As CNBC personality Jim Cramer likes to say: “Tips are for waiters.”

If you’re hearing that the ACI stock is a solid buy because of some news that hasn’t been made public yet, then you might be tempted to load up on the stock thinking that you’ll earn a big return.

You could also go to jail.

If someone is telling you something about the company that the public doesn’t know, it’s likely that they’re practicing something called “insider trading.” That’s a crime.

3. Trying to Get Rich Quick

If you think that the stock market presents an excellent opportunity to make a million dollars overnight, think again. While some people have gotten rich quick with the stock market, that kind of “no guts, no glory” strategy is the exception rather than the rule.

However, if you view the stock market as an excellent long-term investment opportunity, you’ll have a better chance at success. You might not make a fortune in just a few days, but you could set yourself up for early retirement.

4. Failure to Diversify

As the old saying goes, you don’t want to put all your eggs in one basket.

You might think that a particular company is going nowhere but up over the next several years. As a result, you’re tempted to put all of your hard-earned savings into that one company.

So what happens if that company goes bankrupt instead of growing like you expected? You’ve put all your eggs in one basket and lost your savings.

That’s why it’s good to diversify. Put some of your money in one stock, some more in another stock, and so on. That way, if one of your investments tanks, you don’t lose everything.

5. Refusing to Accept Losses

It’s this simple: if you make investments, you’re probably going to take some losses. That’s just how it works.

Prepare yourself ahead of time to accept the fact that some investments aren’t going to go your way. However, even with those losses, a sound investment strategy should still yield a positive return over the long haul.

Investing is a great way to build your wealth. Like anything else, though, you have to do it right if you want to enjoy the benefits.

6 Things You Should Know About Credit Card Loyalty Programs

6 Things You Should Know About Credit Card Loyalty Programs
Lately it’s difficult to find a credit card that doesn’t include some kind of loyalty program. Many credit card companies offer their own rewards or team up with banks, airlines, hotels, grocery stores, and other retail stores to allow patrons to earn rewards on the items they purchase most frequently. This can all be to the benefit of consumers, who earn points, rewards, freebies, and upgrades just for buying the items they would normally purchase anyway.

That said, you need to take steps to understand your loyalty program so that you can make the most of it. Here are a few things you should know before you sign up for a credit card with a loyalty program.

1. Rate of Earning Points

Every credit card differs in its system of points or rewards calculations. In most cases, you’ll earn points or miles with every purchase, but the number of points you earn for every dollar you spend can differ in a variety of ways. These programs don’t tend to be terribly straightforward, so you’ll have to read the fine print. In most cases, you can earn different amounts for different purchases.

Say, for example, you have a card that’s linked to a particular airline. When you fly with that airline, you’ll likely earn more points than you will for other purchases. But you may earn certain amounts for flying domestically versus internationally. You might earn extra points for using preferred travel vendors like hotels or rental car companies. In other words, you’ll have to do some research to find cards that offer the best rewards for the items and vendors you prefer.

2. Redeeming Points

There are also a lot of ins and outs associated with redeeming points, so again, it’s important to make sure you understand the rules. In most cases, you’ll need a certain number of points for certain redemptions, like airline tickets or hotel stays.

However, you may only be able to redeem points with specific vendors, there might be blackout dates, and there could be other restrictions. So long as you are aware of the limitations associated with redemptions, you won’t be caught off guard.

3. Types of Rewards

Some cards offer airline miles, hotel stays, travel upgrades, or other travel related rewards. Some offer discounts and gift cards to your favorite retail stores. Others provide catalogs full of consumer goods or even cash back. There’s a whole world of reward options to choose from, so you’ll want to comparison shop to find the credit card loyalty program that best suits you.

4. Partners

Some businesses partner with credit card companies to provide loyalty programs to their patrons. You might, for example, use a Kroger plus card to get the best deals at the grocery store. Or you may apply for a Toys R Us MasterCard in order to get points to use toward toy purchases for your children (or video games for yourself). If there are stores you shop at frequently, you should consider the benefits to be gained by signing up for the store credit card they offer.

5. Improving Status

There are always rules associated with improving your status, although you generally have to maintain a certain spending amount annually to become a gold or platinum member and get the best reward values. Understanding how to reach higher status levels within your chosen loyalty program could help you to earn the most rewards.

6. Minimums

Every credit card rewards program has minimums for redeeming rewards. You may, for example, need several thousand points to earn a hotel stay or an airline ticket. Knowing what the minimums are will help to ensure that you are able to redeem your points for the rewards you want.

How to Prevent Your Spouse From Overspending

How to Prevent Your Spouse From Overspending
One of the biggest issues many couples face is reconciling disparate spending habits. Some people feel that money is made to be spent. They adopt a laissez faire, you-can’t-take-it-with-you attitude and use every red cent for entertainment.

Others are savers. They want to make sure not only that all the bills are paid in full and on time each month, but also that additional funds go into retirement accounts, college funds, and rainy day savings so that the household is always prepared. Coming to terms with a spouse that overspends when you’re the responsible type can present a major challenge, especially if the other party seems unable or unwilling to change.

However, nobody said that marriage was going to be easy, and this is a difficulty you’ll have to overcome together if you want to make your marriage work. Here are a few tips to prevent your spouse from overspending.

Communicate Openly

There are few marital problems you cannot overcome if you can sit and talk them over like adults. The unfortunate truth of the matter, though, is that people tend to become very defensive when criticized about their spending habits. If this is the case, you might need to speak with a counselor or perhaps a financial planner as a couple in order to reconcile your issues and get on the same page where your finances are concerned.

Take a Finance Class

Sadly, most people receive no formal education where finance is concerned. Unless you happen to be a business or finance major in college, you’ve likely never taken a finance class in your life. This is a tragedy considering that all adults should know how to create a budget, balance a ledger, and set up and manage retirement accounts, an investment portfolio, and other necessary financial accounts. That said, it’s never too late to start. If your spouse simply can’t wrap his/her head around financial matters, enroll in a beginning finance class or go over the basics with your financial planner.

Set Aside Fun Money

If you are living within your means, you should have some money left after you pay your monthly bills. Some of this should go toward savings and retirement accounts, but you might want to try to curb spousal overspending by creating a fund specifically devoted to fun. Whether your spouse likes to buy drinks for buddies after work or spend frivolously on clothing and shoes, this money can be set aside for just such purposes. When it’s gone, your significant other will have to wait until the next paycheck to get more fun money.

Limit Access to Funds

If finance classes, budget forms, and frugal living tips simply aren’t resonating with your spouse, and your pleas to curb spending have fallen on deaf ears, it might be time to wrest control of finances away from your other half. If your spouse simply can’t handle money responsibly, you’ll have to take over household income, bill paying, and overall money management, providing your spouse with an allowance. This is definitely a last resort, since it puts you in a terrible position, but if your partner can’t act in a responsible manner, the two of you must agree to such an arrangement to preserve the household.

5 Effective Ways to Lower Your Credit Card Interest Rates

5 Effective Ways to Lower Your Credit Card Interest Rates
Although many people feel that credit cards are the bane of modern existence, the truth is that they can be useful in a number of ways. Certainly every adult must learn to use credit responsibly, but if you do so, you can use credit cards as a means of building a strong credit history and a top tier credit rating, helping you to secure funding down the road for major purchases like a car or a home.

Many credit card companies these days offer all kinds of reward programs designed to lure new customers, incentivize loyalty and add value. You can use the dollars you spend to earn points that can be redeemed for travel or other freebies.

However, you need to be smart. You don’t want to negate the rewards you earn by paying unduly high interest rates. Starting out, you’re likely to have no choice but a high-interest card. However, there are a number of effective ways to lower your credit card interest rates later on.

1. Reduce Outstanding Debt

If you carry a high balance on your credit card and never pay it off, or worse, if you pay late or miss payments altogether, you might find it difficult to secure lower interest rates. The problem is that your rate is based not only on economic markets, but also on you, including your credit history and credit rating. In order to have some leverage to secure the lowest possible interest rates, you’ll want to reduce debt, specifically your debt-to-income ratio, and prove that you can manage credit responsibly.

2. Improve Your Credit Score

There are several ways to improve a low credit score. To start, you need to know what your credit score is and why it might be lower than you’d like. You can do this by ordering a free credit report from a variety of sources. With this document in hand you can begin to address black marks and clear up outdated or erroneous information on your report. Next you can start to reduce debt and begin to improve your credit score.
3. Negotiate

You’ll never know what you can get until you ask, so politely negotiate with credit card companies to see what kind of rate you can secure. Make sure you understand what leverage you have, such as a good credit rating or long-term loyalty to a particular company. Both can help you to negotiate for a better interest rate.

4. Shop Around

Like any other consumer purchase, you need to shop around in order to determine which high interest credit cards to avoid and which low interest ones to consider. The onus is on you to get the biggest bang for your buck, so to speak.

5. Transfer Balances

Many people start out with multiple credit cards to build credit, but once you’ve built up a decent credit history and a good rating, you needn’t continue to carry or use high-interest credit accounts. So transfer balances to the lowest interest cards, cancel the higher interest ones, and then see about getting newer cards with even lower rates if you can.

5 Common Car Maintenance Mistakes That Can Cost a Fortune

5 Common Car Maintenance Mistakes That Can Cost a Fortune
Part of the responsibility of owning a car involves performing maintenance every now and then. You might be tempted to neglect some basic car maintenance in an effort to save yourself some money. However, that kind of neglect could cost you far more in the long run.

Here are 5 common car maintenance mistakes that can cost a fortune.

1. Filling the Engine With the Wrong Kind of Oil

First time car buyers might think that all oil is created equal. That’s simply not the case.

The fact of the matter is that motor oil is offered in different grades for a reason. Usually, the grade is defined by two numbers that include a “W” after the first number (for example, 10W-30, 10W-40, 5W-10, etc.). The “W” in that formulation stands for winter, and describes the viscosity level of the oil in cold temperatures (the lower the number, the colder the temperature). The second number defines the viscosity level at 100 degrees Celsius.

Your car’s manual should specify the type of oil that’s meant for the engine. Be sure to follow that advice, otherwise your engine could run inefficiently and even deteriorate over time. The resulting repair bill could cost you some serious money.

2. Neglecting to Change the Oil

You might think that you have too many things to do and you simply don’t have time to take your car in for routine oil changes. Think again.

Most modern vehicles simply weren’t made to run on the same oil for thousands and thousands of miles. There’s a reason why professional mechanics recommend oil changes every 3,000 miles. If you own an older vehicle, consider getting your oil changed every 1,000 miles. Doing so will help extend the life of your vehicle.

3. Forgetting to Get Dirty Filters Changed

With new car prices being as high as they are, you probably want to avoid going through the process of buying a new vehicle any time soon. If that’s the case, then make sure you change your dirty filters.

If you avoid changing dirty filters, sensors on your vehicle can fail. That means your “Check Engine” light might not illuminate when you really need your engine checked. The result could be disastrous as you’re forced to scrap your vehicle and start shopping for a new one.

4. Neglected Scheduled Maintenance

If you’re the kind of car owner who only brings your vehicle to the mechanic when something is wrong, then be prepared to fork over a lot of money in the long run.

Your car manual has information about tune-ups and routine maintenance. Follow that advice and you’ll minimize the risk of more costly repairs later on.

5. Failure to Rotate Tires and Check Air Pressure

Rotating your tires and checking their air pressure might seem like a pastime only meant for people who have a subscription to Car and Driver magazine. However, by neglecting to do so, you could cause tire deterioration, uneven traction, and strain on the steering and suspension parts. That could cost you money in repairs.

Take care of your car, and your car will take care of your wallet. With some proper preventative maintenance and a little know-how, you can avoid costly car repair mistakes.

5 Signs That You Are Ready to Retire Early

5 Signs That You Are Ready to Retire Early
So you think you’re ready for retirement even though you haven’t reached the age of 65 yet? If so, then congratulations on a lifetime of hard work. However, you should be absolutely certain that you’re ready to retire early before you do so.

Here are 5 signs that you’re ready to retire early.

1. You Can Follow a Retirement Budget

Remember, when you retire, you’re likely going to be on a fixed income that’s less than what you make right now. Can you live on that kind of income?

If you think so, prove it. Live on your retirement budget for six months. Once you’ve managed to complete that without task cheating, then you’re in good shape for early retirement.

Also, keep in mind, when you were saving for retirement, you established certain guidelines about your annual draw on your retirement savings from your retirement accounts. Make sure you stick to that figure, but also factor in any Social Security income as well.

2. You Have Great Health Insurance

Whatever you think about the Affordable Care Act, the simple fact of the matter is that universal coverage with a single-payer healthcare model is simply not the case here in the United States. That’s why you need excellent health insurance, especially after you retire.

Medicare won’t give you any benefits until you reach the age 65. Even so, you might find that your doctor doesn’t accept it. Keep that in mind as you think about healthcare during early retirement.

3. Your Children Are Financially Independent

If you’ve still got children who rely on you for their basic necessities, including tuition costs, then you might not be ready for retirement. On the other hand, if you’re an empty nester whose kids are out of the house and earning their own paychecks, you might be a great candidate for early retirement.

The problem with retiring before your kids are on their own is that there are many (and, sometimes, expensive) variable costs associated with raising children. As a result, it’s tougher to live on a retirement income and still support them. If you find yourself supporting dependents, consider putting off retirement until they’ve been through college, landed a job, and are financially stable.

4. You Have Almost No Debt

If you’re browsing around for your retirement home by the beach or contemplating the best time of year to retire, then you should also have almost no debt.

It’s okay to have some debt when you retire, especially if that debt is minimal and is part of your primary residence. However, if you’re saddled with too much debt, then you’re expenses (in the form of interest payments) are too high for retirement right now. Get out debt first and then think about retirement.

5. Your Portfolio Can Take a Hit

There’s no denying that, as of this writing, the stock market has done well over the past several years. However, it’s not always going to be that way.

What happens if the stock market drops 20 percent the day after you retire? What happens if there’s a bear market for the next several years? Run your portfolio through some “what if” scenarios using your favorite spreadsheet to be sure that you’re ready to retire early in the event that the market tanks.

It’s great that you’ve saved for retirement. However, be certain that you’re ready for it before you sever ties with a company that’s providing you with a steady income.

6 Things You Should Know Before Buying Your First Home

6 Things You Should Know Before Buying Your First Home
So you’re at the point in your life where you’re ready to buy your first home? Congratulations! Now, it’s time to familiarize yourself with the home buying process so that you don’t get burned.

Here are 6 things you should know before buying your first home.

1. Learn the Value of Sweat Equity

If you’re not familiar with the phrase “sweat equity,” it refers to manual labor you put into a home yourself so that you don’t have to pay a contractor. It’s a way that some people save money fixing up a home.

If you’re someone who’s handy with carpentry-related work, you might save yourself a fortune by buying a house that’s in need of repair and just handling the repair yourself. Sometimes, houses that “need some work” are offered at a steep discount. However, once that work is completed, the value of the home increases dramatically.

If you’re interested in saving a lot of cash and you’re a self-proclaimed handyman, consider buying a house that’s a fixer-upper.

2. You Need a Down Payment

Buying a home is not like renting an apartment. You need to have a lot of money up front before you can move in.

Consider having 20% of the value of the house in the bank before you make an offer. That 20% will be your down payment when you’re ready to close the sale.

Sure, there are home buyer loans that are offered with no money down. But if the real estate market tanks shortly after you move in, then you could be left with negative equity. If the market takes a bad hit, like it did in 2008, then you could be in very serious financial trouble.

If you’re having difficulty coming up with the cash for a your first home, keep in mind that there are home buyer grants available in many states.

3. Save Extra Cash for Maintenance

A house is a money pit. End of story.

If you drain your bank account on the down payment, be prepared for a rude awakening when the first maintenance bill comes due (and it will come due). Avoid falling into that trap by having some cash in the bank ready for “projects” once you move into your new place.

4. Learn HOA Rules

If you’ve found a great home in a great neighborhood, ask if the home is part of a community that belongs to a Home Owners Association (HOA).

For starters, an HOA will cost you money. There are monthly fees associated with joining, which is required if you buy into certain communities.

Second, an HOA also has a set of rules that you’ll have to follow. Sometimes, those rules can seem ridiculous but must be followed no matter what, including limits on construction, decorations, and landscaping. Be sure to read them all before you make an offer on the house.

5. Get Pre-Qualified

Before you go shopping for a house, get pre-qualified from a reputable lender for a mortgage. That way you’ll know that you can get the mortgage once you’ve found your dream house.

6. Come Down From Your Pre-Qualification Limit

Once you’re pre-qualified for a certain amount, resist the temptation to look for a house that’s offered at that price. Come down a bit from the pre-qualification amount and give yourself some breathing room. Don’t max out your available credit.

Instead, back-in to your mortgage limit by considering how much money you have as a down payment and what you can afford for monthly housing costs.

Buying a house is an exciting and sometimes maddening journey. Be sure that you’ve understand what you’re getting into before you buy your first home or you could be miserable for years.

How to Eliminate Credit Card Debt Fast

How to Eliminate Credit Card Debt Fast
If you’re saddled with credit card debt that’s putting a strain on your finances, then it’s important that you eliminate it as quickly as possible. Otherwise, you’ll end up paying way too much money in interest expense over time and hurting your long-term cash flow.

Here a few steps to help you eliminate credit card debt fast.
Pay Off More Than the Minimum Each Month

Credit card companies are notorious for demanding that their customers make a minimum payment each month that just barely reduces the principal. If you just make the minimum payment, you could end up paying off your credit card debt for years longer than you expected.

The best way to avoid getting into that scenario is to beat the system by paying more than the minimum each month. One good trick is to simply add the month’s interest charge to the minimum payment and pay off that much every month, as opposed to the minimum. That way, you’ll take much more off the principal of the balance than you would if you paid the minimum by itself.

Also, if you have an unexpected cash infusion, such as a Christmas bonus from your company or a tax refund, consider putting that money into credit card debt relief. It may seem tempting to want to “live” off of the extra cash that you receive, but you could end up hurting yourself over the long run as you’re forced to make credit card payments for a long period of time.
Consider a Consolidation Loan

If your credit card interest rates are exorbitantly high and you’ve got good credit, you might qualify for a debt consolidation loan. Please note: another loan won’t get you out of debt immediately, but it will serve to get you out of debt quicker because your interest expense will be lower.

Peer-to-peer lenders offer excellent opportunities for debt consolidation loans. Visit sites like LendingClub.com or Propser.com and you might find that people all over the country are more than happy to chip in to help you get a loan at an affordable interest rate that will help you pay off your credit card debt. You’ll also find that the monthly payments are more manageable.
Pay Off the High Interest Rate Cards First

You might have a Chase Freedom card that offers you an affordable rate. In addition to that, though, you could also have a credit card from another company that’s hitting you with a 16.9% annual interest rate. If that’s the case, pay off the card with the higher interest rate first.

That’s a good strategy for two reasons. First, you eliminate a high interest expense when you pay off the card with the higher rate first. Second, it’s psychologically rewarding to see the balance on one card drop dramatically, and even disappear, over time as you work to pay it off.

It’s so easy to get credit cards with no credit these days. As a result, you might have acquired way too much credit card debt and now need to escape from it. Fortunately, with a little financial discipline, you can emerge from that debt quickly.

How to Rent an Apartment With Bad Credit

How to Rent an Apartment With Bad Credit
If you need to find a place to live but you’ve got poor credit, then you might think all is lost. Fortunately, you can still rent a spot that you call home even if you’re credit history is worse than what a landlord wants to see.

Here are a few tips about how to rent an apartment with bad credit.
Be Honest

Your prospective landlord isn’t going to be even remotely interested in renting an apartment to you if you aren’t willing to submit to a background check. If you are willing to do that, then the landlord will soon know all about your credit history.

In other words, there’s no point in lying.

Be up front with the landlord about your poor credit. Explain why it’s in bad shape and the steps that you’re taking to fix it. You’ll find that the property owner or manager is much more reasonable if you’re willing to be honest and explain about some of the bad decisions you’ve made in the past and why you can be trusted to pay your rent on time moving forward.

Also, feel free to share your credit score with the landlord. You might have pulled your credit from one of the “Free Credit Report” sites, so you know the extent of the bad news. If you have that information, share it with the landlord up front. It’s best to get the bad news out of the way as early as possible so that you can move on and not waste your time if the apartment won’t work out.

Talk Directly to the Owner

Sometimes bigger is better, but not necessarily when you’re looking for a place to live and you have poor credit. A 500-unit multiplex is much more likely to have management that’s more inflexible about credit standards than a landlord who owns a duplex.

If you’ve got poor credit, look to rent a place where you can speak directly to the landlord. That way, you can explain to the decision maker exactly why you’re credit is in bad shape.
Offer Cash

You’ve given up on buying a home or looking for home buyer loans because of your poor credit history, but that doesn’t mean you don’t have any cash. Money is one thing that might turn a reluctant landlord into somebody who’s happy to hand you the keys to an apartment.

Maybe you’d be willing to pay two months of security deposit instead of the standard one month. Perhaps you can pay a couple of months of rent in advance. Either one of those bargaining chips might win you over to the prospective landlord and get you a place to live in short order.
Bring Letters of Recommendation

If you want to convince a landlord that you’re going to be a good tenant even though your credit is bad, bring some letters of recommendation with you. That’s what people in marketing call “social proof.”

Your letters of recommendation should include accolades from previous landlords, employers, co-workers, and even some of your creditors.

It’s not going to be easy to get an apartment with poor credit, but it’s not impossible, either. Learn to convince a landlord that you’ll be a great tenant and you can get yourself a new address.

6 Common Investment Mistakes We All Make

6 Common Investment Mistakes We All Make
Some lessons are learned the hard way. Unfortunately, some of those painful lessons are learned from investment mistakes that cost money. The good news is that new investors can learn from the mistakes of their forbears so that they don’t repeat them.

Here are 6 common investment mistakes we all make.

1. Focusing on Short Term Losses and Gains

Most asset classes aren’t intended to make you a quick buck. Sure, you can get wind of some good news that a company is about to announce and buy its stock ahead of time. When the news is finally released, you stand to make a nice profit very quickly as the stock increases in value.

Unfortunately, that kind of activity is called insider trading and it’s a crime.

The best thing to do as an investor is to follow tried-and-true principles of investment and let your money appreciate in value over the long haul. You might notice some unrealized losses every now and then as the stock market dips, but over a period of years or decades you should do well.

2. Paying Too Much Attention to the Media

If you’ve watched CNBC for any length of time, then you know that it’s the one place where people can be wrong over and over again and yet still be taken seriously. The fact of the matter is the financial media, with all of its analysts and stock pickers, is known to dispense bad advice. If you hang on to every word that you hear from financial news sources without doing your own research, you risk losing money.

3. Not Rebalancing

When your winners have run their course, it’s time to sell them and buy more of your underperforming assets. That’s often a challenge for new investors, but it pays well when those poorly performing investments turn around and begins increasing in value.

4. Avoiding Index Funds

There are some great mutual fund managers in the financial community. However, many of them fail to make their benchmarks. Sometimes, the best thing to do is to buy an index fund that tracks one of the major indexes (such as the S&P 500 or the Dow Jones Industrial Average). If you’re planning for a very long-term investment and won’t be looking for states to retire in for quite some time, park you money in an index fund and watch it multiply.

5. Chasing Stocks

Sometimes, the stock of a company that you’ve been watching soars dramatically over a short period of time. However, it’s moved well past your target price for purchase.

When that happens resist the temptation to “chase” that stock by buying it at a higher price than you had planned. It could fall again.

6. Neglecting to do Research

Know everything about the companies you plan to invest in. Go over their financial statements while paying particular attention to trends over time. Also, view their key statistics like the debt-to-equity ratio, price-to-earnings ratio, and current ratio. Then, make an informed decision about whether or not you should make the investment.

Everybody makes mistakes. However, you can learn from the mistakes of others so that you don’t repeat them. That’s just as true when it comes to making investments as it is for anything else.

How to Stay Calm When the Stock Market Tanks

How to Stay Calm When the Stock Market Tanks
So you’re invested in the stock market and, just your luck, the market has taken a significant downturn. How do you stay calm?The good news is that there’s no reason for panic even when people are selling like crazy on Wall Street. You can weather a stock market storm and finish strong.

Here are a few ways to stay calm when the stock market tanks.
Remember That We’ve Been Here Before

As of this writing, the last time that the stock market suffered a severe setback was in 2008. Back then, the stock market charts looked horrible to potential investors as stock after stock took a nosedive.

That wasn’t the only time the market tanked, either. The crash of 1987 seems like a distant memory now, but some people who were there thought it might be a sign that another depression is on the way.

We made it through 2008. We made it through 1987. Heck, we even made it through the Great Depression.

We’ll survive the next stock market crash as well.
Realize That Stock Market Downturns Are Great Buying Opportunities

Are you worried because the stock market just took a nosedive? Then you’re looking at it from the wrong perspective.

Stock market downturns are excellent buying opportunities. That’s because the stock market almost always bounces back later on.

Instead of being worried about a market setback, be happy that you can buy into new stocks for less. Defy the market herd and go bargain hunting. Find some quality stocks that are offered at rock-bottom prices.
Put Things in Perspective

Simply put: there are some things in life that are more important than money.

You can hear the worst stock news that you’ve ever thought possible and think that you might lose quite a bit of your money. But, in the grand scheme of things, is it really the worst thing that could happen?

Think about your family, your friends, and the things in life that are really important. There are so many intangible benefits to life that are priceless.

And a stock market downturn can’t take those things away from you.
Know That Setbacks Are Expected

Look at any stock market index over the decades and you’ll see a general uptrend. However, you’ll also see downturns every now and then.

The fact of the matter is that downturns are expected in the stock market. They’re effectively “baked into the cake.”

If you’re interested in investing in stocks, then you’ll have to be ready to ride out some of those agonizing swings.
Understand That Stocks Are Long-Term Investments

Successful investing in stocks isn’t measured in hours, days, or even months. Often, it’s measured in years.

Stocks are, by their nature, long-term investments. You might think that you can make a quick buck in the stock market by day trading and you might have successfully done so in the past. However, that kind of strategy should be viewed as the exception rather than the rule.

When you’re in stocks, you’re in for the long haul. That’s why a temporary downturn in the market shouldn’t bother you.

It’s easy to lose your nerve when the panicked selling sets in on Wall Street. However, with the right mental discipline and an understanding about how the stock market works, you too can stay calm when the market turns south.

How to Budget Your Cash Back Credit Card Funds

How to Budget Your Cash Back Credit Card Funds
Cash back credit cards offer the ultimate reward. For every dollar you spend, you earn money that you can redeem when you like. In some cases, this could be a significant amount of money. Many people use the money earned as a small “bonus” to be spent on a special treat. Determine the most effective way to budget your cash back funds by thinking about your needs.

Paying Down Debt

If you’re carrying a balance from month to month, you’re not doing yourself any favors. Even though you may be earning rewards by using your credit card, you’re likely paying more in interest fees than you’re earning in rewards. The smartest thing to do is to use any cash back funds you get to pay down your debt. This gets you closer to financial freedom. Many reward cards make it easy for you to use the money toward your balance. Simply select that option from inside your account.

Letting It Build Up

You could also choose to think of your cash back rewards as a sort of savings account. Some people like letting the money accrue throughout the year, then getting a big check back at the end of the year. You could use this bigger check to pay for a vacation or for your holiday shopping. This can be an easy way to save money, since you’re not actually cutting into your paychecks to do so.

Unfortunately, there’s also a chance that you could lose out on your rewards. Sometimes, the rewards expire after a certain time. If you’re not paying attention, your money could just vanish. It’s also possible for the company to change the terms of their program at any time. This could mean that your rewards are worth less than you thought they’d be. A safer option would be to cash out your rewards as often as you can.

Earning Interest

One of the biggest downsides to letting your money accrue in the cash back account is that it doesn’t earn you any interest just sitting there. Savings accounts don’t necessarily earn you a lot of money either, but a little bit is better than nothing. If you want to save up your rewards, the smartest way to do so is to cash out when you can, then transfer them to a savings account. Choose a savings account that you don’t have easy access to so that you can avoid temptation. Some rewards accounts even let you transfer your rewards money to investment funds, such as the Upromise card, which links with your 529 plan. These investments can earn you even more money. The sooner you transfer your money into accounts that earn interest, the sooner your money will start working for you.

Making the Most of Your Cash Back

You should also look for ways that you can make the most of the money in your cash back account. Carefully look over the terms of redemption to see if there are ways that you can earn more money. For instance, if your card works on a points system, there’s a chance that each point is worth more if you wait until a certain number of points have accrued. With a Bank of America rewards card, you get a small bonus when you have your cash rewards deposited directly into a Bank of America checking account. If your credit card offers programs like this, take advantage of them.

Despite the appeal of getting a big check at the end of the year, this isn’t always the smartest way to budget your cash back rewards. Think about the ways that this money can best work for you and plan to use your rewards accordingly.

6 Costly Credit Card Mistakes You Should Stop Making

6 Costly Credit Card Mistakes You Should Stop Making
It’s very easy to make mistakes with credit cards. It’s often the case that the agreement between you and the credit card company is shrouded in a veil of legal and financial jargon that’s often mystifying. How can you adopt “best practices” for credit card management when you can’t even understand the basic rules?

Relax. We’ve got you covered.

Here are 6 costly credit card mistakes you should stop making.

1. Not Reading the Fine Print

Although you might not understand everything in a credit card agreement, you’ll likely understand some of it. Be sure to actually read the agreement so that you can be certain you’re entering a deal that’s in your best interest.

For example, one of the credit card finders you used might have led you to a card with a great interest rate. However, you might find that if you transfer a balance to a new credit card, the interest rate on the amount transferred is higher than the rate for new purchases. That kind of information is part of the devil that’s in the details. Make sure you go over your agreement carefully before signing it.

2. Stop Using It

Believe it or not, it’s a financial venial sin to not use a credit card that you have in your possession. Credit card companies aren’t happy with customers who don’t use their credit cards every now and then. If you’ve got a card in your wallet that hasn’t seen any action lately, consider making a purchase with it the next time that you’re at the mall. Then, pay off the balance as soon as you get the bill.

3. Making Late Payments

This point is fairly obvious. You should always pay your credit card bills on time. Failure to do so means that you could incur late fees, a spike in your interest rates, and be reported to one or more credit bureaus for a delinquent payment. That will hurt your ability to get a loan in the future.

4. Only Making the Minimum Payment

Those wily folks at your credit card company know how to get as much money out of you as possible. They send you a bill every month with a minimum payment that consists of interest and just a wee bit of the principal. If you pay just the minimum, it could take you years longer than you expected to pay down the balance to $0.

Fortunately, you don’t have to fall into that trap. Instead of paying just the minimum, add the monthly interest charge to the minimum payment and pay that much. Then, you’ll be taking a nice chunk off of the principal and pay the balance down much more quickly.

5. Maxing Out Your Credit Cards

It’s easy to confuse having a high credit limit and actually having the money to afford paying for everything you charge. While you want to take advantage of what life has so much to offer with the convenience of using a credit card, you do want to have some money available for the proverbial rainy day. If you can’t resist the urge to spend money with a credit card, consider getting a prepaid credit card that will force you to live within your means.

6. Taking Cash Advances

Although many credit cards allow you to take cash advances, you’ll find that the interest rate on those advances is about as close to usury as is legal. As a rule of thumb, cash advances from credit cards just aren’t worth the expense. Avoid them.

Now that you know about some of the costly credit card mistakes you can make, here’s a good piece of advice: don’t make them.

How to Get Your Retirement Money Early Without Penalties

How to Get Your Retirement Money Early Without Penalties
So you’d like to use your retirement money before you retire but you want to avoid paying the penalty? Fortunately, there are ways to withdraw some of your IRA money before you reach your golden years and avoid paying that additional 10% in income tax.

Here’s how you can get your retirement money early without penalties.

Use the Money for College Costs

You won’t owe Uncle Sam any tax penalties if you withdraw money from your retirement savings to pay for costs associated with higher education. That applies not only to you, but also to your spouse, children, or grandchildren.

The allowable expenses to avoid the penalty include tuition, fees, books, and any supplies required for attendance. Room and board counts as well.

Buy Your First Home

If you haven’t yet bought a house, then you can withdraw money from your IRA account to make a first-time home purchase. That withdrawal will be free of penalties.

You’re limited to how much you can withdraw for a home purchase, though. If you’re single, you can withdraw a maximum of $10,000. If you’re married, you can withdraw a maximum of $20,000.

If you already own a home, then you can still use the money help your child, grandchild, or parent buy a first home. It’s still penalty-free.

If, for whatever reason, the purchase of the home falls through, you have 120 days to put the money back into the retirement account or you could incur that penalty for early withdrawal.
Pay for Medical Expenses

Another way to avoid the 10% penalty on early withdrawal of retirement money is to spend it on medical expenses.

You’re allowed to spend the money on unreimbursed medical expenses that exceed 10 percent of your adjusted gross income. For example, if your adjusted gross income is $80,000, than you can withdraw the money to pay for medical expenses that are in excess of $8,000. Note that the adjusted gross income figure is computed before taking the money from the retirement account.

Keep in mind also that the distribution must occur in the same year as the medical expense.
Buy Health Insurance

If you’re struggling to pay for health insurance, you should know that you could take an IRA distribution without penalty to pay the cost of your premiums.

The allowance here applies to health insurance for you, your spouse, and your dependents following a period of unemployment. However, you can only qualify for the allowance if you receive unemployment compensation for 12 consecutive weeks following a job loss.

The distribution must be taken in the same year that you received unemployment benefits or the following year.

Use It As a Disability Benefit

If you’ve become disabled so that you can’t work, you’re essentially eligible for early retirement. You can withdraw your retirement money early and avoid the penalty. You will, however, be required to provide medical evidence of your disability.

It’s always best to save your retirement money for retirement. However, if you need to make an early withdrawal, you can do so without penalty under certain conditions.

7 Essential Tax Season Preparation Tips

7 Essential Tax Season Preparation Tips
Tax season is upon us and it’s time to get ready for the annual ritual. It can be stressful time if you’ve got a lot of financial documents to pore over and analyze. However, you can reduce some of that stress with just a little bit of preparation.

Here are 7 essential tax season preparation tips.

1. Get Organized

The dreaded “due date” for taxes is April 15. Long before that date arrives, you should get your financial documents together and have them organized. That way, when it comes time to fill out your tax forms, everything you need will be at your fingertips.

2. Review Your W-4 Withholding

If you’re looking forward to receiving a big, fat tax refund from the IRS shortly after you file your taxes, then maybe it’s time to review your W-4 withholding.

Why? Because if you’re getting a refund, then you’re essentially loaning the government money interest-free for a year. That’s no way to manage your money.

Talk to your employer about increasing your withholding allowances so that you aren’t giving money to the federal government without getting anything in return.

3. Sell off Losers

At the very end of the tax year, you can sell off some stocks that are losers and take the capital loss. That loss might be tax deductible, giving you a break in the amount of taxes that you’ll owe for the year.

4. Find Your Charitable Contribution Receipts for the Year

Remember, charitable contributions are also tax deductions. It’s possible that you made some contributions throughout the year that you’ve since forgotten about. Go through your documents and think about the donations you’ve made so that you can be certain that you get the full benefit of the tax code.

5. Think About Changes in Your Filing Status

Did you get married during the past year? Did you or your spouse give birth to a child? If so, then you have a change in filing status for the coming tax year.

Keep in mind that some changes in filing status will reduce your tax bite. Unfortunately, others might increase it. It’s important to be truthful here even if it means paying more taxes.

6. Prepare for an Extension

It may be that you’ve received income from multiple sources. Sadly, not all of those sources will submit tax documents to you on time. Be ready to file for an extension with Form 4868 if you think that you can’t meet the April 15 deadline.

7. Locate Your Form 1040 to File Online

Filing online is an easy and convenient way to pay your taxes without the hassle of mailing a bunch of papers to the IRS. If you want to take advantage of online filing, you’ll likely need your Form 1040 from the previous tax year. You need to provide your adjusted gross income from that document before you’ll be allowed to file online.

Tax season is a burden to many people. However, with the right preparation, it doesn’t have to be so difficult.

5 Crucial Strategies to Build Wealth Fast

5 Crucial Strategies to Build Wealth Fast
You might be at the point in your life where you need to start building wealth quickly. The good news is that it’s not impossible to boost your nest egg in a short period of time.

Here are 5 crucial strategies that will help you build wealth in a hurry.

1. Avoid Financing Depreciating Assets

As much as possible, avoid falling into the trap of financing depreciating assets. That’s because you’re losing wealth two different ways when you borrow money to buy something that decreases in value over time.

For starters, the value of the product itself depreciates. That subtracts from your net worth.

Even worse, though, is the fact that you’re paying an interest expense on the item. That’s money that could be put into a mutual fund so that you could build your wealth quickly.

One of the most popular depreciating assets that people finance is a family vehicle. It might make sense at face value because everybody needs a ride. However, if you pay cash for an older vehicle, as opposed to financing a newer one, you’ll save on interest and have some money left over for investing.

Also, you risk your good credit with a car loan. If you can’t pay, a collection agency will come calling and your credit will suffer even more.

2. Only Buy What You Need

Sure, you want to live a little. That’s why you spend money on various types of entertainment and fancy dinners.

However, that money can add up to a sizable chunk of change over a year. It’s also money that could be put in a mutual fund or savings account so that you can build a nest egg in a hurry.

In short, make it your personal philosophy to avoid spending money when you don’t need to.

3. Tuck Away a Percentage of Your Income

Take a percentage of the income that you receive from every paycheck and put it away into a savings account. Make it disappear so that it’s out of your sight and out of your mind.

Then, live off what you have left over. That’s another way to ensure that you don’t spend money on trivialities that don’t help you build wealth quickly.

4. Have Multiple Streams of Income

If you want more money, earn more money.

Easier said than done, right? Not necessarily. Look for some part-time work at retail stores in your neighborhood or at the local mall. Or you could find some legitimate online opportunities to earn a few extra bucks on the side (note: anyone asking you to pay money so that you can earn money is probably a con artist).

If you want to build wealth in a hurry, generate some additional income and don’t spend it.

5. Invest

You’re going to have to invest in order to build wealth.

Yes, investing can be risky because you can lose money. However, one of the best ways to watch your money multiply is by putting it into a sound investment.

In order to build wealth in a hurry, you shouldn’t just work for money. You should make money work for you.

If you’re looking to boost your net worth quickly, it’s not impossible. You can do it with the right financial discipline and investments.

6 Things to Consider Before Co-Signing a Loan

6 Things to Consider Before Co-Signing a Loan
If you’re thinking about co-signing a loan, you should know that you’re doing a lot more than just offering a favor to a friend or family member. You’re putting your own good name on the line as well.

Here are 6 things to consider before co-signing a loan.

1. What Are the Terms?

When you co-sign a loan, you should know just as much about the loan as if you were taking on the loan yourself. What is the amount of the loan? When is it fully due? Is there a balloon payment involved? What is the APR? Is there collateral involved as with title loans?

Those are all key considerations that you would evaluate when considering getting a loan yourself. You should practice the same level of due diligence when co-signing for a loan as well.

2. How Well Do You Know the Borrower?

The borrower in this case might be your best friend or a beloved family member, but if you know the person’s financial habits well enough to know that it’s not likely that he or she will pay back the money, then you’re doing yourself a disservice by agreeing to cosign the loan.

3. Who’s Setting the Rules?

If there’s some flexibility in the terms of the loan, then you should know who’s making the final call. If you’re willing to co-sign the loan, that person should be you.

You might feel more comfortable if the borrower is forced to pay back the loan quickly at a lower interest rate as opposed to taking a longer time with a higher interest rate. If so, then set the rule accordingly or refuse to co-sign the loan.

4. Have You Talked Openly About the Agreement?

Sometimes, there are ways to get money without going through the formal process of taking out a loan. Have you and the borrower considered alternatives? Have you discussed other options?

Also, take some time to discuss what co-signing will do to your relationship. You don’t want to lose a friend or alienate a family member over money, after all.

5. Can You Afford the Payments?

Once you co-sign on the dotted line, you’ve committed yourself to the loan. There’s no going back once you’ve gone there.

That means if the borrower doesn’t pay back the money, your credit takes a hit too. You’ll be reported as someone delinquent in payment to all the credit bureaus.

Is that really what you want?

Yes, you can keep your credit in good shape by taking up the payments when the borrower doesn’t, but then you take a financial hit. That’s something you definitely want to consider.

6. It’s Risk Without Reward

In finance, people usually take risks to earn a financial reward. When you co-sign a loan, you’re assuming some level of risk with no reward except possibly the gratitude of a friend or family member.

You’re a Good Samaritan for wanting to co-sign a loan. However, you should be aware of what you’re getting into before you do it.

The Best Ways to Prepare for a Stock Market Dive

The Best Ways to Prepare for a Stock Market Dive
If you’re a savvy investor, then you know how to mitigate risk. As someone who keeps there eye on the stock market, you know that it can go through its fair share of ups and downs – sometimes both within the same week – and can even crash from time to time. That’s why you want to be prepared when it happens again.

Here are some of the best ways to prepare for a stock market dive.
Buy Bonds

It’s likely, though not certain, that bonds will go up in value as stocks decline during a stock market setback. If the economy hits a period of deflation or stagflation, you could see bonds become very attractive investment opportunities, giving you an excellent hedge against any stock market losses.

If you’re trying to reduce unsystematic risk with a financial strategy that will prove successful during the next stock market dive, consider boosting portfolio’s percentage of bonds.
Invest in the Right Stocks

Even during stock market crashes, there are a few stocks that shine like a diamond in a mud puddle. If you manage to latch on to shares of those companies when the market tanks, you could survive the hard times and even make a profit.

So what’s the best stock to buy when the market goes south? Consider real estate investment trusts (REITs). They’re known to perform well during periods of rising inflation. That way, even if your other stocks take a hit and your bonds take a hit, you’ll still have some money parked in an asset class that should weather the difficult storm.

Also, look for companies in the basic materials sector to perform well during rising inflation. Companies that mine gold, silver, and copper should all increase in value during inflationary periods.

Cash Is King

You won’t earn any return by hanging onto cash, but you will have some money in your hands in the event that things turn really sour.

Also, consider keeping cash under the proverbial mattress if you’re really concerned. Although you might think your money is safe in the bank, it’s not likely that you’ll be able to retrieve it in the event of a severe stock market crash. The FDIC might have very good intentions about insuring your bank account, but there are few insiders who believe that it can really pay all depositors the money they’ve lost if there’s a run on the banks. The best thing for you to do, if you’re thinking that another Great Depression is on the way, is to put your cash in a locked fireproof box and don’t tell anybody about it.

If you’re not thinking that things will get close to an apocalypse, then by all means keep your cash in a savings account. When the crash hits, consider using some of that money to buy stocks that have suddenly become bargains. The stock market tends to bounce back, after all.

You’re smart for wanting to prepare for a stock market crash. It will certainly happen again at some point in the future, even if nobody knows when. Be sure that you’re ready and you’ll be in good shape when the market takes a nosedive.

7 Surprising Ways to Save Money in Retirement

7 Surprising Ways to Save Money in Retirement
When you hit your golden years, you’ll be happy that you don’t have to devote eight (or more) hours a day for a paycheck. Instead, you can set your own schedule and do the work that you want to do (or don’t do much of any work at all). Another benefit for retirees is that they have opportunities to save money that might not be available to their younger peers.

Here a 7 surprising ways to save money in retirement.

1. Reduce Your Mortgage

When you’re retired, you still might not have your house paid off. However, you might be an empty nester who doesn’t need the extra rooms for the kids.

Why not offload your house and its mortgage and move into something you can buy outright with the equity in your existing house? A home that’s smaller and more modest can save you a lot of money as you enter your sunset years.

2. Follow a Budget

You might have tried budgeting before but found that it “didn’t work” because too many unexpected expenses pop up here and there. Once you hit retirement, you might find that those expenses magically disappear.

Use your retirement calculator to determine the expenses that you’ll have to account for during retirement. Then, build your retirement portfolio so that you have enough money for those expenses based on your expected lifespan. Follow that budget strictly and you’ll save money in retirement.

3. Avoid Giving Too Many Gifts

It’s tempting to help your adult children financially. However, if you do that at risk to your own financial future, you’re not really helping anybody. Be sure to give help when it’s needed, but avoid being too generous or you could end up in trouble.

4. Reevaluate Your Spending Goals

Although you’ve planned carefully for retirement, you know what they say about the best laid plans of mice and men. Sometimes, you might have to reevaluate your spending habits to keep up with changes that are beyond your control. Be sure to do a periodic review of your nest egg and how quickly it’s shrinking. Adjust your expenses as needed.

5. Clip Those Coupons

You have more free time on your hands during retirement. Why not spend some of that time looking for ways to save money? Clip coupons. Shop where the sales are. Visit garage sales. Go out of your way to find the best deals.

6. Take Advantage of Senior Discounts

In addition to looking for general bargains, you’ll also find that many retail outlets and restaurants offer discounts to senior citizens. Take advantage of those discounts to save a lot of money during your retirement years.

7. Save on Clothing

When you retire, you no longer need proper business attire because you’re not in business any more. Even if you need to close the occasional deal, you can pull out a suit from your closet that you wore in your younger days.

The good news is that you just don’t need to care so much about what you are wearing when you don’t have to go to work. Spending less money on clothes is a great way to save in retirement.

Retirement is a great time to live your life to its fullest and not worry about punching a clock every day. It’s also a time to save money so that you can get the maximum benefit from your retirement account and still leave something to your children.

8 Foolish Financial Moves to Avoid

8 Foolish Financial Moves to Avoid
A fool and his money are soon parted. However, there are many people who are smart with their money that still make foolish mistakes every now and then. That’s easy to do because, these days, there doesn’t seem to be much of an emphasis on financial education.

Here are 8 foolish financial moves to avoid.

1. Getting a Big Tax Refund

If you’re tempted to pat yourself on the back because you’re expecting a big tax refund this April, resist the urge to do that and consider flogging yourself with a wet noodle instead.

Why? Because you just loaned the government money interest free.

Think about it. Why are you letting Uncle Sam take more money out of your paycheck than is necessary? You could use that money yourself for investment purposes.

Talk to your employer about increasing your withholding allowances so you can keep more of your money.

2. Paying Someone to Do What You are Capable Of

If you’re savvy with tools and carpentry, put some sweat equity into your own house instead of paying somebody else to fix it up for you. You’ll save a lot of money and you’ll also ensure that the work gets done right because you’ll be doing it yourself.

3. Failure to Negotiate

Negotiate everything you possibly can. Negotiate when you buy a car. Negotiate when you buy furniture. Negotiate at garage sales.

Think about it this way: the worst that’s going to happen if you attempt to negotiate is the other person will say “no.” In that case, you’re no worse off than if you didn’t try to negotiate at all.

4. Failure to Budget

Be sure to budget your annual income and your annual expenses. Then, have the self-discipline to follow the budget that you’ve developed.

You’ll often find that when you follow a disciplined approach to budgeting your money, you’ll have quite a bit left over at the end of the month.

5. Ignoring Your Credit

There are many advantages of good credit. However, you won’t know if those advantages are available to you if you don’t know anything about your own credit history.

Get yourself a free credit report and go over it. If there are any mistakes on it, contact the appropriate parties and get them resolved.

6. Buying Name Brands

Okay, we’ll confess that there aren’t too many ketchup companies as good as Heinz. Beyond that, though, you don’t really need to buy name brands. Look for generic alternatives when you’re shopping.

7. Saving While in Debt

It might be tempting to build up that nest egg while you’re drowning in an ocean of debt, but you’re spending money on interest expenses for every credit card that isn’t paid off at the end of the month. Use that excess cash to get out of debt and then build your savings account.

8. Buying a New Car

A new car depreciates so quickly that it becomes a used car approximately 45 seconds after you buy it. Save yourself a fortune by buying only used cars.

People who simply don’t know the best way to manage cash are most prone to money mistakes. Avoid making foolish financial moves that will cost you a lot in the long run.

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