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& Posted by Jolie Biernacki on May 11, 2008

Retiring on Only Social Security

Looking back it wasn’t all that long ago that we didn’t have this thing called retirement. At the beginning of the 19th century if you were the breadwinner for your family you worked until no longer able. This was either because you became too old or ill. Or you died. At this point you and/or those depending on you moved in with other family members for support or you lived in poverty. At this time there were also places called poor farms where people went who could no longer support themselves. This was the way of life until about 80 or 90 years ago. During the Great Depression, Social Security was created. It paid the primary worker a retirement benefit when they reached the age of 65. At first the benefit was just a lump sum payment and then in 1940 recipients started getting monthly benefit checks. Social Security was never meant to take the place of someone’s paycheck. Instead, it was meant to supplement whatever they had salted away so they could spend their final years in relative comfort.In time, though, many retirees came to look at Social Security as their main and, most of the time, only source of income. Looking back, this probably wasn’t a bad way to look at Social Security since at that time the quality of life for many people at the age of 65 was very low. Now life at retirement is quite a different story. The quality of life has gotten much better and for most people the quality of life at retirement far better than their working life. Retirement is now when you can do all the things you couldn’t do while you were working. That quality life comes with a price, and it’s not cheap. You’ll have to decide how you will pay for it. Let’s look at an average 65 year old planning to retire now and fund his retirement only with his monthly Social Security benefit check. Our person has a current annual salary of $40,000.00 and will be retiring in December when he reaches 65 1/2 years old. Using the at the Social Security Administration web site, we can quickly calculate a rough estimate of our retiree’s monthly benefit. After calculating, our person will get $1101.00 per month. That doesn’t sound bad, but keep in mind with his salary, he was probably taking home 3 or 4 times that amount per month just before retiring. Now let’s take a look at the expenses our retiree will probably have. Let’s assume that he has paid off the mortgage on his house and that he has no outstanding credit card debt.

Car payment…………………250.00

Power/Gas Utility………….100.00

Telephone………………………40.00

Insurance(home/auto) …150.00

Cable/water…………………….50.00

Food/Groceries…………….300.00

Gasoline…………………………50.00

These are fictitious wages and expenses. Plug in your own figures to see how you might fair on just Social Security. The total of these monthly expenses comes to $940.00 leaving our retiree with just $161.00 for anything else they might want to do during the month. But before this can be counted on as extra cash for the month, our retiree needs to consider health insurance. While employed, he most likely had hospitalization and other medical benefits through his employer. Now that he is retired, he will need to sign up for Medicare and supplements depending on the coverage he wants. This coverage could run up to $200.00 per month or more.You can see how hard it would be for Social Security alone to sustain someone through his or her retirement. With the expenses I have listed, including Medicare, a retiree could not survive on just Social Security. The expenses listed could be trimmed and by being very frugal, someone could get by but retirement is your time to enjoy life. The expenses listed do not include any vacations, trips to visit children and grandchildren, or any frills outside of day to day living. It is very important to start planning and saving for your retirement as soon as possible. If you read this and think you still have plenty of time for retirement planning you might want to consider the cost of things when you plan to retire. Nobody can predict the future but we can look at the past to get an idea of what the future may hold. Looking back 35 years, a gallon of gasoline was less than 30 cents and you could buy a brand new Cadillac for $5400.00. That same gallon of gasoline is right around $3.00 today and a new Cadillac starts at over $32,000.00.(From About.com)

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Posted by Chris Yonker on May 11, 2008

Financial Panic in 2008

What financial panic you might say? Hasn’t the recent Fed actions, lead by Helicopter Ben Bernanke, poured enough taxpayer money, pardon me, that is printing press generated US dollars, into the hands of his Wall Street buddies, to ware off any potential panic?

Nope, afraid not. While the government line may be coordinated with the talking heads on MBNC and elsewhere, as to that a crisis and panic has been adverted and that we no longer need to worry, I fear that the truth is that the financial meltdown has barely gotten started as the problems of over leveraging and the necessary deleveraging are still very much with us.

While the troubles with the subprime mortgage lending market has received most of the press on the debt deleveraging issue, and the actions of the Fed in arranging the bailout of Bear Stearns has smoothed out the turmoil in financial waters, the huge ticking time bomb of the huge derivative market has not even been addressed.

The size of this market is estimated at $45 trillion. It is really impossible for the human mind to conceive as to how big a number that is but let me tell you it is huge. Since this market was created largely by the same financial engineers who created the means to package and to transform junk quality residential mortgages into AAA rated securities, we can assume that the same care was taken in creating and packaging many of these often plain weird financial instruments.

The scary thing is this. If only a 10% markdown in value of this $45 trillion pile of potential toxic waste occurs that is a $4.5 trillion write down somewhere out in front of us. Even the Fed would have trouble dealing with a write down of anywhere near that magnitude. Should it occur surely a few major financial institutions would fail.

The fact is that the world has never faced such an over leveraged situation as we have today. Smart guys at major financial institutions who ready should have know better thought that since real estate markets can only go up there was no reason for their financial models to assess the risks of markets falling.

They then packaged and sold trillions of dollars of derivative financial instructions to investors all over the world based upon a flawed model of risk assessment. Some of these guys were greedy and stupid enough (yes, smart people often do stupid things) to keep a few billion dollars of these toxic sure to fail mortgages made to people who didn’t have the ability to repay on their firms own books.

And being extremely greedy they bet the farm that their make believe pricing models were fail proof and leveraged their bad investments at up to 40 x 1. At this high ratio only a 2.5% decline in a portfolio’s value completely wipes out the institutions equity base.

That is why there is such a high probability of a true panic at some stage of this financial disaster up to now slow motion financial train wreck. As the under lying values of the loan portfolios continue to fall as housing value further decline and homeowners stop paying on their underwater mortgages at some point panic will set in as equity disappears in a flash.

The banks and brokerage firms at some point will not be able to attract fresh investment capital to shore up their balance sheets because the new capital they previously raised disappeared so fast.

For all of the above reasons and more there is a high potential for an uncontrolled financial panic in 2008. Perhaps a bit of gold hidden away in a safe hard to find place makes a lot of sense. That and a supply of food and water and a far away place to retire to for awhile.

Gerald Green

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Posted by Chris Yonker on May 11, 2008

Foreclosure Selling Tactics

Once a home reaches pre-foreclosure or foreclosure status it is in the best interest of the lender, and the homeowner to ensure that the property sells quickly, and the balance accrued on the property is promptly taken care of with the profit gained in the sale of the home to the highest bidder. The lending company is given what it is owed, and the remainder to the homeowner. Often, the homeowner gets very little – and thus, reason why a homeowner should not let the home to go into foreclosure.

The key to a successful pre-foreclosure or foreclosure sale is to sell quickly. This will increase the profits made while decreasing the interest and other charges that are being accrued by the lender. Here are some techniques to promote the quick sale of the home:

Home Staging has been referred to as the secret weapon real estate. Research has shown that staged homes are on the market for an average of thirteen days, compared to the average of thirty-one days for homes that have not been staged. During the process of staging the home there are five aspects that should be considered. A diagnostic report should be completed of the home entailing what needs to be changed, renovated, etc. to make the home more attractive to potential buyers. Second, the home should be removed of all clutter, and personal effects. Third, colors in the home should be muted, and neutral. When a buyer walks into the home they should be able to see their life within the walls, not the present residents. Fourth, the home should be clean – and move in ready with new paint, trim and details. Lastly, the home should have curb appeal. A new door, or fresh coat of paint on the door, a manicured lawn and some plants can go a long way in bringing potential buyers into the home.

Staged homes have been shown to sell more than six-percent over the listing price, compared to homes that have not been staged. Staging can cost as little as two-hundred dollars and the profits yielded are well worth the investment.

Pricing is crucial. Once a home reaches foreclosure the lending company is more than likely taking a loss on the property. Asking too high above the balance that is owed on the home, which will go to the homeowner – may deter buyers because it is public record once a home reaches foreclosure. Pricing too little could arouse suspicion in some buyers.

Who is the balance of the mortgage owed to? It is important to consolidate the mortgages with one lender, rather than have two lenders that are owed money because this makes the process more complex.

Prepare the buyers to exit the property and ensure that all paperwork is in order. This way, the new owners are able to move in. A key selling point within the sale is going to be the low price. Entice buyers further with fast closing times, and quick possession dates.

Using these tips should ensure a quick sale – which will not only benefit the seller, but the lender as well.

JOHNATHAN HEUSMAN

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Posted by Jolie Biernacki on May 10, 2008

Get rid of debt tension without any hassle

When people have accumulated debts, their first concern is to be debt free as soon as possible to avoid any crisis. Well, consolidation process is a handy way to put debts off the debtor’s shoulders and gives him an opportunity to start new life all again.loans for consolidation purpose pays off all the debts of the borrower to immediately relieve him from burdensome old debts. After he has paid debts through the loan, he is now supposed to make easy monthly payments to the one new lender. Thus the borrower no longer makes payments to many creditors. In other words, consolidation process merges all the payments into single monthly payment of reduced amount.To pay off greater debts, the borrowers are advised to opt for secured debt consolidation loan under debt management solutions. This loan comes against the home or any valued asset of the borrower. The biggest advantage is that the borrower gets this loan at lower interest rate which ensures reducing monthly payments towards the loan installments after he has cleared high rate debts. Also the borrower can choose to repay the loan in larger duration of say 25 years if he wants to save more money per month for other purposes. The loan amount depends on value of property pledged as security.In case of smaller debts, better take unsecured debt consolidation loan under debt management solution without any collateral. This option makes it a risk free loan offer for the borrower. But the borrower would be paying interest at a little higher rate depending on his credit history and other personal circumstances. An unsecured loan is meant for shorter repayment duration of 5 to 10 years.Some borrowers need just a bit of help creating a spending plan, and then can get a handle on their mounting debts themselves. Others may be able to borrow against their homes and reduce their card debt easily. And do not worry about your bad credit history for availing debt management solutions. Debt consolidation loans are also meant fore bad credit people who have late payments, arrears, payment defaults or CCJs or bankruptcy. With a bit higher interest rate such borrowers get the loan with ease in these days of competitive UK online loan marketplace. Ensure that you pay back the loan installments in regular manner so that you can easily avoid falling in a new debt trap.(By Gracy Bonsu)

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& & Posted by Jolie Biernacki on May 10, 2008

How to achieve more in months than in years

Did you know that by being aware of, and by controlling your thoughts you can achieve more in months that you did in the past few years? Are you not where you want to be in your life? You want happiness and success, yet you can’t seem to get any closer to achieving that wonderful life, even after years of trying? Let me ask you, have you heard these two statements before: ‘It’s all in the mind’ or ‘Stop thinking you are sick and you’ll feel better.’ Ponder over these for a minute. Do you think there is any truth in them? Sure there is. That’s the power of thought in action. Stop thinking you’re sick and sure enough, you will feel and become better. The thoughts that you hold in your mind are preventing you from living a blissful life. Your moment-by-moment thoughts shape your life, your destiny. Everything and anything in your world and mine happens as a result of the power of our thoughts. When Alexander Graham Bell invented the telephone, it was first a thought. Colonel Sanders first thought of the idea of his chicken recipe. Walt Disney first had the thought of a massive fairground. They all started as thoughts. Action followed. But they all began as a thought.Look at the simple day-to-day events. You think about getting out of bed. You think about what to have for breakfast, what clothes to wear, to remember to take your umbrella. Every step of your life is preceded by thought. Everything you do is directed by your thoughts. Your principal, core thoughts that you have held over the years form and shape your life. These ‘inner’ thoughts create your present and future ‘outer’ world. In other words, your thoughts affect your circumstances and outcomes. Since your thoughts affect your life and what you think about materialises, it goes to say that it is imperative that you mind your thoughts; that you keep a watchful eye on your moment-by-moment thoughts.If someone constantly talks about their lack of money, or that they cannot afford to buy this or that, for example, then their predominant thoughts are, ‘I don’t have enough money in my life.’ And since lacking money is their primary thought and focus, they will continue to lack money. The same goes for lacking self-confidence. If they walk around saying ‘I can’t do this or that’, then they will remain where they are in their life; unable to progress because they have no self-confidence. That’s the way the brain works. What you focus on happens. Things do not get better or improve until you change your thoughts. You need to change your thinking patterns. Your financial situation will change when you take charge of your life by establishing new empowering money thoughts. You will take action by having the thoughts that drive you to take action. Similarly, you will have joy and happiness in your life when you adopt the happiness thought patterns. You create your circumstances with your thoughts. Your thoughts are creating something every moment of every day. And the scary thing that you must realise is that most events, outcomes and circumstances are created unconsciously; without any awareness or conscious effort on your part. How did that come about? If you went through life saying statements like, ‘I’ll never be rich’ ‘I don’t deserve this’ ‘Life sucks’ ‘Life is just one pain after the next’ ‘I can’t do this,’ you have created thoughts that you will never have any money, that you will remain unhappy in your life and stay stuck where you are now. When you question yourself later in life why you feel unconfident in certain situations, or why your financial area has not improved, you will have forgotten that you programmed yourself not to feel confident or to have any money years ago. Then no matter what you do at a conscious level, irrespective of how much you want to be rich, live a happy and joyful life, or be a success, your predominant, unconscious thoughts dictate the opposite, which is your reality. The thoughts you hold bring about circumstances in your life that are in complete opposition to what it is you want in your life.Rather than being unaware of the power of thoughts, you can choose to have the thoughts than will change all that, so you may truly live the life you desire. And you do so by reprogramming your thoughts. Instead of lacking money to do what you want or have, instead of not having the motivation to get ahead in life, you can replace these damaging thoughts with powerful thoughts that can give you all that you want in life and more in a short period of time. Always remember than your unconscious thought patterns dictate what is produced in every aspect of your life. Take charge of your unconscious, core, habitual thoughts now. You deserve to live a happy and successful life.(By Hani Al-Qasem)

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& Posted by Jolie Biernacki on May 10, 2008

Reduce Debt With 5 Easy Strategies

Millions of people are over-extended financially. They max out their credit cards and dig a financial hole that seems impossible to escape from. If you find yourself in that situation, there are some strategies you can use to reduce your debt and free some money each month. If you are having financial problems due to excessive debt levels there are only two alternatives. You must bring additional money into the household to pay down some of the debt or you have to reduce your expenses. This article will deal with reducing expenses. The first thing you need to do is change your spending habits, create a spending plan for yourself. Here are 5 strategies to get you started:1. Stop spending money on items you don’t need. Before buying those new shoes at the mall, ask yourself, ‘Do I really NEED them?” The key word here is ‘need.’ Most people spend much more money on things they want, as opposed to things they need. Only buy things you need until your debt problems are under control.2. Take inventory of your monthly spending habits. Most people have no idea how much money they spend each month. They forget the little things like that coffee in the morning, the soda or drink in the afternoons. These little meaningless expenses can really add up at the end of the month. Keep a small pocket journal and write down everything you buy during the course of a month. You’ll be surprised at how much spend on frivolous things hat you don’t really need (and can do without).3. Reduce your expenses by using public transportation if possible. Talk to colleagues about starting a carpool. At the grocery store, buy generic and store brand products. Use coupons whenever possible. Drink tap water instead of expensive bottled water and soda. There are thousands of other ways to reduce your expenses, use some of them.4. Sell some of the items you no longer use or need . Have a yard sale or open a sellers account on Ebay. Millions of dollars worth of used items are bought and sold on Ebay every day.5. Stop using your credit cards! Use your credit cards for emergencies only. Get into the habit of paying cash.(By Jo Mark)

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& Posted by Jolie Biernacki on May 10, 2008

Retirement, what plan types are there to choose from?

There are not many people who know all the details of the known retirement plans out there, knowing this, you can also say that not many people know which retirement plan is the best. When a person is working on his or her retirement plan, this involves a form of saving money periodically for a certain time, that way that person can enjoy a nice time without the need to work in the, so called, golden years. The government encourages people to do so by giving tax deductions and other benefits. This is what we call an Individual Retirement Plan also known as IRA. With an IRA, you are sure of having no a lot of financial worries during your retirement years.Several types of retirement plans in the USA. The most popular retirement plan is the IRA in it’s most traditional form. This plan is simply a savings plan with a custodian like a financial institution, bank or brokerage. Your job would be to deposit an amount of money (most times) on a monthly basis. The custodian would then invest that money in such a way that the returns are as high as possible. You benefit in a few ways from this type of IRA. Of course, one benefit is the saving itself but you are also entitled to get tax deduction for the part that is invested. There are strict criteria to be eligible for this IRA and these are regulated by the Internal Revenue Service (IRS) of the United States of America.The second plan we will talk about is the Roth IRA retirement plan, this is also a very popular type of plan in the US. With a Roth IRA retirement plan, you invest the funds in securities and stock and these would provide a high return. One of the downsides of this plan is that it is not possible to deduct it from your taxes. Another downside would be the 10% penalty when you decide to make an early withdrawal.The third plan, and final one we will discuss here, is the plan known as the simple IRA. In this plan the employer plays a major part. If a company has less than 100 employees and they earned up to $5000 the year before the employer can help in two ways. The employer can contribute 2% towards a retirement savings plan without the need of the employee to do any saving. Or the employer can do a 100% match with the monthly saving the employee does with a maximum of 3% of the employees monthly income. The minimum, however, should not go below 1%. An employee can stop his or her contribution any time they want. The employer has the benefit of getting a tax deduction for the contributions it makes, and the employee has the benefit that any savings they make are taxed the moment they withdraw the money from the plan and not at the time of the savings. So in the present time they don’t pay tax over that part. The employer, in this way, has a nice benefit for the employees and it can give them a form of loyalty towards the employer.Plan your retirement, that is the best advice one can ever give to you. How you do it is the next problem but to be aware of the fact that you need to start saving now is a first big step. The earlier the better. (By John Chomsky)

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& & Posted by Jolie Biernacki on May 10, 2008

The Unlucky Many: The Credit Crunch and the Mortgage Market

‘How has the credit crunch affected you?’ is going to be one of the biggest and most often asked questions of 2008, and only a lucky few will likely be able to answer ‘not at all’. More likely is you’ll receive an answer from one of the unlucky many whose finances have been stretched and tested – especially those with mortgages. In just a couple of years, the face of the mortgage market has changed dramatically, with banks and lenders desperate to pull something back in the wake of some reckless credit lending in recent years. These changes are reflected in the results of recent studies into the mortgage market, in particular the facts showing the limiting of mortgage products available.March 2008 alone saw a drop of 2026 mortgage products (from 7726 to 5700) across the residential and buy-to-let markets, while home-loan deals have seen a fall from the 15,600 available in July 2007, to just 4,700 available today. Overall, then, mortgage lending has declined to an estimated £24 billion, a 6% decrease from February 2007, while February 2008 saw the lowest number of new mortgages approved since July 1995. Though clearly foreseeable, one of the biggest products lost this year was the 100 per cent mortgage. In what has already been dubbed an end of an era, the last lender to provide a deposit-free loan withdrew the deal earlier this month. Buyers will now need to lay down a minimum deposit of 5% - an average of £10,000 - though one expert maintained that the withdrawal of the 100% mortgage from the market was a ‘sign of things to come’, and that it wouldn’t be long before the 95% mortgage followed in kind. One of the beauty spots of the mortgage market that has seen an increase in products, though, is fixed-rate mortgages. Despite the two-thirds drop in the overall number of different mortgages available, the number of fixed-rate mortgages fixed for over 10 years has thought to have risen to a new high of 132. And with an estimated 1.4-million fixed-rate mortgage deals ending over the next twelve months, and customers looking to renew their packages, there luckily remains some choice in this area of the market. Homeowners looking at fixed rate mortgages will, however, be hit by a sudden rise in payments when they switch to a new mortgage; the average to fix a mortgage for 10 or more years now being 6.14%, compared to an average 5.89% a year ago. With the future of interest rates uncertain though, fixed-rate mortgages still provide a more stable and secure payment plan – which is why the Chancellor announced his support for lengthy fixed deals in his Budget. What is important for all homeowners or first time buyers thinking of going down this avenue of payment is that they compare fixed-rate mortgages and judge for themselves whether fixed-rate is the correct choice for them. A recent study showed that three out of four people didn’t know the difference an extra 1% had on mortgage payments, so if you’re unsure, also make certain you calculate the amounts you’d need to pay on different packages using an online mortgage calculator and be sure to speak to a professional beforehand.(By Isla Campbell)

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& Posted by Jolie Biernacki on May 10, 2008

Remedies For Runaway Credit Card Debt

Runaway credit card debt is a problem that afflicts millions of people worldwide. Most people got into this predicament little by little. A trip to the mall here, a new pair of jeans there, and that cool new phone; who could resist that. Suddenly, you find yourself in a financial bind with all of your credit cards maxxed out. What do you do? There are several steps you can take. First if all, you need to stop spending money on items you don’t absolutely need. Most people don’t realize how much they spend on unnecessary stuff each month. If this sounds like you, carry around a small pocket sized journal and each time you buy something, write it down along with the cost of the item. Do this for a month and you will be shocked at the amount of money you wasted on candy, coffee, snacks, and junk.You can even cut your expenses more. The grocery store is an area where you can save quite a bit of money. You should never go to the grocery store on an empty stomach. Studies have shown that hungry consumers buy much more than those who are not hungry. Stores know this and try to tempt you will all kinds of enticing sites, sounds, and smells. Avoid these temptations by shopping after you eat. Do you buy prepared foods and drinks? You can save a lot of money buy purchasing the ingredients and making meals from scratch. Bottled water and soda can also eat up a large chunk of your food budget. Drink tap water, it is cheaper. Using coupons and shopping at stores that double (or even triple them) can easily shave 10% off your food bill.If you give it some serious thought, there are probably lots of other ways you can save money. But don’t forget to apply all of those savings to reduce the balance on your credit cards. (By Jo Mark)