Personal Finance and Investing

Did you notice that S&P has threatened to downgrade our credit rating on the international scene. If that does happen and the dollar drops, there’s an inevitable conclusion. Suddenly everything we import is going to be that much more expensive. Our recovery from the recession has been slow enough. If everything imported goes up in price, families will not be able to cope. Worse, if the world thinks the US might default on its debt, the country will have to pay more interest on the money it borrows. That will force the banks to raise the interest rates for us. Mortgages and loans will go up. Of course, this is all a horror story and it will never happen because the Democrats and Republicans will agree on how to cut the deficit. . .

Meanwhile that leaves us struggling to make ends meet and trying to find every possible dollar of saving there is to be found. When it comes to insurance, there’s an interesting balancing act going on. The number of people driving uninsured has been rising steadily. In some states, it’s as high as 20% of drivers on the road. Mainly this is forced by the high rates although some ignore the law anyway. The irony of this is the more drivers without insurance, the more the rest of us have to pay. That’s either directly as premiums or indirectly because we take out additional cover against uninsured or underinsured drivers crashing into us. All this is putting the profits of the insurers under pressure. If they keep increasing the premiums, this is a vicious cycle and more people stop buying. So the insurers are now playing games with us. They increase the premiums and then offer us discounts or bonuses. The idea is to keep as many people as possible paying about the same total.

So you have to play the game and shop around to find all the discounts and then check out whether you qualify. Let’s see how it works. Any driver passing into their 50s is one of the safest on the road – statistics never lie. So insurers could lower the premiums automatically, or offer a loyalty bonus if you renew, or offer discounts. Most offer discounts to “mature” drivers. To qualify you usually have to go through a defensive driving course. The AARP’s website has a locator tool telling you where the nearest course is being run. This can give you up to 10% saving. At the other end of the scale, young and inexperienced drivers also qualify for a discount if they go on a safety course approved by their insurer. To qualify, ask your insurer which courses are accepted in your area.

So when you get the first round of car insurance quotes, check which discounts you have. Then run the search again changing, say, the amount of the deductible. Each time you run the search, change a variable so you can work out what discounts are available and how much they are worth. It costs nothing to run the search. If you have more time, telephone the insurer offering what looks the best car insurance quote and ask about what additional discounts are available. The rule is, if you never ask, you cannot receive. Find out how you qualify to save money.

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A debt consolidation program for medical bills helps to convert medical bill debts into monthly manageable payment. Debt consolidation programs also reduce the amount of monthly payment on medical bills. The debt consolidation program first understands the client?s needs and then restructures the payment plan. Many non profit organizations, agencies and online services conduct debt consolidation programs. These agencies have established communication links with a list of creditors. The creditors include the government, banks, credit unions, hospitals and other lending institutions.

There are different types of consolidation programs for secured and unsecured debts. A medical bill is a type of unsecured debt. Unsecured debts have higher interest rates. Debt consolidation programs first analyze the amount of medical debt and then prepare a payment plan. This payment plan is discussed with creditors to lower the interest rate. The reduction of average interest rate is on the total medical debt. Late fees, penalties and taxes are also discussed in the payment plan. The revised consolidated medical debt is then divided into easy monthly installments.

Debt consolidation programs for medical bills help to get easy installments from the creditor. The client requires a good credit rating to gain medical bill consolidation from creditors. Debt consolidation programs select creditors with minimum credit scores. They help in the supervision of debts more professionally and successfully.

The advantage of a debt consolidation program for medical bills is that the client has to pay only one medical bill against all the medical bill debts each month. Debt consolidation eliminates the past interest and penalty. It helps to keep current on medical bills. The client has to pay the actual medical debt amount through the debt consolidation program. The client becomes debt free by means of a well organized debt consolidation program.

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Once you have your personal finance house in order another area of finance, personal investing, looms as a challenge. How do you finance major goals like retirement? Personal investing is the answer, so here are some investing tips to help you avoid disaster.

Get your personal finance foundation on firm ground before rushing into personal investing in a big way. Poor credit and money management can force you into bankruptcy even if you have considerable assets. Scenario: You pay $1,000,000 for a house putting next to nothing down in 2006. The only real money you’ve saved has been in your 401k at work, which is 100% invested in stock funds and company stock. A few years later you lose your job as your employer falls upon bad times, the stock market falls like a rock, and your house is worth $700,000 if you’re lucky. Sound familiar?

If you can’t pay your bills you are technically insolvent. In the above case you go broke and end up with a lousy credit rating at the same time. The truth is that millions of Americans have invested in real estate they couldn’t afford and stocks investments they didn’t understand; and many paid dearly for their financial mistakes. Concentrate on personal finance first: your insurance needs, credit management, and a cash reserve to cover financial emergencies should be your first concern. The truth is that as long as you can stay current on your bills and you have an excellent credit rating, you’re still alive financially. Any weakness in the above personal finance areas makes you vulnerable to financial disaster.

Personal investing is the area of finance that puzzles many people, even some who are well off financially. After all, most folks work for a living and have no financial education, especially in the investment and investing arena. Stocks and bonds are not that difficult to understand, but without any financial education or background, they may as well be a foreign language. The best investment tip I can give an inexperienced or new investor is to start investing with mutual funds. These funds were designed for the investing public. They offer diversification and professional management at a reasonable cost. You can invest large or smaller amounts and have access to your money on any business day.

Now for some mutual fund investing tips. Different funds have different financial objectives, risks, and cost structures. Get your feet wet with the safest funds, money market funds. They pay interest in the form of dividends, their share price does not fluctuate, and the cost of investing is usually low. If you need some or all of your money back there is little chance of taking a loss. Once you have some money accumulated there start small in stock funds if you are younger, and bond funds if you are closer to or in retirement. Bond funds pay higher income in the form of dividends with moderate investment risk, while stock funds feature higher profit potential along with higher risk.

Mutual funds do the investment management for you. Your job is to pick the fund(s) that have the same financial objective(s) you do. The best funds in terms of the cost of investing are called no-load funds. They have no sales charges or commissions, and your total cost to invest can be less than 1% a year. If you’re ready to get into personal investing, look no further than mutual funds… the new investor’s best friend in my opinion.

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Are you considering a debt consolidation loan or a debt consolidation program? Have you ever wondered if debt consolidation affects your credit rating? Here is 3 reasons why debt consolidation affects credit ratings in a positive way.

Tip #1

If you have a lot of credit card debt, then it is affecting your credit rating in a negative way. One thing that credit card companies don’t tell you is that if you carry a balance on your cards and it is over 25% of your credit limit, then you are actually penalized on your credit rating, even if you pay your payments on time. So if you consolidate debts that include credit cards with high balances, then you are doing yourself a favor and helping your credit.

Tip #2

You can consolidate not only credit cards, but if you have a car or a personal loan, then when you consolidate those and pay them off you will improve your credit rating. The credit companies love to see that you paid off a car or a personal loan. It helps to boost your credit score quite a bit.

Tip #3

If you have enough debt that you are considering consolidating it, then it is obvious that you need to. The key is that if you consolidate your debt and payoff credit cards, then you need to stop using the credit cards and get rid of them. If you consolidate your debts and then you run your credit cards back up to their limits you are doing nothing to help yourself. You will end up in a worse situation, then you were in to begin with.

So if you are considering consolidating your debts keep in mind that debt consolidation will affect your credit rating and it can be in a positive way if you are responsible and smart with your debt consolidation.

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Did you know that the individual debt in this country is growing 23 times faster than the economy? Did you know that the average person spends $1.05 for every dollar that is earned? Did you know that although it is tougher to declare bankruptcy; bankruptcies are higher than they ever have been in our history, and that the average family is only about three months from trying to declare a bankruptcy? Wow, some sobering facts, wouldn’t you say? The trouble is that the rules are changing and they are changing rapidly. Some of the wealth builders that we have relied on in our lives are no longer as reliable as they once were. One of the perfect examples is owning your own home.

Certainly owning a home is still a good thing, but the housing boom over the past couple of years have done us no favors. The foreclosures, by some statistics are up 50%. Mark Zandi, chief economist at Moody’s Economy.com estimates that every foreclosed home lowers the value of all homes on that block nearly 1.5%. Many experts predict that home prices will continue to fall to the tune of an additional 10% by the end of 2009. Hold on to your seats..the roller coaster is still going strong…

Foreclosures and credit card debt seem to go hand in hand. Again, the average person spends $1.05 for every dollar that is earned; this is called negative spending. On average, nearly half of what we purchase is purchased on our credit card. We as an American society have accumulated a mind boggling 2.2 trillion dollars in credit card debt in 2007. Yet an additional sign that credit card debt is stressing our wallets is that most credit card users pay only the minimum and are typically delinquent in their payments. What this does is increase fees, increase rates, cuts the actual credit limits and gives poorer and poorer credit rating..which then again starts the cycle of higher interest rates, lower credit limits, and higher fees. The circle continues to go around and around.

So what is an individual to do in this challenging economy? The answer is relatively simple: start to take responsibility in becoming financially educated. People are finally starting to turn the corner on understanding that they need to know and understand more about their own financial situation. Amazon Books has reported more than 3,500 book titles on the topic of building wealth, and Time Magazine recently named financial expert Suze Orman as one of the World’s Most Influential People of our time. So, people are starting to understand that they need to take ownership and responsibility for their finances.

But where do people go who need help and advice in becoming financially educated? Depending upon what type of education you are looking for; realize that you may need to access more than one expert. Expert….you must demand the individuals that you seek advice from are actual experts in their respective field. Ask about their credentials, experience and their successes. Do your own due diligence on these people who are calling themselves the expert. You are starting to set up your personal financial freedom, you owe to yourself to have the best of the best.

The areas you might consider looking for financial experts to help you in becoming financially healthy are debt elimination and restructuring; the quicker the better, asset protection, tax minimization, and credit restoration to name just a few. While looking for experts in these areas, can they also offer solutions that help you save the money you will need for an emergency fund? What’s an emergency fund you ask? It’s savings that you have set aside specifically for the emergencies that pop up in life unexpectedly like a tire blowing out on your car, like a new hot water heater that you need, like being in a car accident and needing to get your car repaired. This money is used for unexpected emergencies and nothing else.

Now that you are on your way to becoming financially healthy, can your experts help you choose the right investments that will help you to meet your retirement goals. Can they help you with investment opportunities that are not your typical 401K’s and mutual funds? Many experts believe that you will need at least one million dollars in your savings account to retire comfortably. If you are relatively young and reading this article, that is terrific, but if you are the average 50 year old American..guess what..the average 50 year old American has saved only $50,000.00 towards their retirement. That is a far cry from the one million dollars that experts are predicting that we will need to have in savings and this is with only ten years to go until retirement age.

A word of caution; you may not be able to find one person who is the expert in all of these areas. I would tend to think that if they are a true expert, you won’t, however there are companies out there who have experts in each of these areas under one umbrella so you don’t have to search from one company to another to find the best of the best.

So, if you are like so many Americans and are in debt, living on credit and you see no way out..there are educational lifeguards out there. Now that you know what to look for..go out and find yourself the best of the best.

Disclaimer: You shouldn’t make any investment decision based solely on what you read here. This is not an offer to buy or sell a security. Should you choose to invest in the markets, it should be only after exhaustive due diligence and possibly in consultation with a licensed investment advisor.

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