Managing Money

Here are some personal financial tools and sites we’ve found that may help with improving your finances.

It occurred to me as I was researching some financial matters on the web that many people don’t usually have the time to look for and review websites that may impact their personal finances or improve their financial education. Well, I thought I’d share those financial resources I’ve bookmarked for my own needs, and which are the results of my perusal:

Image by Channel 4.

Helpful Personal Financial Tools and Sites

1. Negative Equity Auto Loan Payment Calculator

This negative auto loan calculator allows you to figure out your monthly payments on a car you are planning to buy, even if your old clunker is worth less than what you owe.

2. FICO Score Estimator

This is a very useful tool to estimate your FICO score, the score that really matters when asking for a loan. Answer the questions truthfully, and have the information on your credit cards and loans (cars, furniture, etc.) at hand, as they will ask you what percentage of your available credit your debts represent; for example, I have two credit cards with a credit limit of $10,000 and my present balance is $2,500; so that’s 25%. My results were very close to my actual FICO score (you can pick up your actual scores and reports from myFICO or check out this myFICO promotional code along with sites offering free credit scores).

3. Pre-Retirement Calculator

This calculator is a good tool to calculate your retirement needs, no matter what your age. You must take into account, however, that your numbers will vary depending on your needs and financial tools. Social Security income may be included. Use this tool to start you off on a savings plan that will help you work towards a comfortable retirement (barring catastrophes and costly divorces). One more thing — count on this calculator to only give you a ballpark figure, so use it for that purpose to give you a basic idea of your retirement needs. To get much more accurate numbers, you’ll need to utilize a lot more information and details to refine your results.

4. Yahoo! Finance, Taxes Section

I find this to be an extremely valuable tax advice site. It even predicts what the new stimulus package and Obama’s tax plan will do to your budget.

5. Mortgage Refinancing Analyzer

The important question many homeowners are asking after witnessing the new lower mortgage rates is: should I refinance? This mortgage refinancing calculator can answer this question while also incorporating several other fees into the calculations, but make sure to add your insurance and local taxes to reach the final magical number.

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Are you one of the seniors or those over 55 who’s retirement investments have been hit during this economic crisis?

If your investments have taken a severe beating lately and you are over 55 years of age, you may be considering the possibility of selling all your stocks, including your 401K funds to cut your losses. This would be a terrible mistake, unless it’s a dire emergency, in which case you would do it anyway, crisis or no crisis.

Was your retirement just around the corner and were you already savoring the dolce far niente, which in plain Italian-English means the pleasure of doing nothing? Suddenly, with this recession, the dark clouds on the horizon have become a full-fledged hurricane, wiping out your precious possessions. What should a quasi senior citizen do in such circumstances?

Image by MSNBC.

Retirement Investments Hit? Financial Options For Seniors

1. Weigh the possibility of a reverse mortgage.

Check out this comment made on Yahoo Shine:
“The older a borrower, the larger the percentage of the home’s value that can be borrowed. Homeowners can receive payments in a lump sum, on a monthly basis (for a fixed term or for as long as they live in the home), or on an occasional basis as a line of credit. Homeowners whose circumstances change can restructure their payment options.”

In other words, people 55 and over may have the option to select a reverse mortgage, which in effect is like selling your home while you keep living in it. There are of course several conditions that must be met, which you can read about here. Just remember to study this option very carefully before signing on the dotted line.

2. Reduce your expenses immediately.

You may have already read about the many ways a family or a couple can lower utility bills and payments by as much as 20%. Ditto for fuel (it’s going up again, you can be sure of that), groceries (buy generic brands), car payments (pick a car you can afford and sell the extra one), insurance coverage payments (play the companies against each other and choose the cheapest one). Find ways to reduce your expenditures — take a look at your existing debt and see if you can work to minimize it. Perhaps you can call your credit card companies and tell them you have an offer to transfer your debt at a much lower rate. The key is to review your family budget and see where you can comfortably make cuts. Then do another pass and see what you can do without, for the meantime.

3. Keep your investments. Adjust your asset allocation with care.

If you’ve invested in solid companies, such as blue chips, then stay with them. They should be worth much more down the road. Once you are satisfied that their values have somewhat recovered, consider changing the percentage you dedicate to stocks and the percentage you allocate to more secure investments, such that your asset allocation is optimized for your age, risk profile and financial goals. At your age, consider reversing the typical 70%/30% allocation formula; that is, go with something more like 70% safe (cash and bonds) and 30% risky (stocks, real estate). If you already maintain a decent allocation, then rebalance your positions accordingly.

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With the continuous rise in college costs, paying for college may seem like a growing challenge, if not an impossibility. Here are our suggestions on how to pay for school on your own.

The University of Oklahoma is a lot like other universities out there. It is famous for its football program, but if I were a student there, I’d be worried about the rising cost of tuition. This year, a student from this state can expect to pay almost $190 per credit hour, while the fees go up for non-residents.

If you’re one of many folks wondering how you’re paying for college without the benefit of a college savings account, then please read on about some options that may help you out. Using certain strategies and the assistance of an online financial coaching staff, we can make it to the graduation endzone without getting tackled by thousands in student loans.

Awesome image from Invisibleman.

6 Ways To Pay for School On Your Own

1. Look into paying for college with work income.

Back when I attended college, I didn’t have options like a 529 account or other savings rewards programs that can support a 529 college savings plan, so I funded part of my tuition through various jobs as a student worker, then at a nearby mall. A neighbor recently told me that her granddaughter pays for college and her other expenses by working Fridays to Mondays; the freshman goes to classes on the other days. I’ve also met people who saved quite a bit of income from their summer jobs.

Then there are those who opt to work for a few years or even decades before completing their degrees. Some of my relatives found success as older students. Also, it’s easier to skip the loans and pay cash for tuition after saving up the money during several years in the workforce.

Another idea is to find employment at a university. For example, the University of Texas at El Paso allows full-time employees the chance to register for a course; in addition, the employees can seek fee waivers.

2. Seek tuition assistance from employers and programs.

There are still employers and programs out there willing to help pay for college costs. Some possibilities:

• The Reserve Officer Training Corps (ROTC) is a good option if you’re interested in a military career and can commit to several years of service.
• Teach for America offers benefits such as loan forbearance and tuition assistance.
• AmeriCorps can offer you some additional benefits as well.

Or you can seek out an internship with a company that can give you on the job skills as well as college credit. BusinessWeek compiled a list of the best internships of 2008 for undergraduates.

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Is your family budget set up for frugal living? No worries, since living cheap doesn’t have to be a pain.

First of all, saving money is now a priority due to the present uncertainties of the economy. But that doesn’t mean that you have to sacrifice the fun in your family budget. Remember that if both of you work, it doesn’t mean that you should be spending to reflect your income level (unless you are filthy rich, in which case stop reading).

Cut Extraneous Costs From Your Family Budget

Let’s say for a moment that both of you earn $120,000 a year (what else?) which makes you one of those middle class folks Obama is talking about. Depending on your mortgage and where you live, that budget must absolutely be designed with the worst scenario in mind. I hope you’re not spending every dime of the budget every month; nor overspending with dangerous credit cards. First thing to do with that specific budget is to prioritize your expenses. Make a list of what you don’t really need and cut the fat from the budget immediately or ’sofort’ as our German friends like to say.

What’s In Your Family Budget? Negotiate!

I made the unwanted list one Saturday morning with my wife (yep, the same for 35 years). It was a lot of fun to banter and bargain and finally compromise on that famous budget “unwanted list”. Her magazine subscriptions, gone. My daily newspaper, gone (I get all the news I want from the Web, small wonder newspapers are folding — pun intended). Phone extras like ID Caller and Call Waiting, gone (Let them call again). Taking the grandkids to those expensive movies, out (hey, more than 50 bucks each time). You get the idea surely, although you may ask where the fun is in that budget.

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The economic recession is bringing us many financial headaches, but there’s a silver lining: frugality is back in fashion, and we’re once more learning to conserve.

“Retail sales are plunging….” That is the banner today for many financial publications, both on the Web and on paper. I say to this, great news, excellent news! I am glad that common sense has finally prevailed. We have been on a binge of gluttony since the 1990’s. Every year the increase in consumers’ spending fed the frenzy of financial institutions. Any momentary decrease in spending was considered anathema. It took a big tsunami of credit failures and credit card defaults to awaken our conscience and to make us change our ways.

Frugality Is Back In Fashion!

So the average 6-pack Joe, as beautiful Sara Palin would say, has decided that he would cut down to 3 beers (a week or a day?), that taking the family to Disneyland and other plastic attractions was really not that important, that the wife could afford to go another year without her 20 handbags and 40 pairs of shoes, and that it was time to cut on expenses. Imagine that! (stolen verbatim from Lou Dobbs ).

I am sure that wealthy Americans have better things to do than bemoan my middle-class articles, so I’ll concentrate on Obama’s favorite target, you, me and 90% of Americans who wonder whence (stolen verbatim from Shakespeare) their next paycheck will come from or whether their present income will be sufficient to cover their expenses.

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Auto insurance quotes are no different from numerous other commodities for which you do online shopping. Astute consumers who spend the time performing their due diligence can save thousands of dollars on insurance premiums over the long term. So how about these few tips to make the shopping process easier?

The Do’s of Dealing With Auto Insurance Quotes

1) Try to secure at least 5 auto insurance quotes from various automobile insurance providers. If you don’t have an established relationship with an insurance company (or agent) whose recommendations you trust, then don’t commit to the first quotes that are offered to you. After all, you wouldn’t normally buy the first car that you see. Auto insurance premiums can be a big slice of your budget, so it’s in your best interest to shop around.

2) Supply accurate information concerning your driving history. To receive insurance quotes, you’ll be required to provide some background information, so make sure that the details you give are as precise and as comprehensive as possible. This data will be confirmed by the insurance company and your rates will ultimately reflect what’s been verified.

3) Confirm that the quotes you receive are meant for the same car insurance coverage. You need to compare apples to apples.

4) Get quotes that represent various deductible amounts. This way, you’ll fine-tune your policy requirements and get the best value on your coverage. By increasing the deductibles on your policies, you’ll save a lot on your insurance premiums.

5) Do your homework before shopping for an auto insurance policy. Check the financial ratings of the insurance companies you are considering, and read their reviews from consumer reporting organizations before making any commitments.

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We may love the convenience of online bill pay and automatic deductions, but they’ve got a downside.

When our money travels along the ether, we don’t usually think about it much. But according to the Electronic Payments Assocation (or Nacha), the electronic payment network upon which our automated payments travel, the error rate for our money transactions occur at a rate of 38 for every 100,000 bill payments.

That doesn’t seem like much, but if it happens to you or to me, it’s one time too many. Just trying to fix the error by the bank would try the patience of Job (and he had plenty).

Almost everybody uses online bill pay systems and appreciates the convenience of automated deductions. You set it up and you forget about it. Hey, no writing checks, no spending on stamps and no forgetting to send the payment on time. There are however a few problems as indicated above, and others that escape even the careful watch of “Nacha”.

Why I Don’t Set Up My Bill Pay Account for Automatic Deductions

When I was younger and innocent (just a little), I decided to allow my home security provider (who then handled our home alarms) to automatically deduct his monthly fee from my checking account. After a couple of years, I felt that the service was lousy, their headquarters was 600 miles away and they didn’t have an office in my small town, so I told them to terminate the agreement. Little did I know that an apparently simple procedure was going to cause me so many headaches.

First of all, they demanded to know why I wanted to cancel: well, I had every right to do so after 2 years! Then they applied the usual trick of trying to intimidate me with the falsehood that my contract had not yet expired: well it had, 2 months earlier! Meanwhile, the payment kept going into their coffers. Exasperated, I sought a friend who worked at the bank and asked him to terminate the payment. He said that only the payee could do that. As a last resort, I sent an official looking letter with as much legalese I could muster to the security company threatening them with a lawsuit if they didn’t desist. They finally did, without a thank you note, can you believe it?

My takeaway here is this: be very careful to whom you deliver your checkbook which is what you effectively do when you set up automated deductions.

Except for very reliable large companies, such as house and car payments, I stopped automated payments to small outfits. Nowadays, I prefer controlling every monthly payment I have to my creditors such as the phone company, credit card company, utility outfits and whoever handles my memberships. Since then, I’ve had no problems whatsoever.

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