Personal Finance, Loans & Insurance

There are plenty of simple tips for you to save money when it comes to personal finance basics. Some are a little more time consuming than others but despite that fact it is well worth the time it might take. Even if you follow one or 2 of the following tips you could save hundreds of dollars every year.

REQUEST FREE SAMPLES:

There are lots of websites that offer free samples on every day products. Even the huge stores like K-Mart or Home Depot have excellent opportunities for you and I to get free products. Those items range from skin lotions and personal hygiene products to pet food or bathroom products. Another option is to go directly to a manufacturer’s website to locate some free samples on newly released items. If you need something, type ‘free sample’ into google before you go to the store to buy that product. This is the beginning of mastering personal finance basics.

CHANGE CREDIT CARD SPENDING AND HABITS:

Credit cards can be wonderful but can be hazardous. With high interest rates and monthly fees, credit cards may wind up costing you a lot more down the road than you may have planned.

Things I keep in mind:

- always use cash unless its for a major purchase

- always make sure you are able to afford the item before you use a credit card

- always pay the balance of your credit card

AVOID IMPULSE BUYS:

We all know what it’s like to push a shopping cart through the aisles of the grocery store and when we get to the check out we ‘ve picked up double the amount we planned to buy. Always, always, always make a shopping list, follow that list and never purchase anything that isn’t on your list. This goes for any type of shopping including wardrobe, books or movies or CD’s. Stores are designed specifically for impulse buys with magazine racks and gum within easy reach. Make your list, check it twice, and follow it.

SHOP THE SALE RACK:

This is another personal finance basics rule but don’t confuse this with an impulse buy. If you made your list and know what you need, so check the sale display before you shop. It’s pretty likely you might locate that said item on sale and pay far less than the regular price. Food stores work the same way. They often over order items and sometimes run unadvertised specials on overstock items. Just be sure the product is on your list.

SAVE YOUR HARD EARNED MONEY:

This may be the hardest thing you have to do when cash is tight, but it just might be the most important of these steps. According to the book ‘The Wealthy Barber’ you should save ten per cent of the money you make each month. That may not seem like a lot but it does add up rather quickly and if properly invested it will go a long way towards your retirement plans in the future.

SAVE YOUR CHANGE:

This may sound a little silly but this simple tip is a great one. How? Because it’s just like found cash. After you come home from the store put any loose change into a jar. Each month or every few months count up the change, roll it up and deposit it into your bank account or reward yourself to a well deserved evening out. These are the personal finance basics you learned when you were very young.

BUY IN BULK:

We’ve already touched on shopping but I have another shopping idea that mostly applies to grocery shopping. Buy in bulk. If you mostly drink orange and you see that it is on sale at half price, buy 4 instead of two or buy the 24 pack of water instead of the 12 pack. It seems to make sense but many people don’t make bulk buys on every day items.

CLIP COUPONS:

I know this may make you feel like your grand mother but this is another great way to save lots of cash. It takes just a couple minutes every week and you will probably save hundreds of dollars every year on things you were already planning to buy. Go through the local newspaper or check the Internet for some money saving coupons.

RECYCLE PLASTIC BAGS:

This is a wonderful way to ‘Go Green’ and it will put money in your pocket too! Lots of retail outlets are now charging around ten cents for plastic bags. You probably have about a million of them hidden away somewhere in your house. Couldn’t you just bring those bags when you go shopping and re-use them? Try to use those plastic bags from the store for the garbage under your kitchen sink or in the bathroom. You don’t have to spend money every month on a pack of kitchen garbage bags when you already have them at home.

These easy tips will not only save you hundreds of dollars every year but they are simple and might even be fun. It’s always rewarding to know that you have started to take the right steps to becoming debt free. If you follow these tips to save money you are one your way to understanding the personal finance basics all of us should know.

Got Gas? – Part 3

Think of all the elements in your house that use Natural Gas to run. My folks use a gas stove, fireplace, furnace, hot water heater and a clothes dryer. Now they are need personal finance help if they want to reduce these costs. When they figure out their budget one day, they’ll understand if their gas bill is what it should be compared to their income. I’ve sent them to our resource link for a comprehensive budget spreadsheet and other financial calculators, but they could also search google. Here are 3 easy gas saving tips you can implement in your house.

It’s Getting Hot In Here – I know you’ve heard the song. Don’t get to the point of wearing shorts at home in January. Can I offer an easy bit of personal finance help you can use to reduce your heating costs. Drop your thermostat setting by two degrees and you will save a large 5% on your gas bill.

Mmm Smells Fresh – Why does no one hang clothes out to dry. If your dryer is gas powered, you could save a lot of cash by hanging your clothes to dry. This is my favorite personal finance help tip as it relates to gas bills, because of the fresh odor it provides. If you your clothes become stiff, tumble them on low for five minutes.

I Burnt Myself Again – Have you ever burnt your hands when washing them or doing dishes? Think of all the things you use hot water for. I don’t think your hot water should be so hot that you are unable to hold your hands under it with some discomfort. If you can’t hold your hand under it, it’s set too high and is costing you cash. My personal finance help tip regarding hot water heaters is change the setting so it’s not around 100 degrees, but is warm enough to get your dishes clean.

As a personal financial consultant, I’ve assisted many families reduce their overall costs. Their first step when receiving my personal finance help is to get their budget figured out. Simply doing this has often allowed them to allocate or free up hundreds of dollars a month. The next step is always to see where you can reduce expenses in other areas. In this case, I hope these tips will help you reduce your gas bill. Stay tuned for Part 4.

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Seller Financing/ Owner Financing can provide benefits for both the seller and buyer of real estate, but the seller should be careful to structure the terms of the mortgage to maintain the value of the note. Here are 7 key tips for creating a mortgage note that will maximize the value of the mortgage should you decide to sell it at a later date..

Seller Financing/ Owner Financing can provide benefits for both the seller and buyer of real estate, but the seller should be careful to structure the terms of the note to maintain the value of the note.

For the seller, the best reason for offering seller financing is it allows a much larger pool of eligible buyers for the property. Today there are interested buyers, however many of them do not fit the narrow criteria that would allow them to attain traditional financing. Offering these potential buyers an opportunity to obtain financing privately will dramatically increase the chances of selling the property. Traditionally, seller financing allows the seller to obtain a higher price because of there willingness to extend financing terms to the buyer.

For the buyer, utilizing seller financing means they do not have to pay the points and fees and go through the “red tape” at the bank. Buyers will also consider this because a privately held mortgage does not show up on a credit report or a balance sheet. This allows the buyer to get additional loans that he/she would not be able to obtain through a bank or other lending institution. The bank considers debt to equity ratios and income necessary to repay the loans. Once that threshold is attained, the banks will not lend any further on any other properties.

A common mistake made by sellers when offering seller/owner financing is creating terms that facilitate the sale of the property but result in a mortgage note that does not hold its value should they attempt to sell it. Most people defer to their realtor to make the lending terms, which is great for the sale of the property and the realtor’s commission, but not great for the value of the mortgage.

Jerry D. Remien MBA & CMI, President of Mortgage Buyers Inc., a company specializing in buying seller financed/ owner financed mortgages since 1991, offers the following advice for maximizing the value of a privately held mortgage note, “There are 7 important keys to creating a note that will allow the seller retain as much of their equity as possible and I will go through them in order of importance. Many of these points are adversarial to making the sale, so the ‘art of creating the note’ is to strike a balance between creating terms that will sell the property and terms that will sell the note. The realization of the equity in the property consists of the selling price of the property and the retention of the value of the note in a future sale.”

Seven Keys to Creating a Seller Financed/ Owner Financed Mortgage Note

1/ CREDIT SCORE This is a very important point. You are about to lend a stranger a large sum of money and their credit score is a measure of their past financial performance on their other financial commitments. This is the best indication we have as to how they will pay our note. In addition, depending on the number of commitments, or the total dollar value of their debt, one may want to see a financial statement to see if they have the income and/or the equity necessary to pay the note and still meet their other financial obligations. It is a measure of the potential risk and the terms of the note should be adjusted accordingly to that risk. Common sense dictates that you should see a person’s financial track record prior to lending them money. The best advice is not to lend to anyone with a credit score under 600 with any of the three rating agencies.

2/ DOWN PAYMENT This is the most important point in creating a note. Get at least 10% down in cash, 20-25% is ideal. The equity in the down payment makes it much more difficult for the buyer to stop making payments and get the property taken from them in foreclosure. It is a measure of the buyers’ commitment to the property and the principal source of repayment for the loan. Be certain to document the down payment with the closing title company or attorney. Make a copy of the check whether you close at a title company or on your own. If you do close on your own, deposit the entire amount of the down payment in your bank account as a single deposit. Do not accept the down payment in cash and only record the balance in the Mortgage or Deed of Trust. Provide an auditable trail of the full amount paid including down payment and mortgage note. People attempt this to lower the taxes for the next owner, but it dramatically lowers the purchase price of the note. There is no credit given for a down payment that was actually paid at closing, but not properly documented.

3/ BALLOON DATE The balloon date is a date specified in the note where the balance of the loan is to be paid in full. Balloon payments are an effective means for shortening the duration of the loan and will raise the pricing for the loan as long as it is achievable. Many people create balloon payments based on their personal timeframe and need for the cash. The balloon payment should be set at a time when it is feasible that the loan could be refinanced by the outside lending community. A rule of thumb is to set the balloon date to one third of the amortization duration. For instance, if you have a 360-month amortization, set the balloon for 120 months from the inception of the loan. This will give the balance a chance to decrease and the property value to increase, which gives the lending community a realistic chance to make the loan to your payor. If you want a shorter balloon time period shorten the amortization accordingly.

4/ AMORTIZATION This is the time period it would take for the note to fully pay out and reach a zero balance. Generally, the shorter the amortization period the higher the price for the note. Avoid making an interest only loan. These loans never amortize and require an alternative source of financing to replace them or face foreclosure of the property to repay the equity in the note. In addition, it is best to make the pay periods on a monthly basis rather than quarterly, semi-annually, or annually. Monthly payments are much more widely accepted and easier for the servicing companies to track.

5/ INTEREST RATE A typical seller-financed note should have an interest rate that is 250-300 basis points higher than the banks are currently lending its best qualified customers. For example if the banks are lending at 5.00% to well qualified individuals, seller financed notes should be written at 7.50% to 8.00% or greater. After all, you are not in the lending business and if they do not like the rate, they are welcome to apply at their local bank to see if they can get a loan for less. Real estate sellers make this classic mistake and it can have an enormous impact on the pricing of the note.

6/ PAY HISTORY DOCUMENTATION An actual pay history that can accurately be tracked is very often the difference in getting the loan sold or not. Make photocopies of the checks when they arrive and deposit them in full as a single deposit in your bank account. This will give the buyer of the note the confidence necessary to buy the note. Do not accept cash under any circumstances have them go to the post office and get a postal money order if they do not have checks.

7/ PERSONAL GUARANTEE This is only necessary when the buyer of the property is an organization and not an individual. Have the head of the organization personally guarantee the transaction. This will immediately have a negative impact on the pricing if there is not a personal guarantee. Many buyers attempt to sign as an LLC, Corporation, or Limited Partnership specifically to avoid personally liability.

Remien concludes, “Do your own due diligence, do not rely on other opinions when it comes to your money. Create the terms of your own note. Many people allow their real estate agent or attorney to make the terms and conditions of the financing. Both of these individuals have a vested interest in having the deal closed so they can receive their fees. I hope that these tips will help you create the best note that you can and attain the best balance between selling the property and selling the note. If both are done correctly you will realize the most equity possible out of the transaction.”

For further questions about structuring a mortgage note or service in purchasing or selling your note after it is created, contact Mortgage Buyers, Inc. toll free 800-949-0888. Mortgage Buyers, Inc. has over 20 years of experience as a mortgage note buyer and will be happy to answer any questions you may have.

The global recession continues to hit the average family hard and a lot more people are showing more interest in how they run their personal finance.

Did you know that almost 1 in 2 American adults spend more than they earn? And did you know that recent studies show that personal bankruptcies have doubled in the past 10 years? This article helps to ensure that you don’t add to these statistics and helps you to review your personal finance.

Reduce Your Debts
In times of recession, it’s essential to reduce your debt; particularly expensive unsecured debt like hire purchase, credit cards and personal finance loans. Typically it makes sense to pay off those debts that attract higher interest rates before other cheaper forms of finance. Review your savings and the rate of interest you earn from them. If necessary, use these or any spare cash you may have to pay off debts as soon as possible as it’s unlikely that the interest on your debt will be much more than what you’re getting on your savings. You might want to maintain a small ‘emergency fund’ but your focus should be on paying off outstanding debts on your cards and loans.

Budget mercilessly
You should plan your personal finance very thoroughly and down to military precision. If you are not doing it already, you should record all the cash you spend – on food, utility bills, insurance, ‘phone, fuel. etc . You should then determine how much you spend each month and compare that figure to how much money you earn. On which expenses can you make some quick cutbacks? Keep in mind that you have to start creating a surplus to begin to pay back debts.

Slash discretionary bills and expenses where you can
Thoroughly investigate and try and cut back or reduce some things. Have a good look at everything you purchase to establish what things you can get for less – switch off lights, buy food in bulk and everything you can think of! Ask yourself if you eliminate some spending entirely such as morning coffees, magazines or lunchtime snacks how will this affect your personal finance.

Think sensibly before signing up to long term expenses
Think very carefully about locking yourself into to long hire purchase agreements. Ask yourself whether you really need to have a new 60 inch television? Of course, it would look nice with the brand new surround system you recently bought on hire purchase on an expensive 4 year deal. But you may end up having both of them repossessed if you cannot keep up with the payments.

In difficult times, it’s important that you can take some responsibility to review your personal finance.