How to Determine If Term Or Whole Life Insurance is a Good Fit
Author: Walter Sigmore
You are searching for life insurance to buy, so you might already have come across whole life insurance and term life insurance. It is important not to base your decision on what someone told you. Get to know the definitions of “whole” and “term” before you make a decision on which one to get. Find out about the advantages and disadvantages of both (and how you will be affected by them).
First, there is term insurance. This type protects an individual for a period to thirty years. It is considered to be less of a cost than whole life insurance. The insured can get protection from yearly renewable premiums and level-term premiums. Level-term premiums stay fixed during the period of the policy. Yearly renewable premiums increase with age of the insured.
Second, there is whole insurance. This combines term with an investment element. The two parts of whole life insurance are: the mortality cost, covering the expense of the insurance policy, and the investment element, which can provide savings and accrues interest. When a person ages, the mortality cost rises as the investment element lowers. You may not be able to get the amount you expect if you turn your policy in for money, because the value can appear different from what it is. When the market changes, the policy value changes, not always keeping in line with what is.
Last, term life insurance may be your best choice if you have limited finances, and need a great policy that fits in your budget. It is low cost and will not give you more protection than is necessary. If you do have the means to buy whole life, you can use it as a means to plan your estate. Proceeds can be applied to estate taxes, allowing your family to avoid a battle with the government.
Whole life insurance is very costly. If your resources are limited, you might not be able to acquire all the insurance protection you need.
The wealthy occasionally use whole life policies to plan an estate. An insurance trust is set up, and upon death, transfers the earnings of the policy to the estate taxes. This helps their family to avoid the great cost of determining the outcome of the estate with the government.
Source: http://www.articlealley.com/article_834709_19.html
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March 25, 2009
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Gain Control of Your Money With a Personal Budget
Author: Phil Rogers
Even though we tend to plan most of our activities- from vacations to daily events, we’re not so inclined to plan on how we are going to spend our money. A money plan is essentially a budget. The bu
dget specifies how much we are going to spend and save, and differentiates between our needs and our desires.
The first task to gain control of day-to-day spending is to keep a journal of all expenditures for one month. Don’t change how you normally spend your money, simply keep track of where it goes for one month. After one month, evaluate your journal. Differentiate between essentials and non-essentials, perhaps with a highlighter. This is where the difference-making begins: identify non-essential expenses that you could decrease. Often, simple awareness of where your money is really going is all you need for m
otivation to gain back control. Hopefully, you will see and increase in cash flow by eliminating small non-essentials and creating new budgets, as needed, to obtain your overall goals. Be realistic. If a budget is too demanding or limiting, then it will be nearly impossible to live by and quickly becomes a burden. Allow little allowances of the things you enjoy. Also, view your budget as a work-in-progress, for several months so as to avoid the uncomfortable strain of a sudden lifestyle change. You want YOUR budget to work for you over the long term.
In order to establish a baseline budget to use during months two and three, identify which ar
eas you can cut expenses.
1. It is necessary to look into the monthly expenditures that are not necessities. This can be broken down to average expenditure for one week. Less money than spent the previous month, should be taken out - in weekly allotments. This type of personal budgeting can be used for non-necessary expenditures for the next month. If the money is spent before the week ends, the remaining extra expenditures can be cut.
2. Review how often you dine out at restaurants each week. In the first month you may eat o
ut, but less often. Choose the days that you eat out based on what is easiest for you. Then don’t eat out more often than that.
3. Head straight for the clearance racks when you are shopping. Then check out the sales racks. Only buy things that are on sale. Periodically check out the clearance areas of your favorite stores. Accumulate your wardrobe one piece at a time, buying items at a discount instead of purchasing an entire outfi
t at once.
4. Taking the time to shop around for the best rates and looking for potential switching bonuses can save you money when getting a new credit card or changing one of the following services: satellite/cable, telephone, and garbage pickup.
5. Avoid getting cash from ATM machines other than those of your own bank to save yourself additional fees.
6. Make a list before shopping. Buy only what is on the list. Tell yourself you can return to the store
if you forgot something that you left off the list. You probably won’t need to return to the store until the next trip. You will save more money by avoiding the store which prevents impulse buying. If you want to succeed at saving money avoid going back to the store if at all possible.
Overall, remember reduce stress by starting with a snap shot of where you are spending money now, make a budget in increments, allow yourself a few luxuries as you go, don’t be too hard on yourself. You wa
nt the budget to work over the long term. Create successes for yourself in the beginning, reevaluate over a period of several months, and a new lifestyle will emerge where you will be more in control of your spending and have less wasteful spending that will generate more cash flow for you as well.
Source: http://www.articlealley.com/article_834734_19.html
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March 25, 2009
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Investing 101 - Taxes and Investing
It is often said only two things in life are certain: death and taxes. Next to coming up with a proper asset 
allocation, taxes are probably the most important factor that will determine your long-term investing success. As you will see, when and how you pay taxes can have a dramatic impact on your long-term returns.
Investment Taxes 101
When you buy an asset, be it a stock, bond, piece of real estate, etc and sell it for more than you paid, you have generated what the IRS calls “taxable income.” The tax rate owed on this gain depends on several factors.
If you sold the asset for a gain less than one year from the time you bought it, it is considered a short-term capital gain by the IRS and is taxed as regular income, just like income from your job. Currently, the highest marginal tax rate for regular income is 35%, although this is of course subject to change at the whim of Congress.
If you hold an asset for longer than one year after buying it, your gain is considered a long-term capital gain. Long-term capital gains are taxed at a lower rate than short-term capital gains in order to encourage long-term investment. This favorable tax treatment makes sense if you think about it: long-term investment is much more likely to create new jobs and fund the discovery of new technologies than is short-term investment. Currently, long-term capital gains are taxed at a maximum rate of 15% (although President Obama has expressed interest in raising the rate to 20% or even more).
Bond interest and stock dividends have their own tax treatment. Bond payments are simply taxed as regular income at your regular marginal tax rate (excepting municipal bonds, which are a special case). Qualified stock dividends, on the other hand, are currently taxed at the same rate as long-term capital gains, or 15% for most investors. The reasoning behind this is that since shareholders are the actual legal owners of the company, they have already paid taxes on their earnings once in the form of the corporate tax. The separate tax on dividends is widely seen as a double tax, and so the dividend tax was lowered by President Bush in order to avoid the problem of double taxation of corporate earnings.
The above tax treatment applies only to taxable investment accounts, of course. Investments held within tax-advantaged retirement accounts such as IRAs and 401ks have entirely different tax characteristics.
Source: http://www.articlealley.com/article_832270_19.html
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March 25, 2009
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Tax Returns: Basic Tips
Author: Alice Shown
Tax returns are reports containing information used to calculate income tax or other taxes. These reports are filed with the government agency responsible for tax collection and tax law enforcement. In the US, this agency is the IRS, or Internal Revenue Service. Tax returns are prepared on forms prescribed by the IRS or another taxing authority.
Tips on Preparing Tax Returns
Here are some tips to prepare better tax returns:
The 4 Cs - Tax returns should be clear, current, comprehensive and correct.
Forms - Take time to arrange the forms. Ensure that you have all the forms and all the correct forms. Ensure that they are in sequential order.
Use a computer - This will not only make your filing more systematic, but economize on the time taken in manual paperwork. Moreover, errors or omissions can be reduced.
Taxpayers who file taxes electronically tend to get their refunds faster and without errors.
Filing status - Ensure that you file in the correct filing status. Filing in an incorrect tax category may result in a significant loss of credits and deductions.
Exemptions - Ensure that you claim all exemptions that you are eligible for.
Avoid rounding off numbers - The use of rounded numbers indicates that you are using estimates instead of the actual numbers, which increases the probability of an audit.
Joint filings - If you are married, you and your spouse can file taxes jointly. This makes you eligible for additional IRS income tax deductions.
Timeliness - Ensure that you file your tax returns on time. A delay can attract unnecessary penalties.
Don’t hesitate to file an extension - In case you are not ready, don’t hesitate to file an extension.
Keep a copy - Keep a copy of your tax returns for at least six years.
Filing for tax returns is not easy. There are many forms to be filled, federal guidelines to be adhered to and regulations to stay abreast of. So, hiring a professional for this task is the best way to prepare and file better tax returns. This is also a hassle-free solution. Your tax consultant will not only file your returns, but will also ensure that you get the highest rebates.
Source: http://www.articlealley.com/article_832317_19.html
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March 24, 2009
Posted in: Personal Finance, Taxes No Comments
Bankruptcy Myths Debunked…
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March 24, 2009
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Credit Cards: Friend or Foe? Part 2
Moving on to debit cards… the convenience they provide is outstanding. What’s lurking in the background isn’t quite as pretty. Debit cards have fewer protections for the consumer. The money you draw upon is typically from your checking account and therefore, your money. The banks have less of a reason to resolve cases involving debit cards because it is the credit cards that are their money and what they are really concerned about protecting.
Luckily for all of us credit card holders, come June 1, 2010, there will be an end to the two-cycle billing code of conduct that many credit card companies practice. Basically, if you pay off your credit card in full each month, there technically should be no interest incurred. With two-cycle billing, interest charges begin with the day you make the purchase. Banks defend themselves by saying that “it’s a way to make sure card users pay interest should they suddenly go from being “transactors” (those who pay off every month) to “revolvers” (those who carry a balance),” states Ron Brooks, a spokesman for National City. In the meantime, stay away fro credit card companies that utilize two-cycle billing and stay with those that use an average daily balance.
Watch out when traveling abroad as well. Credit cards and debit cards have all but replaced the once lucrative traveler’s checks. Unfortunately what many people are unaware of is that credit card companies raise the rates on currency conversion from 1% to 3%. Check with your bank before you leave the country and decide if bringing cash or traveler’s checks is a better option.
Sometimes it’s easy to feel ambushed by your credit card statement. It feels like it is due moments after you’ve received it. As of July 1, 2010, creditors will be required to send a statement 21 days prior to the payment due date. As of now, many have a 9AM deadline on the date of payment due which is before the mail is even delivered! Talk about cutting corners! A number of class-action lawsuits have succeeded in getting banks to push back their deadlines to 2PM, the traditional banker’s closing time, and when most mail has been delivered.
Read Read Read the agreement you are signing on with your credit card companies. Your once perfect agreement can be shifted and changed at their very whim and all that’s required of them is a short 15-day notice. Banks explain that credit cards are the riskiest type of loan, hence why it is so expensive; they are protecting themselves once again. So at the end of the day, the best thing you can do is pay attention to all of the mail you get from your credit card company, even if it seems insignificant.
And finally, be aware of your credit limit. Most credit card companies will allow you, with a penalty, to exceed your credit line. In fact, they love it when you make this error as it can bump your interest rate off the charts. Once you are over your limit, you will be charged an over-the-limit fee for every month your balance continues to be outstanding. These fees are simply another way for the banks to prey off the uninformed.
Be careful out there. Not everyone is on your side that you may think. Be you number one defender and stay proactive. Knowledge is power. Power leads to control. Control leads to your financial freedom.
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March 24, 2009
Posted in: Debt, Personal Finance No Comments
How To Save Money On A Real Estate Transaction
Author: Stefan Hyross
Buying a home is an exciting event. However, it can also be a expensive one, especially if you are not aware and prepared for all the costs. Insurance
, titles, taxes, these are only a few of the costs that you may not be aware of. Here are a few things to keep in mind when planning to buy a home.
You bought a house. You love it and got it a good price for it. Now is the time to shop around for a mortgage. Wrong! Before you set out to search for a home, you should have shopped around for a mortgage and be pre-approved.
With so many different lenders and mortgages out there, it pays to enlist the help of a mortgage broker. The broker will help you determine the best type of mortgage for you and will shop around on your behalf for the best possible deal. Your broker will protect your interests and sort through the various lender offers. Beware of no-money down or 5% down loans as they can have higher interest rates and other associated costs.
Shop around for a good title company. Their fees can be quite high so make sure you carefully review what you are paying for. They sometimes tack on ‘rush delivery charges’ of $50 to deliver papers across town. The same applies for insurance.
Be prepared for the closing costs which can run you a few thousands of dollars. They can include mortgage insurance, title expenses, lawyers fees, land transfer taxes, property taxes, etc. You should also budget some money for moving expenses, possible storage rental, paint and decoration, etc.
When shopping for a home, you may be offered to assume an existing loan on the property. This can be very advantageous, especially if the seller has a low interest rate on the loan. In other cases, you may be able to negotiate to have the seller pay a portion (or even all) of the closing costs.
We all know that the last few years have been a seller’s market, however the situation is changing and the buyers are once again in the driving seat in many markets. This may translate into some better prices but also potentially better terms. This can be true even in a seller’s market if the seller is in a rush to offload the property because of a divorce, death in the family, layoff, etc. In both cases, you may be able to negotiate a better deal.
As with any large transaction, how much homework you do at the beginning will determine how good a deal you will get. Enlist the help of a good real estate agent and mortgage broker who will look out for your interest and save you time and money. Shop around for the best rates and prices possible for the various services you will use to complete the purchase of the home. Make sure you plan for closing costs and moving expenses. If you do all this, buying your new home will be a breeze.
Source: http://www.articlealley.com/article_831879_19.html
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March 24, 2009
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Financial Freedom
Author: Justin Narin
Financial freedom gives you the flexibility to pursue your dreams, enjoy your family and free time, or enjoy your retirement. Financial freedom doesn’t simply mean being out of debt. It means being comfortable with your income and financial future, knowing how to live within your means, and having enough money to accomplish your goals. The first step to financial freedom is getting out of debt.
Gaining Debt Freedom
The first step to achieving financial freedom is to resolve your debt. Make a list of all of your debts, and rank them according to type, amount, and interest rate.
Your goal should be to pay off all of the credit card and personal loans as quickly as possible. Car loans can either be paid off next or paid off over time. If your student loans
have a low interest rate (below 6%), then paying them off doesn’t need to be a priority. Your mortgage is considered a good debt. Paying it off early isn’t necessary for financial freedom unless you’ve completed the other steps.
If you need help paying off your debts, you may need to consider getting some sort of debt help such as debt consolidation or debt settlement.
Controlling Your Expenses
Learning to manage your expenses is a big part of paying down debt, but it’s also important for people who don’t have debt. Your expenses should be at least 20% lower than your income. That allows you to respond to any financial surprises, as well as save and invest money for the future.
If you’re currently living paycheck to paycheck, or are close to it, list all of your expenses and income and see where you can make cuts or improve your income. Accomplishing both would give you the most benefit. Once you’ve reduced your expenses, use the difference to pay down debt, contribute to savings, or invest in your retirement.
Saving for the Future
Once your debt is eliminated and your expenses are manageable, the next step is saving for the future. There are three aspects to saving:
· Retirement investments
· The emergency fund
· Investments
If you have a retirement plan at work that offers matching funds, contribute at least enough to receive the full match. From there you can decide how much more to contribute. If you don’t have matching, contribute to the plan anyway. Due to the wonders of compounded interest, you’ll be amazed by how your money will grow.
In addition to retirement, you should establish an emergency fund. Ideally, your fund should contain enough to cover three month’s expenses, but you can save more.
Once your retirement and savings plans are in place, start investing in the stock market. Index funds are the best way to get your feet wet.
Enjoying Financial Freedom
Once you’ve achieved financial freedom, you’ll no longer experience the day-to-day stress of worrying about paying bills and you’ll have the financial flexibility to take a vacation, retire early, or support your children and grandchildren. Financial freedom is more than a financial status, though. It’s also a mindset. Once you attain it, you can only keep it by maintaining the practices that got you there.
Source: http://www.articlealley.com/article_831926_19.html
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March 23, 2009
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Credit card debt, what it does to us, and how to deal with it.
Are you overwhelmed by the amount of debt you have? Have you been late on your credit card payments or struggled to make a payment? Does debt just keep piling up? Being in debt can be such a great burden on your life keeping you form taking care of other important expenses.
Having debt will also negatively affect your credit. This can prevent you from obtaining a loan for a home or a car, a student loan, renting, and even keep you from employment. It can also affect your interest rates. If a lender sees your credit score is low, they will give you a higher interest rate on your loan.
There are also the negative effects on your health. Often being in financial trouble will make you stressed and anxious, keeping you from sleep and affecting your physical activities.
It’s time for you to free yourself from debt; to end those annoying calls from creditors and bill collectors; to have peace of mind. Think about how much money you could be saving if you were not paying off that car, home, medical bills, or credit cards every month. How great would it feel knowing that you can keep your home or car and not lose it to your lender? In these difficult financial times wouldn’t it be a relief to know that something can be done to liberate you of your burden? Well, something can be done.
When reviewing your options, you will find that you can file for bankruptcy, turn to Credit Counseling, Debt Consolidation or Debt Settlement. When analyzing your situation it is important to analyze the pro’s and con’s of each program. In addition, a reputable company should be chosen to ensure the proper follow up is done.
One of your options, Bankruptcy, can stay on your credit for 7-10 years and will follow you for the rest of your life. In addition, the laws have changed over the years to force you to pay back a portion of your debt.
Another option out there is Debt Consolidation, which is basically taking out a loan from your property’s equity to pay off unsecured debt (your credit cards). The problem is that with sinking housing values, the little equity you have remaining may get eaten or significantly reduced (they can also take your house if you do not pay). Many times people who pay off their credit card debt with an equity loan fall right back into debt again. Although many people say they won’t fall back into that trap again, an alarming many do.
Another common program people enroll in is Credit Counseling. Credit Counseling basically acts as intermediary between you and your creditors. They usually arrange one payment for you to pay off your debt in typically 5 years. This is done by negotiating down your interest rate on all your cards. One of the major problems with this approach is that there many “non-for profit companies” that are in actuality funded by the credit card companies themselves. There is definitely a conflict of interest here so be wary.
The last option available to consumers is Debt Settlement. With Debt Settlement, professional negotiators will negotiate with the credit card companies to reduce your principal balance between 40 - 60 % (say you owe $ 10,000. They will bring it down to $4,000). Payment plans are setup which is usually much lower than credit counseling. In addition, you do not pay interest and they negotiate down on what you owe on the card. The problem with debt settlement companies is that you need to ensure that the company you enroll with has a third party collecting your payments.
Of the many options discussed not one is recommended because all situations vary. The best thing you can do is speak to a professional who can help you determine which route is best for you. Ignoring credit card debt can lead to serious repercussions. We have seen banks go as far as take debtors to court to even go as far as to attempt to garnish their wages. Credit card companies are a volatile business at best because people who lived beyond their means are barely getting by paying minimum payments. Credit Card companies recognize that they are going to suffer some big losses so aggressive actions can be taken. The most important thing to do is to act smart and act fast. Talk to a professional who can quickly analyze your unique financial situation and tell you what course you should take.
Source: http://www.articlealley.com/article_832012_19.html
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March 23, 2009
Posted in: Debt, Personal Finance No Comments
Credit Cards: Friend or Foe? Part 1
Credit Card companies and credit issuers have always been sure that there was a bulk of fine print for you to read in hopes that you wouldn’t catch on to everything they are up to. To be perfectly blunt, the credit card companies are not your friend, but will give you every hook, line and sinker to make it appear the opposite.
Ever heard of “universal default?”  You can be a model payment maker, either making a payment in full or always making the minimum. The one time you forget, perhaps, there was an emergency and you were distracted or were away on a trip- they have the right to jack up your interest rates on cards that don’t even apply to the payment default. Rates can change on short notice, from low and reasonable to up to 35%. Credit card companies defend this practice calling it “risk management.” If you are disputing a charge on a bill of some sorts or waiting for an insurance mix up to be remedied and they are pushed into collections, you’ve also been pushed into universal default.
So what’s the best way to protect you? Pay your bills on time. If you prove to be out of town much of the time, try scheduling automated payments on-line, phoning in your payments or join a debt mediation group such as the Platinum package of The Truth About… Personal Finance that will automate your bills for you and reduce your interest rates where possible.
Credit card companies also don’t want you to know that identity theft is a situation that the companies play into. While there is fraud protection offered, many people let small charges slide, hence playing into the hands of the greedy credit card companies. What to do? Buy a shredder and minimize the credit applications coming to your house by registering at OptOutPrescreen.com.
The next issue that is becoming more and more of an alarming concern is the way these credit card companies are targeting our youth. Young adults in college that are being to earn their own wages make them “good credit risks.” Unfortunately, instructions on how to manage your money or deal with lines of credit don’t come with the card. The companies are confident that the parents will eventually come to the young adults’ rescue if they fail to pay their dues. The best bet parents have is to begin teaching their children about personal finance at a young age, the value of money and the understanding of what credit is and means.
Beware of rewards cards! They often times come with a higher interest rate. Make sure it is a card that you will actually use the benefits that you are reaping. If you are a frequent traveler, then a card that earns you miles with your purchases is the way to go. If not, why bother? A rewards card doesn’t make financial sense for just anyone. See if the card’s incentives actually match your needs.
Want to know about Debit Cards and even more about credit cards…? Check in next week.
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March 23, 2009
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