About the Author
Clark Covington is a freelance author, writer, passionate Pekingese owner, and internet marketer. As a businessperson Mr. Covington has created and marketed dozens of websites, selling hundreds of thousands of dollars each year in the form of products and services. continue...
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Budgeting-TheKey to Hitting Your Financial Goals
Do you have a budget in place to control your finances? Most people have no idea how much money they spend every month and where their money is spent. A good resolution as 2008 begins is to think about your personal finances and to create a budget. This article will give you a few quick tips about the importance of budgeting and areas you can save money every month.
The easiest way to create a budget is to first hit the Internet. Google “financial budget” and you will find several different examples of spreadsheets that you can use for this exercise. Then grab your last two bank statements and see how you spend your money. There will be different categories for your spending such as: rent or mortgage, car payment, utilities, entertainment, and dining. If you need to, add or delete categories off of the sample budget you got from Google’s search results so that you can accurately reflect your income situation. This exercise will take some time but it will provide you with two valuable pieces of information: are you spending more money than you are making and also detailing where you spend money. Most people spend more than they make. This explains why the United States has a negative savings rate and that the average American household is in credit card debt for a little less than nine thousand dollars.
To help you find areas where you can eliminate wasteful spending, look at your small, every-day purchases. If you spend four dollars on a cup of coffee every workday, that breaks down to twenty dollars a week times fifty weeks in a year totals out to one thousand dollars. Your morning coffee cost you a thousand dollars? Think about if you eat out during lunch every day you are at work. That has the same effect on your pocket book. Packing your lunch or making your coffee at home can be a great way for you to lower your spending without a significant change in your lifestyle.
Using a budget and not buying a morning cup of coffee are two very simple ways that you can improve your financial situation without a great deal of work. Taking an hour a week to track your expenses will go a long way in making you more financially educated and successful.
Retirement Resolutions in 2008
As the New Year begins, people make many resolutions and keep very few of them. What you should look at is deciding how you can create a retirement resolution in 2008 and stick to it. If you talk with a hundred different retired people, you will find that most wish that they had saved more for retirement. This is a subject which is not often talked about enough but it is one of the most critical topics out there.
Think about where you are in your life and how much you have saved. You can not continue to work forever and it is not known currently whether Social Security will be around for any generation after the Baby Boomers. Take some time to think about where you want to be with your retirement and how much it may take to get to where you want to be.
There are three basic steps which you will need to undertake so that you can resolve to save more for retirement and meet that resolution. The first step is that you need to assess your current situation. Think about what you want from your retirement. This would involve location and your lifestyle. The second step is to consult with your financial advisor. Your financial advisor will help you create a retirement plan so that you are able to make your dreams for retirement a reality. The third step is to follow through on the plan. Taking action is the part many struggle with. If you follow these three basic steps, you will find that you will be in better shape than most as you work towards your retirement age. Do this now rather than later. The sooner you start saving, the sooner that your money can start growing for you.
Industry Profile-The Overspender
Daniel Gordon is a successful lawyer who makes roughly $50,000 a year. He has some credit card debt (roughly $3,000) and doesn’t sleep very well at night because he never feels in control of his finances. He keeps a checkbook and writes down his expenses but has never taken the time to budget. He often has to dip into his savings account every month and is happy if he finds any extra money in his checking account at the end of the month.
He decided that he would try to do a budget and keep track of where he spent money. This was really hard for him because it takes a great deal of time to create a budget and stick to it. It is very similar to riding a bike in that you will struggle mightily at first but you will get better and it becomes easier as you do more and more of it.
He put a budget into place beginning in August of 2007 with the $3,000 in credit card debt. By watching where he spent money and cutting down on going out by one less time a week, he has managed to save himself $200 a month easily from that. He budgeted $300 a month to go towards the credit card debt. He now knows how much money he has going out with expenses and he has paid down his credit cards by $2,000. He put the extra $200 he saved from going out one less time a month towards the credit cards along with the $300 in his budget. This is something you can do if you work on putting a budget into place.
Emily Cane-Avoiding overdrafts at the bank
Emily has struggled to get herself out of debt and one of her major struggles is that she uses her debit card without knowing how much money she has in the bank. This has caused her to overdraft her account about twenty times in 2006. That may not seem like that much but think about the fact that the average bank overdraft fee is thirty dollars. She has given away $600 to her bank in 2006.
What did she do to get herself out of this situation? She decided to start carrying cash and writing down her purchases. She now carries cash to pay for her small items such as buying a pack of gum or a soda. She knows how much money she has and she also has to be much more sparing because once she runs out of money, she has nothing left to spend. She also used her checkbook to do a better job of keeping track of her checking account balance so she did not overspend as she had in the past. She has only had two overdrafts on her checking account in 2007. She changed her habits a bit but look at what she did: she kept $540 more in her pocket by watching her bank account a little more closely!
Quick Tips
What does it cost to invest?
-It all depends on how much you are investing and what you invest in. With most mutual funds, you will either pay a fee to get into a mutual fund or when you sell the mutual fund. The third type of fee is a percentage which you pay every year. It is often recommended that if you have to pay a fee to get into a mutual fund, you will want to pay the fee when entering the mutual fund. This is easy if you think about this example: if you invest $100,000, do you want to pay the fee on the $100,000 now or on the $200,000 it may be worth 10 years down the line? You should not pay a percentage of your account every year because this ends up costing you the most money in the long run.
Is this something that I can do on my own?
-You can do your retirement investing on your own. It can be hard to do this, especially if you have a job, family, and extracurricular activities. Using mutual funds can be a great way to achieve your goals and allows you to do the things you need to get done without having to constantly monitor the stock market. Talk with your financial advisor about the mutual funds which will be right for you.
What is your suggestion for the perfect investment portfolio?
-It all depends upon the particular individual. Each person is different in what kinds of risks and rewards he or she is willing to take. What one person feels comfortable with is different than what a different person is comfortable with. At the end of the day, it is important to get you the best return possible while still allowing you to sleep at night. Your particular portfolio will only be recommended after understanding what kinds of risk you are willing to take.
How would you recommend that I increase my savings?
-Watch where you are spending money everyday. Many banks offer a monthly automatic transfer from checking to savings. If you were to have $50 transferred from your checking to savings every month, you will have saved $600 by the end of the year. Many companies also offer direct deposit and you can have up to three different accounts where money is deposited. Put a small portion into your savings (maybe 5 or 10%) of your paycheck. You will not even see this money leave your checking account. This can be another great way that you can save money without even realizing it even there.
Did you know?
The amount of money you can contribute to an IRA has increased for 2008. You are now able to contribute $5000 to a Traditional or Roth IRA and, if you are over 50, you can increase that amount to $6000.
Conclusion
Take time within this new year to give me a call. Most people wish they had saved more for retirement. With my knowledge and experience in the financial planning industry, I will help you create a plan so you can retire and live the life you have always wanted to live. I will help you make your dreams come true. The first step is yours though. I can help you but you must first make that call to me. Good luck and I look forward to talking with you soon!
Sample 2
The Ultimate Guide to Buying Real Estate Newsletter
Buying real estate is one of the best investments you can make. Not only do you get a roof over your head that is in your name, but you also get equity. With this equity you can take out loans when you need extra cash now and then or simply let it build up. If you choose the latter option, you can make a hefty profit when you are ready to sell your house.
There is just one issue involved with buying real estate…. knowing exactly what you need to do to get the process going. If you feel overwhelmed with all of the choices available, continue reading this newsletter to get an idea of what you can do to ensure you’re getting the best house for your dollar in a minimal amount of time. Once you’ve finished reading these sections, you can read a couple of success stories from buyers who’ve followed these suggestions. The newsletter will then conclude by providing insider information that can further help you in your quest to buy real estate.
Saving Time While Buying Real Estate
One of the best ways you can save time in the real estate buying process is by selecting a good realtor. Why is this so? Well, firstly, realtors have access to listing information that non-licensed individuals do not have access to. This is through the MRIS service. Through the MRIS realtors can quickly get data on any listings in the state they are working in. This includes info relating to the condition of the house, its age and how other houses in the neighborhood fared in the selling process. The comps are of particular importance, because it will give you an idea of what you can negotiate with sellers.
However, it should be noted that you need a good realtor in order to really save time buying real estate. When you investigate your potential realtors, make sure they have ample experience in working with buyers. Furthermore, you will want to call any references they have. Additionally, ensure that the realtor outlines how they will go about finding your property. Realtors that work for the buyer need to do more than log into MRIS. They should go out to the property and see if it is even worthwhile before inviting their clients to see it. They should also have excellent negotiation skills, so they can at least try to get you the house of your dreams at a lower price. Most importantly, it should be made clear that you are their fiduciary, not anyone else.
While the realtor is helping to find your properties, you can further save time in the buying process by looking for some yourself. You can find properties in the newspaper, the Pennysaver, real estate sites and real estate magazines. Also, if you have a particular neighborhood in mind, drive through it and see if you notice any ‘For Sale’ signs. If you do that’s another potential lead for you. Either way, take note of the address and give it to your realtor. They can then look the property up in the MRIS and get more specific information about it. If the property looks interesting on paper, they can make arrangements to go out and see it.
Saving Money in the Real Estate Buying Process
Buying a house can be a very expensive venture, so if you have an opportunity to save a few thousand on your house, you should take advantage of it. One of the best types of houses one can look into for saving money are foreclosures or pre-foreclosures. Foreclosures are houses that the bank has repossessed due to non-payment of mortgage while pre-foreclosures are those that are about to be foreclosed on. Both can offer great deals because whether it’s the bank or a homeowner, the main goal is to get rid of the house as soon as possible. To get access to any of these houses, it’s best to see if your realtor has contact with investors.
In addition, if you have good credit, you should be able to have more negotiating power at the settlement table. Buyers with good credit can get deals where they don’t have to pay any money down and/or get cash upon settlement. In fact, cash back deals should be of special consideration if a person is considering buying a distressed property. With the cash in hand, they can make the improvements necessary to make the property decent enough to live in.
Speaking of distressed properties, these can also be a great type of real estate for affordability, even without cash-back or no-money-down offers. And don’t necessarily think that a distressed property has to be in bad condition. Some properties can be considered distressed due to stigmatism or obsolescence. Stigmatism is when a property is not emotionally desirable due to a murder or even things as strange as ‘ghost’ hauntings. On the other hand, obsolescence is when a property loses value because structurally it is no longer in style. An example of a property suffering from obsolescence would be one in which there is only one bathroom, (as most modern day houses in Western cultures will have at least 1 and a half bathrooms).
If the thought of getting even a stigmatized or obsolescent property bothers you, consider the Amityville horror house. This house had both murders and supposed ghost hauntings, but the current owners have not had any issues since living there. Tourists are the only real problem associated with the house. So, ultimately, this can serve as an example that perhaps some of the fears associated with stigmatized properties should be reassessed. Certainly, the thought of a murder is horrible, but the only difference between a stigmatized property and a ‘normal’ one is that you know something happened there. Abuse, violence and even murder happen in other properties… you just never hear about it. Besides, it’s not the fault of the house for such happenings.
Real Estate Success Stories
Beverly:
Beverly had been a client who lived all her life in apartments. She made a decent salary and had suitable credit, but just didn’t feel comfortable making the next step towards the American Dream. That was until she met her real estate agents, a father-and-daughter team who had gotten into the industry out of love for houses. The father, possessing more people skills, was able to go forward with being able to negotiate the best prices for his client. The daughter worked more on the administrative end, looking for properties that would interest her client. Anyway, all the work paid off. Within just a month or so, Beverly, her daughter and her grandchild were in a 3-level, 3-bedroom, 2 ½ bath town home. The location was perfect, as it was right across the street from a major shopping center. This had been of particular concern, since Beverly and her daughter had to share one car. Beverly had wanted a house that was close to a shopping center, so she could do her shopping without taking the car. Additionally, the bus line was right in front of the house, making things even more convenient for Beverly.
Another party that was happy with the house was Beverly’s daughter. Having just had a baby, she was concerned that their previous apartment would not be big enough for their growing family. But now that they have a house, such issues are no longer a concern.
Jung
Jung was a relatively young man in his late 20s that had never had a house of his own. Even when he rented apartments, he had to deal with roommates. Well, when his wife became pregnant, he had to quickly find a way to switch from roommate living to living in a house of his own. This process scared him since he didn’t have the best credit in the world. He also didn’t have much money he could put down on the house.
Well, thanks to his realtor, he, (like Beverly), was able to get a very nice town home. He was even able to get a few thousand back at closing. This money was very much needed, since it hadn’t been too long since his first son had been born.
Now Jung is looking to relocate to an area that is closer to his job. To see the power of appreciation, when he initially bought his town home, he paid $175,000. Just two and a half years later the house is worth $250,000. That is an appreciation of $75,000. If Jung had continued renting, he would’ve never been able to realize such a profit. In addition, his credit score had jumped 50 points just from making timely mortgage payments.
Quick Tips Addressing Common Concerns Among Real Estate Buyers
• If you find that you are having trouble qualifying for a loan, ask your realtor about looking at mortgage companies that offer alternative financing. There are many subprime loans that are available for those who have bad credit.
• Always check what the Better Business Bureau says about your realtor’s broker. If you find that the broker has a bad record, you will want to consider going elsewhere.
• Another option for those with bad credit or no credit is using a co-signer. A co-signer agrees to take responsibility for a mortgage loan if the main owner fails to make a payment.
• Don’t get involved in straw-buying schemes. This is when property with a ‘high’ appraisal is flipped to a buyer. If their credit is not clean, the parties in a straw-buying scheme might use fraudulent credit-cleaners to make it so. They also use a fraudulent appraiser to make the value of the house higher than what it is. Either way, if you get caught in a straw-buying scheme, you could be responsible for any legal repercussions as well as a mortgage bill you may not be able to afford. To avoid such things, make sure you thoroughly check your realtor’s credentials. Also use your common sense and intuition when looking at any fine print you might be signing.
• If you tried every avenue for buying a house, consider using your realtor to help you get involved in ‘lease-to-buy’ arrangements. With these setups, you’ll lease with the intention of buying after a certain period of time.
• Use mortgage calculators to help determine how much house you can afford. These are available quite frequently online.
• Make sure to get your house inspected. Many mortgage companies may require this before doing business with you, but if they don’t consider getting it anyway so you can be fully aware of any repair issues associated with your house.
• Incorporate your property taxes within the mortgage itself. This will make your monthly bill a little higher, but if you don’t do it you’ll have to pay several hundred to several thousand to Uncle Sam during tax time.
• On the subject of taxes, you can use the interest you pay on your mortgage as a deductible.
• Don’t buy more than what you can afford. If you do you may risk getting foreclosed on if you are unable to make your payments.
Did You Know?
Usually the refrigerator and he dryer will come with the house, but sometimes you can get other ‘fixtures’ as well. This could include things like a flat-screen TV or a window air conditioner. Although these things are in the owner’s possession, in the real estate world they could be considered part of the house. See if they can be negotiated in as part of the sale.
Conclusion
So, there you have it. Hopefully, by reaching the end of this newsletter, you have a basic understanding of what it takes to go about buying real estate in a timely and affordable manner. With that being said, why not go on and take the next step… actually get a realtor. You can start by working with me, the author of this newsletter. Not only do I possess years of experience in working with buyers, I also genuinely care about them. I get as happy as they do when I see how joyous they are in their new homes. Why? Well, aside from the obvious reasons of human empathy and compassion, I was also once in their shoes. I know about the annoyances of renting along with the dissatisfaction of not owning your house, because I’ve been there. When I was able to acquire my first house, I felt a feeling of nirvana that cannot be described. It is such a pleasant feeling that I strive to make sure others can possess it as well when trying to get their new homes.
If you are interested in working with me, you can send me an email or give me a call. I will respond very promptly.