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The Carrot

May 28th, 2010 at 07:27 pm

The Carrot, what does that mean? Well I got a call from a good friend of mine who is currently looking to buy a house. The interest rate they gave him was 4.65% with a 1/2 a point. That is a good rate but then they said "Hey, we could give you an 7/1 ARM with a rate of 3.75%". Wow, that is a full point lower. Who wouldn't want that? That bank they are really nice. But are they?

Now that you have that "Carrot" in front of you why not take the savings. Well in my opinion the only way you should take that is if you plan on selling your house within 7 years or you can use that saved money in a much more lucrative investment. Maybe your income is low at this time but you are betting that it will increase a good portion over the next few years. The rates are so low today one would believe as the economy recovers over the next year or so the rates will only increase. When it comes time to refinance after seven years or take their new adjusted rate you are most likely going to erase the savings from such a low rate today.

The bank did not volunteer what the new rate would be; prime +2, prime +5. He had to ask them. It is the old adage that if it is to good to be true then it is. Needless to say my friend made what I feel to be the correct decision and took the 4.65%.

Tax Season - Should I use Turbo Tax?

February 22nd, 2010 at 06:02 pm

Hello All, as you all know by now Tax season is upon us and as we all get ready to file our taxes I always get asked the same questions. Should I do my own taxes and save the few bucks? Should I use Turbo Tax? Should I use a tax service like H&R Block or should I go to an accountant that also does financial planning. I always answer with this old story...

A man walks into an lawyers office and asks him a question. The lawyer turns around, takes a book off of the shelf and reads a paragraph that answers the question. The lawyer then explains the ramifications. Once that is done he asks the client for $500. The client says $500 for reading me something out of a book? The lawyer says no, the $500 is for me knowing which book to find the answer.

Now a good accountant takes it one step further he can look at your financial life to help you with your taxes but also help guide you on decisions that can shape your future. Does Turbo Tax take an interest and ask you where you financially want to go? Does the part time worker at H&R Block do that? Will he give you his cell phone and say call him anytime? This is why sometimes it pays to pay a little more. You should never step over the dollars to pick up the penny's.

Real Life Advice for Managing Your Credit Score

August 28th, 2009 at 10:37 pm

Borrowing money today requires a higher credit score than it did two years ago. You pretty much need a 750 FICO score today to get the same treatment that a 700 score would of gotten you back then. So what is one to do in today's ever changing credit market.

1)Learn Your Score - You have three FICO scores, one from each of the three credit bureaus; Equifax, Experian, Trans Union.

2)Look For Mistakes - 1 in 3 people who pull their credit reports finds a mistake. If you do find one request a correction.

3)Debt To Credit Ratio - You should try not to have more than 20% debt to credit. Which means that if you have $10,000 in open credit you shouldn't have more than $2,000 in debt. You also should not have more the 50% debt on one single card, better to spread it out.

Helping to Fix Your Credit Score
Online simulators can show you how to increase your credit score.

1)Creditkarma.com - This simulator will calculate how your score might change if you do things such as take on more debt or pay down existing debt. What will happen if you close your old credit cards or make late payments. You will need your social security number but the firm states that it does not store this information. If you would rather not submit your social then there are 2 more sites for you to check out.

2) Credit.com and myFICO.com - These sites will calculate how your FICO score will change by reducing a loan balance or making late payments. You don't need your social security number but you will have to enter your debt and payment history.

At the end of the day you need to take responsibility for looking out for yourself and managing your finances. This info is just one tool to help you do that.

Saving Money for your Financial Future

August 19th, 2009 at 09:27 pm

Most people focus on how much money they earn or make. The difference being that when you go to work you earn money and when you invest you are looking to make money. At the end of the day it doesn't matter how much money you make if you spend it all. Whether on bills or comfort items but wouldn't you like to live a better lifestyle or your current one cheaper? In today's economy more and more people are looking for ways to save more money and to reduce their expenses. Here a re few ways that should help you.

Save on Property Taxes
For you homeowners your property taxes can be a big part of your monthly expenses and with house values dropping your property taxes aren't going down. What do you do about that? Grieve them.

Up to 60% of taxable property in the U.S. is assessed at a value that's higher than it should be, according to the National Taxpayer's Union. And that means the property is taxed at a higher rate as well. Additionally, the American Homeowner's Association references a Consumer's Report article that up to 40% of property appraisals have clerical errors in them.

Did you know that less than half of homeowners ever try to appeal. Many homeowners don't fight back because they either don't understand the process, or feel that the amount of research and paperwork won't be worth the time. Try calling your local grievance lawyer and you could see a significant savings. You can find one who will only charge you if you win, now you can't beat that.

Credit Card Interest Rates
Call your Credit Card company and see if they are willing to lower the rate. Keep an eye on your mail because if they raise your rate FDIC Consumer Protection law gives you 15 day grace period to opt out of that increase. They will probably close the account but you will still be paying the lower rate. This doesn't always work if your rate increase was due to a late payment.

Paying Down Credit Cards
Do you find yourself having a few cards to pay down and you send them all $100 a month? The best way to reduce your debt quicker is to pay the highest interest rate card first. For example if you have 3 cards 14%, 12% and 10% instead of paying $100 to each you should make the minimum monthly payment to the 10% & 12% card and pay what remains of that $300 to the 14% card. Once that is paid of you start paying down the next highest card.

Real Life Advice for Increasing your Credit Score

August 19th, 2009 at 09:22 pm

Borrowing money today requires a higher credit score than it did two years ago. You pretty much need a 750 FICO score today to get the same treatment that a 700 score would of gotten you back then. So what is one to do in today's ever changing credit market.

1)Learn Your Score - You have three FICO scores, one from each of the three credit bureaus; Equifax, Experian, Trans Union.

2)Look For Mistakes - 1 in 3 people who pull their credit reports finds a mistake. If you do find one request a correction.

3)Debt To Credit Ratio - You should try not to have more than 20% debt to credit. Which means that if you have $10,000 in open credit you shouldn't have more than $2,000 in debt. You also should not have more the 50% debt on one single card, better to spread it out.

Helping to Fix Your Credit Score
Online simulators can show you how to increase your credit score.

1)Creditkarma.com - This simulator will calculate how your score might change if you do things such as take on more debt or pay down existing debt. What will happen if you close your old credit cards or make late payments. You will need your social security number but the firm states that it does not store this information. If you would rather not submit your social then there are 2 more sites for you to check out.

2) Credit.com and myFICO.com - These sites will calculate how your FICO score will change by reducing a loan balance or making late payments. You don't need your social security number but you will have to enter your debt and payment history.

At the end of the day you need to take responsibility for looking out for yourself and managing your finances. This info is just one tool to help you do that.