Jun 03

Today’s guest post is from Noreen Ruth –

Warning signs are everywhere with some so downright hilarious that the seriousness of the issue is lost in the hilarity. For example, “Not intended for human consumption” was a warning on a bottle of bubble bath. Or this one found on the packaging for a set of earplugs, “These ear plugs are nontoxic but may interfere with breathing, if caught in windpipe.” Or this warning on a hairdryer, “Warning: Do not use while taking a shower.” Well, duh!

While we may get a little chuckle from these seemingly silly warnings, their intent to protect is serious business. Consider the consequences of simply ignoring any of these warnings. In the same way, signs that point to poorly managed finances have dire consequences, if you don’t take them seriously.

Ignoring the Wisdom of Others
One reason some people are surprised to find themselves in financial trouble is that they were indifferent to the clues that were clearly on display. Inexperience and arrogance often go hand-in-hand when troubles are left unresolved. Wise advice is considered irrelevant or out-dated for the situation. Those who step up to point out clues to trouble ahead might include family and friends who have more experience to draw from. They offer their help so that you might avoid pitfalls that they may have gone through – perhaps because they ignored the signs.

The right attitude about money is vital to establishing and maintaining excellent financial management skills. If you still rely on parents or friends to support your way of living, you need to resolve your dependency or miss wonderful opportunities for growth and personal success. Money is a means to an end and should be thought of as a tool to be used to build and live a sustainable life.

To write about all of the warning signs of a poorly managed financial lifestyle would fill a book. For our purposes and with word count restraints in place, the most common warning signs are included in this checklist.

  • Has Little or No Savings: The target to shoot for is a minimum of six months worth of savings to cover any unexpected job loss or emergency. Without this safety net, you’ll be inviting disaster. A recent survey shows that nearly half of Americans have less than $500 in the bank.
  • Doesn’t follow a Budget: Anything well managed incorporates a plan to reach their goals; and so it goes with finances. Without one there’s no direction and will be easy to get off track.
  • Insufficient Income/Poor Job Performance/Outdated Job Skills: These issues are interrelated with one impacting the other two and vise versa. Begin by learning a new skill and being more responsible on the job and the income will resolve over time with a new job or a pay raise.
  • Uses Payday Loans: Using one of these is an act of self-imposed desperation. Not only are you borrowing on your own future income, you’ll be paying interest to someone else to borrow your own money.
  • 5+ Year Car Loan: Pushing an auto loan beyond 60 months is a warning sign that the loan is too much to handle in your current situation.
  • Denied a Loan or a Credit Card: If lenders consider you too high risk to approve additional credit, this is a warning sign that you already have too much debt in relation to your income.
  • Uncontrolled Credit Card Spending: Credit cards should never be used as supplementary income. Never use one to purchase everyday necessities – do without until cash is available. Eventually it all needs to be paid back to the lenders, a bumpy road for sure when you’re overwhelmed by credit card debt on multiple accounts.
  • Agreeing to Debt Consolidation while Continuing to Use Credit: This strategy will backfire, as you will basically be standing still while incorporating a plan that would normally help lower debt. Consolidating all your debt into one account can be a great way to dig your way out of debt, but not if you keep using your available credit.

Personal reasons unrelated to finance that may be triggers to future financial problems, include a lack of or insufficient insurance coverage on your health, car and home. Disputes and disagreements between couples about money are the most common relationship problem. Sometimes one partner lies or hides the truth about how they’re spending the couple’s money. Issues like these need to be addressed and worked on until a joint agreement has been reached.

By keeping alert to the warning signs of poor financial management and correcting your course when one crops up will free up funds to invest in college for the kids or to pad your investments set aside to secure a carefree financial future for your retirement years.

Identifying the warning signs is the first step; the second is equally important. You need to take action to resolve the issues to protect your financial integrity and future in the best interest of yourself and your loved ones.

About The Author: Noreen Ruth is a staff writer for www.asapcreditcard.com, a site that provides credit tips, news, credit card comparisons and reviews. She is interested in educating consumers about using credit responsibly and taking actions that will affect their ability to borrow the money they may need in the future.

written by Joe \\ tags: ,

May 30

A Guest Post today from my friend Crystal –

No-fault states often require that people purchase much more auto insurance than tort states, so it’s not a surprise that nine of the ten cities with the most expensive auto insurance rates are in two no-fault states. The following 10 cities have higher auto insurance rates than any others in the country:

• Detroit, Michigan ($4,599)
• Highland Park, Michigan ($4,214)
• Brooklyn, New York ($4,133)
• Fort Hamilton, New York ($3,947)
• Grosse Pointe Park, Michigan ($3,504)
• Bronx, New York ($3,443)
• Allison, Texas ($3,385)
• St. Albans, New York ($3,233)
• Springfield Gardens, New York ($3,213)

According to autoinsurancequotes.com in no-fault states, it doesn’t matter who caused the collision. The at-fault person will not be required to pay the medical bills of everyone who was hurt. The insurance company that insures the vehicle in which the injured parties were riding will be required to pay the medical bills up to the limits of the PIP insurance policy.

Required Insurance Coverage in Michigan

Along with Personal Injury Protection (PIP) insurance that pays everyone’s medical bills, Michigan residents must purchase Property Protection insurance in the amount of $1 million. Even though Michigan is a no-fault state, drivers are still required to purchase bodily injury and property damage liability insurance coverage. Generally, people are only required to purchase bodily injury and property damage liability insurance coverage in other states. Therefore, the greater amount of coverage and the higher limits will naturally increase the prices for people living in Michigan.

Required Insurance Coverage in New York

New York is also a no-fault state, and a greater amount of insurance coverage is required of drivers here as well. Motorists must have a certain amount of bodily injury and property damage liability coverage, but they are also required to have PIP insurance as well as uninsured and underinsured motorist bodily injury coverage.

Higher Rates for Everyone

In the cities mentioned above, even people in the most desired demographic who have the greatest driving records will be quoted auto insurance rates that are higher than they would receive in other cities. The reason is that insurance companies base their quotes on the zip code in which their customers live. For example, insurance companies perform research on different cities in which they sell insurance, and they often discover that more claims for auto insurance coverage come from customers from a particular zip code. Because this is the case, anyone who is driving in this zip code has a greater chance of filing a claim with the insurance company, and these drivers will be assessed higher rates.

Auto insurance companies set rates based on more than just the number of claims filed. The number of accidents and thefts and vandalism rates also play a role. Cities with a high risk for most or all of these factors are going to be the ones that have the highest auto insurance rates. Auto insurance companies charge clients who are less likely to need to use their insurance coverage lower rates, and those who live in high risk areas in no-fault states don’t fit this description.

How is your car insurance bill? Anything close to these top-ten cities?

written by Joe \\ tags: , ,

May 30

A Guest Post today –

Treating your investments as anything less than a business is a mistake. Following advice of your broker isn’t always bad, but just like in business you should see a return on your investments and most brokers have interests that might not align with yours. If you have found yourself losing money, then you aren’t investing, you’re spending. Just like any business venture it’s essential to understand what brings success and success in the investing game is all about ROI.

A business cannot take major losses, and remain a business for long. Why would you be any different when investing your money? Brokers still get paid when you lose money, so excuses like “everyone’s losing money” or “it’s a bad market” are just that… excuses.

In business, having an employee consists of being able to utilize that employee in the most efficient way possible in order to maximize your return on investment. Think of your broker as an employee–can you afford him? I am sure that firing your broker isn’t what you want to do, but just like in business you can’t spend money if you aren’t making any.

Stocks are Products

Running a business comes from selling either a service or a product. In the personal investing side of things, it runs the same way. You buy and sell products (stocks) – in this case pieces of a company – in order to maximize the return on your money. Having a weak link, such as a bad broker or a computer that can’t keep up with the current trading software is costing you money, just like a bad employee would in a small business.

You Need a Plan

Every good company started with a solid business plan and every solid investment portfolio should utilize a plan as well. A business plan involves promotion, whether in the form of business cards, t-shirts or see these promotional products, a Nashville, TN company has to offer. Stock portfolios are essentially the same, only instead of promoting your business you are doing your best to promote your portfolio to hungry investors that’ll buy these stocks and make you some money in the process.

Set Goals

Another piece of the plan is goal setting. Make a list of things you want to accomplish. At what age would you like to retire? How much debt do you have and at what point does it need to be paid off? Which financial wants and needs are a priority?

Once you have solid goals, you can begin to calculate what needs to happen to get you there. For example, on a 7-percent annual return, do you need to invest 15-percent of your salary each year, or could you get there with 10-percent and wait to reap the rewards for another couple of years. Financial planners are great assets when trying to decide on your short and long-term goals, and they should be utilized unless you are an experienced and savvy investor.

Build a Team

Every business needs a good team to function. When investing, your team is essentially yourself, an accountant, a broker, and a financial advisor or consultant. The accountant is the easiest to justify a return on, as they keep you on track and help you navigate tricky tax codes and deal with capital gains. If you have previously experienced losses, he will help you to apply them over the next few years, thus saving you money right away. The broker isn’t going to show you a huge return (even with their “hot” tips), but they are a necessary evil unless you do 100-percent of your trading online.0

Now, the advisor or consultant is probably the easiest to calculate a return on. If you are solely relying on their advice, it’s pretty simple to calculate your annual returns, thus calculating the ROI from that team member should be a breeze.

Successful investors treat their portfolio as a business. They plan, they strive to make sound decisions and every dollar put in has to generate a return – not unlike a small business. Treat your investments as a product and get out there and start generating a return.



written by Joe \\ tags: , ,

May 27

A guest post today from Aunty –

There are several ways to invest in real estate.

Pants on fire!

The one that gets the most attention is buying low and selling higher for a profit. This is called “flipping” and this method is fast and exciting with potentially high rewards in a relatively short period of time.

There are some drawbacks to flipping, the biggest ones are not timing the market and getting too greedy. Many a successful investor prior to 2008 got caught with upside down properties that hit them hard and left them with bad credit and nothing to show for it.

For the savvy and hardworking:

There are also creative ways to get into real estate such as wholesaling, purchasing liens, tax deeds, subject to financing, etc., but Aunty has never really gotten into those – mostly because I didn’t understand them well enough, but also because I always wanted to be a landlord.

Landlord dream

This was a dream of mine ever since I was a little girl growing up in Palolo Valley clutching $100 in cash and flying through the backyards of neighbors to deliver it to our nice landlord. My mom was a hardworking single mother supporting a family of 4 kids by herself, money was tight, and $100 was a LOT of money in the 50’s. (Yep, Aunty is old.)

Homes in Hawaii cost about $30K back then, and the ROI (return on investment) for a landlord would have been 4%. Not that great a return? Maybe not, but it was solid steady income, especially for a 7 year old who couldn’t believe the abundance in her hands as she ran through shortcuts to deliver this fortune into the hands of a landlord. [*note about ROI – this formula is an annualized return of monthly rent x 12 months divided by cost.]

Appreciation and rents over 50 years

Hawaii’s real estate appreciated over the years, and 3 decades later, in the 80’s, a house in Palolo would cost $120K, rents would have gone up to $400/month, and the ROI would have been 4%, with an appreciation of the original asset at 400%.

In the late 80’s, Hawaii house prices soared and soared even more in the 1990s. It was like a huge bubble that didn’t pop. It retraced a little, but never came close to mid 80’s prices.

Today, an average house in Palolo would sell for $600K. Palolo is an interesting neighborhood of older wooden houses with a spattering of huge new houses nestled into a valley with a couple of low income housing complexes. On the other side of the mountains is Manoa Valley, a verdant valley of wealthier residents with older larger homes in the $1+ million range.

At $600K, the average Palolo house has appreciated by 20 times its original value of 60 years ago. Rents have increased to about $2000/mo. ROI based on today’s FMV (fair market value) would be 4%. ROI based on 1980’s prices would be 20%. ROI based on 1950’s prices would be 80%!

[Please forgive Aunty’s overly simplified numbers – they are not taking into account monthly expenses that would offset rental income lower, and they are based on an all cash purchase of a property.]

Adding a mortgage to the mix

However, if the property was mortgaged at 70% LTV (loan to value), then the cash down portion of the investment, which is the amount of your investment drops to 30% of the cost of the property.

In 1987, if you could get a 70% LTV with a 10% annualized interest (loans had higher rates back then), you would have a negative ROI of on a $120K house bringing in $400/month in rental income because you would have a negative monthly cash flow of $800. Your cash basis would have been $36,000 with a -26% ROI.

Today, if you could get a 70% LTV with a 4% annualized interest, you would still have a negative ROI, and a negative monthly cash flow of $2400. Your cash basis would be $180,000 with a -16% ROI.

What does that mean?

Hawaii is not a cash flow income-generating place to invest in unless you have a huge chunk of cash to purchase and you will be satisfied with a 4% annual return on that cash, or you bought a while ago and your mortgage has been paid off.

It also means that Aunty does not invest in rental income properties in Hawaii, because these options and numbers are not good.

What to do?

If one does want to invest profitably in today’s Hawaii real estate, the modus operandi is buy and flip – but carefully, with good market research and reliable resources for rehabbing.

Or, look for better markets that have better numbers for investing. Places such as Indiana, Las Vegas, and other cities that have low property values and moderate rental incomes that give very decent cash flow and higher ROIs (10% or better!)

No more yesterday

Slowly and steadily, we are building a real estate portfolio, but not in Hawaii. Perhaps later, if and when it makes sense to do so.

Gone is the little girl who would fly on skinny legs to complete her most important task of delivering rent each month. Today’s scene includes a property manager who takes care of everything. Automatic deposits and debits in an investment business checking account replace the hand-to-hand payee/payer transaction that first sparked the aspiration, “I am going to be a landlady one day!”

Is real estate investing the best investment vehicle? I cannot say for you, but for Aunty, it fulfills her lifelong dream. Have your got your dreams, your success?

Whatever you dream of, may it be.

Note: Aunty is the gal that blogs at Honolulu Aunty where she writes on a variety of topics, money, recipes, travel, and a good half dozen more.


written by Joe \\ tags:

May 21

A guest Post from Tim Aldiss –
Financial regulations are always put in place with the intention of lending further transparency to decision making processes. However, the eventual results do not always mirror the initial vision. Although providing a new breed of qualified investment advice may help investors avoid financial pitfalls, many individuals are now distancing themselves from this prepaid and often times still confusing arena. The end result has been that markedly fewer people are seeking the services of a financial adviser; indeed, less than one-third of all adults will consult these professionals.

Although some analysts will state that a reduction in the number of professional advisers is one of the goals of many regulatory authorities, others will feel that the do-it-yourself tendency being witnessed may usher in dire consequences for those inexperienced in the financial industry. Is this a future financial debacle waiting to unfold?


Another effect that this shift has had is in the way financial companies now communicate with potential clients. Unsurprisingly, many professionals are now learning to embrace the internet as a means to drive business forward and to disseminate their services. It seems that online execution-only platforms may be the way forward. In fact, the investment giant Hargreaves Lansdown now boasts a website that attracts more visitors in the United Kingdom than The Times or the Post Office. They have also adopted an iPad version of their newsletter and cater to thousands of Twitter followers each month.

Additionally, it should come as no surprise that garnering investment advice from social media sites has also increased in popularity in recent times. Many of those who follow the do-it-yourself mentality will utilize the knowledge base of the larger, interactive populace to help shape their financial decisions. Although this methodology is still in its infancy, some feel that the purchase of equities and deciding upon the correct investment fund may be the next logical step forward in the social media arena.

It is obvious that financial companies and fund managers need to quickly adapt to a generation increasingly focused on mobile devices, business apps and real-time flexibility. No longer does this approach represent but a small portion of investors; rather this will be considered the norm in the relatively near future.

So, while the landscape of financial advice may be changing dramatically, the ability to acquire sound and secure advice is more important than ever before. While companies continue to modify their practices to accommodate this growing trend, individuals need to avoid the pitfalls often times associated with such a malleable environment.
Tim Aldiss writes on behalf of Four Broadgate, the financial services PR experts.

written by Joe \\ tags: