Personal Finance

Once upon a time, Sarah and I lived in a two bedroom apartment. The two bedrooms were pretty small. When we had our first child, we made the second bedroom into a nursery and, eventually, into a little boy’s room. When our second child was about to arrive, we decided that the apartment was just too small for us. Like many people in that situation, we went out and bought a larger home – a four bedroom affair. It gave us a lot more room for our family to grow – at least in theory. What’s actually happened? Our three children enjoy sharing a single bedroom. One of the bedrooms sits largely empty as a guest bedroom. Our ample closet space mostly just stores stuff that we don’t really need to keep and we could sell off. We have a living room and a family room without any real reason to have two separate rooms for that. While our original apartment might have been slightly on the small side, we really didn’t need a house nearly as big as the one we have. We have a lot of excess space that’s mostly used either to store stuff or to sit empty until the rare occasion comes when we might use it. In our day to day lives, we mostly just use two bedrooms, the combination kitchen and dining room, and the living room. We use the family room a bit, but we don’t do anything in there that wouldn’t work just fine in the living room. One of the bedrooms is unused, and the other is an office that could work in the corner of the living room. We have a bedroom we basically never use and two bathrooms that are rarely used, too. We could easily be very happy with 60% of our square footage. That doesn’t mean I want to downgrade. After all, our house is fully paid for and it’s in an area where property values are inching up steadily even through the housing collapse. What it does mean is that our perception of what kind of house we needed was drastically overinflated before we actually made the purchase. Here’s the truth: a big house seems like a great idea, particularly when you have a family, but an awful lot of it just winds up being storage space for stuff you rarely use. It’s effectively an overpriced storage unit. So, what would I do if I had it to do all over again? For starters, I’d buy a home substantially smaller than what I thought we needed. We did not need to triple the square footage of our apartment. We needed to perhaps increase it by 50% or maybe, on the outside edge, double it. Everything beyond that has essentially become storage space. Why do it this way? A smaller home means a smaller mortgage, which means smaller payments and much smaller professional stress to maintain a certain income level. How can you assess what you actually need? Rolling back the clock, I should have simply made a list of our needs and not our wants. It can be hard to distinguish between the two. A technique that really works well for me is listing every reason I can possibly think of for the move, giving the list some time to rest, then going through it and eliminating those that are clearly “wants.” That doesn’t mean you should buy a house because it has attributes that you want, but if you focus instead on houses that just meet the things you need, you’ll be paying far less and still likely getting some of the things that you want. The result? You’re happy and your wallet is definitely happy, too, as is your stress level. The post The House That Is Too Small appeared first on The Simple Dollar.

I have had a number of people ask me about Credit Karma. I have used it a number of times to check my credit score and like it, so I figured I would go ahead and write a Credit Karma Review for all of you. When people start to repair bad credit, they oftentimes land at Credit Karma. While most people enjoy the idea of the service, many are not sure it is legitimate. In reality, Credit Karma is a great service that a savvy consumer must use. Of course, many vigilant consumers will still have their doubts about the business. Here is a quick guide for a consumer who wants to learn more about Credit Karma and how it works. Completely free: Oftentimes, a user will sign up for a “free credit score” only to find out that the score is not free. Not only that, the consumer will only find out the monitoring service costs money once he or she has entered all of their personal information. With Credit Karma, a user can sign up and will never have to give his or her credit card information. Make money: Naturally, most people probably wonder how the company makes money. They make money in a couple of ways. For starters, when logged in, Credit Karma will recommend credit cards to their users. When clicking the link and signing up for a card, the company will then make a small commission. Furthermore, with this service, a consumer will receive monthly emails with advertisements. Of course, a client can easily opt out of the promotion emails at any time. While other services charge a fee or sell information, they only make money by sending relevant marketing emails and showing relevant advertisements. credit karma review Secure: There is no doubt about it; Credit Karma is a legitimate service. In fact, the company has an A rating with the Better Business Bureau and has only eight complaints filed against them in the past. Some fear using Credit Karma as it requires the customer to provide his or her social security number. This fear is unfounded; when you go to check your credit score with any service, a user must give their social security number as a way for the company to get access to their data. Furthermore, the company uses SSL for their website and takes plenty of steps to ensure the safety of their customer’s information. Scores: Credit Karma provides customers their TransUnion credit score. The company updates the information often, which allows a user to see what direction where their score is heading. In addition, a customer will receive his or her TransUnion auto grade. Finally, a consumer can get access to his or her Vantage Score, which is a cumulative score across all three credit bureaus. Without a doubt, the TransUnion score is the most valuable information that Credit Karma offers, though the other two scores are valuable to most customers. Understanding: When looking at a credit profile, a consumer should understand what he or she is viewing. With a Credit Karma account, a customer will see more than his or her credit score. A user will see the total accounts he or she has, the age of the accounts, the amount of credit inquiries and much more. With all the information provided, a consumer will know exactly where he or she stands. Simulator: For consumers looking for how to improve credit score, the included simulator is a godsend. With this tool, a user can see what will hurt and improve their score. The simulator will help a customer who wants to get back on track. Ideally, a user would consult the score simulator before making any credit decisions. When doing this, one can avoid any serious dings to his or her credit score. Alerts: When actively monitoring ones credit score, a user can avoid serious problems. Luckily, Credit Karma alerts users of potential problems. For example, when a user is near a limit on one of his or her cards, the company will inform the client. While it may not seem important, it is crucial for a consumer to take proactive steps to protect his or her credit profile. Conclusion: There are plenty of

The internet age is filled with all kinds of innovations and world changing technologies. It’s also filled with glorious time wasters that take something like a movie you know and love, and recap it in a 60 second black and white animation with little talking. This is the latter. Related posts: Black Comedy Weakonomics Weekend Edition: Vodka Martini Edition Own A Piece Of Hollywood Thanks To the Hollywood Stock Exchange Related posts brought to you by Yet Another Related Posts Plugin.

Each week, I highlight ten things each week that inspired me to greater financial, personal, and professional success. Hopefully, they will inspire you as well. 1. Keith Ferrazzi on poverty “Poverty, I realized, wasn’t only a lack of financial resources; it was isolation from the kind of people that could help you make more of yourself.” – Keith Ferrazzi This is one of society’s greatest challenges. It takes someone really exceptional to escape an impoverished childhood. 2. Maria Bezaitis on the surprising need for strangeness It isn’t the ordinary and mundane that shapes our lives. It’s the unusual. 3. Cornelia Funke on fear “Fear kills everything. Your mind, your heart, your imagination.” – Cornelia Funke It is a true individual triumph to overcome something you’re afraid of and see it for what it truly is. 4. Sir Ken Robinson on changing educational paradigms Education today was designed for an industrial economy. Today, we have an information economy. How do we cross that bridge? 5. Thomas Carlyle on idleness “In idleness there is a perpetual despair.” – Thomas Carlyle One of the few things I fear is sitting still. 6. Beth Fantaskey on fear “Fear is the worst kind of grave, because it buries one alive.” – Beth Fantaskey The problem with fear is that it bends so many of the choices you make in life. When you’re afraid of something, it bends all choices you make related to that fear, altering your life profoundly. 7. John Perkins on economic hitmen It’s an economic model that keeps the rich rich and keeps the poor poor. 8. Thomas Harms on answers “Saying ‘I don’t know’ doesn’t mean you stop searching for an answer. A lot of people misunderstand that bit. Accepting your own bounds without shame or guilt allows you to see more clearly when your first urge may be to deny your ignorance to yourself or others, and instead admit your limitations and seek the solution from someone or somewhere.” – Thomas Harms We are all limited. Saying that you don’t know something isn’t a sign of weakness. It is a sign of being a human. 9. Tony Robbins on why we do what we do He really is the master of motivational speaking, and this is a prime example. 10. Aldo Leopold on the land around us “We abuse land because we regard it as a commodity belonging to us. When we see land as a community to which we belong, we may begin to use it with love and respect.” – Aldo Leopold What right do I have to say I truly own the land that I hold a deed for? It was here long before humans appeared on this planet. The post Ten Pieces of Inspiration #126 appeared first on The Simple Dollar.

This week's events with IRS targeting has confirmed my belief there is no accountability at the top. Note the difference from the private sector. When JP Morgan Chase had significant losses due the "whale" trader, the CEO and Chairman, Jamie Dimon, was called before Congress and held accountable to for the issue. Over the last few days, I've listened to President Obama claim outrage, unacceptable behavior, and dismay, but never accountability. President Obama claims he had no knowledge until the press reported the issue. However, it shouldn't take any unbiased investigator long to figure out where the idea to target politically conservative groups came from. With the current capability to track and trace electronic communications, the originator of the of the directive can be found. That's why Mr. Obama should be accountable and use a special independent counsel to investigate the issue. For more on Reflections and Musings, check back every Saturday for a new segment. This is not financial or policy advice. Please consult a professional advisor. Copyright © 2013 Achievement Catalyst, LLC

Good reads from around the Web. I have a soft spot for Hetty Green, and a bit of sympathy. There’s no doubt this super-investor of a century ago was a craven asset accumulator who put amassing a fortune above all else, but then so has been Warren Buffett for most of his life. Yet whereas “Uncle” Warren is lovingly known as the Sage of Omaha, Hetty Green has gone down in history as “The Witch of Wall Street”. Her black dress and hat didn’t help, but I think it was her ruthless and successful market raids in times of strife that got up people’s backs (or let’s face it: men’s backs). Like Buffett, Green was greedy when others were fearful, amassing vast quantities of assets during downturns and then selling them at her leisure when the good times rolled. This was back when cartels of wealthy speculators really did gang up to break each other and Green stared down more than her fair share. She ended up insanely wealthy. The only way is not up I’ve been thinking about Hetty Green because for the first time since 2009 I’ve been a net withdrawer of money from the market this month. Only a per cent or two here and there. Nevertheless it feels odd. This year I’m not only doing it to defuse capital gains tax. I’m selecting the option to “transfer money back out to your nominated bank account”. In metaphorical Lord of the Rings terms, this is a dusty, cobwebbed path that has only been whispered about in myths and legends in my house. I’m obviously not calling a top, nor claiming an ability to. As it happens I don’t share the doomy prognosis that this whole rally is built on phantasmagorical easy money. And for what it’s worth, I think the market is far more likely to be 100% higher than 25% down in five years time. But there’s no denying these are “good times”. In contrast I remember ransacking my loft for semi-valuable junk that I could flog on eBay to keep buying even more shares during the darkest days of 2009. I was lucky, but I might not have been rewarded so quickly for my boldness. The fact is I became massively overweight in equities, and I was very conscious of this when I welcomed my more level-headed co-blogger The Accumulator to the Monevator fold the following year. My Colonel Kurtz style expedition to the limit of stock market exposure was not what I’d created this blog to be about. The Accumulator practices what he preaches. Back to reality That was then and this is now. Things turned out okay, and it’s just as important to be fearful when others are greedy as the more oft-cited opposite. Having run with far higher equity exposure than is prudent for anyone who still hopes (/needs) to use a fair slug to buy a house, I’ve started dialling it back. I’ve been withdrawing cash, and also shifting some money into safer stocks and preference shares.1 Hopefully I’ll finally buy a house or flat soon (I really do want that big, cheap mortgage). But if I don’t buy then cash is an amazing asset over the short-term, even at a time of diabolically low rates, thanks to its great optionality. Moody blues As of Friday I’ve pretty much tripled my net worth since those 2009 lows (not entirely due my investments rising, but they did most of the heavy lifting) and if I’m honest I feel myself getting impatient if my portfolio doesn’t end the day or the week higher. I’m taking for granted daily moves in my net worth that surpass my monthly earnings. A terrible sign! This is a dangerous mood, and I’ve known it before — from before the crisis of course. Yet I probably wouldn’t be taking out anything if I already had the house. I would probably just tune the active portion of my portfolio to a more passive auto-pilot setting and take the summer off to refresh. As it is I will definitely need some of this money within the next five years (perhaps th

What is Pay As You Earn? Pay As You Earn is a repayment plan for eligible Direct Loans that is designed to limit your required monthly payment to  an amount that is affordable based on your income and family size. What federal student loans are eligible to be repaid under the Pay As You Earn plan? Only loans made under the Direct Loan Program are eligible for repayment under Pay As You Earn. Eligible loans are Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans that did not repay any PLUS loans that were made to parent borrowers. Loans that are currently in default, Direct PLUS Loans made to parents, Direct Consolidation Loans that repaid PLUS loans made to parents, and Federal  Family Education Loan (FFEL) Program loans are NOT eligible for repayment under Pay As You Earn. Who is eligible for Pay As You Earn? You must be a new borrower. You are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan as of Oct. 1, 2007, or if you had no outstanding balance on a Direct Loan or FFEL Program loan when you received a new Direct Loan or FFEL Program loan on or after Oct. 1, 2007. In addition, you must have received a disbursement of a Direct Subsidized Loan, Direct Unsubsidized Loan, or Direct PLUS Loan for graduate or professional students on or after Oct. 1, 2011, or you must have received a Direct Consolidation Loan based on an application that was received on or after Oct. 1, 2011. In addition to your being a new borrower, your federal student loan debt must be high relative to your income. While your loan servicer will perform the calculation to determine your eligibilityfor Pay As You Earn, you can use the U.S. Department of Education’s Pay As You Earn calculator at http://studentaid.ed.gov/PayAsYouEarn to estimate whether you would  likely qualify for the Pay As You Earn plan. The calculator looks at your income, family size, and state of residence to  calculate your Pay As You Earn monthly payment amount. If that amount is lower than the monthly payment you would be required to pay on your eligible loans under a 10-year Standard Repayment Plan, then you are eligible to repay your loans under the Pay As You Earn plan. If you are married and you and your spouse ?le a joint federal tax return, and if your spouse also has eligible federal student loans, your spouse’s eligible loan debt is taken into account when determining whether you are eligible for Pay As You Earn. In this case, the required monthly payment amount under a 10-year Standard Repayment Plan is determined based on the combined amount of your and your spouse’s eligible loans. If the combined monthly amount you and your spouse would be required to pay under Pay As You Earn is lower than the combined monthly amount you and your spouse would pay under a 10-year Standard Repayment Plan, you and your spouse are eligible for Pay As You Earn. Although only Direct Loans may be repaid under Pay As You Earn, your (and, if you are married and file a joint federal tax return, your spouse’s) eligible FFEL Program loans will also be taken into account when determining whether you qualify for Pay As You Earn based on the amount of your federal student loan debt relative to your income. For this purpose, eligible FFEL Program loans are Subsidized and Unsubsidized Federal Stafford Loans, FFEL PLUS Loans for graduate or professional  students, and FFEL Consolidation Loans that did not repay any PLUS loans for parents. FFEL Program loans that are currently in default, FFEL PLUS Loans for parents, and FFEL Consolidation Loans that repaid PLUS loans for parents are not counted as  eligible loan debt. What are the bene?ts of Pay As You Earn? LOWER SCHEDULED MONTHLY PAYMENT: Under Pay As You Earn, your monthly payment amount will be less than the  amount you would be required to pay under a 10-year Standard Repayment Plan, and may be less than under other repaymen

Reverse mortgages have a number of different factors that go into the determination of the borrower’s benefit amount, or the loan amount that they will ultimately receive.  The property value is one of those factors, but so too is the borrower’s age, interest rates at the time, the program that the borrower chooses, fees associated with the loan (not just the origination fee but also whether or not there is a servicing fee), and also the program the borrower chooses.Since you are able to live in the home for the rest of your life without having to make a mortgage payment on the loan, the benefit amount or loan amount for a 62 year old borrower is much less than for an 82 year old borrower.  The program is based on actuarial tables based on the age of the youngest borrower to be on the loan.  If there is more than one borrower, then the benefit amount would be derived by taking the youngest borrower’s age into consideration.The next factor that goes into the calculation for the reverse mortgage benefit is the interest rate.  Right now all rates are below HUD’s “floor” of 5% so all the amounts are going to be the same at all rates available, but when rates again go over 5%, the amount available to borrowers will begin to drop as the rate rises.  The interest will accrue faster at higher rates so at these higher rates borrowers will receive less money under the program.Finally, the program you choose will affect how much money you receive.  The only fixed rate loan available is the Saver Program (which is also available as an adjustable line of credit or monthly payment).  HUD implemented the Saver Product for borrowers who did not need all of the proceeds available to them in the Standard Program and in recognition of the lower risk of the lower proceeds, drastically reduced the Up-Front Mortgage Insurance Premium for that loan.Finally, HUD does change the program every so often.  There have not been any changes to Principal Limits (the amount borrowers receive) for a couple years but it does happen.  It is easy to go online and find a free reverse mortgage calculator such as the one at ALLRMC to run different scenarios at any given time based on current market conditions rather than counting on a set percentage, only to find out that there has been a change in one or more of the factors on which you were counting later.

I am doing a chapter by chapter review of the book Personal Bankruptcy Laws For Dummies by James P. Caher and John M. Caher.  Today I review Chapter 2. Chapter 2 is all about not making matters worse. If you’re considering bankruptcy, odds are that things are pretty bad already. You might be sweating even the minimum payments on your credit cards, neglecting medical and dental care because you can’t pay the doctor’s bill, or waking up in the middle of the night worrying about money. But get this—you’re not alone. There are tons of Americans who are going through, or who have gone through, the exact same thing. The important thing to keep in mind is that there’s a way out. Although personal bankruptcy can seem pretty devastating, you need to maintain a positive, can-do attitude and focus on getting out of the hole. It’s time to take a step back and assess the situation through clear eyes—figure out what you own, what you owe, and what you can do in the short term to prevent further damages. Preventing Further Damage Now It’s time to be careful, not take even larger risks. Until you meet with a bankruptcy lawyer and know just where you stand, don’t take any big steps that have a large financial impact. This includes: Borrowing any more money Making any payments on debts to friends, business partners, or relatives Getting married—or divorced Ignoring lawsuits Moving out of your homestead or entering into a contract to sell it Voluntarily leaving your job Credit Card Arbitration Proceedings These are important—don’t ignore them! Some credit-card companies are part of a National Arbitration Forum, which is basically a way for creditors to get stealth judgments against consumers without going through a real court with a real judge. It starts with a legalistic notice that arbitration proceedings have been started against you, and that if you do not respond, an award may be turned into a real court judgment against you. They’re counting on you not to respond, which is of course how they screw folks over. If you get one of these notices, don’t ignore it if you have any reason to question the amount of the claim against you. Controlling Your Spending The first step to controlling your spending is keeping track of all your expenditures. Caher and Caher suggest carrying around a little notebook so you can record every expenditure you make for a month. Not only will this let you prepare a realistic budge, it’ll also make small spending such a hassle that you’ll be motivated to spend less. Next, figure out where you can eliminate unnecessary expenditures. Here are a few things to focus on: Credit-card payments: Bankruptcy might be the best solution if a big chunk of your monthly income is going to credit-card bills. Daily dribbles: It’s easy to develop habits of unnecessary spending such as that cup of coffee in the morning, or the afternoon snack from the vending machine. It all adds up in the long run. Extravagances: Think twice before that expensive sushi dinner or the pay-for-view TV show. It’s helpful to calculate how many work hours it took to pay for each luxury. Impulse purchases: Many people buy tons of stuff that they never end up using—just head to your attic or your garage if you want proof. Figure out what you really need and avoid the rest. Overwhelming mortgage payments: the home might not be worth keeping if most of your monthly payment is going toward the interest. Killer car payments: Consider selling your expensive new car and buying something more affordable if you’re struggling to maintain payments. If you have to buy things, visit a coupon website such as Coupon Code Raja. What You Owe and What You Own Document your assets—and how much you owe on debts. Figuring out what you have helps to create a basis for figuring out what property you may lose by filing bankruptcy, lets you know if avoiding bankruptcy by selling things is a viable option, and demonstrates how little you have to show for thousands of dollars of c

Remember Bernie Madoff? He was convicted of what's considered to be the largest Ponzi scheme in history and sentenced to 150 years in prison.Lawyers and consultants have spent the past five years cleaning up the mess he left behind, and they're making lots of money doing it, CNNMoney says: $701 million and counting.A court-appointed trustee, Irving Picard, and the many other lawyers and consultants working with him have so far recovered $9.3 billion in cash and assets, and repaid $5.4 billion to victims. A total of $17.5 billion was lost through the scheme.Read 7 remaining paragraphs on MoneyTalksNews.com.