Archive for the ‘Money’ Category

Reverse Mortgage Scams
September 29, 2009

Today, the Office of the Comptroller of the Currency (OCC) released a consumer advisory in regard to reverse mortgages. http://occ.gov/ftp/advisory/2009-2.pdf

This comes at a time when many mortgage companies are advertising heavily before major changes take effect October 1, 2009. The S.A.F.E. Act will require that all condominium units go through a HUD approval process for reverse mortgages. Loan originators are using that date to push deals through, which may not benefit the consumer. In essence, buyer beware.

What is a reverse mortgage? It is a type of mortgage that allows you to convert the equity in your home into cash. You must be sixty-two-years of age to qualify. Most seniors use the money for repairs, living expenses, etc.  Unfortunately, many seniors have been victims of several types of scams. Normally, they fall into one of three categories:

  1. Charging for Free Information. Detailed information regarding consumer rights is available for free at HUD.org. Being an informed consumer is the best way to make sure you are not getting ripped off.
  2. Disregard of Pre-Counseling Loan Services If a company tries to perform pre-counseling over the phone, be concerned. Legitimate organizations will either have a face to face meeting, or offer one through a third party.
  3. Forgery. Never sign any paperwork with blanks that are incomplete. Never assign any checks to another party.

Ideally, reverse mortgages should be unnecessary when a solid financial plan is in place. The goal should be to have your mortgage paid off, and your retirement fully funded prior to reaching that stage in your life. These days, that is less and less the case.

If you or someone you know is considering a reverse mortgage, remember to do your homework. Don’t consider a reverse mortgage that is tied to another financial product, like an annuity. And don’t agree to something you don’t fully understand. Your home is your greatest financial investment. Be careful.

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9 Ways to Earn Extra Money (and Still Keep Your Day Job)
September 15, 2009

There are really only two ways to get ahead financially; spend less and earn more. In this blog, I have talked a lot about how to spend less. However, this time I thought it important to talk about earning more. There are so many reasons why you might need more money right now: winter clothes for the kids, to pay down debt, to build up savings, to catch up. Life happens, and you may find yourself needing extra cash. Here is a list ways you can generate some extra income.

EBay
Clear out your basement and attic while making some money selling things you never use. There are millions of buyers around the world who search eBay for everything from CDs and VHS tapes (remember those?) to children’s clothes. With very little time invested, you can make some money on your old things.

Garage/Yard Sale
Not sure if Internet sites like eBay are right for you? Use a time-tested method for selling your things … garage/yard sales. For some great tips, visit Yard Sale Queen. Whatever you don’t sell, give to a charity or church. It feels good, and you will get a receipt for a tax write off.

Become a Guest Speaker
Do you have a business skill that people need? Do you find yourself giving out advice about a particular area? Business clubs like ABWA, ACA, BNI and others often pay for guest speakers. Write an outline of your presentation, and start calling networking clubs. Also, check your local community colleges for teaching opportunities.

Make and Sell Items
Do you have a craft or skill? A member of the Essential Knowledge team makes amazing items for pets. She sews these in her spare time, and sells them at area craft shows and makes $500 a day. If you paint, woodwork, or have another talent, look into places where you can sell your products.

Use your Secret Talents
Can you design a website, write a marketing plan, or offer a service? Freelance work is all around us, and easy to list on social networking sites. You may be surprised at the demand for your talents.

Pick up a Paper Route
This may not be as glamorous as the others, but it does pay well.

Become a Website Affiliate marketer
Set up affiliate agreements with online vendors, and do the marketing for them for a percentage of the sale. ShoeMoney has a free tutorial to get started.

Get a Part-Time Job
We all know that this is an option, but sometimes it is hard to schedule around your day job. However, if you have more time than you have money, it makes sense to get another steady income. Dave Ramsey will tell you to deliver pizzas, but don’t rule out bartending, waiting tables, or retail stores. Each type of business will offer different shifts or schedules.

Switch Banks
Financial institutions are very competitive right now, and many are offering cash incentives for new accounts. Do some research, and you can pick up an extra $100 for opening a new account. Just make sure to meet the minimum requirements, and plan on staying for awhile.

Do you have a great idea how to make extra money? Please share!

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Debit Cards are the New Cash Cow for Banks
September 10, 2009

The Credit Card Act that took effect this year, coupled with the recession, has created a void where many fees have been collected in the past. What pays banks more than penalty fees on credit cards? You may be surprised to learn that it is overdraft fees on debit cards.

Debit cards have been marketed as similar to an ATM. When the money is gone, you can’t make a transaction. However, since most are now endorsed by Visa, banks are covering transactions, and charging large fees when the transaction occurs on a negative account.

What does this mean to you? Even if you don’t have the funds to cover a transaction, it may still be approved. In which case, be prepared for your bank to charge you $20 or more for that transaction. Those fees can easily add up to more than is possible to cover. If you, or someone you know, is in this situation, contact your financial institution. You may have to opt out of the provided overdraft protection. But it’s worth it.

Debit cards are becoming more and more like a checkbook. Which is why it is more important now than ever, to reconcile those accounts on a regular basis. In this age of electronics, many people are relying heavily on bank balances as an indicator of funds available. Make sure to keep your own check register, or log of what you have spent, so that you don’t fall victim to one of these fees.

For more about the debate in Washington, Click Here to read the New York Times article published this week.

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Credit Card Changes in Effect Today
August 20, 2009

In May, President Obama signed into effect the Credit Card Accountability, Responsibility and Protection Act. The act was passed to protect current and future cardholders against unfair practices, and to standardize the industry. The first of three phases takes place today.

Billing – Prior to today, credit card companies were required to bill within 14 days of a payment due date. Now, cardholders are billed 21 days before the due date. This is good news for cardholders, especially if you travel or use online bill pay. You now have more time to get that payment in.

Rate Changes – Instead of 15 days to notify you of a rate change (which was sometimes retroactive), companies now must give you 45 days notice. I can’t tell you how important this is, based on scenarios I have seen in some families. For those that struggle to make the minimum payment, it is a real tragedy when the rate goes up drastically, because it increases that minimum payment.  Many have been forced into default. Now, the extra time gives consumers the ability to try to negotiate that rate, switch a balance to another card, or to pay off the balance.

Even better, if you disagree with the rate change, you now have the option to freeze your current rate. Your account will be closed to new charges, but you will have five years to pay off the balance.

What this means to you:

As a cardholder you are being given more time to deal with your creditor. However, don’t take this as a free pass to procrastinate. It is just as important to get those payments in on time, and to take action on rate increases. Use your time to your advantage and make decisions with your wallet.

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Feeling Fear about the Future of Your Money?
August 4, 2009

Essential Knowledge interacts with many people through our programs. Fear is everywhere. It is in the air we breathe and the water we drink. As a result, people are jumping to some pretty crazy decisions. Recently, one of our team members shared this personal rule she sticks to:

In times of great change, change as little as possible. What does this mean? When craziness is all around you, do not hit the panic button. Sure you should look at your overall financial picture, but be smart about it.

This means not to give in to Money Madness. Here are three ways to avoid doing so…

Do NOT put your money in your mattress! Now is not the time to take money out of your bank and keep it at home, unless your bank is not FDIC insured. Despite the rumors, banks will continue to be the best way to house your money for checking and savings.

Do NOT withdraw your money from your investments completely. Too many people are concerned that because the stock market is shrinking, that they are better off holding onto their money in a savings account or at home. This is a simple question of math. If you have five years or more until retirement, your best bet is to keep that money invested. The taxes and penalties to withdraw those funds will most likely never be made up in the interest on a savings account. You may want to visit with your advisor to talk about your risk tolerance and make changes along those lines.

Do NOT be late paying your bills. Now, if you are unemployed, this statement may not apply to you. However, if you are gainfully employed, make sure that your payments are made on time. Most major credit card companies are increasing interest and fees to make up for default losses. Do not give your creditors an excuse to rack up additional charges on your accounts. Need to make a budget? Go to www.essentialknowledge.com/resources.

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