Mar 30 2015

Weddings – How to Keep Costs Down to a Minimum

By |March 30th, 2015|General Personal Finance|1 Comment|

Your wedding ranks up there as one of the most important days of your life, so it’s worth splurging on. However, it’s not uncommon for weddings to cost as much as a college education these days. Between the venue, catering, flower arrangements, photography, and dress, the little things quickly add up. So how do you plan the day of your dreams on a budget, without it feeling cheap? It’s all in the details. Keep these handy tips in mind as you start planning.

weddings

Image Source: Pixabay

  1. Carefully curate your guest list.

It’s only natural that you want to shout your love from the rooftops and celebrate it with several hundred of your best friends and distant relatives. But remember: the bigger the wedding, the bigger the bill. Don’t give in to feelings of obligation. If you want to keep your wedding small and intimate, do so without guilt!

  1. Have an outdoor wedding.

For most weddings, the largest cost will be the venue. If you do decide to rent out that elegant mansion, plan your wedding in an off-season when rates are lower. Otherwise, consider using nature’s own elegant backdrops. Public parks, beaches, or even your own backyard could provide scenic views for exchanging vows.

  1. Arrange your own catering.

After sorting out the venue, catering is usually the next biggest expense for a wedding. This can be tricky if you’ve shelled out for a proper venue, because they may have their own onsite catering that you’ll then also need to pay for. If you’re able to, try arranging your own catering. This will nearly always be cheaper, and allows you to either ask your own family for help or use a smaller, family-owned restaurant. Smaller restaurants are usually willing to work with you on a great rate, because catering weddings is great publicity for them as well. This way, you can still provide a meal to remember at a price you can afford.

  1. BYOB

Bringing your own beer and wine can keep costs down as well. Ask your venue about corkage fees first though! If you provide your own booze, shop around to find the best prices and buy in bulk for discounts. Don’t provide an open bar if you can’t afford it – cash bars are perfectly reasonable.

  1. Use friend or student photographers and musicians.

Do you have talented friends? Ask them about providing musical entertainment and photography duties. Another option to cut costs is to turn to your local art school. Student musicians and photographers trying to build their portfolio will be happy to work for lower rates. Just be sure to look carefully at their existing work first to be sure you’ll be happy with the quality.

  1. Shop early for clothing and accessories.

Tuxedos, bridesmaid dresses, and rings are all areas that you don’t want to skimp on. This is one day when you definitely want to look and feel your best! But shopping early and hunting with an eagle eye for sales can save you cash. Browse online on sites like Vashi for engagement rings to get a feel for prices in advance. For tuxedos, try renting them for the full wedding party together to take advantage of group discounts. When it comes to the dress, keep an eye out for sales and don’t overlook department store ranges which can rival designers in terms of quality. Vintage and charity shops may also be worth a look for all of the above – you may luck out!

Mar 30 2015

A Guide to Obtaining Secured Loans

By |March 30th, 2015|General Personal Finance|Comments Off on A Guide to Obtaining Secured Loans|

A secured loan has some type of security attached to it. This means that if you default on your loan, the lender can take possession of this security and sell it to cover their costs. As such, a mortgage is a type of secured loan.

People take out these types of loans for a variety of reasons. You may, for instance, want to lend quite a high amount of money. Perhaps you want to improve your property, consolidate your debt or more. Alternatively, you may have a poor credit history, in which case secured loans are the only option out there for you. Because you offer a lender security, they will be more forgiving of your credit history.

How Can You Get a Secured Loan?

You don’t have to be an outright home owner for a secured loan. If you want to secure it against your property, however, you do have to have equity against which you want to secure it. Alternatively, you can apply for different types of secured loans that have been specifically designed to help people in a financial emergency who also have bad credit. These all tend to be low amount loans with high interest rates, but very short running times, generally one month. Let’s take a look at some of these options.

Pawn Loans

With a pawn loan, you hand over an item of value to a pawnbroker. This could be a piece of jewelry, an expensive item of clothing, something electronic and so on. The pawnbroker determines the value of your item and pays you this, and you then have a set amount of time to pay that back, with interest. If you do not pay it back, the pawnbroker becomes the new owner of your item and will then sell it in their shop.

Payday Loans

With payday loans, you secure a loan against your next payday. This means that when you get paid, the lender will automatically take the loan principle and interest out of your account. Generally speaking, you will not be able to lend more than 50% of your monthly income, as the lenders need to be careful that you are able to meet your various financial obligations in the month that you pay your loan back as well.

Title Loans

Title loans are loans secured against your vehicle. This means that you have to have a clean deed on a vehicle in order to apply. The lender will determine the value of your car and lend you money against the value. Usually, the maximum they will lend you is 50% of the value of your car, up to a maximum of $2,000, although there are exceptions. This loan is designed to run for one month, at which point you pay back the loan principle and the interest.

As you can see, there are numerous different secured loan constructions out there to consider. You must always first think whether there is any way to meet your obligations without borrowing money, however.

Mar 27 2015

5 Ways ETFs are Different from Mutual Funds

By |March 27th, 2015|Blog, Personal Finance Tips|Comments Off on 5 Ways ETFs are Different from Mutual Funds|

Let me say this up front. I think ETFs, or exchange-traded funds, are super cool. I have nothing against mutual funds – or any product, really – but I do have a thing for ETFs. Undoubtedly, I am not alone in this, but I feel compelled to confess my bias up front.

ETFs and mutual funds offer the opportunity for individuals to take part in larger portfolios of stocks, bonds or other securities, providing easy access to diversity for the smaller investor. Each is sold in shares, whose net asset value, or NAV, reflects the price of the underlying securities in the portfolio. It’s right about here, however, that the similarities end. Their differences are numerous, but here are five of the most obvious:

1. ETFs trade on the secondary market.

This one is simple. Mutual fund shares, for the most part, are purchased from and redeemed by the fund. (The exception to this would be closed-end funds, but that’s another post altogether.) This is the primary market. ETFs, on the other hand, are bought and sold on the secondary market, like common stocks.

2. The price of an ETF changes throughout the day.

Mutual fund shares are valued and priced at the end of the day, which means that an investor who decides to purchase or sell shares will do so at a price to be determined when trading closes for the day.   ETFs, on the other hand, are priced throughout the day, and allow investors to take advantage of short- term gains and losses in the market. (Which is not a selling point for long-term investors. It is merely a difference from traditional mutual funds.) It also bears mentioning that ETF shares purchased or sold at a price that differs from NAV.

Confused over your investment options? Here are five ways ETFs are different than mutual funds and why they're both good investments!

3. Trading of ETF shares has little effect on NAV.

A mutual fund can essentially issue as many shares as investors want to buy, which has performance implications. Mutual funds must purchase securities when money is invested, and sell them when shares are redeemed. This results in trading costs, which are paid by the fund. Also, demand can be an issue for mutual funds. Excess demand can put fund managers in the position of looking to buy, even when, in a perfect world, they may prefer to time their opportunities differently. The same goes for redemptions, when investors sell their shares back to the fund. If the fund gets enough redemption requests, it can be forced to sell securities it would rather hold on to, which can mean the fund misses out on an anticipated gain, or realizes a gain that is taxable to the fund.

Buying and selling of ETF shares does not impact its NAV, since the fund is not involved in the transaction.

4. Most ETFs are passively managed.

ETFs are typically designed to reflect a specific index or even a subset of an index. In this way they do resemble some mutual funds. Changes in the ETF’s composition generally reflect changes in the index, or result from rebalancing to bring the portfolio back in line with the index.

However, many mutual funds are actively managed, where the portfolio manager’s goal is to beat an index.

5. ETFs generally have lower expenses.

After reading number 2, it would be logical – and correct – to conclude that ETFs generally offer lower expenses than mutual funds. ETFs bear little to no trading costs, require less marketing and incur fewer distribution costs than mutual funds. Index mutual funds close this gap a bit, but as a general rule of thumb, ETFs are cheaper.

Comparing ETFs to mutual funds is the logical place to start your education, but there are many additional benefits to ETFs, along with potential downside. Because I believe that responsible investing requires a deeper dive, look for more about these intriguing products, including tax advantages, legal structure and more.

Mar 25 2015

Bonds as a safety net? Choose carefully.

By |March 25th, 2015|Blog, Personal Finance Tips|Comments Off on Bonds as a safety net? Choose carefully.|

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Image credit: epSos.de

Simplified lists that order investments by risk almost universally describe bond funds as less risky than equity funds, and often, this is true. But it isn’t categorically true, and that’s a problem for me. A novice may think he or she has enough information to reasonably conclude that any bond fund will provide the stability to offset any losses from riskier investments. This is because in our effort to simplify things, we sometimes leave out important information.

Critical differences

Equity fund managers invest your money in securities that represent ownership. Most commonly, these are stocks, but there are other types of equity securities.

The risks of equity funds are those related to the price of the securities owned by the fund. Low earnings, market perception and high amounts of corporate debt are some of the many factors that may affect price.

Bond fund managers invest in debt securities, which basically means they loan money. Companies and governments issue bonds to raise capital, and investors (such as fund managers) buy those bonds, in effect lending money to the entity that issued the bond at an agreed-upon interest rate.

The most common risks of bond funds generally fall into two categories: the possibility that interest rates will rise while your money is tied up, and the likelihood that the debt will be repaid. A third risk category would be currency risk, which applies to any security from a foreign country.

Consider what those last two risk categories mean. As the likelihood that a debt will be repaid decreases, another one rears its head: the likelihood of default. Default, as you might imagine, can result in the near-total loss of an investment, and that is a pretty big risk. Also significant is currency risk, since the money will be loaned in the currency of the country where the bond is issued. If an investor is being repaid in currency that declined significantly relative to the dollar after the investment was made, the value of the investment could decline dramatically.

The bottom line

Some bond investments carry more risk than many equities. Bond issuers are graded by creditworthiness. Higher grade, shorter duration domestic bonds are generally safer, so if you’re looking to mitigate riskier investments in other areas of your portfolio, start there.

Mar 25 2015

The Truth About Reverse Mortgages

By |March 25th, 2015|General Personal Finance|Comments Off on The Truth About Reverse Mortgages|

91e4091481414cb08833daad2898d54cA reverse mortgage is defined as a loan, most often government insured, for senior homeowners 62 years of age and older.  With a reverse mortgage, a borrower may be able to convert the equity in their home into non-taxed cash to use however they would like.  At the same time, the borrower may continue to live in their home for as long as they choose, provided they comply with loan terms such as continuing to pay property taxes and homeowners insurance, and maintain the property.  However, unlike traditional mortgages, borrowers do not have to pay a monthly mortgage payment.  These features make the reverse mortgage loan increasingly attractive to many senior homeowners with equity sitting in their homes.

Misconceptions and Truths

Despite the many benefits reverse mortgages provide for retirees and senior homeowners, there are also many misconceptions.  Like any loan, reverse mortgages can be misused and the consequences of past misuse as well as a lack of accurate information can thus breed misconceived notions about this loan.  The following are common reverse mortgage misconceptions as well as their corresponding truth.

Reverse mortgage costs are too high compared to traditional mortgage loans

When a reverse mortgage is kept long term for the duration of a borrower’s life, the costs are not dissimilar to traditional mortgage loans.  And when compared to traditional mortgage loans, the benefits of reverse mortgages outweigh costs since there are no monthly mortgage payments while the borrower to continues to live in the home and receive non-taxed cash.  In addition, the majority of all costs and fees can be financed into the loan, allowing the borrower to avoid many up-front and out-of-pocket expenses that they would usually have to worry about with traditional mortgage loans. 

Borrowers lose title or ownership of the house

Ownership of the home stays with the homeowner as long as they continue to live there.  Just like any mortgage loan, the lender gets a security interest in the property. When a borrower closes on a reverse mortgage, they retain the title and may remain in their home for as long as they like.  One of the ways a borrower may possibly lose ownership of the home is if they default under loan terms, such as failing to pay taxes and insurance.  The loan would then become due and payable and the home may be foreclosed upon.  Another due and payable event is no longer living in the home as a primary residence.  However, if the borrower maintains taxes and insurance and meets other loan terms as they had promised, borrowers should never lose the title or ownership until they leave the home.

Borrowers may owe more than the home is worth

Under the Federally-insured reverse mortgage program, borrowers are protected from ever owing more than the home is worth when sold at loan maturity.  Even if the borrower’s loan balance exceeds the home’s worth, federal insurance will cover the excess amount, and the home’s sold value is all that will be needed to repay the loan.  If you are considering a non-government insured reverse mortgage, check with your advisor about loan terms.

Heirs will not support the idea of their parents getting a reverse mortgage

A National Reverse Mortgage Lenders Association (NRMLA) survey in 2010 showed that heirs are supportive of their parents’ decision to obtain a reverse mortgage.  Heirs understood that reverse mortgages allow their parents to pay all their expenses, and thus allow heirs not to have to worry about them.  In general, heirs usually want their parents to be independent, and they appreciate the freedom and autonomy a reverse mortgage allows their parents.

Heirs will lose their inheritance and don’t have the option to keep the home

Because senior homeowners borrow against their home equity, there is a misconception that heirs will not be able to inherit the property.  However, often homes continue to appreciate over time and will retain enough equity to pass on to heirs.  After the loan is repaid, heirs keep all remaining equity.  Heirs may also choose to keep the home and repay the reverse mortgage, such as by refinancing into a conventional mortgage.

Medicare, Social Security, and pension benefits will be affected

Because reverse mortgage funds are considered loan proceeds and not income, Medicare, social security, and pension benefits will not be impacted.  Do note however that it may be possible for Medicaid and other income entitlement programs such as SSI to be affected.

Criteria to Get a Reverse Mortgage

Now that many misconceptions have been clarified, what are the criteria required for a senior homeowner to get a reverse mortgage?  According to the website for the U.S. Department of Housing and Urban Development (HUD), there are a few borrower, property, and financial criteria one must fulfill in order to secure a reverse mortgage.  Requirements for non-government insured reverse mortgages are typically similar.

Borrower Criteria

Borrowers must be homeowners 62 years or older who live in their home as their primary residence.  The home’s original mortgage must either be paid off completely or a considerable amount must already have been paid down.  Borrowers may not have any delinquent federal debt and must complete a counseling session with a HUD-approved reverse mortgage counselor before loan application.

Property Criteria

Properties eligible for a reverse mortgage include single family homes or a 2-4-unit home with one unit occupied by the borrower.  Manufactured homes and condominium projects may also qualify if HUD-approved and all requirements of the Federal Housing Administration (FHA) are met.  HUD insured reverse mortgages are limited to the borrower’s primary residence, but some non-government insured reverse mortgages may be available for second homes. 

Financial Criteria 

Borrowers must also be financially able to continue making payments on all taxes, homeowner’s association dues and homeowner’s insurance, as required by loan terms.  Unlike most mortgages, usually no escrow account is established under a reverse mortgage to pay these amounts – the borrower must pay these themselves.  Financial assessment requirements going into effect in 2015 will require that lenders verify a borrower’s income, assets, expenses, and credit history to determine if a financial set-aside for taxes and insurance will be required from a borrower’s reverse mortgage proceeds.

The government-insured reverse mortgage loan is only getting increasingly stronger and safer every year and proves to be a great option for many senior homeowners across the nation.  The reverse mortgage industry is also constantly working to clarify misconceptions and educate consumers on the truth about reverse mortgages.  The truth is that for the many seniors who use this loan product wisely, reverse mortgages allow for a financially strategic and more comfortable retirement.

Mar 23 2015

How to Save on Everyday Expenses

By |March 23rd, 2015|General Personal Finance|1 Comment|

7da9f2d4905741a6a225f19d5e9bbb0eLooking to save money on your home necessities? Walgreens, the largest drug store chain in the United States, has a lot of discounts and promos that sometimes it can be overwhelming. It is not only a store pharmacy but it has expanded into bath and beauty products, groceries, personal care items, seasonal decor, and household essentials. If there’s something you need to know about shopping at this place, here’s a couple of things you need to know first:

Sales Cycle

Always keep an eye out for their sales cycle. It usually runs Sunday through Saturday and in addition to weekly deals, Walgreens also offer monthly deals and a Rewards Program.

Coupons

We are not going to go extreme here, don’t worry, but we will cover the basics, just enough to save you money on your purchases. Walgreens accepts the following types of coupons: Walgreen coupons, manufacturer coupons, Register Rewards and internet printable coupons.

When you go to Walgreens at the Groupon site you can see a wide variety of items to choose from. It’s best to have a list on what products you need to buy and then when you find what you’re looking for, get the coupon code or have it printed out if it’s an in-store sale. Don’t forget to include the bar code in the print out, that is very important for you to avail your discount.

If you are using several coupons at the same time, the best tip would be for you to apply the Register Rewards Program first, then followed by the coupons.

Time to re-stock those everyday items at your home? View Groupon’s wide selection of Walgreens coupon and get discounts you won’t believe!

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