Plan Ahead for Short Term Emergencies

An emergency may be unexpected, but it is not necessarily unforeseeable. If you’re not planning for life’s emergencies ahead of time, you may end up turning to short term loans as your only way to finance them. However, there are other ways to stash away emergency cash for when life hand’s you one of its little emergencies.

Medical Expenses

Health insurance is one way to plan for medical problems you can’t predict, but are due to happen. To plan even further to pay for co-pays and the deductible, you can also set up a flexible spending account with your company. The funds are automatically deducted from your paycheck on a pre-tax basis each pay period and they can be used for health items like eyeglasses and dental care. Not only is the saving painless, but it also can give you more savings due to the pre-tax status. If you work for yourself, you can set up a Health Savings Account (HSA) instead, and roll over the savings if you don’t use them that year.

Repairs and Maintenance

Owning a car or a home can come with unexpected repair and maintenance costs. You might not know when you’ll have an emergency, but you know it will eventually happen. To avoid having to take out short-term loans that may be difficult to repay, you need to plan ahead and save now. Get registered for a home maintenance plan that can be as low as $50/month and cover major repairs like electrical problems in the home or bad appliances. Having a savings account set aside and using direct deposit to direct a portion of your paycheck to it can help you prepare for those emergencies.

Building an emergency fund is not difficult. It just needs to be consistent. If you have extra consider loaning it to family and friends, so that when your turn comes around they’ll be there for you, too.  If you automate savings and plan ahead it removes the stress of being caught short when bad things happen. It can be a wonderful feeling to know that the money is in the bank for a repair or replacement when the air conditioner fails during the height of summer or something else occurs that you may not have foreseen, but you were wise enough to plan for, regardless.

5 Things you Need to Know about Financial Spread Betting

Financial spreading is an area of interest to a lot of people, who are keen to increase their income by speculating on financial markets. However, many people lack the confidence that comes with understanding, to immerse themselves into this type of trading.

Here we will take a look at 5 points that you should be aware of, in relation to financial spread betting. Hopefully, this will give you a greater knowledge of this practice, and maybe you will even invest to try and turn a profit. But before you do, read on.

1) You can trade tax-free

If you gain profits from spread betting in the UK, the good news is that they are exempt from tax. This means you don’t have to pay capital gains tax, income tax or stamp duty on your profits. This appeals to a lot of people who are interested in speculating on the markets.

2) You can trade long or short

Trading long means that you are speculating that a price will increase. Trading short, accordingly, means that you are betting that a price will decrease. Financial spread betting is flexible as it allows you to trade either way, depending on your hunch and the research you have done.

3) You trade on margin

Financial spread betting is leveraged, meaning that you only have to put down a small percentage of the overall value of your trade. This frees up extra capital to be used or invested elsewhere. The percentage amount mentioned here is known as the margin, and this can range from as little as 0.2% of the total value of your trade.

4) There are risks involved

As with most types of investment, there are risks involved here. It is called spread betting after all. It is possible to make a nice profit with financial spread betting but it is also possible to lose everything you deposit, plus more.

5) It helps to find a trusted and regulated financial spread betting company

As witnessed in the aforementioned example link (chosen at random because of its reputation within retail FX and spreads spheres) – There are various financial spread betting companies out there, offering platforms on which you can trade. These firms can help you whether you are an expert in financial markets, or a total novice, unversed in the ways of investment. The main point is that it is never too late to learn about financial spread betting, and indeed to do it if it appeals to you after you are aware of how it works and what the risks are.

Buying Property: Three Key Points to Remember

There are three key financial elements to remember when purchasing a property.  These are crucial, to ensure that investors get a property to suit their lifestyle, and something within their budget. The process of purchasing a home varies slightly, depending upon whether the investor lives in England and Wales or Scotland. 

Borrowing Estimate 

Before looking at property for sale at or similar sites, it’s important to speak with a mortgage advisor. They will calculate the size of the deposit, how much the investor earns and their credit rating.  Then work out a maximum loan amount. 

Gone are the days of 100% loans. Since the 2007 credit crunch, banks are less likely to take risks. Bear in mind that the smaller the deposit; the more the lender will charge to mitigate against financial risk. Lenders can lend around three to four times the annual income. If investors are buying as a couple, then this can increase further. 

One-Off Costs

These are costs that can possibly occur during the purchase, and therefore need to be factored into the borrowing process. This list covers most, but not all, potential one-off costs:

  • Lender’s Valuation
  • Building Survey
  • Legal/Conveyancing Fees
  • Stamp Duty
  • Land Registry Fee
  • Local Authority Search Fees
  • Estate Agency Commission (for the sale of another property)
  • Mortgage Indemnity Fees

Calculate How Much Is Affordable

After visiting a lender and also working out the one-off costs, it’s time to work out how much is affordable.   Here’s a step by step breakdown which should help you figure out who much is affordable:

1. Work out the income from the sale of the current property, if there is one. 

2. Then calculate the amount that can be borrowed.

3. Calculate the savings or investments that can be used for the purchase.

4. Deduct the approximate one-off costs for the property. This will provide a rough estimate of the price range that is affordable.  

If you follow these three steps you should have no problem making the huge investment which is a piece of property. Just be sure to take your time and do everything properly, as there are few purchasing decisions as important as this one.

Photo by: james.thompson

529: It is never too early to start

this that and the mba, baby reading book, baby readsWith so many people I know having children, this question comes up a lot.  What is a smart investment that you can give a baby?  As a parent it is essential to start saving for your child at a very young age.  The power of compounding can work wonders!

Today more than ever people are entering college to pursue advanced degrees.  I think setting up a 529 plan for your child is a great decision for their future.  Who knows what the future holds but you can be certain that saving for an education for them is a safe bet.  So what does 529 mean or where did it derive its name?  529 refers to Section 529 of the Internal Revenue Code which has established the plans. 

Giving the parents a 529 in the parent’s name is the way to go; it will make it easier for others to contribute to the account.  Contributions to the 529 plan are made with after-tax dollars.  Meaning you have already paid taxes on it when your employer gave you the money in your check.

There are special tax circumstances if you use the money for qualified college educational expenses.  It will grow tax-deferred as long as you use the money for qualified educational expenses.  What I didn’t know and many do not know is that 529 plans are not a federal program, they are actually unique to each state.  Some states have added tax benefits for investing in the 529 of their state.     

The funds upon distribution do not have to be used at a college in the state that the 529 was set up, they can be used at any accredited public or private college within the United States.  The investment vehicles that the 529 plans invest in are generally conservative. 

The account owner is usually an adult and the child is named as the beneficiary.  An account owner can change the beneficiary at any time.  Like most investments there is a minimum initial investment to open the account.  There is up to a 10% penalty for using the funds for expenses that are not deemed qualified college educational expenses.

At juniors next birthday be sure to open him/her a 529, because as a parent of 2 little kids, I know I would certainly appreciate it for our kids!  Investing in an education is by far the best gift you could ever give!

PHOTO BY: jinglejammer

Gas prices got you down?

gas, gas prices, oilI was sitting there having a mind freeze on what to write and I looked over to my wife and asked her for a topic.  She said, “gas.”  Sitting there thinking that was out of left field, I pretended not to hear and said huh.  Gas prices, Ahh gotcha!

Well if you haven’t noticed gas has been creeping up, it seems as though every time I drive past a gas station it is 10 cents higher than it was an hour ago.   I read an article the other day that crude prices over $100 a barrel are going to be the new norm.  There are over 160 different types of oil so they use the terminology of barrel to describe all these types.  A barrel is approximately 42 gallons.   

The basic law of supply and demand with respect to the gas situation is that there are more users of gas while supplies have remained relatively flat.  As demand increases and supply remains unchanged, this results in a higher equilibrium price.  The Organization of Petroleum Exporting Countries (OPEC) is a cartel comprised of 12 of the largest oil producing countries.  OPEC has a large influence in the prices of oil throughout the world. 

Oil is an important commodity that is traded in the markets today.  The supply of oil is heavily regulated by the OPEC nations to maintain higher prices.  Ultimately the gas that we use is a combination of the overall supply and demand of oil, coupled with the quality and ease of refining the oil into gasoline.  Companies like Southwest Airlines have used fuel futures as a hedge against rising fuel prices.  While this may not be practical for you or me, but if you own a company this may be an option to explore.

At any rate it looks like $3.90 and above gas prices are here to stay at least for the time being.  Prices today may not be as high as they were in 2011 when the average price was $3.99 or July 2008 when the record was $4.11.  Time to start looking at all of my expenses as the price of gas will put more and more pressure on my personal budget.

PHOTO BY: Atle Brunvoll

National Financial Literacy Month: What it means to you!

financial literacy month, april, my birthday, this that and the mba, thisthatandthembaWhat a great success the Roth IRA Movement was.  In a few days we are going to enter National Financial Literacy Month, what a great month to celebrate it, ohhhh the coincidence it also happens to be my birthday in April too!  National Financial Literacy Month came about in 2004 when the Senate passed Resolution 316 which officially recognized April as my birthday National Financial Literacy Month.  Originally started as youth financial literacy, it was realized that we all need to be well versed money and personal finance.  For my Canadian friends sorry we will have to wait until November to celebrate your financial literacy month!

Financial literacy plagues many of us in the sense that we live our day to day lives and forget to plan for the future.  No matter what country you live in around the world there has to be some end goal that we are saving for, which is usually retirement.  Living pay check to pay check and not setting aside funds early on can wreak havoc on your financial situation as you near retirement.  Sitting at work about to turn 30, 🙁 I cannot imagine coming to work at 75 and flying through excel spreadsheets at the same speed I do now.  Granted employers are not to age discriminate, but realistically when I get older I do not see myself as having the capacity to do the complex functions I do now. 

What am I doing about it?  I am saving for retirement so that when I am 75, I can be sitting around with my grandchildren enjoying the fruits of my labor with my wife.  What I am asking is for you to take a moment and look at your financial situation and decide what you are going to do about it!  If you look at your retirement portfolio at the moment, is it large enough that you could see yourself living on that for the 20-25 or more years in retirement?

I am not telling you to put aside your whole paycheck to retirement but see if you have any wiggle room to increase your contributions, if you can’t see the money outlasting you.  Every now and again we get caught up in the daily routine that we have to look at the big picture.  This month is not only to make you aware of financial literacy but also to look at your own situation!

Take inventory and maybe you will find an opportunity to save some money by refinancing a car loan or a mortgage now with the low interest rates.  Even a personal loan with low interest rates to consolidate high interest credit cards, there are many ways out there at the moment to save a little money. 

What tips or tricks can you offer the readers as ways to either make additional money or find ways to save?  Any interesting side hustles like the mobile hotspot?  How does your retirement portfolio look at the moment?

PHOTO BY: Yourdoku