More than 60 % of households are ‘at risk’ of being financially unprepared for retirement

Posted on March 10, 2010
Filed Under Retirement Planning | Leave a Comment

The latest analysis of the National Retirement Risk Index [NRRI], released today by the CRR and underwritten by Nationwide Mutual Insurance Company, examines how not taking full advantage of housing equity affects the share of U.S. households ‘at risk.’ The result is a 10 percentage-point rise in the Index compared to just a seven-point increase from the 2008 stock market crash.

The NRRI is a percentage measurement of how many working Americans are ‘at risk’ of being unable to maintain their standard of living in retirement. The NRRI uses very conservative assumptions in its baseline scenario. One of those assumptions is that consumers access their home equity through a reverse mortgage and invest the proceeds in an inflation-indexed annuity to help generate retirement income. The new research removes that assumption.

“ Even after the bursting of the housing bubble, our research shows that home equity remains a major financial asset and can significantly impact retirement security, ” said Center Director Alicia H. Munnell. “ The impact of home equity on the percent of households ‘at risk’ is greater than that of the recent stock market crash. How baby boomers and future generations decide to use their home equity could determine how well many fare in retirement. ”

MORE >>>> http://investing.businessweek.com/research/markets/news/article.asp?docKey=600-201003091000BIZWIRE_USPRX____BW6210-1&params=timestamp||03/09/2010%2010:00%20AM%20ET||headline||Home%20Equity%20Impacts%20Retirement%20Planning%20More%20Than%20Stock%20Market%20Crash||docSource||Business%20Wire||provider||ACQUIREMEDIA||realtedsyms||

A dangerous omen looms for bonds

Posted on March 9, 2010
Filed Under Personal Finance | Leave a Comment

One of the key questions faced by investors today, a year after the markets were at their worst, is how safe it is to go back in the water. Given that bonds have turned out to be a better bet than stocks over the past 20 years—and given the steep decline and perhaps shaky rebound in the equity markets—is it time to reassess the primacy of stocks in our portfolios? Will we be better off with the security and steadiness of bonds?

A great answer to that question came last week from Charles Schwab chief investment strategist Liz Ann Sonders. Presenting her outlook on the economy and the markets to a group in New York City, Sonders spotlighted what appears to be a powerful contrarian indicator — that is, measure of how the investing herd is zigging in the market, giving a wise and brave investor a roadmap of where to zag.

MORE >>>> http://moremoney.blogs.money.cnn.com/2010/03/08/a-dangerous-omen-looms-for-bonds/

Consolidating Credit Card Debt? Watch For Hidden Fees

Posted on March 8, 2010
Filed Under Credit Card | Leave a Comment

Your bank account can have a lot of damage inflicted upon it by the high interest rates you may be paying on your credit card bills. The higher the interest you have to pay, the less each payment you make tales off the principal, so the balance left seems like it barely goes any lower. This is why a lot of people feel it is a smart strategy if they can transfer the balance they owe on 1 credit card over to a different card that carries a lower interest rate. When one bank is charging an interest rate of, for example, 16 percent and another one has a lower rate of, say, 13 %, the opportunity to make a transfer could look quite appealing. This ability to consolidate credit card debt depends, of course, on having the opportunity of having a second ( or even a third ) credit card account.

Anyone who is thinking about such a debt consolidation should take a few cautious steps before making a leap that could be more problems than they thought. One aspect of making balance transfers that people frequently overlook is the extra fees you may not realize you have to pay. Banks and other financial institutions are required to spell out all the details about finance charges and transfer fees, but they often print these details in tiny type that is not only hard to see, but can also be confusing to understand.

It is advisable to look very carefully at the terms of the lower interest card. What you want to check for is whether there is a balance-transfer-fee you will be required to pay. Some banks tack on a flat fee of, for example, $25 to $50 per transaction, while others charge a percentage of the amount transferred. If it turns out there is a five percent transfer fee, and if you were hoping to transfer $5,000, then you are going to be charged a whopping $250. When that fee is applied to the transfer amount, you would then be looking at a total of $5,250 that is owing on the second credit card bill.

As if this unexpected charge was not enough, it can get even worse. There are some financial institutions that ding you with an extra charge if you make your payments over the phone. This telephone payment fee is sometimes as much as $10 per transaction. Of course, all of this is perfectly legal, but it is another example of why consumers need to be well informed when it comes to making what they thought would be an advantageous credit card debt consolidation transfer.

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Did you know you have a bankruptcy risk score?

Posted on March 4, 2010
Filed Under Bankruptcy | Leave a Comment

Designed to help banks and lenders more accurately reflect the risk of lending to consumers, this metric has been around for 20 years, unknown to the general public.

Your bankruptcy score is calculated using ‘advanced mathematics and data analytics’ according to Bankrate.com, to analyze your spending habits and the types of charges you make. Lenders then use this information to alert them to people who exhibit signs of higher bankruptcy risk. It helps the bank better assess their risk of lending, and hopefully reduce the amount of their bad debt reserves. The score ranges from negative numbers up to 2000 and, contrary to the credit score, a lower number is better.

This figure has remained unavailable to consumers in the past because it is considered internal management data. Usually the score is used when a consumer is applying for a new loan, bank card or credit card. Recently a client mentioned to me that he was given his bankruptcy risk score along with his credit report when applying for a loan. I hope in the near future we will all see this score on our reports. It might help consumers to correct bad credit habits if they see how lenders view them.

Alternatives To Filing Bankruptcy

Posted on March 3, 2010
Filed Under Bankruptcy | Leave a Comment

Contacting creditors is an alternative to bankruptcy. Instead of filing for bankruptcy, you work out payment options with your creditors. In many cases they are very willing to work with you. It’s to their advantage to keep you as a customer. The creditors know the alternatives for bankruptcy will bring them more profits if you don’t file for bankruptcy.

Getting a debt consolidation loan is a good alternative for bankruptcy. Financial services can combine all your debts into one loan payment every month. A consolidation loan as an alternative for bankruptcy, can help pay off debts. For bankruptcy consolidation loans, you can shop online for the best terms and rates. Lenders are very competitive to earn your business online.

You may also consider a debt workout for bankruptcy alternatives. With a debt workout, an attorney contacts your creditors and makes arrangements. In most cases the monthly payments will be less than if the credit account was settled in full. For some cases they want the payment in full, but over a longer period of time than originally stated on the credit agreement.

Bankruptcy alternatives are a good idea to consider, before you rush off to file for bankruptcy. If you look into some of these alternatives, at least you will know you tried your best to avoid bankruptcy. Having bankruptcy on your credit report for 10 years can be a long time.

Payday loan industry targets unemployed

Posted on March 1, 2010
Filed Under Loans and Credit | Leave a Comment

The payday loan industry has found a new and lucrative source of business: the unemployed.

Payday lenders, which typically provide workers with cash advances on their paychecks, are offering the same service to those covered by unemployment insurance.

No job? No problem. A typical unemployed Californian receiving $300 a week in benefits can walk into one of hundreds of storefront operations statewide and walk out with $255 well before that government check arrives — for a $45 fee. Annualized, that’s an interest rate of 459%.

Critics of the practice, which has grown as the jobless rate has increased, say these pricey loans are sending the unemployed into a cycle of debt from which it will be tough to emerge.

MORE >>>> http://www.latimes.com/business/la-fi-payday1-2010mar01,0,6155669.story

How to Save When You’re in Debt

Posted on March 1, 2010
Filed Under Credit Card | Leave a Comment

If you’re in debt with credit cards, or personal loans and a mortgage you may be feeling a little nervous when you think about your lack of savings, but does it make sense to direct funds towards a savings account when the interest earned there will be overshadowed by the interest you are paying on your debt. There are ways to save when you are in debt, and there are financial products which can help specifically with this situation. So here are 5 years you can save, even if you have debt.

Savings Money Tips #1: Consolidate credit cards to one balance transfer card

Try and avoid using equity or a line of credit on your home loan to pay off your credit card debt because you are in fact just stretching out your credit card debt for another 30 years, when you can target it now and get it out of the way for good. Instead, find a balance transfer card with a ‘low interest rate’ which will allow you to transfer all of your credit cards to be charged one low rate. In this way you have your debt under control, you have a manageable monthly repayment and you have a payment plan which will help you get rid of your credit card debt.

Savings Money Tips #2: In debt to 9%

Many financial planners and advisors will use the 9% rule – if you have debt which is charging you interest of more than 9%, you should direct as much of your income as you can towards paying down that debt. This means you should continue to pay your home loan as usual as it is unlikely to be charging you more than 9% interest in the current financial climate, and any personal loans you have are probably below 9% too. Instead you can focus your debt repayments on your credit cards as in the first point, after which time it makes sense to start looking at a savings plan.

Savings Money Tips #3: High interest savings accounts

If you are going to save effectively while paying off your debt, you need to be getting the most out of the dollars you are directing towards a savings plan. Therefore, choose a high interest savings account which will give you the best return on the money you are able to put away..

By depositing your regular savings to a high interest savings account, even if you have debt you are going to be able to earn a regular and attractive interest rate on your savings as the interest is calculated daily and compounds into a monthly payment. Even if the interest rate on your savings can’t top that on your home loan, it is sure to be higher than the balance transfer card you are using to pay off your credit card debt.

Savings Money Tips #4: Save for your retirement

Regardless of any debt you have you should be thinking about your future and about building a retirement fund. Retirement savings accounts and superannuation funds have different tax rates and can make your contributions go even further, even if you are also directing some of your income to pay off debt. In saving for your retirement you can also take advantage of employer or government contribution schemes which will match your personal contributions up to a certain amount. Therefore, make personal contributions to your retirement savings up to this amount, get all of the tax and government incentives you can, and you can still focus on paying off your debt while sticking to a savings plan for your future.

Investment : Looking to Buy Foreclosed Homes?

Posted on March 1, 2010
Filed Under Investment, Mortgage | Leave a Comment

With interest rates at record lows and the stock market looking too perilous for small investors, many people are putting money in an asset they understand– real estate.

One of the best places to invest is in foreclosures and bargain residential real estate.
The current market conditions make it a perfect time for a small investor to purchase one or more foreclosure properties for their private residence, rental or resale. During economic recessions, more upscale homes go into foreclosure, so the notion that foreclosure homes are only available in crime ridden areas is not true. Beachfront and homes in affluent areas are part of the mix of foreclosed properties available.

But anyone considering buying a foreclosed home should forget about paying pennies on the dollar.
“You can buy foreclosures for as cheap as 30 % or 40 % below market, but most foreclosures sell for 5 % below market,” said John T. Reed, editor of Real Estate Investor’s Monthly, a newsletter based in Alamo, Calif.

Yet the savings may be two-fold if the property is purchased from the lender who holds the mortgage that’s in default. That lender may be willing to waive some closing costs, maybe even offer a break on the interest rate or the down payment.

Investment of time
A beginner must learn to navigate the foreclosure process. But Todd Beitler, owner of the Real Estate Library in Boca Raton, Fla., says the time and effort can translate to savings. “If somebody spends 10 hours a week for five weeks to do research, it’s worth it.”

For most consumers, however, the foreclosure process can prove daunting, Reed says. Good buys are available, but they require research, preparation, patience and persistence.

The foreclosure process starts when a property owner falls behind on mortgage payments. Many owners of homes that go into foreclosure have been struggling financially for almost a year before they give up, which usually means that the house has not received needed repairs or general maintenance for a while.

This may include everything from missing light bulbs to roof leaks. Tree limbs in front yards, broken appliances and windows, and dirty carpets and/or floors. Walls may need painting.

This can be a boon ( or boondoggle ) for a buyer. Houses in poor condition might fetch bargain prices, but repairs can boost the cost again. The first rule of real estate, “location, location, location,” applies in these situations. If there is trash in every room of the house, but the foreclosure is in a good area with high property resale values, get a cloths pin for your nose, walk through the entire house and consider making a low offer.

Reading assignments
When a lender decides to foreclose on a property, a notice of default or a lis pendens ( Latin for “lawsuit pending” ) is filed, depending on the state. This document is a public record, and for buyers, it’s the first step in locating a property in foreclosure. A buyer looking for foreclosures also can buy magazines and newsletters that list properties in default.

Once a home has been located, search public records. Look for liens on the property, since they can drive up the purchase price. Liens typically are placed on a house for unpaid property taxes. Also check assessed values and sale prices of neighboring properties.

Research local state foreclosure laws, since they differ. Some states – such as Florida, New York, Ohio and Pennsylvania – require the lender to sue the borrower and get a court order for the sale of the property, a process known as judicial foreclosure. Other states – including California and Texas – follow the non-judicial foreclosure process, which doesn’t require a lawsuit.

For novice investors, buying from the lender is the safest way to buy. Most foreclosures are taken back by the bank during auction, Beitler says. While well-located homes in good shape generally don’t sell for deep discounts, rundown properties can be sold more cheaply.

Often, the banks hire a real estate agent and sell foreclosed homes in the traditional manner, Reed says. But sometimes buyers can succeed by pestering bank loan officers with low offers.
Buyers might try low-balling the lender’s REO ( for “real estate owned” ) officer shortly before the nonperforming assets have to be reported to supervisors, Beitler says.
The safest deals

Bank-owned properties offer the safest deal for inexperienced foreclosure buyers, Beitler says: “There’s no risk. There are no taxes, no liens, no tenants to evict.”

A lender that’s eager to sell might be willing to offer attractive terms, says George Tribble, broker of record at Jetstream Mortgage in Oakland, Calif., and past president of the California Association of Mortgage Brokers.

The lender might offer to finance the property at a below-market rate or with a lower-than-usual down payment. Because the bank already has done an appraisal, the buyer might not have to pay an appraisal fee, Tribble says. And lender deals typically include title insurance, which removes much of the risk that accompanies buying homes earlier in the foreclosure process.

MORE >>>> http://articles.moneycentral.msn.com/Investing/RealEstate/TheSafestWaysToBuyForeclosures.aspx?page=2

Finding value in a pricey market

Posted on March 1, 2010
Filed Under Investment | Leave a Comment

A year ago, when all sorts of investments–stocks, bonds, commodities–were being tossed on the scrap heap, dyed in the wool bargain hunters who had the courage to sift through the market’s ruins were richly rewarded.

U.S. blue-chip stocks, for instance, rebounded 59 % from March to January. Bonds issued by companies with poor credit ratings rocketed nearly 60 %. And shares of fast-growing firms based in emerging economies, like China and India, nearly doubled.

“You could throw darts and do well,” says Forester Value manager Tom Forester, whose stock mutual fund was the only one to have made money in 2008, and has gained 8% a year since the financial crisis began.

While the across-the-board rebound served as vindication for those who took Warren Buffett’s advice to be “greedy when others were fearful,” it poses a major challenge today.

If a value investor is someone who bets on stocks that his peers are ignoring, can you still be one after so many have piggybacked on your bets? And with almost everything well above its March 2009 low, is there such a thing as an undervalued asset anymore?

Obviously the pickings are a lot slimmer for buy-low devotees. But it’s not impossible to find attractive opportunities. “There is still value out there,” says Forester. “It’s just harder to come by.”

The trick is to know where to look. Start in the most obvious place: among those investments that didn’t fully participate in last year’s rally — and are therefore cheap by anyone’s standards. Granted, it isn’t a terribly long list, as the numbers at left indicate.

Another strategy is to look for stocks that have shot up alongside the broad market — but whose fundamentals have improved even more. As a result, these shares can be regarded as real bargains in both relative and absolute terms.

MORE >>>> http://money.cnn.com/2010/02/26/pf/funds/value_investing_rally.moneymag/index.htm?section=money_funds

Filing For Bankruptcy? Don’t make these common mistakes

Posted on February 26, 2010
Filed Under Bankruptcy | Leave a Comment

Common Bankruptcy Mistakes #1. Liquidation of your Retirement Account

In most bankruptcy cases, the petitioner’s retirement account is protected. However, despite this fact, many people choose to liquidate their retirement accounts and other assets in order to satisfy or pay down their debt prior to filing for bankruptcy. In most instances, this is not recommended, and you should consult with a knowledgeable bankruptcy attorney prior to making this decision. Your savings are your future, keep them safe!

Common Bankruptcy Mistakes #2. Repaying Some Debts, But Not All

With regard to repaying debts, you cannot choose to pay back a family member over your creditors. In fact, a Bankruptcy Trustee can reclaim any amount repaid to a family member within one year of filing bankruptcy. In other words, while your intention is to honor your family member; this mistake would create even more tension. The idea behind filing for bankruptcy is that you will be considering all of your debts to be your priority to repay. Unfortunately, you will be unable to pick and choose which debts you feel are a higher priority.

Common Bankruptcy Mistakes #3. Maxing Out your Credit Cards

Don’t use your credit cards once you have made your decision to file bankruptcy. According to the State Bar of Georgia, “Consumer debts incurred for luxury goods and services owed to a single creditor in excess of $500.00 within 90 days of filing are presumed to be non – dischargeable and may be found to be due and outstanding. Cash advances of more than $750.00 within 70 days of filing are presumed to be non-dischargeable and may be found to be due and outstanding”. Don’t jeopardize your chance to regain your independence by maxing out your credit cards.

Common Bankruptcy Mistakes #4. Securing an Additional Line of Credit to Repay Creditors

Don’t take a loan against your real estate in an effort to use your equity. You can often file bankruptcy and be able to retain this valuable asset. If you take out a second mortgage to pay credit card debt; you are putting your house at risk, especially if your bankruptcy petition is denied.

Common Bankruptcy Mistakes #5. Disregard for Hearings or Other Court Appearances

If there’s a collection case pending against you in State or Federal Court; don’t assume that avoiding the court process will buy you some time. In fact, until your bankruptcy case is filed, collection efforts will continue. Even more importantly; if you fail to make an appearance in the bankruptcy court, often your case will be dismissed depending upon your state law.

Common Bankruptcy Mistakes #6. Property Transfers

A Bankruptcy Trustee can reverse a transfer of property agreement that you made concerning property that was previously in your possession. This action can occur if the transfer was made within two years of the filing. Bankruptcy laws are enforced to protect both the petitioners and the creditors. If the bankruptcy court determines that you made a property transfer with the intent to hinder, delay, or defraud a creditor; your transfer will be voided and you may be faced with harsh fines.

Common Bankruptcy Mistakes #7. Failure to Be Honest with your Attorney

An attorney can only provide advice based upon information provided by the client. Failure to notify your attorney of all your assets can lead to the loss of those assets, denial of your Bankruptcy Case, fines, and Imprisonment. Do not fool yourself; your actions could be construed as Criminal. Be honest with your attorney and they will protect your rights, your property, and your assets.

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