Supersize your Savings
By Cassandra_BHM | May 31, 2010
By downsizing your lunches out, and upsizing the money you didn’t spend into your bank account, you could supersize your savings in record time. But sometimes the temptation to spend can be overwhelming. When the spend-money sweats hit hard, go ahead and treat yourself-you have to break out once in a while, right? Other times, though, a few tips and tricks can pare down your spending appetite, and keep fattening up that savings account.
Pay yourself first. You deserve to be paid, first, before any of the bills, credit cards, or other obligations. Put something, no matter how small, away every payday that’s intended for you, and your future.
Set up your savings account so it’s completely separate and apart from your chequing account. In other words, don’t let it be easy to access your savings. Make sure that you have to drive to the bank, get in line, and fill out paperwork to get at your money. That will give you every opportunity to think carefully before you withdraw.
Make automatic deposits to your savings. You can easily set up automatic transfers from the account where your pay cheques are deposited into your savings account. That will ensure some money goes into your savings account on a regular basis.
Learn to live on less. Try 10% at first. Look at your pay cheque. Let’s say it’s $500 every week. Do you think you could cut back by $50 every week? Too much? What about 5%, or $25? Start slow and easy, then add more to your savings until you get to that magical 10%.
Use a piggy bank. Whenever you get change, pop it into a piggy bank-and not the kind you can just open up from the bottom. Get a ceramic one you have to smash open to claim your coin. Get the whole family involved. Keep track of what everyone puts in, and the one who adds the most, gets to smash open the piggy bank. For even extra savings, don’t allow pennies, just nickels and up.
Save with a friend. You go running with a friend, to the movies or out for a Friday afternoon beer, so why not save with a friend? Knowing you’re not alone, and talking about the challenges of saving, the things you’re trying in order to save, can really keep you on the savings track.
After you pay off a debt, keep paying that same amount into your savings account. If you’ve lived without that money this long, you can keep living without it, and give your savings a nice boost.
The amount you save doesn’t have to be a lot. The secret is regular deposits, not big ones. Even the smallest amounts will add up to big bucks over time. So go at it easy, but keep at it every payday.
Posted in Being Frugal, Reducing Debt
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Options Before Bankruptcy
By Cassandra_BHM | May 28, 2010
Are you at the end of your credit rope? Thinking about taking a leap into the bankruptcy abyss? Before you take such a drastic step, be sure you have explored all your options.
Credit counseling
Call a credit counselor. Sometimes what you need is professional advice to help you figure out how to meet your debt obligations. It can be simple things that are getting in your way-not planning your purchases, impulse buying, not tracking your bills or not paying them on time. A credit counselor can show you tips and tricks to keep you on track, and perhaps help you avoid declaring bankruptcy.
Debt consolidation
Sometimes all you need is debt consolidation to help you get your finances in order. That’s where you take your debts and apply for a loan to pay them all off. The new loan is generally secured with some kind of collateral-such as your house. Then, you pay off the lending institution. It can make life easier because you have one monthly payment, and often the interest rate can be lower. On the other hand, you now have a lien against your home. But that might be a better choice for you.
Consumer proposals
If things are really tough, but you still don’t want to declare bankruptcy, consider a consumer proposal. The details vary from province to province, but basically you must owe more than $5,000 and less than $250,000, excluding your mortgage. You must have a job and the ability to manage some kind of payment schedule, and you must be in the position where you simply cannot pay all of your creditors. A trustee puts the proposal forward to your creditors, and if they agree, your debt load is reduced.
Car title loans
Okay, so taking out a loan when you’re already neck deep in financial hot water may seem a little kooky. But you’re facing financial death by bankruptcy, so why not explore all your alternatives? And vehicle title loans are meant for people in tough situations like yours-from bad credit to bankruptcy. They are a higher interest loan, which makes sense given the troubled waters, but a car title loan might provide just the monetary infusion you need to consolidate your debt and help calm those rough financial seas.
How to qualify
To qualify for a car title loan, you must own your vehicle, and the vehicle must be under eight years old. If that describes you, consider making an application. It’s fast and easy. You can fill out your application online, and in as little as 24 hours be approved for up to 40% of the wholesale value of your vehicle. Loan repayments are tailored to fit your current situation.
Before you declare bankruptcy, check out all the alternatives and make the choice that works best for you.
Posted in Bankruptcy, Reducing Debt
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Tips on How to Buy a Foreclosure
By Cassandra_BHM | May 27, 2010
If you are in the market for a new home and are looking for a way to get in before the interest rates increase, there are a few non-conventional options. If you’re considering purchasing a foreclosure for instance, there are three variables to be aware of. First, a foreclosure can consist of a pre-foreclosure where the homes are in the foreclosure process but they have yet to be sent to auction. It can also be in the auction stage, where the home will yield the lowest price, and then there is the repossession stage where the house has gone through the auction stage but did not sell.
If you take a closer look at the pre-foreclosure option, you will find that it has a few drawbacks. When a home hits this stage, it’s generally because the homeowners owe more on the house than it’s worth and they simply cannot afford to make the payments. When you are looking to buy a pre-foreclosure, as a potential buyer, you must negotiate a deal with the lender as well as the homeowner. That will make buying at this stage of the foreclosure slow and complicated. An advantage, however, is that this is the only method of foreclosure buying that allows you a home inspection prior to purchase.
The auction option is perhaps the easiest way to buy as it is officially a bank-owned property. Even though these sales bring in the lowest prices, they are riddled with difficulties. There is no chance of a home inspection prior to buying, often leaving new buyers with a long list of home repairs. This option is often best left to professionals who are contractors and investors who have experience repairing these types of properties.
Buying a house that has been repossessed also has some benefits. First of all, the bank selling the home may extend the preferential financing terms to the new buyers and may have even made some repairs to the home prior to it being sold. If not, you as a potential buyer may have the opportunity to have a home inspection done yourself before closing. It is best to keep in mind, however, that in most cases, the homes are sold ‘as is’ which means the bank won’t pay for any cosmetic repairs but will often pay for any health and safety issues, which makes getting a home inspection even more critical. Homebuyers may not get the best bargain during this stage, but the property does come with a clear title.
The best way to get into your dream home is always to do your research and know what you are getting yourself into. Jumping on the first house you fall in love with without properly investigating is almost always a mistake.
Posted in Financial Dreams, Uncategorized
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Are you as Reckless with Money as Iron Man?
By Cassandra_BHM | May 26, 2010
Here’s the thing. Iron Man is so rich he can afford to smash up every toy he owns and just go out and buy some more-or build a replacement in record time like he did his multi-billion bucks research lab. Don’t we wish we all could. But when it comes to finances, most of us are a little more like Iron Man’s arch rival, Justin Hammer. He totally freaks out when Mickey Rourke rips the head off one of his “$12.7 million dollar” Iron Man knock offs. Ouch! Now there’s an expense we can all feel for.
But let’s get out of our iron suits and back to reality-we can probably relate better to Gwyneth Paltrow and her worries about Stark Enterprises. Tony Stark just keeps making poor financial choices that threaten the company’s solvency. In the end, we all have to watch our pennies-even when you’re as rich as Tony and you’ve single handedly “privatized world peace.”
But even if you’re on the brink of financial ruin-maybe you’ve already gone bankrupt-you can and will recover. Bankruptcy may make it tough for you to get some credit, but there are lines still open to you. Consider vehicle title loans, for example, which can be a great source of help in tough times.
Car title loans are designed especially for people who have had bankruptcies-or people like you, with a troubled credit history. You have to own your car (or truck or SUV) outright, and it has to be less than eight years old. And that’s it. If that’s you, you can use your vehicle as collateral against the loan. And there are two bonuses. One, you get to keep driving your vehicle just like usual. And, two, the loan can help you get back on a good credit track.
So, if you need some quick cash to get your life turned around, consider a vehicle title loan. You can apply online, right from home. It usually only takes about one day to process your application and, because your car is your collateral, the odds are in your favor that you’ll get approved. About 99% of loan applications do. You could be approved for as much as 40% of the wholesale value of your car. And that’s a lot of scratch (well, maybe not to Tony Stark-but hey, he’s got a nuclear reactor for a ticker) to get your debts under control, and a whole new credit history under way. You can even have your loan direct deposited to your chequing account, for extra convenience. So apply today, and get your finances back on track.
Posted in Being Frugal
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What’s Your Debt Set Point?
By Cassandra_BHM | May 25, 2010
Debt set point means the amount of debt you think you can handle. How you figure that amount out certainly varies from person to person. And let’s face it-some people are just prone to exaggerate sizes. Here are some signs that you can watch out for to ensure that you don’t exceed your debt set point and blow the lid off your finances.
Does your debt keep you awake at night? If you’re fretting in the wee dark hours when the rest of the world is asleep, you need a debt check. Sometimes, it can be a complete relief, when you discover that your debt load is reasonable and quite within your ability to manage it. More likely, though, it means you’ve overspent, and it’s time to start looking at ways to reduce your spending and pay down that credit line.
Do you suffer from impulse control? Are you a see it-buy it kind of person? Odds are, you’re in debt trouble, unless your Aunt Jenny left you a pretty juicy trust fund. You may be in financial trouble because you were never taught how to manage finances-especially credit-or maybe your models used credit poorly themselves, and you learned that was just how people lived. Either way, if you just cannot control what or when you buy, it’s probably time to do a debt check.
Some experts suggest there’s a relationship between the size of our waist lines and our debt load. The bigger we are, the bigger our debt gets. And that makes us depressed-so we buy more, and eat more. That may or may not be the case, but there’s little doubt that Canadian debt loads are at all time highs, and Canadians are spending more, and saving less than they ever have in the past. If that’s you, it’s time to pull a switcheroo between what you save and what you spend-hey, and maybe you’ll lose a few pounds, too.
Debt denial plays a big part in exceeding debt set points. If you don’t know what you owe, you can’t be over your debt capacity, can you? Hmmm . . . are you worrying your nights away about debt? See paragraph two.
Anxiety over money is a pretty normal thing, especially if you’re buying your first house, car, or other big money item. It’s scary to sign on the dotted line for five, or six figure items, and squint through the fine print. But if you don’t grow into your debt load over time (and one year is plenty of time) it may mean you’re beyond your debt set point, and then it’s time to re-configure your debt load.
Posted in Being Frugal, Reducing Debt
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First Significant Employment Growth in Four Years
By Cassandra_BHM | May 20, 2010
Hiring 66,000 temporary government workers to do a national census through the Labour Department does not hurt, but it seems the backbone of the US economy, which are the private employers, have added 231,000 jobs to the labour force last month, the most since March 2006. Job creation in April totalled 290,000, raising the jobless rate to 9.9 per cent.
With businesses displaying confidence in the economy by increased hiring, consumer confidence has also increased with noticeable spending up in March, the largest amount in five months. Job gains in were noted in manufacturing, education and health services, leisure and hospitality, construction, government and retailers. Factory production also grew in April at the fastest pace in nearly six years.
Still, an Associated Press Poll done in the first weeks of April show that only 21 per cent of Americans feel the current economy is in good shape. Job hiring is not expected to be aggressive enough in the upcoming months to lower the unemployment rate. The economy would need to grow at an annual rate of 6 per cent to 8 per cent each quarter to make these numbers noticeable, instead of increasing by the 3.2 per cent pace we’ve seen for the first three months of this year.
On a positive note, hourly earnings did make a slight increase to $22.47 in April, however, job cuts in April were noted mostly in information companies, transportation and warehousing. The underemployed, the combination of people who work part time and have given up seeking work, increased to 17.1 per cent in April. Also, the number of people who have been out of work for six months or longer grew to 6.7 million in April, making up 45.9 per cent of all unemployed people. In total, 15.3 million people are still out of work.
Also thrown in to the economic mix is Europe’s debt crisis, which is expected to dampen the demand for US exports. The Europe issues are also playing havoc on local stock markets as the Dow Jones industrial average dropped nearly 1,000 points before eventually recovering only two-thirds of its losses before days end. Economists have said they feel it will take many years yet to lower the unemployment rate to a more usual 5.5 per cent range. In the meantime, many Canadians are feeling luck on their side as the local economy continues to recover at a faster pace.
Posted in Economy, In the News
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Visualize Savings and They Will Grow
By Cassandra_BHM | May 19, 2010
Having trouble seeing you and your family debt free, or with a positive balance-of any kind-in your savings account? The key to saving money is to “just do it”-and then keep doing it forever. Savings are an important part of good budgeting for you and your family. You need cash set aside for emergencies and unexpected hiccups in your money management scheme. Here are some ways to help you put a few dollars aside for when you might really need them.
Set goals
Decide how much you want to save (be reasonable) and set a date to get there. Bring everyone in on it, and brainstorm ways to save a few dollars a day to reach that goal. Make it a friendly competition to see which family member can figure out how to save the most cash each month.
Picture your goals
Great athletes do this all the time-they see themselves crossing the finish line first, crushing their competition. You can do the same thing. See your goals. Visualize that money in your account. Whenever you feel the urge to splurge, bring up that picture of money saved and debts paid.
Look for higher interest savings accounts
Don’t underestimate the amount of money you can make from a higher-interest savings account. Even one-half or one-percent higher interest, over time, can add up to substantial dollars.
When temptation strikes
When you get tired of saving (and we all do) and just want to blow that cash, consider the full cost of what you’re buying. For every dollar you spend, you probably have to actually earn nearly two dollars-taxes, pensions, and other deductions take a big bite out of the money you put in your pocket. So look at that price tag, and multiply by a factor of two. Is it worth that price?
Put savings into a separate account
Money that isn’t set aside can easily get lost, or spent. Put your savings into a separate account, and one you cannot access except by going to the bank and withdrawing it directly.
Make automatic deposits
Choose some small amount each month, or perhaps every payday, that you will have automatically transferred into your savings account. If it’s automatic, you’ll feel less pain when the money is withdrawn, be less tempted to touch what you’ve saved, and not have to worry about making the deposits yourself every month.
Pay yourself first
View savings as paying yourself-and do that first. Even when times are lean, reduce how much you set aside, but don’t eliminate it. Even a few dollars, added up over time, can become a sizeable amount.
These are just a few ways you can ensure that you save some small amount each month. And with your family onside, you can probably come up with plenty more.
Posted in Being Frugal, Financial Planning, Reducing Debt
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Home Buying Mistakes to Avoid
By Cassandra_BHM | May 18, 2010
With the upcoming mortgage rate hikes less than a month away, many Canadians are still trying to cash in on the current rates before that inevitable increase in June. That means, many Canadian are looking to buy a home. If you happen to be one of them, you may want to consider avoiding a few of these purchasing blunders before making your way out the door.
A very common mistake consumers make is buying a large ticket item on credit before they buy their house. If, for example, you have bought a car before a house, the amount of your car loan will seriously decrease the amount of your available credit limit. It may also have an affect on your credit score so it’s advisable to not open any new accounts, including any credit cards, while your mortgage application is in progress.
Not knowing your credit score is a serious fault if you’re considering a home purchase. It is imperative that you know exactly what your credit score is and it’s just as important to go over your credit record and make certain that everything listed is accurate. If not, it will be necessary to correct any of the errors being as the interest rate the bank will offer you will be directly reflected from your credit history. The lower your score, the higher your cost of borrowing.
The American Society of Home Inspectors is reminding buyers that many of the homes currently on the market are distressed properties in that they are short sales and foreclosures; so paying for a good home inspection is vital. The last thing a new homeowner wants are massive home repair bills. With many of these current listed homes, their previous owners usually did not have the money for house maintenance and upkeep, so there is a lot of deferred maintenance to be aware of. Problems such as plumbing, electrical, insulation, heating, mold, roof and foundation issues are only some of the problems a potential owner should have their home inspector look for.
Hiring a lawyer is one of the best ways to ensure you do not make a bad purchase as nearly everyone else involved in the sale of the property gets paid only after the property is sold, therefore, they may not necessarily do what’s best for the buyer. It’s also standard practice to put up between 1% and 3% ‘in earnest’ money in the event the buyer decides to back out of the deal. An inexperienced buyer may sign a contract without including common contingencies such as failing to qualify for the mortgage or major home inspection problems. It’s also very important to remember to budget for home insurance. Despite having insurance for such things as theft and fire, if your new home is in a known flood zone, that will significantly increase the cost of your homeowner’s insurance.
Diligence and thorough research are the difference between buying a house that will become your dream home and buying one that will be a nightmare. Take the time to be sure you have all the facts before jumping at any purchase. You’ll be glad that you did.
Posted in Financial Dreams, In the News
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Qualifying for Interest-Only Mortgage Now More Difficult
By Cassandra_BHM | May 17, 2010
Starting August 31, 2010, Fannie Mae, the government-backed mortgage giant, has announced it will be tightening its lending requirements for the interest-only loans and adjustable rate mortgages. It will also set new requirements that borrowers of the interest-only loans have sufficient cash to make the mortgage payments and other housing expenses for at least 24 months, as well as own a credit score of at least 720 points. They also stated that they will no longer fund the so-called balloon mortgages as too many people saw their mortgages swell to unmanageable heights, which caused them to lose their homes when they were unable to either pay or refinance to come up with the huge payment.
The past few years has seen many potential home buyers qualifying with little to nothing down, entitling them to own homes they simply could not afford. When the great recession hit, many of these homeowners were suddenly unable to meet their monthly financial obligations, which resulted in them either struggling to make their mortgage payments or ended with them being forced to completely abandon and walk away from their homes altogether.
To get a Fannie Mae interest-only mortgage after August 31, a home buyer will have to make a 30 per cent down payment of the sale price. For adjustable mortgage rates, the company will only buy those whose borrowers can afford the payments even if the loans initial interest rates were the rate plus two percentage points or the maximum interest rate, also known as the cap rate. So if your loan started at a 5 per cent rate and hit the cap rate of 6 per cent, you have to prove you can afford to keep up the payments at the six per cent rate.
Marianne Sullivan of the Single Family Credit Policy and Risk Management at Fannie Mae pointed out “Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long term, while helping our lender partners offer a range of mortgage products for qualified borrowers. These policy changes reflect our intention to continue providing liquidity to different market segments by ensuring that support for ARM products remains in appropriate circumstances”.
Fannie does not issue the mortgages themselves. Instead, they buy them from lenders but few lenders will issue loans these days unless they can sell them to Fannie Mae. If the recession had a similar affect on you and you are currently suffering a bad credit score from it, there are many private lending institutions that can help. Getting a debt consolidation loan is an easy way to get your credit back on track.
Posted in In the News, Lending
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The Real Cost of Qualifying for a Mortgage
By Cassandra_BHM | May 14, 2010
In an attempt to prevent potential home buyers from purchasing homes they cannot afford, home buyers will now be facing tighter rules. These new rules are an attempt to discourage people from taking out mortgages they may not be able to pay for in the event of higher interest rates or larger issues such as job loss or another recession.
This decision comes after the past few years have seen people taking out large mortgages as housing prices soared across the country, combined with the announcement of interest rate increases. However, many real estate agents feel that this move will only cause potential homeowners to become creative in their financing to ensure they qualify for a mortgage.
Under the new rules, the government will require that all potential homeowners applying for a mortgage meet the borrowing standards for a five-year, fixed-rate loan, even if they chose variable or shorter-term loans. The maximum that Canadians can withdraw when refinancing their mortgages will change to a maximum of 90 percent, down from 95 percent of the value of their home. Also, a minimum of 20 percent down payment is necessary to qualify for CHHC insurance for non-owner occupied properties acquired as an investment.
It is estimated that between 90 per cent and 95 per cent of qualifying homeowners have been putting the minimum five per cent down payment, which they obtain from either family help or their own line of credit. It is difficult enough for people to come up with the five per cent, so a minimum 20 per cent will definitely cause people to come up with creative financing. In the meantime, many people have jumped on board now, buying their homes before the new rules take effect, inevitable making it much more difficult to qualify for a home mortgage.
The Canadian Real Estate Association shows there were almost 100,000 homes listed for sale in March, an increase of 20 per cent increase, with an average home price of $340,920. However, Ontario and British Columbia residents will be facing harmonized sales taxes in their provinces as of July, which will raise the costs of buying a house by thousands of dollars. The Canadian Real Estate Association foresees the housing resale to be slower in the second half of 2010, noting that resale listings have increased and should help balance out the housing market.
For people who are thinking of getting into the housing market, it is never too late for creative financing. If personal debt is weighing you down, you may want to consider a consolidation loan or a car title loan. Getting a bad credit loan from a private lender will definitely help you get back on the right financial track.
Posted in In the News
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