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We of ten hear the phrase “save for a rainy day”. While most of us think this is just a phrase and do not pay it much attention, for those who understand the value of sound retirement advice know how important it is to save for retirement. While most consumers are of the opinion that saving for retirement is something they would be interested in when they are past their mid 40s, it might be advisable to rethink that thought process.  Most financial planners and advisers who have seen their clients weather this terrible financial storm will strongly advice you to save for retirement and put in a place a sound retirement savings program.

Retirement And Savings

It may be interesting to look at some figures with regard to retirement savings to decipher whether we are in a bit of a

Put a Retirement Savings Plan in Place

spot. Experts are of the opinion that Gen Xers are probably going to be the worst affected as nearly 49% of Gen Xers will have to reduce their current lifestyles in retirement. On the other hand, baby boomers are in a better spot with studies showing that only 35% have had to downgrade their lifestyles for retirement and savings. It is more important for Gen X and Gen Y to consider their retirement savings options owing to the simple fact that the ’saving for retirement’ options such as company pensions, full social security benefits from early sixties  and 401(k) savings accounts are not available to Gen X and Gen Y. Hence it is very essential for the current generation to save for retirement and use unconventional channels apart from their mainstream options as mentioned.

Retirement Savings Account

The Bush government, in an attempt to enable consumers to be able to make after-tax contributions towards their retirement introduced a retirement savings account (3). This retirement savings account was meant to replace the traditional IRA, Roth IRA and Simple IRA accounts. Although this could be a tax haven and could help you save for retirement with tax free dollars, it is essential to keep the following points in mind to avoid any tax liabilities or implications:

• If your employer offers you a 401(K) retirement savings plan with a matching plan, make sure that you contribute enough to get the maximum amount as offered by your employer.

• In case you are switching jobs rollover your funds in the 401(k) account into an IRA account as this gives you more flexibility.

• Ensure that you nominate your children as beneficiaries for your IRA account. This will give your children tax- deferred and tax-free growth by allowing them to stretch the IRA payouts over their lives.

Retirement Savings Plan

The IRS (Internal Revenue Service) (1) has developed several programs to help individuals save for retirement. Some of the initiatives from the IRS are as follows:

• The IRS have expanded ways in which individuals and sponsors can automatically enrol into in retirement plans.
• By making the process of saving tax refunds easier and
• By helping individuals roll-over their lump-sum payments like payments for unused leave and other similar payments into various retirement plans.

In addition to this, with the help of the IRS, consumers can also receive their tax refunds in the form of government bonds, should they elect to do so. Moreover the IRS also provides information and advice on rolling over distributions received from unused vacation or employee termination and retirement lump-sum distributions.

Apart from these, there are several other savings plans available. It might be beneficial to consult your financial planner to get more personalised advice that is best suited to your retirement savings needs and objectives.

It is obvious from the abundance of options out there that it is possible to have a comfortable retirement. The only requirement is to have the drive and commitment to out the wheels in motions. Let us not forget that retirement savings are the need of every individual and it is never too late to start saving for retirement or to put a retirement savings plan in place.

References:

1. Retirement and Savings Initiative – Internal Revenue Service
2. Is there really a retirement savings crisis? – MSNBC
3. The President’s Savings Proposals – U.S. Department of the Treasury

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One phrase that has become very common place nowadays is “times are tough”. While this is true, most consumers can avoid feeling the pinch too much by being a bit prudent financially and learning how to budget money. By budgeting money and staying within their means most clients can weather this financial storm .Below are a few budgeting tips to help you get started.

How to Budget Your Money

While most clients would immediately assume that they know how to create a budget for household budgeting, we recommend that you follow some of these easy steps to creating a budget:

• Calculate Your Cash Inflow and Outflow: It is necessary that you correctly state what is coming in and
  

  Creating a Budget is a Necessary Evil

  exactly how much you are spending before you try to figure out how to budget money. While creating this statement and list all your expenses no matter how trivial they seem. You might be surprised to see how much you really spend on unnecessary items.

• Implement Your Budget: If you have been a spendthrift in the recent past, you may find it hard to live within financial boundaries and budgeting money. Start by taking small steps in order to get started with your household budgeting. First implement a weekly budget and then a fortnightly or a monthly budget. This will help you cultivate a budgeting money habit.

• Get Rid Of Unnecessary Expenses: Take a close and unbiased look at your expenses and see what can be gotten rid off from your household budgeting needs. This might mean foregoing a favourite pastime or not going on a shopping binge. Try and channel these funds into a savings account so that you have a buffer should you have any unexpected expenses or should times get tougher.

• Try And Live Within Your Budget: The most important thing to do is trying to live within your budget for household budgeting needs. While this will be hard at first, if attempted genuinely it can be achieved. The trick is to keep at it.

Budgeting Tips

Once you have created and implemented your budget, it is very important to keep a few things in mind for budgeting money to stay on track.

• Budgets are necessary and they will only help improve your financial situation. Try and stick to your budget and use any excess funds to pay down bills or deposit in to your savings account.
• There are plenty of budgeting and personal financial planning softwares out there which can help with budgeting. Some examples are Microsoft Money and Quicken.  Use these household budgeting tools to save yourself the trouble and frustration of calculating every item.
• Always try and spend only 90% of your income. This is a good way to start a 10% savings pattern per month or week etc.
• Do not indulge yourself by counting a luxury as a necessity. This a very fast way to blow your hard earned money on articles you could have done without.

Budgeting Guide For a Recession

This is one aspect of budgeting money that is very relevant in today’s economic climate. All of us at some point have felt the effects of the global economic meltdown, hence it may be prudent to take precautionary steps to avoid feeling the hit even more:

• Prioritising Your Bills is a good way to start off. List your monthly or weekly outgoings in preferential order and pay the important ones off first. You will notice how your unimportant expenses on yourself and luxuries can easily be avoided.

• Trim Your Budget to suit your income level. If you have recently experienced a pay cut or a wage loss, expenses that could have once been justified can’t anymore. Hence it would be a good idea to scale back for money budgeting and live within your means.

• Make Better Use Of Your Funds by looking for bargain shopping deals and by making better use of coupons and vouchers. This will greatly help reduce your monthly expenditure and will also take the increasing stress off you.

These few simple and easy to follow household budgeting steps could well be the difference between consumers managing to emerge financially stronger at the other end of this economic meltdown or becoming increasingly burdened by growing bills. As trivial as it may sound money budgeting is a great way to help you save for a rainy day or help you get back on track.

References:

1. How to build your first budget – MSN Money
2. Making a Budget – CNN Money

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Consumers are often confused about their debt collection liabilities with regard to time barred debts. While it is a definite fact that you are liable for all your debts, you might be able to get away with certain debts which have been time barred.  Depending on your state after a debt has passed a certain amount of time it is declared as uncollectible in accordance with the Statute of Limitations and collection agencies cannot pursue the collection of those debts.

What Are Time Barred Debts?

In simple terms a time barred debt is a debt which if from so far back that the creditor or debt collector cannot sue you in respect to that debt. Depending upon the state you are in and in accordance with the statute of limitation, there is a certain period after which debt collectors may no longer file charges against you.  It is best to check the period after which a debt is considered time barred. Information regarding the same can be obtained from the Attorney General’s office (1).

Debt Collection On Time Barred Debts

The Federal Debt Collection Practices Act (FDCPA) does not place any restriction on the collection of a statute of limitations debt by a debt collector. However the one restriction in place with regard to statue of limitations on debts is that debt collectors cannot sue or threaten a client in regard time barred debts. In the event that you have been sued by a debt collector for a debt with a statute of limitations, the law suit can be annulled by informing the judge that the debt has reached the status of being time barred.

Time Barred Debts and Your Credit Report

There has been a lot of speculation with regard to whether or not a statute of limitation debt can appear on your credit report. It must be kept in mind that irrespective of whether or not the debt is time barred, it can appear on your credit report depending on the period of delinquency. Once a debt is more than seven years old it usually falls off your credit report. Debt collectors cannot collect on debt that has been discharged in bankruptcy, irrespective of when the debt was incurred.

Efforts To Collect On Time Barred Debts In The Future

It may be in your best interest to get a written confirmation from your creditor stating that you have been released from your debt obligation. In relation to this written confirmation it may be advisable to consult an attorney in regard to the validity of the document. Once you have received this document debt collectors can no longer pursue you with regard statute of limitation debts. If a debt collector is pursuing you in regard to a time barred debt, you have the right to sue the debt collector. In the event that your law suit is successful you will be entitled to claim not only damages but also a sum of $1,000 and all your attorney fees and court charges.

Hence these are the basic rules governing time bared debts. It is very essential for consumers to completely understand their situation and obligations with regard to time barred debts before seeking any form of action or pursuing any law suit.

References:

1. Home Page – National Association of Attorneys General
2. What are time barred debts? – BCS Alliance
3. Time Barred Debts – Federal Trade Commission

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A lot of low income families have been faced with the questions as to whether or not they will be able to apply for a mortgage loan or afford a home of their own. In order to assist low income families the federal government has made available federal housing grants by working in conjunction with state and local developments to assist communities and individuals to secure their own homes.

U.S. Housing Grants

The US department of Housing and Urban Development (HUD) each year spends close to $1 Billion each year on housing grants. However the HUD does not work directly with individuals. It works with local and state governments who are in direct contact with low income families and communities. The Department of Housing and Urban Development sets up finance facilities for these governments (such as Lines Of credit or Accounts) thereby giving them access to the funds from federal grants. The local and state governments in return draw on these funds to assist local residents who meet the criteria of these programs. The most common variety of such federal housing grants is the HOME Investment Partnerships Program also commonly known as HOME. Most information about existing and new grants is posted on the Federal Government website (1)

Applying For A Federal Grant

Listed below are a few easy steps to being able to get a federal housing grant:

1. Contact the Department of Housing and Urban Development and ask them for the application pertaining to the type of federal grant for housing you want to apply for. Remember most of these applications are available online.
2. Having read the application, complete it and make sure that you have provided all the requested supporting documentation.
3. Make sure that you check the application for completeness and accuracy and book in an appointment with the department to ensure that is completed accurately. Ensure that you have provided them with all supporting documentation as requested.

Tips To Secure The Housing Grant

Having ascertained the type of federal housing grant you would like o apply for it is time to understand some of the tips on getting a federal housing grant:

• Genuine Need: It is vital for applicants to prove to the HUD that they are in actual need of the federal grant for housing. Provide ample supporting documentation to support your reasons. For instance provide them with employment documentation if ou are a low income earning member or if you have been affected by a natural disaster provide proof of that etc.
• Do Your Research: When an application is received by the HUD a grant panel reviews it. There are certain specific criteria that are expected to be met in the application. Research the HUD website and see how you can accentuate or highlight those qualities or criteria in your application.
• Correspond With HUD: The department of housing and urban development has been known to be an extremely helpful organization. Liaise with the department to ensure that our application is complete and which is the best grant for your circumstances and needs.

The federal government has numerous grants to assist individuals. These grants could be the boost that you require to help you obtain your first property.

References:

1. Federal Housing Grants – Federal Grants
2. Grants – U.S. Department of Housing and Urban Development

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Consumers who like to manage their mortgage loan efficiently and like to have the freedom to draw down used equity or surplus funds in their home loan account, might just find that a line of credit mortgage product is just for them.

Definition: Line Of Credit

A line of credit is popularly referred to as an LOC. This is probably one of the most popular forms of revolving credit, second only to credit cards. In the formal sense the definition of line of credit is a credit contact between a client and the financial institution whereby the client can readily access funds as if it were their own savings account. Interest on lines of credit is only charged on the used portion of the loan. In other words if the total limit of the line of credit is $500,000 and the consumer has only used $300,000 then the interest will only be levied on the $300,000 and not the full loan amount like a normal standard variable home loan/mortgage. This is quite advantageous owing to the fact that if you have been making larger repayments into your mortgage, in effect over time you will be reducing your interest repayments as you are constantly reducing your Line Of Credit outstanding balance.

Common Uses Of A Home Equity Line Of Credit

Being as versatile as they are a home equity line of credit can be used for a variety of purposes. Some common uses of lines of credit are:

1. Managing your home loan better
2. Using the available redraw in your line of credit to make investments.
3. Using the surplus available in your LOC for repairs, improvements and payment of bills around the house.
4. To meet unexpected and urgent expenses.
5. Consumers at times use the surplus/redraw available in their LOCs to pay for holidays etc. This is owing to the fact that the interest rate on an LOC is much lower than credit cards and in addtion not only do you get a much longer term to pay of the amount (over your home loan period) but you also do not have to tap into your savings.

Pros & Cons Of A Home Equity Line Of Credit

The following are a few advantages of a line of credit loan:

• You always have easy access to the money as it is sitting in your home loan account and you do not need to go though the process of applying for a new loan etc.
• LOCs give you the ease of making a single repayment for several bills, as you are only paying off your line of credit or mortgage account.
• The interest rates on a line of credit are much lower and expenses paid of your redraw can be paid back over the course of your mortgage.
• As long as consumes are cautious that they do not exceed the limit on their LOCs the can keep drawing down on the funds.

As is the case with all good things line of credit loans aren’t free from a few flaws either. Some of them are as follows:

• The interest rates on LOCs are open to fluctuations and as a result of that you might find your repayments varying with interest rate changes.
• In case of a residential loan for a main/principle residence consumers must ensure that over the course of the loan the principal component of the line of credit is reduced.
• Sometimes having a lot of credit/redraw available might lead to clients developing a habit of overspending.

Home Equity Loan Line Of Credit & Your Credit Report

A line of credit loan can be very beneficial for your credit report. If you have successfully managed to pay down you outstanding balance with larger and timely repayments, this stands you in good stead with the credit reporting agencies like Experian, Equifax and Transunion. Moreover if you have a large limit on your line of credit and are only using a portion of it with a decent amount unused, this will also help boost your FICO score.

Hence as we have discussed that a line of credit can be a very powerful tool to help you manage not only your home loan better but will also help you manage a lot of your own personal finances. It is however essential that consumers evaluate their situations before getting a mortgage product as this is a matter of personal choice. Lines of credit are powerful financial tools designed to give consumers the advantage and freedom of managing their finances and credit effectively.

References:

1. What is the Advantage of a Secure Line of Credit? – All Business

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Consumers generally tend to be of the opinion that once an individual has been declared bankrupt, it spells the end of the road for them as far as new credit contracts are concerned. This is not quite true. Nowadays it has become much easier for an individual to obtain an after bankruptcy home loan. However it must be remembered that there are a few factors you should consider prior to applying for a new home credit loan.

Getting A Home Loan After Bankruptcy

At the very outset you should remember that once you have been discharged from bankruptcy it is best to wait for at least 2 years prior to applying for a bankruptcy morgage loan.  If however you do decide to apply for a after bankruptcy home loan prior to the 2 year gestation period, ensure that you have flawless repayment history and that all your contractual obligations associated with the bankruptcy have been paid and are up to date. Once the 2 year wait period is up it is fairly easy to get a bankruptcy mortgage loan and in certain cases you can even get up to 100% finance. Lenders when considering bankrupt client applications look at the following things:

• Repayments history post discharge from bankruptcy.
• Timely payment of all financial obligations related to the bankruptcy, especially government debt if any.
• Source of deposit for property.
• Employment and stability of income.

These are a few things which lenders keep a close eye on. One thing that you might have noticed is that lenders nowadays are very particular about the source of the deposit on the property. This is particularly important owing to the fact that in the past clients have tried to defraud banks when getting a home loan after bankruptcy by misstating the source and details of the deposit. If your bankruptcy mortgage loan deposit is from a relative, the banks might need you and your relative to get a signed statutory declaration stating that the funds are a non-repayable gift. This is done so that the bank is satisfied with the source or else it will also constitute another loan or credit contract.

Home Loans With Bankruptcy – Tips

Applying for an after bankruptcy home loan is not the same as applying for a regulr home credit loan. Listed below are a few tips to help set yourself up well for home loans with bankruptcy, after you have been discharged from bankruptcy. This should ensure that you are in a good position while applying for a after bankruptcy home loan.

• Budget: One of the most important things post bankruptcy is budgeting. Take into account all of your fixed overheads. Then take your income and subtract your expenses from it. This will give you a residual surplus which you can use to start a savings pattern or use to reduce bills faster before you apply for an after bankruptcy mortgage loan.

• Rectify Mistakes On Your Credit Report: Quite often consumers emerging from bankruptcy find that there are still a number of accounts which appear as delinquent, overdue or open on their credit reports when in fact these should actually be closed and are credit report errors consumers are often unaware about. Take these issues up with the appropriate credit bureaus and try and resolve them as soon as is possible. This will ensure that your credit report looks a lot healthier when applying for a home credit loan.

• Apply For Small Chunks Of Credit: By applying for small amount of credit you will put yourself in a position to repay these small loans like car loans and personal loans a whole lot sooner and thereby build your repayment history and increase your credit score. This will work in your favour when applying for a bankruptcy mortgage loan.

• Use Your Credit Card Sparingly: Having a credit card and using it only as required is another way to build up your credit score as discussed in the post about credit card balances. When you use your credit card sparingly and pay out the credit card debt in full each month, this adds a lot not only to your credit score but also your repayment history, making it possible for lenders to trust you when you apply for a bankruptcy home loan.

Consumers must remember that your bankruptcy might be on your credit report for a period of 10 years, but it will not be there forever. It will eventually come off and your credit report will go back to being normal. It is prudent to ensure that all your bills are up to date and that you are trying to build your credit report every step of the way. With these simple steps consumers who have just been discharged from bankruptcy should have no problem applying for an after bankruptcy home credit loan.
References:

1. Bounce back fast after bankruptcy – MSN Money
2. Personal Loan after Bankruptcy - The Dolar Stretcher

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With the increase of identity theft virtual credit cards are becoming more popular each day however they must be distinguished from the prepaid credit cards we have previously discussed. Virtual prepaid cards not only help save you from identity fraud but can also help you protect your spending habits and thereby from hampering your credit report. These internet credit cards are created specifically for online purchases. However it might be advisable to enquire with your bank how their virtual credit cards work (if they issue them). In today’s fast paced e-commerce world, where consumers and sellers are miles apart, prepaid virtual credit cards might be the answer to making safe and risk free purchase over the World Wide Web.

Prepaid Virtual Credit Card: Definition

A prepaid virtual credit card, as the name suggests is virtual hence no real plastic card is issued. Most banks issue them. All you need to do is log on to your internet banking and apply for a virtual credit card and fill out the corresponding details. While applying select your limit based on the amount you are looking to shopping online. It is essential to remember that these internet credit cards usually expire within 24 hours and hence it is advisable to use them as soon as they are issued.

Once you have applied for the virtual prepaid card you will be issued with a 16 digit card number and a CVV2 number coupled with an expiry date. These cards are normally accepted at all online merchant stores who accept Visa or MasterCard.

Features of Virtual Bank Cards

Listed below are some of the features of virtual bank cards:

• Virtual credit cards usually have a fixed spending amount and this is directly proportional to the limit that you selected while applying for the same.
• An internet credit card usually has an expiration time of about 24 hours and they are usually issued with temporary PIN numbers.
• Consumers can use both debit and credit cards to create virtual prepaid cards from their bank accounts.
• If after usage, your virtual bank card has any balance left on it the amount is transferred back to your bank account.

Advantages Of Virtual Credit Card On Internet

• Protection Against Identity Theft: Virtual credit cards on internet are a great way to protect yourself against identity theft while purchasing goods online. Owing to the fact that these cards predetermined spending limits and set expiration dates it a safer way to purchase online and you can be rest assured that in the event of identity theft the amount lost will be refunded by your Credit Card Company or bank any way. This is usually listed in the terms and conditions of your contract.
• Immediate Availability: These virtual credit cards are almost immediately available for use. There is very little or no wait time between applying for the cards and being able to use it.
• No Impact On Your Credit Report: Virtual prepaid cards have absolutely no impact on your credit report unlike a real credit card and does not create massive credit card debt. These are also a good way to keep a check on your spending as they can be used over and can be refilled. Prepaid virtual credit cards offer the freedom of a credit card without the impact of a real credit card balance on your credit report.

Disadvantages Of Prepaid Virtual Credit Cards

• 24 Hour Expiry: The first distinct disadvantage of a virtual credit card is that they usually expire within 24 hours and hence it is advisable to use them as soon as they are issued.
• Spending Limit: Most banks while issuing prepaid virtual credit cards place spending limits on them. This is done to not only protect the consumer in case of fraud but to also protect the bank as in the event of fraud or identity theft the banks are liable to refund the customer.
• Delay In Dispatch Of Goods: Another drawback of virtual prepaid cards is that until the payment made by a virtual card does not clear or hit the merchant’s account he does not dispatch the goods. This could result in a delay in consumers getting their goods.

Virtual credit cards are beneficial for consumers afraid of identity theft or for sending online. Prepaid virtual credit cards are safer, easier and is hassle free with the added protection of indemnity in the event of fraud or identity theft, not to mention the advantage of not having any impact on your credit report.

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