Another financial advice website to check out
I was just asked to review a web site called Finance Genius. I have to tell you I like what I saw. Basically the site is an information portal that helps consumers with a combination of advice and what amounts to a brokerage approach in connecting consumer to different options for things like insurance, mortgages, student loans and Auto Warranty services. With automotive warranties in particular I always advise people to shop outside sources, the extended warranties offered by dealerships tend to be over priced and then simply lumped into your loan so you get to pay interest on it. My additional advice is wait until your included warranty is almost up before paying for an extended on. Why pay for a warranty you may not use?
Like any site that is recommending various financial products my advice is to shop what they have and compare it to other options. Always make sure you find the best deal you can but Financial Genius certainly looks like one of the good guys so if you are in the market for any of their services have a look around their site and see what they have to offer. Remember my view is debt is bad but when it is necessary get the best deal, with the best terms you can find. Sites like this one are good tools for finding those types of deals.
Filed under Personal & Home | Comment (0)Cut your health insurance costs
I was asked to take a look at a new health insurance website called, Peoples Health Insurance and I have to say I was impressed with their offering. These guys are not a broker but an actual agency that can help you find the best rates and the best plan for your needs. I took a look specificly at health insurance Florida programs because I know by and large Florida is a high market for all insurance needs.
Health insurance costs are something I suggest you take a look at every year whether you are a self insured individual or a business owner, either way health insurance costs tend to be one of your biggest single expenses. So now is the time early in 2008 take a moment and evaluate your current insurance program and its’ costs. Take a look at the service they provide and what they cover and don’t cover. You know my view if you can get the same or better for less money then do it.
Filed under Business & Marketing | Comment (1)Why you should be making money online
In the future I will discuss many specific ways that you can make money online. Remember key to our philosophy here at cut that bill is not just reducing expenses but keeping more of your money, investing it wisely and most importantly increasing your cash flow in to your household or business. There is quite simply no easier or more passive way to earn some additional money today then to do it online.
Let me be clear though, “how to do it”, is irrelevant until you get your head around the why and until you grasp how a very “small success” can drastically change your future. Let’s take three very doable numbers and consider how they could impact your life to really grasp how powerful an additional income stream from the internet can be. These figures are
- $100
- $250
- $500
Now trust me making these types of additional monthly income figures is very doable for just about anyone with a willingness to do some investing, learning and work. You will have to work harder in the beginning but such is life. Again though for now let’s stick to why you should and what it can mean. What do each of these figures mean to you,
An extra $100 dollars a month can smash 1200 dollars of out standing additional debt a year which is a good start. Paying off 1200 dollars in additional credit card or other high interest debt actually saves about 5000 dollars of long term interest if it is applied on top of your existing payments. Add 100 dollars to a typical house payment on say a 120,000 dollar mortgage and it can shave GET THIS almost 5 years off a 30 year loan. Invested at 10% and just put away it will add a quarter million to your retirement in 30 years, do it for 40 years and it is now worth about 600K added to your golden years. Remember that is only 100 dollars a month more!
An extra $250 is a lot more powerful as you might imagine, with investing you don’t just get 2.5 times the effect as compounding creates an exponential increase. Invested over 40 years of your working life that 250 dollars a month turns into over 1.5 million at simple 10% interest. Of course you can do much better then that with some creativity and participation in your financial planning. Turn to debt and you can pay down an addition 3000 dollars in debt annually which can save many in credit card debt over 20,000 dollars over the live of debt!
Step up to an additional $500 in income into your monthly cash flow and you can begin to really make a massive impact. Try 6000 dollars in additional debt destroyed per year. This alone would destroy the average of 20K in consumer debt most middle income Americans are living under in just over three years. Get out of that type of debt in three years or less and you can save massive amounts of interest. Investing gets interesting, 30 years of 500 a month at 12% interest equals GET THIS over 5 million dollars. There is even more power though!
500 a month would allow you to buy a modest second home if you wanted for vacations in some beautiful part of rural America. Don’t believe me? Fine I own a beautiful modest second home in an somewhat tourist area of the South up in the beautiful Ozarks. The place sits on 5 acres, is 15 minutes to town, 20 minutes to a beautiful lake and only about 10 people live all the dead end road the place is located on. Everyone owns at least 5 acres so the houses are very spaced apart. My total payment? With taxes and insurance 523 dollars a month. How I just looked hard enough.
Now the real beauty here is what I call my “Plan B”. Let’s say that my companies all go bust, I can’t find a job and my wifes income all of the sudden can’t cover our bills at our primary residence. Now this is not to say that everyone should invest extra income in a second/vacation home, it just begins to open your mind to the types of things you can do to build and preserve wealth with just a few hundred extra dollars of income a month.
Filed under Business & Marketing | Comment (1)Pay the right price for you home
This post is not about setting your budget for a mortgage, taxes, insurance, etc. That is a number you need to come up with before you start even looking for a home. You need to determine what you can afford then follow this golden rule, SPEND LESS then you can afford.
What this post will do is help you find the right home for the right price with in your means. So let’s begin.
First, write down what you want this includes,
- What area you want to live in
- Your price range
- Bedrooms, Bathrooms, Garage, etc
The typical things you are looking for in a home.
Second, start to form your own idea of what is available in your area. Cruise over to Realtor.com and search properties. Drive the neighborhoods you are interested in and get prices on the houses with signs in their yards. Do your home work before you speak to a realtor. Visit new model homes, get pricing on everything. Learn what homes are like just above and below your target budget. If you are going to spend about 150K, then look at homes in the 90-250K range. Learn your market before you even think about spending a penny. Take as long as you need to do this well. Write down homes you could see yourself buying and see how long they take to sell at their price point.
Third, call a few different real estate agents (get referrals if you can). Talk to at least three, tell them exactly what type of home you want to buy, the neighborhoods you want to look it and the schools you want, etc. Be very specific. Tell the agent that you know about the phrase, “buyers are liars” and find it offensive! (I will explain buyers are liars at the end of this article). Then ask the agent what price range you should expect to have to pay to get that type of home.
In other words DO NOT let your agent start the whole interview by asking you what you can afford, you tell an agent you have a 125-150K budget and odds are you will find yourself in a 160K home! Remember you now know your market and you should get a number back from your agent that matches what you already know. Many times the number is much higher and this tells you that your agent is NOT LISTENING TO YOU, they are not understanding you. In many instances they are therefore not right for you.
Never let your agent call the shots control the relationship from the get go. They are experts, they are supposed to know more then you your preshopping will tell you if that is the case. Just because they know more then you does not mean they know what you want. Never let an agent say crap to you like, “you don’t what this” or “you really need to consider paying a bit more”. My accountant knows more then me, my financial advisors do to. Yet they work for me and are employed at my pleasure, I do not let them forget it.
Your agent may want you to sign a buyers agent contract. Never sign one that forces you to buy a home via them, one that protects you from going direct to the seller is fine. So is one that requires that if you buy a house they show you that your work with them on it but stay away from those that want a 180 day exclusive agreements. Explain you will be fair, that you want the right place for the right place and will give them the time they need to get the job done. Yet be clear they work for you and reserve the right to fire them at any time.
Fourth, choose the agent you get along with best that was at least close to the price range you expected to hear when you answered the question. Now take your maximum budget (lets call it 150K but it could be anything based on where you live and your income level, etc) and cut it by 10%! So that would in our example mean down to 135K and now your mission is to find a home that compares well with others selling at 150K. You can ALMOST always do this. Not in every market and not all the time but in most instances you can always find a deal like this.
Fifth, when you find the home you want to buy make your offer at least 10% below the asking price. So on this 135K home you now offer about 123K! All the seller can do is say no, you can always offer more, what do you think is going to happen? Do you think they might be so offended as to raise the price to 180? The only risk is someone else will buy the home. So what you must be willing to walk away from any deal. Most times when you low ball at precisely 10% the agent on the other end “gets it”, they generaly counter offer in the middle some where, you just might get that home worth 150 that is listed at 135 for 130.
There are always deals
Such deals are possible and in fact anyone can get one! I have done it on the last three homes I purchased. I bought one for just 84K and sold it for 109K just two years later with no improvements other then a deck. I bought another for 135 that was appraised at 159 and sold in three years later for a few pennies under 200K.
My latest find was a house easily worth 170 that was listed for 139 and I paid get this 120! How come, the listing agent was an idiot! The home had a second living area, a huge yard (1/3rd of an acre average lots are 1/10th), and a home office. The listing agent listed the house as a 3 bedroom, 2 bath, 2 car garage home, brick and vinyl. Nothing more! The guy should have been shot but it was my gain, we offered 115 they countered at 120 and I jumped on it.
The owners were days from having to start paying a second mortgage and I got the place for a song. Honestly there wasn’t another house with all of this going for it under 200K with in 10 miles of it but the buyer had to sell. The house was on a culdesac so it got no drive by traffic and the agent clearly blew the marketing.
So there you go a blueprint for finding the best deal on a home. Will it work in those white hot markets where houses sell in 24 hours? Not usually but generally just outside of those areas there are deals just waiting to be had. Be flexible, consider your options and spend LESS then you can afford. With a little work you can really get a great deal and build a solid investment from day one. Just remember real estate is not a game, you are not in it to be nice or make friends or even help people. You have to be tough, stand your ground and walk away if you need to.
Filed under Personal & Home | Comment (0)Why you should never buy whole life insurance
This is going to be a brief and short post, I am going to put this simply DO NOT EVER purchase whole life, universal life or any other name they ever come up with to try to sell it to you. This has been written on a lot so if you want to know more then I give you here, do a bit of research online and you will find a lot more information to back my suggestion.
Let me be blunt, Life Insurance is for when you die, nothing more and combining it with anything is a mistake. Your life insurance should be about 10 times your annual income if you are supporting a family. The reason for that is simple, 10% returns are quite doable with solid investments so your survivors can invest the proceeds, draw 10% a year and not deplete the money for a very long time. This effectively replaces your income for longer then your working life.
Now to carry that much whole life insurance would be extremely expensive, beyond the budget of most working Americans. An insurance agent will try to show you how whole life builds “cash value” but this is nothing but an illusion.
Remember life insurance pays out when you die! When you live a long time (most of us do) it is good for the Insurance company, you pay and they do not. So when you buy term insurance you pay the amount that very smart economists and math PhD’s have determined will be profitable for the insurance company based on average life expectancy. In other words a fair market price that covers you if you die during the term.
Now look at whole life, you pay a LOT MORE for the same amount of insurance (the risk incurred by the insurer) but the insurance company has the same level of risk. Now if you are a good stooge and pay way to much for way to long, they will then give you some of your money back some day. In the interim they invest your money at market rates of 10-15% returns. So they make that interest, they hold your money and they tell you how great it is that they will give some back.
If you like that how about this. Go get 100,000 dollars, send it to me and I will hold it for you, I will even pay out 2% interest on it. Twenty years from now you can have your 100K back, plus 2% interest per year or you can just let me keep holding it until you die. When you die, I will give the money to who ever you tell me do. Sound like a good deal to you? Of course not! Oh and yea if you ever need the money I will loan your own money to you and you can just pay it back with a bit of interest. Sound like a scam? It’s not you just pay in your 100K in installments and they call it whole life!
So here is what you do, buy the insurance you need on 20 year level term and invest the rest of the money in good solid investments. You make the 7, 10, 12 or 15% depending on your risk tolerance and ability, you retain the ownership and control of your money. If you die in the interim your loved ones are covered, if you live till the end of the term and have invested well then you should not need as much insurance. Perhaps you might buy a bit less for say 10 years and by then if you still need insurance you have done something very wrong.
Don’t let the insurance guy tell you how hard it is for a 70 year old to get insurance! At 70 you don’t need life insurance if you have done a good job of saving and investing. You are not leaving behind a young wife and 3 kids, you just need to be buried. If you can’t save enough money to get yourself put in an box and under six feet of dirt in 70 odd years something is drastically wrong.
I won’t be writing on this subject very often as it is pretty well known and accepted by most good financial professionals today. I just wanted to get it out right away because it is a huge mistake often made by young people who end up in front of a well trained but undereducated insurance agent.
Filed under Personal & Home | Comment (0)