Talking Openly with Teenagers About Money Finance and Debts

Talking Openly with Teenagers About Money Finance and Debts

Talk openly with teens about money

It’s a very good idea to talk openly to teens about money because this is a method of coaching and mentoring them as it pertains to money and how it works. When you talk openly with teens you help them to understand the misconceptions and the myths about money. They then begin to understand the important laws of money such as compound interest and why it is important to start to save early.

Just to give you an example, if you at the age of 25 begin to save $50 per month until you are 65 years old you will have saved $24,000 without any interest. Now let’s assume you save $50 per month starting at age 25 until you hit 65 years of age but this time the money you are saving is subject to an interest rate of 4%. Your money is now $59,295 instead of $24,000, what a difference this makes.

Let’s look at another example. If a person at the age of 25 begins to save $100 per month until the age of 65 they will have accumulated $48,000 with no interest. Let’s assume using the above example that they now receive interest of 12% on that money by the time they reach 65 they will have accumulated $1,188,242 in savings. This is because of compound interest. You are actually earning interest on your interest.

These examples above are only hypothetical and they certainly don’t take into effect the impact of taxes. Teenagers should know that there are certainly some risks involved when you start investing your money depending upon the type of saving or investing vehicles you use. However when you start young and you are looking at the long term it usually works out in your favor. Certainly there will be some ups and downs when it comes to your money.

You are not guaranteed a profit when you invest on a regular basis and your principal balance could fluctuate up and down depending on the economic conditions which could cause you to lose your initial principal balance.

Teenagers should be warned also about the dangers of credit cards because if they incur too much credit card debt it will limit their ability to save and invest for their future. If you become over burdened with debt it can cause you to incur some past due debts which will cost you money in the long run.

As young adults teenagers will begin to get a lot of credit card offers from various companies. The best practice is to talk about it with your parents and understand that only one credit card is needed to help you establish credit. Once you purchase something pay your balance in full. Oft times when you pay on time for a long period of time the credit card company will increase your line of credit when will tempt you to make additional purchases up to that line of credit.

Resist the temptation to because this is how you are slowly pulled into the system of credit cards. It all starts very innocent and as time goes on, if you are not on guard you will begin to incur a mountain of credit card. Your life is now dependent upon credit card debt.

Refinance Your Mortgage and Save Money

Refinance Your Mortgage and Save Money

With all the hubbub about the mortgage industry right now, you may be feeling you should stay away from mortgage lenders. But at least one positive thing has come out from all economy troubles…low interest rates. Rates are at record lows right now, making it a great time to refinance your mortgage.

If you currently have a mortgage, check to see what your rate is. The rule of thumb is that if you can lower your interest rate by a point or more, you should refinance. For example, our currently mortgage interest rate is 6.875% and we have the opportunity to refinance at 5.5%. This change will save us over $120 on our monthly payment, not to mention thousands of dollars in interest payments…definitely worth it.

A great resource for determining the saves is Bankrate.com. They have tons of financial calculators including a refinancing one. The site also provides national interest rate averages and will even give you suggestions on mortgage lenders in your area.

For the ease of refinancing, you may be better off contacting your current lender to see what rates they are offering. Also check other institutions in your area for a comparison. Most lenders will post their current rates on their websites. This is an easy way to research rates in your area. Also, look for a large capacity lender. Smaller banks make money off of selling their mortgages to larger banks. If you start out at a large bank, you may be able to get a lower rate.

Still be weary of the “too good to be true” lender. Go with a lender that is reputable…do your research. Do not sign any papers until you feel entirely comfortable with your lender and the terms of the loan.

Also, when calculating your savings, be sure to include closing costs. Closing costs often vary due to the amount being borrowed, but figuring about $2000 is a good average. Often these fees can be rolled into your refinance, but you will still need to pay at least the appraisal fee upfront.

Not only can you save money, you can also save years of payment. Be sure to ask about shorter term mortgages that may not save you money on your monthly payment, but will surely save you thousands in interest payments by paying off your home in less time. Consider reducing from a 30 year to a 20 or even 15 year. If you have a 20 or 15 year, look at a 10 year or the rare 7 year. You will save big time that way. If you have ever paid attention to the amortization schedule, you will see the huge chunk of your monthly payment goes towards interest. This is a great way to pay less to your lender…more money in your pocket.

Depending on the type of loan you currently have, you may qualify for a streamline refinance which can save you time and money on closing costs. Ask your lender if you qualify for that program.

Now is the time to refinance. Get online and start your research, then call you lender to begin saving. It may seem intimidating, but you will be glad that you did…I know I am!

Debt Consolidation Advice: Recover from Credit Card, Personal Loan and Other Financial Arrears

Debt Consolidation Advice: Recover from Credit Card, Personal Loan and Other Financial Arrears

Everyone is looking to save money on various financial payments, but when debt arrives many people immediately turn for help in order to get out of monetary trouble. Unpaid bills, credit card debt, and personal loan debt can mount over time if not monitored properly and carefully.

However, debt consolidation can be the answer to these financial issues. Learn how to recover from debt and begin a fresh financial outlook.

Debt Consolidation

When an individual finds the idea of paying off multiple debts to be overwhelming, debt consolidation is a capable option. Many times a person can be swarmed by credit card debt, unpaid/overdue bills, and personal loan debt. An individual may reach the conclusion that paying off all the debt…is simply not possible.

This financial plan allows an individual to only make a single monthly payment. The debt that has accumulated from several different places and factors is now joined into one payment. This simple restructuring allows the individual to get a better grasp and handle on his or her fiscal situation.

Credit Card, Personal Loan, and other Paperwork

The next step in the process is to meet with a debt consolidation expert. However, before a person takes that step, it’s vital to gather all the necessary paperwork. Get the contact information of all the creditors, and gather each and every necessary document to present to the debt consolidation expert. This is yet another reason to save all financial paperwork.


When this debt option is being considered, it is paramount that an individual have all the proper records and documents of his or her financial debt history. In order to be helped, an individual must first stay on top of his or her financial standing.

Debt Consolidation Company and Debt Strategy

When an individual has found the proper debt consolidation company, he or she can now be advised how to handle the situation. The company will make note of the total debt in all areas, including credit card, personal loan or any other financial hardship. The company will also make note of how much an individual can actually afford to pay per month.

The payment plan will then be constructed around the total debt and the total income. Everyone is unique, so a specific plan will have to be developed and understood. The individual’s debt consolidation advisor will speak with every creditor listed, and will work in conjunction with each one to establish an agreed upon financial plan.

Advice on Reducing Debt: Reduce Debt with Strategic Planning and Money Saving

Advice on Reducing Debt: Reduce Debt with Strategic Planning and Money Saving

Reducing large debts can seem a daunting proposition, but with a little forward planning and prioritising it is possible to save considerable amounts. There are many ways to effectively reduce debt without resorting to debt consolidation companies.

When tackling the problem of reducing debt it is vital to know exactly how much is owed to which creditors and the different rates of interest. The most efficient way to reduce debt is to pay off high interest debts first.

How to Reduce Credit Card Debt

Many people owe money on more than one credit card. If this is the case it is important to prioritise which card the largest amount of money is sent to each month. By paying off the highest interest credit cards first the process of clearing debt is accelerated while interest charges are minimised.

It is vital to communicate with any creditors, including credit card companies. Most companies are happy to discuss alternative ways of reducing debt and may offer alternative repayment plans to suit particular financial situations.

Reducing Car Finance Debt

Shop around for competitive loan rates and consider paying off the remaining balance of a car loan at a lower rate of interest. When buying a car dealers may give the impression that finance has to be taken out with them, but this is not always the case. Do not be afraid to contact alternative finance companies and to negotiate with the dealer for a better rate of interest.

Reducing Mortgage Debt

For most people a mortgage is the largest debt they will ever have. Arranging a mortgage where additional payments can be made (assuming extra funds are available) allows homeowners the opportunity to pay off the debt sooner. Renting out an unused room in the house to a lodger can bring in considerable extra income, which can then be put towards further reducing debts.

Ways to Reduce Household Bills

Reducing monthly outgoings is a great way of freeing up more money to tackle outstanding debts. Simple measures can go a long way to cutting bills. Normal light bulbs can be replaced with more efficient energy saving examples. Ensuring a home is properly insulated means that heating will be required less often and at a lower setting.

Debt Helplines and Charities

There are many organisations and charities which specialise in debt reduction advice. They often have a debt help line which anyone can phone for free advice. An example of this is the National Debt Helpline in the UK. An internet search for debt helpline numbers will return a large selection of results. Likewise, debt help charities are also well represented on the web.

The main aim when reducing debt should be to pay what is owed in the shortest time, while minimising interest charges. Debt consolidation is an attractive proposition for many people, but is best used as a last resort. Although monthly payments will be greatly reduced by a debt consolidation company and they will offer an attractive interest rate the total amount repayable will usually be considerably more, stretched over a much longer period of time. Before embarking on any debt reduction plan it is advisable to consult a qualified financial advisor.

Three Bankruptcy Alternatives to Consider

Three Bankruptcy Alternatives to Consider

More often than not, individuals in dire financial distress can avoid bankruptcy simply by considering any other credit solution. Such alternatives include Individual Voluntary Arrangements (IVAs), debt management and negotiation, and debt consolidation.

Individual Voluntary Arrangement

An Individual Voluntary Arrangement (IVA) is a credit solution that serves as a popular bankruptcy alternative. It involves a formal agreement between debtors and their creditors made through an insolvency practitioner. Arrangements are typically flexible and are based on the debtor’s capacity to pay. Generally, through such arrangements, debtors will be left to pay only a percentage of what they owe and interest and debt charges are frozen.

While its nature is quite similar to bankruptcy, an Individual Voluntary Arrangement gives debtors more control over how their debts will be settled as well as how their assets will be allocated. In many cases, individuals who pursue IVAs will be able to keep specific assets, including their homes. Furthermore, IVAs cost less because there are fewer and lower fees involved.

 

Debt Management and Negotiation

The development of debt management plans also serves to be an excellent credit solution to uncontrollable debt. This is typically a good option for those who have trouble with unsecured debts including those accumulated through personal loans and credit cards.

Through this alternative, debtors typically seek the help of finance experts such as consumer credit counselors in order to come up with a debt repayment plan that suits their specific situation. Upon developing a suitable plan, consumer credit counselors or debt management companies negotiate with creditors on behalf of their clients. If successful, debtors are then left with debt management plans that are more manageable.

Debt Consolidation

Debt consolidation involves taking out a loan to pay off another loan or many other loans. While this can be done through banks, it is often done through debt consolidation companies. Through this option, debtors can cover unsecured loans by taking another unsecured loan but it is often more beneficial to cover unsecured loans through secured loans because of the difference in interest rates.

Typically, debt consolidation is done to gain lower interest rates on the total amount of debt. Sometimes, debtors can also gain fixed interest rates through this option. An additional benefit to this bankruptcy alternative is that debtors need only to make one monthly payment to one company rather than several monthly payments to several creditors.

There are a great many options available to debtors in financial distress. Often, such people will find bankruptcy alternatives to be very beneficial. If they have the capacity to pay, they should seek the advice of a consumer credit counselor or any other professional in the field of finance. Such experts will be able to help them find the best credit solution for their specific debt situation.

New Home Price Negotiating Tips: How to Negotiate Home Prices and Terms with Home Sellers

The following is a guest post from Houston, Texas real estate developer and entrepreneur Tracy Suttles.

Overall Home Price

The most obvious new home negotiation point is the overall home price. When determining the price to be offered for the home, it is best to use the asking price of the home as a last resort. This number is typically just what the owners want to receive for the house and may or may not reflect its actual value. Working with a Realtor, comparables of recently sold homes in the area can be used to determine an appropriate home price. Use an average of homes that are similar in size, design and maintenance level.

If the real estate market in the area is a seller’s market, be prepared to pay top dollar for the home. The buyer may even have to compete with other offers when the offer is made which gives the seller the upper hand in the negotiation process. If it is a buyer’s market, the buyer may be able to make a low-ball offer that is below the perceived fair market value of the home.

Home Sale Contract Contingencies

In addition to overall price, the buyer can also negotiate based on other terms or contingencies. For instance, the sales contract may be contingent on an appraisal of at least the offer, an approved mortgage loan at a certain interest rate and a satisfactory inspection of the home.

New Home Concessions and Terms in Sales Contract

In a buyer’s market, the buyer can likely negotiate additional concessions into the contract such as a carpet or paint allowance or additional sod and landscaping. A buyer may also negotiate a portion or all of the closing costs into the price of the home. For instance, the buyer may make an offer of $200,000 for a home that also includes the seller paying for $5,000 in closing costs. This is in essence offering the seller $195,000 for the home.

Depending on the buyer’s situation, it may be necessary to negotiate certain terms into the sales contract. These terms could include the sale of the buyer’s home before this sale is complete. Or it may include a shortened or extended time before the home is closed.

A sales contract should not be signed unless all terms have been reviewed by both the buyer and the seller. Once the contract is signed, it will be difficult to walk away from the contract without giving up the retainer that was paid by the buyer upon acceptance of the offer. Negotiate the sales price and terms before signing and know that if it is not in the contract, the buyer nor the seller can be held to it.

 

Book Review – The Credit Crunch Cookbook: Delicious Recipes and Clever Ideas for Cooking on a Budget

Book Review – The Credit Crunch Cookbook: Delicious Recipes and Clever Ideas for Cooking on a Budget

There is more to spending less on food than cutting back on takeaway and giving up luxuries like decadent desserts and expensive ingredients. The Credit Crunch Cookbook (Hamlyn) offers a collection of recipes and tips to help singles, couples and families save money in the kitchen by wasting less, being more organised and shopping more efficiently.

Cooking on a Budget

Many householders know that they need to spend less on groceries and meals, but it can be difficult to know where to start to cut back on expensive shopping and cooking habits.

Filled with practical, economical recipes and a large collection of tips for reducing waste, being more organised in the kitchen and saving money when shopping for groceries, The Credit Crunch Cookbook is ideal for those who want to make changes to their spending habits, but don’t know how.

Recipes are divided into three sections covering family meals, entertaining and make-at-home restaurant meals:

  • Budget Basics (light meals, main meals, sweet things),
  • Impress for Less (starters, sides, mains, desserts)
  • Dine In (Italian, Mexican, Indian, Thai, Chinese)

Recipes are easy to prepare, featuring readily available ingredients and easy to follow step-by-step instructions. There are no photos of completed dishes. Recipes are generally suitable for both children and adults and include:

  • Beef and ginger salad
  • Spaghetti carbonara
  • Meatballs in spicy sauce
  • Pumpkin and root vegetable stew
  • Chicken and spinach potato pie
  • Steak and mushroom pie
  • Tomato and green been salad
  • Pears with chocolate crumble
  • Caramelized orange and pineapple

Spending Less on Groceries and Meals

There is more to reducing the grocery budget than swapping to cheaper alternatives for favourite ingredients. The Credit Crunch Cookbook includes a collection of practical and easy to follow tips to reduce food waste, increase organisation at meal times and making sure that meals are prepared efficiently.

Helpful kitchen tips include reducing food waste by using leftovers and planning meals in advance. Writing a menu plan and thinking about the amount of food required for each meal can significantly limit waste and thereby reduce grocery costs. Suggestions for using leftover yoghurt, eggs, potato, rice, pasta, bread and cheese for using leftover vegetables and other ingredients are included.

Other tips include reducing food costs by buying fruit and vegetables in season and storing food correctly in the pantry and freezer. There are hints on how to save money by saving energy and water when preparing meals and tips for shopping wisely.

The Credit Crunch Cookbook encourages readers to be organised as well as economical. With planning, the book advises that it is possible to serve a romantic dinner for two for the same cost as an everyday meal and to feed hungry children and picky eaters without blowing the weekly shopping budget on expensive snack foods.

Save Money by Getting Organised in the Kitchen

Ultimately, the best way to save money at home is to be organised and plan ahead in all areas, including buying groceries and preparing meals. The Credit Crunch Cookbook offers tips for preparing a meal plan to reduce unnecessary grocery purchases and includes a sample budget menu for a weekly meal plan, romantic dinner for two and a dinner party menu for no-fuss entertaining on a budget.

The Credit Crunch Cookbook contains more than 100 recipes and numerous tips for better household budgeting. It is a practical resource for all homes and is an ideal housewarming gift for a new homeowner.

Roth IRA for College Savings: A Great College Investment Vehicle

Roth IRA for College Savings: A Great College Investment Vehicle

If you qualify, earning less than $95,000 for a single filer or less than $150,000 if filing jointly, you likely know the Roth IRA is a great way to save money for retirement. You receive no tax deductions when you fund your Roth account, but your money earns interest tax-free until you retire. Then, if you have owned the account for at least five years and you have reached age 59-1/2, your earnings are non-taxable when you make withdrawals from your savings.

You may not realize that some key features of the Roth IRA and the particulars of college financial aid awards also make the Roth IRA an attractive way to save for your children’s higher education expenses.

You can withdraw Roth contributions at any time

Since you paid federal tax on your contributions at the time you earned them, you can leave your money in your Roth account, earning interest tax-free. Withdraw your contributions when junior enrolls at the university with no tax or penalty and let the earnings rest until you retire.

If you start when your child is still in diapers, you can accrue a tidy sum. The most a couple can invest in a Roth is $8,000 ($4,000 for each spouse). Over 18 years, that adds up to $144,000. Even saving half of that amount, which is a more likely sum for a family that meets the Roth IRA income limits, results in a hefty $72,000.

Roth earnings can be withdrawn without penalty if used for higher ed

Avoid the 10 percent penalty on early withdrawal of earnings from a Roth IRA by using the money for higher education expenses. Remember: withdrawal of contributions are always tax free, but early withdrawal of earnings are subject to federal taxes. Paying taxes on the earnings seems a fair trade off for all those years of tax-free accrual.

Roth IRA avoids the financial aid radar

The formula for determining a student’s and parents’ ability to pay for college usually doesn’t take retirement savings into account. This is where the Roth IRA out performs other college savings plans like the Coverdell Education Savings Account or state 529 options.

Financial aid concerns also reveal the flaw in using the Roth IRA for college savings–distributions from the IRA can count as unearned income and throw a monkey wrench in the following year’s financial aid assessment. The benefits and drawbacks could balance out in the end, however.

Lower income savers get IRS tax credit for Roth contributions

Joint filers with income less than $50,000 receive a tax credit for contributing to any retirement fund. The lower the income, the greater the credit. But even the smallest credit, 10 percent of your contribution that year, is a good return on your investment.

Save for college and retirement in the same account

The Roth contribution limits are likely to continue to increase in future years. Parking both retirement and college savings in a Roth IRA is a one-stop solution for these important financial goals.