Champagne Taste on a Beer Budget – Do You Live Beyond Your Means

It was not that long ago that the prospect of any major purchase, be it a new home or car or even a television set, was a major consideration for the average American. Savings, careful budgeting, and sacrifice were the name of the game. Then came credit and everything changed. Today, wanting something new is and having it is as easy as pulling out a small plastic card and worrying about the repercussions another day.

It’s a slippery slope however and habitually buying that which you cannot afford has a major psychological effect on a person who soon becomes “unable” to cut back on their style of living. We’ve all heard the term “champagne taste on a beer budget,” but how do we tell if that is the case for us?

Here are five hints to help you find out:

You Know What an Overdraft Fee Is Because You Routinely Pay It

There is really no excuse to overdraw on your bank account. If there is no money there, then don’t use it. However, if you have absolutely no idea how much money is in your bank account and/or cannot get through another billing cycle without taking the risk that there won’t be any money, it’s probable that you are living beyond your means.

You’ve Had to Skimp on Essentials

Ever eaten Ramen for a week straight because you didn’t have the money to buy food until your next paycheck? What about choosing between paying the rent and paying for your car? These items need to be the first on your list of bills and yet when people saddle themselves with too much credit card debt they are the first to go. Your living expenses need to be covered before any luxuries and if you still cannot afford them, then it’s clear you need to reevaluate your lifestyle choices including the car you drive or the place where you live.

You Cannot Remember the Last Time You Used Cash for a Purchase

If every pay check you get is already spoken for, that is, there is no cash left after all the bills are paid, then you have a problem. Not only are you failing to save for your distant future, but in the event of an emergency you are dooming yourself to just take on more credit card debt.

You Use Debt to Pay Debt

While credit card companies make it alluringly easy, using cash advance or balance transfer

Securing Your Financial Future

What Have We Learned From Madoff?

It has been a few years since the investment mogul, (Bernard Madoff), was caught in the midst of what has been stated as the largest and most elaborate Ponzi scheme to date. As a result of his demise, the world received an eye opening experience of the U.S. financial community. Now, more financial scams are finding their way into discovery because of the careful eye of the now informed consumer. Nonetheless, there are those who have not really caught on to what the signs are that indicate the possibility of a rip off.

There are underlying indications that, if they are not noticed, can lead the unaware investor down a path of great displeasure and loss. Whether you are a young investor or a soon to be retired person there are ways that financial advisers attempt to take advantage of an investor so they can earn more money. What is needed before entering into any type of agreement with a financial advisor or even an insurance agent is to ensure their credibility and their track record. Stating this means, just because someone has a series of letters behind their name does not mean they are what or who they say they are. In the case of a financial advisor, they should hold a registration with either the SEC, (Securities Exchange Commission), FINRA, (Financial Industry Regulatory Authority) or CFP, (Certified Financial Planner board), to name a few.

Questions to Raise

When dealing with an investment broker, advisor, or agent, how certain questions are answered can point out reasons not to work with those individuals. For instance, asking them what methods of compensation they work with, fee-based, or commission, as such if they outright refuse to discuss or even hurry through their explanation, this gives just cause to walk away immediately. The thing to keep in mind is that as an investor, you are the boss, which means, that the adviser works for you and should be completely transparent about how they are compensated for their services.

Looking into this aspect further, if they receive payments via commissions from selling products they need to prove there is no conflict of interests. What may occur is they would try to entice an investor to spend money on something that provides a higher commission for them. This is one issue when dealing with brokers or advisers that work with third party entities. It

Mortgage Insurance Should Be Included With Every Mortgage

Just like when we are born, nobody knows when we are going to die. It is a fact of life and eventually will happen to all of us. When someone is financing a large home purchase, they should put mortgage insurance on it for many reasons.

Even if someone is in the best of health, they could die today or tomorrow. The next day is never guaranteed to us even if we have plans. Doctors cannot be entirely certain that something will not happen even if you visit them every single day.

They do not run tests unless they believe there are issues. Many people are born with aneurysms and do not have any symptoms until the day that is ruptures. When this happens, the chance of survival is very slim. If a person does survive this, it is likely that they will have much impairment and will not be able to work.

Mortgage insurance is going to help the family pay for this home. If a person dies, their family will not have to worry about coming up with a mortgage payment each and every month or have to worry about getting evicted from their home. It is something that people do not think about every day though.

Tragedy can strike on any day at any time without warnings. Accidents are not planned either. If someone gets hurt and cannot work for a period of time, the mortgage insurance is going to take over the payments on the mortgage until that person can return to work.

Mortgage insurance does come with a small cost, but without it, there are not guarantees for the future of the family if the person that holds the mortgage passes away. An average mortgage is for 30 years. This is a long time to guarantee that someone is going to be alright.

Cancer does not choose its victims based on a certain race, a certain income level or anything else. Some people do not know that they have it either. Having any kind of insurance can take the burden off from everyone in the family in most cases.

Even if someone has life insurance, it is not always going to cover the cost of the home if they suffer a heart attack. There are a lot of things that need to be considered. Choosing the right insurance can be very important.

Not everyone is going to use this insurance. People never know

The Market Is Nervous – Are You Nervous

Okay, so 2014 stock market has gotten off to a shaky start. There have been several down cycles – one after another. Memories of the market melt-down of 2008 are surfacing. It’s funny how the painful memories are so much stronger than the pleasant memories.

But let’s recall a few of those memories – painful and pleasant. The downward slide was scary – not knowing where the bottom was. It took nerves of steel to stay the course.

As a financial advisor, I told my clients, you can get out of the market if you want. You can sit on the side lines in cash – just let me know when you are ready to get back in. And remember this, market recovery comes in spurts. It isn’t a straight ride up. It is jerky and erratic. But you have to be in the market to benefit when it is on the upswing.

You can follow the indexes like the Dow Jones or the S & P 500 over several decades. You will see that each decade had at least one major decline of 15% or more. While the markets fluctuated after the declines, the declines were often followed by meaningful recoveries. (There is no guarantee this will be repeated.)

So all this statistics is head knowledge. It can calm your nerves to an extent. Experiencing a few of the market swings helps carry you the distance.

I found my clients with more investment experience were calmer than ones who had only experienced the thriving 1990′s and limited recession of 2001-2003. Ones who survived the depression or the recession of the 1980′s had nerves of steel. The same response was coming from the money professionals. A young money manager said she was glad for the dinosaurs in their company who calmed the waters with their vast experience. “This too shall pass.”

Can You Time The Market?

In the market downturn, I heard clients say, “I wish I had some cash to invest.” Yet those with cash were asking “Are we at the bottom yet? Is it over?” So when is the right time to get in the market? The best financial advisors don’t get it right 100% of the time. One Fund Company advisor laughs at efforts to time the market. His focus is on tried and true fundamentals – that has more weight with the success of a fund.

What about the average investor? What can they

Mortgage Insurance – Understanding the Benefits

With economic struggles, job loss, injury and accident, financial institutions are taking steps to make sure that should something happen to their customers which results in non-payment of their loan.

This is understandable and beneficial to both the customer and the financial institution. The financial institution guarantees most of the outstanding loan, while customers can enjoy a host of benefits, offering them happiness when investing in property.

Mortgage insurance offers added security to a lender. A lender will do the necessary checks on all customers to make sure that they can afford to repay the amount they borrow, but this is extra security for them that should something happen, they will receive most, if not all, of the outstanding balance.

For anyone looking to buy a home, whether it’s a first time buyer or someone who is looking to upgrade or downsize, taking out mortgage insurance can help reduce the down payment. The advantage to this is that in most cases a sizeable down payment secures the financing needed.

When you’re looking at a new home, you have so many expenses to take into consideration. There is the down payment, which in some countries is around twenty percent of the total home value, there is the cost of the move and then you have to still budget for the monthly repayments on the loan. In some cases, coming up with a sizeable deposit is exceptionally difficult and you would rather get your foot on the property ladder and not paying a rental to someone else.

In these cases mortgage insurance is beneficial, enabling you to secure the financing you need with a smaller and more realistic down payment based on your steady income.

This level of insurance is affordable and is often required by lenders for purchasers that want to pay a down payment amount less than the accepted percentage. This eliminates risk for them and also ensures you get the home you want without having to find extra cash to make up the required down payment amount.

In addition to this, mortgage insurance can increase your purchasing power. If you have a set amount set aside for a down payment, the home you can afford determines the cash amount you have ready. Taking out this level of cover, enables you to look at properties at a higher price bracket because you don’t have to meet the set percentage down payment criteria.

Another benefit is that you only