Personal Finance

Fed Cuts Interest Rates to Zero – How Does This Affect Your Mortgage, Home Equity Line, and Credit Cards

by

The phones are blowing up all over as news of the Federal Reserve Board’s decision to cut interest rates to between 0% and 0.25% spreads.  Here is what it means to you. First off, this is a strange deal.  The Fed always sets a hard number for its interest rate target.  So, this range thing is a little bit strange.  But, it is basically either 0% or 0.25% depending upon how you want to look at it. Second, although the Fed Funds target rate is an important benchmark for lending, it actually has nothing to do with you or your loans.  Most loans are tied to the PRIME RATE which generally moves in similar ways to the Fed’s interest rate.  Most of the time, when a loan or credit cards specifies the prime rate, they mean the Wall Street Journal Prime Rate.  Here is the thing you need to understand.  Your loan agreement says exactly when it is affected by the prime rate.  So, your loan may say something like, the prime rate as published in the Wall Street Journal on the first Monday of each month.  If that is the case, then today’s move does not affect your interest …

Read More

Great Minds Think Along the Same Lines

by

Unbelievable.  I grabbed my trusty notebook this morning and wrote a post for the Finance Gourmet from one of the many topics I have listed in there.  Basically, I wrote about how actually saving some money is more important than learning all the tricks to investing money, particularly when you don’t have much money to invest in the first place. Then, this afternoon I was (finally) going through my feeds that I had ignored in order to keeps from getting thrown off schedule by the 4th of July holiday and the associated vacation we took, I read this at The Simple Dollar which is pretty much the same concept.  He spends some times showing you the numbers instead of relying on the workout analogy like I did.  Anyway, check it out if you want to see more data.

Personal Finance Basics

by

Like trying to setup a fancy exercise routine before commiting to regular exercise sessions, trying to take on fancy investment ideas before building up solid savings is doomed to failure. Here is how to make it happen now.

Top 10 Fine Print Gotchas

by

Being a smart consumer, or smart investor, or smart anything really is all about knowledge. Understanding the world you are playing in just makes good sense. I can spot most finance scams by reading the title. The reason? I’ve spent plenty of time reading the fine print and have grown accustomed to what fine print goes with that BLARINGINGLY GOOD TITLE! So, without further ado, here are the Top 10 Fine Print Gotchas: That’s Not It One of the most common fine print gotchas is when the really great picture you see isn’t actually what they are talking about. For cars you’ll see a fully equipped XJT9X version in the picture when the ad is talking about the base no-options model. For others, the fine print will point out that the picture is only “representative” of the product, meaning it is pretty much like that, but not just like that. Rebates The one I really hate these days is rebates. Electronic store ads are filled with them. A great deal on a monitor for $199? Sure, but you will pay $279 today. Then, you can get a rebate from the store (but it’s an “easy” rebate) for $40 and then you …

Read More

Free Credit Score at My Credit Union

by

Several years ago when I was a wild-eyed, fresh out of college, computer guy, I got my first “real” job with a local company. The company had around a 100 employees or so which meant that the HR person was the Office Manager. On my first day, the Office Manager went through all the basics with me: payday, W-4 forms, copies of my Social Security Card (or passport), and so on. We also went over my “Benefits.” Now, at the time, I didn’t much understand what benefits were or why I cared (other than insurance and vacation time) but, I understood what the word benefit meant, so I nodded along and paid close attention. One of my benefits was the right to join a credit union. Back in those days credit unions were a little bit tighter in their membership requirements, still it wasn’t too hard to join one. But, since it was one of my benefits, I marched down right away and opened an account. It wouldn’t be until years later that I would understand that the reason my company offered me this benefit was because the credit union offered me another benefit which was the ability to have …

Read More

Avoiding Bad Financial Products

by

As a professional financial planner, I often come across finanical products that are such bad ideas that I don’t even know how (or why?) someone got them to market. Usually the answer is flat out greed. A company willing to make a buck at the expense of its customers is always out there.

A posting over at Wise Bread talks about some of these bad ideas. The one at the top of the list is the new 401(k) credit card / debit card. No doubt, this idea orgininated with the goal of allowing retirees to access their 401(k)s in an easier manner so that they could consider leaving the balance in the 401(k) plan instead of rolling it out into an IRA. (Rolling it out is almost always better – keep an eye out for the coming article on Finance Gourmet.) Now, however, some companies are offering these cards to everyone!

Read More

How to Get a Bonus On Your Tax Rebate!

by

Tax Graphic Ok, it’s official. Pretty much everyone in America is getting a [tag]tax rebate[/tag] this summer. The IRS says they’ll start mailing checks in May. So how would you like to get a nice tax-free bonus on your tax rebate? Here’s how.

Your tax-rebate is part of the [tag]economic stimulus[/tag] package recently passed by Congress and signed by the President. You will get up to $600 per person or up to $1200 per joint couple. You also will get up to $300 per child. That money will be a tax free payment from the government. So how do you collect your bonus?

If you qualify for a deductible traditional [tag]IRA[/tag] contribution in 2008 and you put your rebate into a traditional IRA then you will get to deduct the amount of the contribution. So, if you are in the 30% tax bracket, it’s like getting a 30% bonus in the form of a deduction on your 2008 taxes (which you will file in 2009). If you are self-employed you can accomplish the same thing using your SEP or SIMPLE IRAs.

Read More