Is an Additional Retirement Plan Needed Aside from Social Security?

Many individuals approaching retire­ment age may depend on Social Security as their primary income source. With the things people are hearing about how underfunded the system is, it is not unusual that doubts abound on how secure our Social Security really is.

The most estimable matter that anybody can do is offer an opinion on the financial competence of the Social Security system.  As of now, those who are already receiving benefits will be covered to the extent of the government's capacity.

The potential problems for them are twofold: first off, inflation can easily devaluate any fixed income retirement plan. Social Security has a built-in cost-of-living adjuster, but any extended inflationary cycle would almost certainly involve necessary modification. This can happen if the government is deficient in funds to override double-digit inflation. Second, the trend in Congress is aimed at shifting costs, such as Medicare, to the recipients and taxing benefits at a later date. Either of these can create mayhem when you're living on a limited income.

If a married retired couple will both be living off on retirement benefits, and one faces death, the survivor may have to deal with inade­quate income to fund the daily needs. It would be best to have another income source, such as a part time job and formulate a sav­ings plan that could eventually provide extra income outside of Social Security.

For younger workers just getting into the system, the future of Social Security cannot be fully depended upon.  If there will be fewer new workers contributing to the sys­tem, and recipients are living longer, this would cause a big problem if not remedied by the government.  It is almost certain that retirement ages will be pushed back, and benefits will be cut down beyond in a few decades from now. In 1935 the system started with seventeen contribu­tors for each recipient. By 1980 it was seven to one, by the year 2000 about four to one. If this trend stays, by 2025 there will be only two contributors for every recipient.  The worse that could happen is that, the system will be bankrupt earlier than expected. It is just sensible for anyone to have an alternate retirement plan.

The Best Options for Long Term Retirement Planning

© 2011 Athena Goodlight

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What is Homeowner’s Insurance Policy?

A homeowner’s insurance policy is a comprehen­sive insurance program that covers the home, its con­tents, and any liability linked with the property. Typically, a homeowner’s policy is the least expensive way of insuring a home.

Individuals or families, who buy a house, will most likely be offered a fire insurance policy by the mort­gage company. First time homeowners may not be aware that there are other options. More often, they will not be informed either. Later, they will discover that they could have bought a homeowner’s pol­icy for nearly half of what was paid. It pays to do some research.

What options are available in homeowner’s insurance policies?  READ MORE

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Debt: How to Get Out of It

When you have overspent for the last three or four years, chances are it would eventually catch up with you. You may go through bill consolidation loans, loans from parents, and equity loans. Still you might find yourselves unable to pay the bills again. Added to that, you may also have overdue credit card bills, but still are using credit cards just to live month by month. How do you get out of this mess?

One of the simplest economic principles ever written: "If you don't borrow money, you can't get into debt" The second simplest economic principle is, "If you don't borrow any more money, you can't get further into debt"

Read more:  Start Getting Out of Debt Now



 

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Difference Between Banks vs. Owner Financing

It can often be difficult to get a loan from banks, this is among the reasons why owner financing is growing in popularity among real estate buyers.  Among the many benefits of owner financing, the seller often accepts a lower down payment as compared to banks who often charge 20% or even more.  Additionally, several owner financed properties can be obtained without a credit check.  This is particularly good for anyone who has a few flaws on his/her credit report, which causes banks to charge a higher than regular interest rates.  An individual, or real estate developer, who is in the business of providing owner financing will likely extend financing to anyone who agrees to keep the payments current.

In recent years, the internet has become a hub for owner financing properties while also providing plenty of lending opportunities for anyone who wishes to apply for a loan from banks.  Currently, a lot of the major internet auction sites have a category that is specifically designed for buying and selling real estate.  These categories are more often used for owner financing options related to land purchases, but buyers will find a few homes sprinkled in now and then.  From a mountainous retreat to a tropical island paradise, there is owner financing for land in these and other areas.

Customers who wish to apply for loans from banks will find a variety of credit and loan resources online.  These sites offer a customer the ability to have banks competing for their business.  According to these sites, offers may begin arriving within hours.  Not everyone will be approved, however, as there are a number of deciding factors that banks look at when deciding to extend credit.  Among them, the customers credit history, debt to income ratio, ability to repay the loan and the presence of regular income. 

Loans that are obtained through banks will require documentation, which may include previous 2-3 years of tax returns, current pay stubs and/or proof of employment.  If they own land, individuals who are interested in buying or building a home will find that they have more success with banks.  The reason is because the land will become partial collateral for the loan and, if the buyer defaults, banks will foreclose on both the house and the land.  In addition, many land owners do not have to come up with the money for a down payment as the equity in their land will serve as the down payment.

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Divorce and Life Insurance Fine Print

 Did you know that your life insurance policy could nevertheless cover your ex even if you two are already divorced and no longer like to be a part of each other's lives? Insurance policies have many fine writing when it concerns this. You don't want to neglect your insurance decisions since it may end up making you pay more than you think. The divorce laws vary for every state, so you'll want to check into what it means for you and your spouse, because you might find yourself in the midst of some expensive ramifications. If you have a good insurance broker, you might be able to protect yourself from this. You'll want to make certain that you think carefully about your insurance choices when it comes to your mate...READ MORE>>>

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How to Maximize Your Home as an Investment Asset

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Is your home a valuable asset or a liability?

With the present economic crunch, many homeowners are left thinking if their house is a wise investment or merely place to stay. Is your home a valuable asset or a liability? Here are some of the major concerns of homeowners and tips on what they can do with the property given the present economic situation.

Is my home more of an investment or a liability?
Although your home can be considered your most valuable asset, it is unlikely to deliver greater gains in the long run as compared to investing in a diversified portfolio of stocks and bonds. This has been held true even before the drop of real estate values. Over the past two decades – including the period of the real estate investment growth—the average gains of home prices are just about 3.6% per annum as compared to stocks, despite their recent drops, were up 8.4% about the same period.

The Long-Term Advantages
There are, however, other important financial benefits of owning a home. A homeowner can benefit from tax breaks. These are deductions for property taxes and mortgage interests (plus, the first 500,000 that couples make after selling is tax-free). Owning a home could also be counted as an ideal savings tool— with every mortgage payment, you are forced to set aside money, thus keeping your savings intact in form of a tangible asset. This is also the key reason why most homeowners have a higher net worth than renters. Throughout history, real estate has been considered a good hedge against inflation.

Additional Tips
If you plan to resell your home in the future, don’t overspend in renovations, you might recoup when you sell. Instead, focus on fixing its problems and invest in projects that add functionality to the home.

Be realistic about your gains. In the long run, the value of your home can have an expected rise of about one to two percentage points over inflation.

© 2010 Athena Goodlight

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Being a Personal Loan Co-signer

Being a co-signer on a personal loan for a friend or a relative is a very benevolent offer as it will likely mean the difference between them being able to qualify for such a loan and not being eligible. However, the decision of being a co-signer for a personal loan should not be taken lightly. It is the responsibility of potential co-signers to educate themselves about how this situation affects them, especially with regard to their responsibility to the loan in case the borrower default.

Most co-signers don’t realize that this loan is going to show up on their credit report. Keep in mind that this might affect your ability to get your own loan down the road as the personal loan you co-signed on with by used to calculate your debt to income ratio. It can also affect the interest rate you get your own loans at. If you feel it is a good idea to co-sign a personal loan for a friend or family member, do so with the understanding that after a set amount of making on time payments the borrower will attempt to redo the loan under their own name only. The more money you co-sign for, the longer you can expect to be a part of that loan.

Since the loan can both positively and negatively impact the credit rating of the co-signer it is important to set the loan up so that they co-signer can access the account information. This will allow you to find out what has been paid on the loan and what is still owed. Make sure the lender will inform you of any late payments or non-payment issues with the borrower as soon as they happen. Too often co-signers aren’t aware there was an issue with the loan until it has already impacted their credit.

While co-signing a loan for a friend or family member can help them, be aware of how it will affect not only your credit but your relationship as well. Nothing can sour relationships faster than money issues. It is important for a co-signer to look at the circumstances that lead to the individual needing one in the first place. If it comes down to simple money mismanagement, then you aren’t doing them or yourself any favors. However, it is the result of circumstances they had no control over you may want to consider it.

To minimize your risk as a co-signer, don’t make it habit of offering to do so for friends and family. The word will spread like wildfire with more requests heading your direction. If you don’t feel your own credit and finances can’t hold up if the borrower doesn’t repay the loan, then do not co-sign for a personal loan. It can be difficult to say no, but it is important you are able to.

You might consider having the borrower provide your with verification that payments are being made including regular statements or canceled checks. To further reduce your risk as a co-signer insist the borrower purchases personal loan insurance that can cover loan payments for a particular amount of time due to unemployment, illness, or death.

Co-signing a personal loan for someone is more than giving your signature. You are putting your financial history and worthiness on the line for that person. It is important that you carefully review the borrowers need for the money as well as their spending patterns. If they owe other people money or continually live beyond their means, walk away with a clear conscious. There are times that being a co-signer on a personal loan is the right thing to do. Only you can make that decision. If you decide to go forward with it make sure you can afford the cost of any missed payments and that the lender is going to keep you informed on the payment status on the personal loan.

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