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Many people are struggling to make ends meet today and are worried about being able to save for their children’s college education.  Being able to go to college and earn a degree is becoming more and more important in today’s job market and it stands to reason that a college education will be even more important for obtaining a job when your children are old enough to enter the job market.  As a parent, you want your children to have the best in life and have all the tools that they need to succeed in the world on their own.  Being able to save for your child’s college education can go a long way towards giving your child an advantage in life.

Different Ways To Save

There are a number of different ways that can be used for saving for a child’s college education.  One of the most popular ways to save for college is to put your money into a 529 college savings plan.  Once the child is ready to go to college, the money that has been placed into the savings plan can be used to pay for the tuition to the college.  The rules of the 529 college savings plan will dictate exactly how the money may be used for college expenses and these limitations will be disclosed before the person decides to place any money into the plan.

Other people choose to open interest bearing savings accounts for the money that they are trying to save for their children’s college education.  These savings accounts may have a low rate of return, but the money that is saved in these accounts can be accessed at any time and can be used to pay for whatever it is needed for, including food, books, or dormitory furnishings.  The parents can also dictate how much money will be placed into the account at any given time, contributing more when there is additional money coming into the household.

Even people that do not make a lot of money can save for their children’s college education.  By placing $25 per month into a savings account for each child, a parent will be giving them a head start on their future that will be greatly appreciated.  When it is time to apply for college, applying for scholarships may take care of a portion of the tuition costs, meaning that the student will be paying less for each semester of college and may even be able to offset the costs even more by working part-time. Having these savings in reserve for the amount that is not covered by other methods will ensure that the student has enough financial backing to pay for their education until they receive their degree.

By now, everyone has heard of someone or has read about someone that has been affected by the mortgage crisis.  There is enough blame to go around for many different players in the mortgage bubble that collapsed, taking many people’s home equity away with it, but the truth is that many of the foreclosures that have been seen were because the person took out an exotic mortgage loan to finance a house that they could not afford. 

In the buying frenzy of the moment, many of these people opted for adjustable, teaser rate loans with the belief that they would always be able to find a buyer to purchase the home for more than they had paid for it and they could get out from under the mortgage loan before the interest rate reset to a higher rate.  When the mortgage bubble collapsed, many of these people found themselves stuck in a home that they could not sell and owing much more on the mortgage than they could possibly afford.  The result was that a wave of foreclosures swept across the nation, leaving the banks owning many of the homes that they had signed loans for just three or four years earlier.

If you are in the market to purchase a house today, there are some rules of thumb that you should follow to make sure that you do not find yourself in the same trap:

1.  The 30 Year Fixed Rule
Many of the people that are in trouble with their mortgages today chose adjustable rate loans so that they could purchase a larger house with less money down and lower initial monthly payments.  Honestly, if you would be unable to afford the mortgage payments at the 30 year fixed rate for the loan, then you should not be buying the home because the price of the home will place an economic hardship for you.  Because the 30 year fixed rate loan is considered one of the most reasonable loan products available for mortgage loans, this is the type of loan you should be pursuing when looking for a mortgage loan.

2.  Do Not Purchase A Short Term Home
Although owning your home would seem to be an attractive solution in any case, purchasing a home to live in it for a short period of time can be a tremendous waste of money.  If you are not planning on being in the home for at least 7 years, then the fees that you have paid for the purchase of the home and the fees that you will pay for selling the home and for paying off the mortgage loan early will erase any monetary gains that you have made while staying in the home.  Add in the cost of repainting and repairing everything that is needed to get the home ready for sale and you may be losing a great deal of money by moving out of the home within a short period of time.

3.  Be Aware Of The Fees That You Are Paying And Why
As many of these foreclosures and personal bankruptcies work their way through the court system, many people are finding that the fees that they were charged for their mortgage loan were well beyond and above what they should have been paying in fees.  Some of the brokers originating the loans were adding additional fees into the loans as vague entries in the hopes that the person signing for the loan would not notice.  Make sure that you know about each of the fees that are being charged on your mortgage loan and what they are for.  If you do not know what a fee is for or why it is the amount that it is, do not sign the documents until all of your questions have been satisfied.

One of the biggest problems that is facing the nation today is the amount of unnecessary debt that many people have accumulated over the last decade.  Many people have wasted a great deal of their money on things that do not retain any value, such as the latest electronic devices, expensive fad fashions, and luxury vacations.  Some of these people believed that they had a personal ATM in the equity in their home while other people believed that they could keep charging things to their credit cards, forgetting that all of those purchases will have to be paid for eventually.  Now that credit limits are being reduced and home equity loans are more difficult to obtain, people are finding that they are having a hard time coming up with the amount of money they need to maintain their current lifestyle.

By avoiding many of the traps that trick you into obtaining debt that is unnecessary, you will be able to save quite a bit of money each month to put towards paying off credit card balances or other living expenses.  It is easy to identify the tricks once you know what they are and you will be able to see them used in various ways depending on where you are at and what you are doing at the time.  Many retailers use a number of different tricks to get you to purchase more than you intend to and other businesses have their ways of extracting more money from you as well.

1. Avoid Paying Extra For Convenience
One of the traps that many people pay for is the convenience of doing things just a little bit faster or making it a little bit easier for the person to do.  A perfect example of this is paying ATM fees for withdrawals from your bank account because you went to another bank’s ATM.  For most people, there are enough bank branches near their home or place of employment that if they planned their purchases carefully, then they would never have to use the ATM of another branch resulting in fees paid to both banks.

2.  See If There Are Items You Can Eliminate From Your Daily Life
Many people have items that they pay for every day that they do not even calculate as a drain on their finances because the day to day cost of the item is so small.  For example, a person that purchases coffee at the neighborhood coffee shop for $2.50 each day could save themselves $625 per year by brewing your own coffee at home and bringing it with you to work in a reusable travel mug.  Bringing your lunch to work each day instead of purchasing lunch at a fast food place or casual restaurant could help you save more than $1,200 over the course of a year.

3.  Make A Shopping List Every Time
Retail stores are experts when it comes to convincing people to purchase more than they really need or came in to get.  In order to help you resist the temptation to purchase more items than you wanted to buy, you should make a shopping list of the things you want to get prior to going into the store and stick to the list while you are in the store.  By only purchasing the things that are on your list, you will save money by avoiding impulse purchases and will not have additional things in your home that you do not use or use infrequently.

As the economic downturn continues, many recent college graduates are having a difficult time finding jobs that pay well enough to allow them to live comfortably and begin to pay off their student loans.  Depending on the school that the student was attending and how long they had been in school, many of these students find themselves owing tens of thousands of dollars to the student loan companies after they have graduated.  In order to minimize their losses, many student loan companies have become aggressive in their tactics to recoup the money that they are owed on student loans before their borrowers start to default on their student loans.

As the price of secondary education has become more and more expensive over the years, more and more people have turned to student loans in order to finance their college degrees.  Because a college education is such an important part of getting hired for the best positions today, many people see obtaining a student loan to pay for college as their only option for getting ahead in the world.  Thousands of recent high school graduates and people interested in furthering their education sign up for student loans each year.

So How Do You Avoid Getting In Over Your Head?

A good rule of thumb to remember is never apply for more in student loans than you would make as a salary in the first year of a job in your field.  If the beginning salary for a typical position in the field you are earning a degree in is $35,000 per year, then you should try to restrict your borrowing to less than $35,000.  Many people accomplish this by using money from other sources, such as a job or a gift from their family members, to pay the rest of the balance that is due to the university.

By holding the amount that you are borrowing from the student loan company to the amount that you should be making in your first year of employment, you will be ensuring that the loan payment for the student loan will not be an unmanageable percentage of your income.  This will increase your success at building your life after you graduate from the university because you will be able to focus on other areas of your life, such as housing and transportation, rather than spending all of your money paying back student loans. 

The money that is obtained from student loans should go towards your education and little else.  Many student loan companies would be happy to loan you more money than you truly need for your tuition so that you can pay for your books, your food, and your lodging as well, but you must remember that every dollar that is obtained from a student loan will be charged interest and will need to be repaid in the future.  You do not want to sacrifice your future comfort so that you can live well on campus today by applying for more money in student loans than you actually need.

It can be difficult for a person to know whether the time is right for refinancing their home and refinancing at the wrong time can cost the person a great deal of money in the long run.  Deciding whether the time is right for refinancing your home will depend on your financial situation at the time, the financial climate of the country, and the reason for the refinance.  By taking all of these things into consideration, you will be able to determine whether refinancing your home is the right solution at the appropriate time.

Your Financial Situation

Many people choose to refinance their homes because they are in a dire financial situation and they need to extract themselves from the situation as quickly as possible.  Although this may not be the best reason for refinancing your home, it is an option for obtaining a large amount of money fairly quickly to handle emergency issues that you would not be able to take care of any other way.  If you are not facing a financial crisis and you do not really need the money for anything important, it is best to leave the equity in your home where you will not be paying interest on it to a financial institution.

The Financial Climate

Some people choose to refinance their home because the financial climate of the country has changed and they are able to get a better interest rate on the new loan than they have on their current loan.  Refinancing into a lower interest, fixed rate mortgage loan can save the homeowners thousands of dollars over the life of the mortgage loan, but only if it is done in the correct way.  The difference between the interest rates will need to be more than just a few percentage points apart, there should still be a significant amount of time left on the life of the original loan, and the fees associated with obtaining the refinancing should not be so much that it negates the financial gain of obtaining the loan at the lower rate.

The Reason For The Refinance

Some reasons for refinancing your home are better than others.  If you are refinancing to obtain money to remodel your home, that is great because you are reinvesting in your home by using the money to improve your residence which will increase the value of the home.  Refinancing the home to take an expensive vacation is a bad idea because you will have nothing to show for the money that you have spent except memories and you will be paying off the money that you obtained for a much longer period of time than if you had used a credit card.  It is important to make sure that you use the money for a purpose that makes the interest rate for the money and the length of time that it will take you to pay off your house worth the result.

Anybody that has been watching television in the last few years have seen a commercial for a newly created financial product called a reverse mortgage.  These products are geared towards seniors and the commercials are very vague about what a reverse mortgage is, other than stating that it will get you the money that you need.  Although the commercials for the products state that they are a good way to obtain additional financing, many people believe that the reverse mortgage was created to prey upon the vulnerabilities of senior citizens who are often living on fixed incomes and provide a way for financial institutions to drain the equity out of a homeowner’s house.

What Is A Reverse Mortgage?

A reverse mortgage product allows a homeowner to take equity out of the home in the form of a lump sum payment or several equal payments spaced out between specified periods of time.  There are no restrictions on what the money can be used for, although many of the people that obtain the loans use the money for their living expenses or to fund a major project that they are having completed.  The amount of the loan is based on the amount of equity that the homeowner has in the home at the time of the loan and only certain percentage of the equity can be obtained through the reverse mortgage process.

Only senior citizens that are homeowners and have a significant amount of equity in their homes will qualify for a reverse mortgage.  In fact, a person is not able to apply for this type of mortgage product unless they are at least 62 years of age and if the person is older, they will qualify for a higher loan amount than if they were closer to the age of 62.  There are no payments due on the loan during the lifetime of the homeowner unless they decide to transfer ownership of the home, at which point the entire principal and interest of the loan becomes due.

What Are The Negative Aspects Of A Reverse Mortgage?

One of the biggest negatives associated with obtaining a reverse mortgage is the huge fees that are charge for originating the loan in the first place.  Because there are no payments due on the reverse mortgage until the home has transferred ownership, there is no way to tell how long the loan will be in effect, which could be many years or only a few months depending on the circumstances.  In order to ensure that the financial institution will make money on the reverse mortgage, they will charge high fees and take them out of the initial payment to the homeowner.

Another negative aspect of the reverse mortgage is that in many cases, the financial institution ends up holding all of the equity that was in the home, effectively preventing the homeowner from leaving the home to another person in their will.  People that do not have any close relatives or do not intend on leaving their home to a family member after they have passed on may be okay with this, but people that would like to leave their home to their children or their grandchildren will find that whoever they leave their home to will owe a great deal of money to the lending company when the home changes hands.  Whether a reverse mortgage is right for a person depends on their situation at the time and what their plans are for the future, but it is important for the person to take all of these things into consideration when deciding if they should take out a reverse mortgage.

According to a recent report the majority of credit card holders in the UK who have rewards based credit cards are more interested in the type and level of rewards that they receive from their credit card than in the rate of interest and other fees that are charged on the card. It is estimated that around 50% of rewards based cardholders are more interested in what they can earn on the card rather than on how much interest they are likely to pay.

This could be because many of those with rewards based credit cards tend to clear the balance within the interest free period anyway, which means that the APR charged will not affect them, as they are able to avoid paying interest charges. Those that plan to spread repayments on their credit card balance should look at other options, such as a 0% purchase credit card, as otherwise the interest that they pay will far outweigh the rewards that they earn on the card.

One industry official stated: "Credit card rewards programmes clearly remain an important element in attracting and retaining card customers. However, consumers need to ensure they choose the right programme to suit their spending habits and lifestyle. Issuers need to understand that consumers want more control in redemption but the trade-off is that rewards programmes do not have to be as rich in benefits as they have been. I think we’re entering a new era for rewards programmes in the UK and many of the traditional propositions need radical review."

There are many different types of rewards based credit cards on the market, and consumers are urged to find the one that best meets their needs, and offers rewards that they will use and find valuable.

Risk is something that everyone will experience when trying to plan for their financial future.  Many things that have to do with finances are uncertain from year to year, making it difficult for a person to predict how events will affect their financial stability.  Sometimes, circumstances beyond the person’s control can wreak havoc on their financial planning, such as an illness or death in the family or the loss of a well paying job, but in most cases, predictable events have the greatest effect on the person’s financial situation.  By reviewing these predictable events and adjusting your finances before these events come into play, you can effectively manage the risks you are taking with your financial future.

Now, not all risk is a bad thing when planning for your financial future.  Taking some risks with your finances can help them to grow more quickly, such as purchasing good stocks in the stock market, but the trick is knowing when to hold on to the risky assets and when to reduce the risk to prevent the devastation of your account balances.  Managing the risks that you are taking can be difficult and many people will make a few mistakes before they get the hang of managing their risk effectively.

How Much Risk Should You Be Exposed To?

When planning for your financial future, the amount of risk you should be exposing yourself too should be directly related to your age at the time.  Workers that are younger can accept more risk into their financial planning because if the deal goes bad, they will have more time to replenish their finances before retirement.  As a person becomes older, the level of risk that they are exposed to should be reduced until there is virtually no risk to their finances in their retirement years.

If a mistake is made and the person finds themselves facing a large loss, the answer is not to take on more risk to try to recoup their losses quickly.  People that choose to go this route almost always find themselves facing significantly larger losses than they began with.  The correct reaction would be to chalk up your losses as a learning experience and reduce the amount of risk that your finances are exposed to until you have rebuilt your accounts to their previous levels. 

In order to manage your financial risk successfully, you must do your research before making any major financial decisions.  Do not buy a stock without researching the company simply because someone has told you that the stock is hot and you will obtain a sizable return on your investment.  Stocks that rise fast can also fall fast, taking your financial stability with it if you have invested too much of your money in the company.  Take the time to weight the pros and cons of each financial decision and that way, you will never really be surprised by the outcome.

Refinancing your home is an important decision that can have many negative consequences if the timing is not right.  If you are considering a refinance, it is very important that you take some items into consideration before making a final decision on whether to refinance or not.  Refinancing a home loan without taking into consideration whether the timing is right can cost you thousands of dollars in penalty fees and interest payments over the life of the mortgage loan.

1. The Reason For Refinancing The Loan
Refinancing a home loan for certain reasons is always a bad idea and you should avoid falling into these traps at all costs.  A home loan should never be refinanced to pay for an expensive vacation or to pay off credit card debt so that you can charge more items to your credit cards.  Using the equity in your home in this manner is a phenomenal waste of money and if you cannot pay for these items in any other way, it is a good bet that you should not be going on the vacation or purchasing any more items that are not absolutely necessary.

2.  How Interest Rates Are Moving
Right now, mortgage interest rates are steadily rising in all parts of the country and the type of mortgage loan product that you currently have will determine what steps you should take next.  If your current mortgage loan is a traditional, fixed rate loan then it may be cheaper for you to stay in your current mortgage to prevent your mortgage payments from increasing due to the higher interest rates.  However, if you took out an adjustable rate mortgage loan to pay for your home, it may be best to try and refinance into a fixed rate mortgage to lock in the current interest rate and mortgage payment before the rates rise further.

3.  Length Of Time You Will Be In The Home
A home loan should only be refinanced if you are planning on staying in your home for at least five more years.  Any length of time shorter than that and you will find yourself paying the mortgage company hefty prepayment penalties for paying off the loan early, often costing thousands of dollars.  The prepayment penalties required for getting out of the loan will take away from the amount of money you will have for placing a down payment on a new home, not to mention the fact that you will be giving a great deal of money to the mortgage company for nothing.

By thinking about these items before you decide whether or not to refinance your home loan, you will reduce the risk of refinancing at a bad time and losing thousands of dollars on the deal.

Purchasing a new car is a major decision with long ranging financial consequences, so it is very important to learn all that you can to get the best deal that you can when shopping for new wheels.  There are a number of different tips that should be followed when shopping for a car to ensure that you are not being taken advantage of and that you are paying a reasonable price for the car that you want.

Tip #1 – Choose Your Price Range Before You Start Shopping
Many people make the mistake of deciding how much they can spend based on the car that they desire or are looking at in the dealership at the time.  These people often find that they are paying more than they can afford for the car and have to cut back in other areas of their lives to meet their car payment obligation.  A car payment should never exceed more than 20% of your monthly income, so calculate what about 15% of your monthly income would be and use that as a limit for the monthly payment for the new car.

Tip #2 – Do Some Research Before Heading To The Dealership
Before going to a dealership to begin looking at cars, try to do some research online to determine what cars you may be interested in and which cars are within your price range.  This will save you a lot of time from going around from dealership to dealership looking at many different cars in many different colors and trying to compare them when they are in different places.

Tip #3 – Review Several Prices For The Chosen Car Before Negotiating
Car dealerships are in the business of making money and most good salespeople can smell a sucker from a mile away.  Review the listed price of the car that you have chosen on the websites of several different dealers before negotiating with your salesperson and take advantage of the payment calculators that are can be found on a number of different websites.  This way, you will have a better idea of how much the car should cost and how much your payments should be each month.

Tip #4 – Look For Deals On Cars Or Financing
In today’s competitive market, many car dealerships are offering special deals on their cars or on financing their cars in order to draw more people into the dealership.  Sometimes, these deals are very good for the customer because the dealership is trying to get rid of vehicles that they have ordered too many of.  Be sure to look for deals in the advertising of dealerships that are nearby because you may find that you can get the car that you want for a lot less than you would have otherwise. 

Tip #5 – Be Sure To Test Drive The Vehicle Before Purchasing
You would be amazed at the number of people that purchase a vehicle without first test driving it.  Test driving the vehicle will show you if you will be comfortable driving the car, how the car handles, and how the engine of the car performs   People that do not do a test drive before purchasing the car often find that they do not like the way the car feels when they are driving it and often end up spending more money to get out of that car and into another one within the next two years.