There are many different kinds of investors out there.  Some do it themselves from start to finish, spending hours researching investment opportunities and making buy and sell decisions on their own.  Others simply glance at statements as they arrive in the mail, and hire money managers to make decisions on their behalf.  There are many different styles of investors and all of them can be successful with the right amount of research, planning, and discipline.

One of the reasons that many investors struggle to get returns comparable to market indexes is that they allow their emotions to take over and put rational decision making aside.  Many investors also simply misunderstand what they own and then get disappointed with results that they weren’t expecting.  Regardless of how you invest or the types of investment vehicles you use, there are a few questions that every investor should be able to answer about the holdings in their portfolio.

What Is My Goal? When you make an investment, you should have a goal in mind.  Some goals are based on major purchases that you might plan to make in the future or dreams you’re trying to fund like retirement and travel. Others are based more on the performance of the investment being better than the results for comparable investment indexes over the same time period.

What Risks Am I Taking? There are several types of risks for an investment portfolio.  Most people focus on market risk, or the chance that your investments could lose market value.  However, there are several other types of risk that you should understand.  Bonds have been less volatile over time than stocks have but there’s a perception that stocks are risky and bonds are safe.  In bonds, it’s important to consider factors like credit risk, interest rate risk, duration risk, and reinvestment risk.  If these terms are foreign to you, talking to an investment professional can help you understand the various risks in your portfolio and to develop a strategy to mitigate those risks.

What Fees Am I Paying? Every dollar that you pay in fees comes directly out of your investment returns and many of the fees can be difficult to uncover.  If you invest in stocks, you should understand the fees and commissions associated with buying and selling.  In Mutual Funds, the prospectus will include information on commissions, management fees, and 12 b-1 fees.  Remember that no one is going to manage your money for free and even no load mutual funds and index funds have fees that cut into your returns.  If you feel the fees and commissions you’re paying are excessive, shop around—you’re likely to find someone that will work to find you a better deal in today’s competitive climate.

What Is My Exit Strategy? Knowing when to buy can be fairly intuitive and there are strategies like dollar cost averaging that can help you be smart about getting money into the market.  Getting out is a much more difficult decision though.  When you invest, you should have an idea of the amount of downside volatility you’re willing to tolerate and commit yourself to selling and jumping off of a sinking ship rather than riding it all the way down.  Tools for investors such as limit orders can help you to automate your exit strategy so you don’t have to have your finger on the “sell” button at all times.

Popularity: unranked [?]

Tags: bonds, commissions, Investing, mutual funds, Stocks

If there is one good thing that has come out of the economic crisis and crash of the housing market, it is that people are far more savvy about how home loans get made and also get sold. There was a time not so long ago when obtaining a home loan was as easy as catching the common cold, and like the common cold, those home loans often developed into something far worse than what they first appeared to be. As foreclosures rose in 2008, and lenders like Countrywide and Freddie Mac went under, home buyers began to grasp what those notices meant informing them that their home loan had been sold and why they now had to mail their mortgage payment to a different address and make the check payable to a different lender.

One of the big reasons why home loans are more difficult today is that with the collapse of the housing market, investors are not greedily buying up home loans from the banks as they once did, so banks are more careful about who they are lending to since whether a borrower repays the loan is no longer automatically an investor’s problem. As the public has been educated about the meaning of subprime loans and how the subprime market is a big contributor to our flailing economy, lenders have become more responsible about the loans they offer and the documentation they require to make sure a borrower can actually afford the loan they are being given.

There are different views about who is at fault for the rise in foreclosure rates and the deflation of the housing bubble. Some say the consumer is at fault for living beyond his or her means, and for taking out home loans for bigger and better houses without considering how they would pay for that bigger and better house if they suffered a job loss or equity loss. Some blame predatory lenders who place unknowledgeable borrowers in loans without fully explaining prepayment penalties, or adjustable rate mortgages, or the ramifications of interest-only payments. Others blame greedy CEO’s, past presidents, and even television executives who flooded the airwaves with shows about how to pull money out of home ownership.

It’s easy in hindsight to say it was greedy investors or real estate gurus — who promised  real estate would never be a bad investment — are to blame for the drop in home prices and the upside down status of many of today’s home loans. The reality is that we are all a little wiser, a little more cautious, and a little more scrutinizing of the loan industry and its practices. And wisdom is always a good thing.

Popularity: 1% [?]

Tags: foreclosure rates, Investors, loan industry, predatory lenders

The Fair Credit Reporting Act (FCRA) entitles citizens of the United States access to a free annual credit report from the government.  It is important to understand how credit scores work and their importance to you.  The number on a credit score tells a potential lender how reliable you are to pay on the loan and not to default.  The higher the number is, the better the score. Rather than thumbing through your entire credit report, lenders have access to a score that is calculated from the payment history of your past loans.  The complicated formula, based on the loan amount and if there were any delinquent or missed payments, is converted to a number that can tell how good of a risk you are.

Credit scores range between 350 to 850, with the most borrowing options for consumers ranging between 700 to 800.  A poor score may prevent you from purchasing major items such as a car on credit or obtaining a mortgage at a good interest rate.  You should carefully review your free annual credit report from the government to be sure there are no errors and that it is current and accurate.  To do this, knowing how credit scores are calculated will be a major advantage.

Credit scores are calculated by your payment history, amounts you owe, length of your credit history, types of credit used, and new credit. The software created by Fair Isaac Corporation is called FICO. The FICO score looks at the number of accounts paid as agreed, negative collections, and delinquent payments.  The FICO looks at how much you owe on accounts, types of accounts (credit lines, credit cards, and revolving credit), installment loans such as a car that shows a steady decrease in outstanding balance, and how many zero balance accounts you have.

Your free annual credit report from the government is an important document to keep track of and to understand since your credit score is based on the history of your credit contained therein.  By understanding the way that credit scores are calculated, you can make adjustments to your spending style and improve your credit score.  So when that major purchase such as a house or car needs to be done, you can have a great credit score to enable you to achieve your dream.  You are entitled to one free credit report every year according to federal law.

Popularity: 1% [?]

Tags: credit score, free annual credit report government, good credit score, payment history, poor credit score

For many the idea of credit card counseling only has the ability to touch one aspect of concern.  Likewise, there is a staunch train of thought that if the trouble area is finances, then more traditional counseling services like those offered by a professional therapist couldn’t possibly be indicated.  The truth is that money problems are not always as simple as having bad spending or budgeting habits or running into some hard luck without large enough of a safety net.  The root cause of debt accumulation and reckless spending can often be found in psychological traumas and hurts that have to be overcome or the cycle of spending, debt accumulation, and credit repair will continue.

Getting Credit Counseling Help

Like any kind of problem, the first step to real credit recovery is to recognize there is a pattern of reckless spending and that help is needed.  If credit card counseling services or therapy is forced upon an unwilling participant, then they are not going make much if any positive progress.  In all likelihood, coerced individuals are more likely to rush back into the arms of bad habits that lead to debt accumulation and the need for further credit recovery.  Thus, the downward cycle continues.  If, however, you know you need help with credit repair and retraining reckless spending patterns, then therapy and credit card counseling can help!

Making Changes in Your Spending Habits

No matter what kind of help is sought for credit and reckless spending woes, changes will need to be made.  Sometimes these changes can be quite drastic.  If spending is a on a collision course leading only to bankruptcy, then getting the help of a credit counseling service may mean you create a plan with their help to get you out of debt and then let them manage your money on your behalf until the plan is completed in its entirety.  Changes in the way one feels about money also will probably need to be made.

Money can emote strong feelings of power, well being, control, or bounty.  If purchases are made in an effort to dispel sadness and capture these more positive feelings, professional therapists can help you retrain your relationship with money and its use.  Change can be difficult at first, but with competent professionals guiding you through the process, it needn’t be frightening.  Life without the burden of debt or the money perched on your back rushing you into needless purchases is so freeing that the price paid in change seems like a small price to pay.

Popularity: 1% [?]

Tags: credit card counseling, credit recovery, debt accumulation, reckless spending

It’s tempting, in February, to look toward cash advances as a way to escape the winter blues. Even if you don’t live in a state with a cold climate, February isn’t exactly the friendliest month. The holidays are long gone. The credit-card bills from them aren’t. And there’s little to look forward to after the Super Bowl. It’s human nature to desire a vacation, maybe a three-day trip to Las Vegas or a short stay at a nearby water park with the family, to chase away the blahs. Here’s the problem, though: If you can’t afford to take this trip right now, and pay for it in cash, don’t make the mistake of either paying for your lodging and entertainment with your credit cards or taking out cash advances to cover the costs. You may have fun on your trip, but you won’t be smiling once it’s time to pay back the money you borrowed.

Expensive Money

Cash advances have their purpose. So do credit cards, of course. But both of these financial vehicles are best used for financial emergencies. If your car breaks down when you’re miles from home, putting the repairs on your credit card is a sound financial move. If the electric company is threatening to turn off your power and your next paycheck is weeks away, a cash advance can help you keep the lights on. But both credit cards and cash advances are expensive. Credit cards come with an average interest rate of over 16 percent today, according to the Web site IndexCreditCards.com. And cash advances often come with high origination fees and interest rates. Neither is a cheap way to borrow money.

Emergencies Only

Cash advances, especially, should be reserved for emergencies only. And, no, a case of the February blues does not constitute an emergency. An emergency is when you have no money to pay for groceries, your car’s gas tank is empty and your next paycheck isn’t due to arrive for 14 days. An emergency is when your landlord wants your rent now, and is getting ready to post that eviction notice.

Fees Are Too High

Simply put, the fees associated with both cash advances and credit cards are too high to justify using them unless you absolutely have to. In a perfect world, consumers would buy everything with cash. Unfortunately, our world is far from perfect these days, what with the national unemployment rate still above 10 percent as February began. People, then, will need to rely on their credit cards and cash advances. Just make sure, though, that you only turn to these financial vehicles when you need them most.

Popularity: 1% [?]

Tags: cash advance, cash advances, credit card, credit cards, debt, interest rates, late fees, late payments, origination fees, payday lender, Payday Loan

The nation’s bad economy – with its high unemployment rate – is turning payday loans into a more important tool for a growing number of consumers. For many people, these small loans are a way to pay the bills until their regular paycheck arrives. Unfortunately, the world of payday loans is marked by excessive fees, exorbitant interest rates and horribly punitive late fees. There’s a reason why a growing number of state legislatures are crafting laws designed to reign in the fees and interest rates that payday lending firms charge their customers. But there is a way to use payday loans responsibly, a way to take on these short-term loans without spending an excessive amount in fees and penalties. You just have to follow three simple rules:

Emergency Use Only

Only use payday loans for real emergencies. If your phone bill is already late and your next paycheck doesn’t arrive for two weeks, a payday loan might be the right choice. If your car’s gas tank is on empty and you need to fill it to get to work each morning, a payday loan, again, might be the appropriate choice. But don’t turn to payday loans to fund a three-day trip to Las Vegas or that new outfit you’re dying to get your hands on. Taking out payday loans for non-essential items is the quickest way to suck the life out of your bank account.

Get It in Writing

One of the biggest dangers with payday loans is the fact that some lenders in this business charge such high interest rates and origination fees. That’s why it’s important for consumers to always ask up front what these fees are. And don’t be satisfied with simply asking: Get these fees in writing. If the payday lender with whom you are considering working won’t put this information on paper, walk away. There’s sure to be another payday lender who will. Remember, your goal is to avoid any nasty surprises. Getting the facts in writing is one way to do this.

Don’t Be Late

Finally, never,ever miss a deadline when it comes to paying back your payday loan. This is the surest way to go broke. Many payday lenders charge excessive penalties when customers are late on their payments. It’s a way for them to boost their profits. You, of course, don’t want to help these lenders do this, so never repay your payday loans late. Payday loans can be a useful tool if you’re facing a financial emergency. Just make sure to follow the three rules, and you’ll limit the financial beating they can cause.

Popularity: 1% [?]

Tags: cash advance, cash advances, interest rates, origination fees, payday lender, payday lending, Payday Loan, payday loans

Medical identity theft is the fastest growing form of identity theft and potentially the costliest and deadliest form of fraud for victims. Unlike traditional forms of theft where an individual’s credit cards or bank account numbers have been compromised, medical identity theft has little consumer protections built in and can result in financial and health care repercussions that are astronomical. Education abounds for consumers as to how to protect their mail and their credit scores, but when it comes to medical records, there is very little information for patients who find they are victims of this type of identity theft.

Medical identity theft can be perpetrated in several different ways. A thief can obtain a copy of someone’s insurance card and assume that person’s identity to obtain health care and services. A social security number and a name can be given at an emergency room and the person, even without photo identification, has to be seen and treated by law. Private medical information can be sold by health care and medical office workers on the black market, and false insurance claims filed on behalf of patients who may not know for years that their medical information has been compromised.

When a thief steals the identity of a patient for medical purposes, the costs to healthcare and to a patient’s health can be vast. Once a medical identity thief obtains health care under someone else’s name or social security number, the medical records of that patient are compromised, inaccurate, and in an emergency can be deadly. Further complicating the issue of medical identity theft are privacy laws such as HIPAA. If a thief’s medical records are commingled with a victim’s, the victim may no longer be able to access their own medical records to clear the confusion due to privacy laws that now affect and protect the perpetrator.

Medical identity theft can go undetected for years, and medical records can be erroneous in health care offices and hospitals that the victim may never even know about. Sometimes the only way to know that your medical identity has been compromised is when collection agencies send bills for health care services that have never been received by the individual. By then it may be too late for victims to correct or mitigate the damage that has been done. Health care practitioners and law makers will need to make photo identification of patients standard practice, and the issue of medical identity theft must be a priority in all identity theft education and prevention topics. It can be a matter of life and death.

Popularity: 1% [?]

Tags: fraud, health care practitioners, medical identity theft, social security number

In recent years, plenty of financial institutions have heavily promoted the concept of saving money on credit cards by transferring the combined balances to a single card bearing an interest rate lower than most or all of the other cards.  Such a procedure, their advertisements claim, will reduce your interest rates overall and ultimately will save you a bunch of money.  Some companies have even promoted introductory rates at zero percent!  However, such enticing rates are just that; they are meant to be enticing.  These introductory rates are meant to expire after a prescribed period of time–most can last a year before the market will kick in to determine the prevailing rate.

This method of debt consolidation can be an effective way of gaining a more realistic grip on a mountain of credit card bills and may lead to better control or management of your overall credit card debt load.  It may also provide a way to repair poor credit by creating an opportunity for a fresh start.  If you can qualify for a zero percent introductory offer, it may be a wise move for your long-term financial health, but not all of these balance transfer cards hold the same advantages.  Take the time to consider a few factors as you plan to transfer a number of your credit card balances onto a single card.

Know Your Combined Credit Card Debt and Total Monthly Payments: This will involve listing your individual cards with their required monthly payments and adding your balances in order to be clear when you compare this information with a new card offer.  If it isn’t able to save you money, it isn’t wise.

Compare Various Credit Card Offers: Many companies advertise such credit card transfers, so you may have plenty of choices among those clamoring for your business.  Take time to compare what may be available to you before you decide to go with one company’s offer.  Just because you may bank with one firm where you deposit your paycheck, it doesn’t mean that you shouldn’t check out the competition.  Their deals may be sweeter.

Check the Terms of Each Offer Carefully: Not all the zero percent introductory offers are created equal.  It is important to note that there are some companies that will give the zero percent introductory offer only on your new purchases and not on the total transferred balance.  However, there are some companies which may still offer the zero percentage on the whole enchilada.  In addition, many offer other perks like cash back deals, rebates, and other rewards.  Competition can be good for you.

Popularity: 1% [?]

Tags: balance transfer credit card, combined credit card debt, credit card debt, credit cards, debt consolidation, zero percent introductory offer

A debt consolidation loan is one method of dealing with mountains of bills as you attempt to escape from the valley of debt.  These types of loans will roll all of your various debt obligations (credit card balance, auto loans, personal loans) into one bigger loan with one monthly payment.  A consolidation loan can be a good plan to deal with personal debt if the monthly bills being consolidated carry high interest rates like credit cards or auto loans with less than attractive rates.  One example of a debt consolidation loan would be a home equity loan (which only homeowners have access to).  Another type of consolidation loan would be an unsecured personal loan which may carry a higher rate of interest because the lender is not requiring any collateral against the loan.

There are a number of businesses that clamor through advertisements about how debt consolidation is the answer to your debt problems and is capable of reducing your debt or saving you from bankruptcy.  In reality, without knowing one’s credit and overall financial situation, it is unreasonable to make such powerful promises.  Consolidating most of your recurring bills into a single payment may work, but consider these points before contacting a lender promoting consolidation loans.

Debt Does Not Disappear Like Magic: Loan consolidation is simply a process of combining most or all of your debts that bear high interest rates, into a single loan.  The total combined amount will usually be the same as the original amount, or it may increase if you string the payments out for a longer period of time.  Debt will disappear as long as you keep paying your new creditor one lump sum as opposed to paying the bunch of creditors individually.  Although you won’t see the bills hitting your mailbox, there is no magic.  It’s still about taking the money out of your pocket and paying the amount you owe.

You Are Not in Charge: Your creditors are paid by a new creditor who is in “control” and will pay your bills for you.  It is taken out of your hands and supposedly put into the hands of professionals. 

Regular Monthly Payments Are Still the Key: Debt consolidation will reduce your debt, but, it will not work unless you make the monthly payments to your new creditor as required.  This is a priority.  For those who have a hard time keeping track of dozens of monthly payments, the consolidation process may help get them back on track financially.

Popularity: 1% [?]

Tags: Auto Loan, bankruptcy, credit card balance, debt consolidation loan, home equity loan, unsecured loan, unsecured personal loan

A few years ago, lenders were much more willing to loan money with better interest rates than they are now.  Unfortunately, credit was extended without careful verification of borrowers’ true financial situations.  Home loans were even given with very relaxed approval guidelines, which led to the mortgage crisis that began weakening our country’s financial health.  Now, even getting personal loans, auto loans, or other types of minor loans, is controlled much more strictly.  Once again, credit scores have become a primary measuring stick in determining whether a conventional loan is offered to a more “financially qualified” borrower or a loan with a higher than average interest rate is all that is available to someone with an unacceptable credit score.

Bad Credit Loans Help Out, At a Cost

If you have been denied a loan recently, you may not have to throw in the towel; however, if you refuse to borrow money at a higher rate of interest, you may need to repair your credit rating instead of sitting around waiting for “things” to get better.  With respect to your unique  financial needs, under certain conditions, getting a bad credit loan may be an acceptable alternative to getting nothing.

In the aftermath of the sub-prime mortgage market crisis, many lenders became cautious about extending credit to individuals who looked like poor risks for repaying the loan.  Our country went through a period where banks were not even willing to lend to other banks that seemed to be poor risks. Most banks, especially the smaller, more regional or local banks are still very cautious; however, keep in mind that one of the main ways that banks make money is by loaning it out and collecting the interest paid by the borrowers.  Some savings and loans and banks or credit unions are willing to lend money to folks who appear to represent a higher risk, but the worse the credit rating, the higher the interest rate will be.

Being turned down for a loan is not fun, so most people don’t want to go through that very often, and not all denials are total denials.  Just because a bank has denied you a loan, it doesn’t mean that all banks or lenders would do so.  If you apply for a bad credit loan carrying a higher interest rate, you may be approved.  Of course an approval will still depend upon a number of factors, many of which have to do with why the credit score is low in the first place.

Popularity: 1% [?]

Tags: bad credit loans, conventional loan, credit rating, credit score, financially qualified, interest rate