Wednesday, March 4, 2009

The twilight zone?

I was watching one of the cable channels (either CNN or CNBC) and I caught a Suzie Orman interview. You should all know Suzie. She is a well known, and respected, personal finance guru. But I heard her give some advice that is absolutely backwards.

She said that in times like these you need to have cash in case you get laid off. Now that in and of it self I do agree with. But she suggests you fore go paying off you credit card balances and save the cash instead. Even in tough times like this that is short sighted thinking.

Any cash you have is most likely making less than 3% interest. I cannot imagine any credit card with an interest rate anywhere close to that. The name of the game is to have your money work for you. If you are borrowing at a rate higher than you're saving, you are playing a losing game.

If you are carrying credit card debt and have no cash, you are already in a bad position. Stay focused and applied at work so you can hopefully avoid a layoff and start getting your finances in order now.

At today's mortgage rate you should refinance the house if you can, pay off those credit cards, and starting living within your means.

You can do it.

Monday, March 2, 2009

Double Your Return Today

This thought was more sexy when we were talking about 4% vs 2% returns but the concept is the same.

If you still have any significant money in a brick and mortar bank savings account you are throwing money away. The return on your money is most likely less than 0.5% and certainly not more than 1%. Today you have other choices. On-line banks are offering rates that rival most money market accounts and some CDs (Certificates of Deposit). On-line banks can offer these above average rates because they maintain low overhead and employee costs. They pass those savings on to you in the form of higher returns.

So, as the title says, you can start earning twice the return today. Since you are reading this article you obviously have access to a computer and the Internet. You can go to any of the on-line banks right now and set up an account and transfer some or all of your savings account balance from your current bank to an on-line bank. I am not advocating making a quick decision about your money so go ahead and do some research. Also, you may want to keep a small balance in your existing savings account so you can have immediate ATM access to some money. Some on-line banks do now offer ATM access as well so keep that in mind as well.

Do you have money in an old fashion savings account that you won’t need within three days of a withdrawal request? Typically your on-line bank can execute a transfer request within 3 days so your money becomes available. Do you want to increase the return on your money? Do you even know what return you are getting right now? Check out your last, or next, bank statement. If you’re tired of the paltry interest rate, check out the link below. It lists a host of on-line banking options and the interest rates they’re offering. Depending on your situation, be sure to take note of which banks require a minimum balance and which don’t. Choose a bank that does not charge any fees. Also, make sure the bank is backed by FDIC insurance.

What did I do? I have moved all but a couple hundred dollars of my savings to ING DIRECT online bank. I am not necessarily recommending ING DIRECT, it’s just the one I like. It has a very straight forward and easy to use web site. My account there has no minimum balance requirement, no fees, and is backed by the FDIC. I also make an automatic monthly deposit from my checking account into the ING account. You can setup scheduled or one time transactions to/from several accounts.

So, please do yourself a favor. It really is simple to put your money in a place where it will earn twice the return it does now.
Do it; in fact do it TODAY!!

Friday, February 27, 2009

Now is a great time to buy a House!

Of course we all know about the housing market crisis by now. Prices went through the roof (no pun intended). Builders over built. The sub-prime mess contributed to the current economic downturn. Yes it obviously is worse than most of us expected (me included). But the great reality is that out of every "disaster" comes opportunity. And you may just be in a great position to benefit from this crisis. Yes it is a great time to buy a house!! It is a phenomenal time to buy a house. Supply is greater than demand and that means home prices are down dramatically. So are interest rates. I just refinanced for 30 years at 4.875%. An important thing to remember however is that it is also a tough time to sell a house. So you will need to take that into account. But if you are currently in an apartment, have good credit, and can manage a reasonable down payment, go for it. And remember, the new stimulus bill is going to give first time home buyers a nice tax break. While I hate government give aways we'd all be fools not to take what they're offering.