Live Below Your Means

November 13, 2008 – 11:53 am

Money Management Tips for Surviving a Recession

1. Increase your freedom and quality of life by increasing your family’s financial literacy.

By simply taking 20 minutes each week planning your family’s finances and setting individual allowances, you can move your family to the right direction of financial well-being.

If you also want to avoid having your adult children still run to you and depend on you when you are already close to retiring, then you need them to get started on thinking about financial independence.

Below are non-profit and government links to get you started on how to live below your means, increase your savings, use credit wisely, invest, and how to retire comfortably. First, help yourself get started, then gradually involve your spouse and children.

www.consumerfed.org- offers ways to save money

www.MyMoney.gov

www.jumaventures.org – financial literacy for young adults

www.nefe.org- National Endowment for Financial Education

www.jumpstart.org

www.investoreducation.org

www.ftc.gov- investment scams alert

www.sec.gov- help with investing

2. Resolve to spend less than you earn.

Don’t buy anything you don’t have money for. Make a budget to ensure that you will have money at the end of the month. Set a guideline for your spouse and family regarding spending.

Many people who have started tracking their spending have discovered that they spend a large percentage of their hard-earned money over unnecessary stuff which they even do not really care for and forget!

Start using programs such as Microsoft money to help you keep track of all your family’s spending. Or you can keep a notebook and jot down your purchases immediately. Some counselors even advice noting down the emotion that came before or after the purchase was made to help you become aware of your spending habit.

If you purchase things out of anger, frustration, boredom, depression or to get a thrill; you need to seek alternative methods to release those emotions such as exercise, meditation, joining volunteer programs, seeking another employment, taking brisk walks, gardening, and etc.

Eat breakfast at home and pack lunch for work as often as you can to save money.

Save on electricity by using electric fans rather than air-conditioners.

Hand-wash your dishes at least three times a week.

Decrease the number of visits to the hair salon.

You also do not need to change furniture or cars too often. Always do comparison shopping for big purchases.

3. Develop self-discipline and focus your thoughts on saving, investing and wealth-building rather than consuming and burying yourself in debt.

Keep in mind that buying bargains and items on sale are not helpful when you do not need those products in the first place.

4. Use coupons.

It’s smart & fun to use coupons! Never feel embarrassed to do what is right for you family.

Links of Best Coupon Sites from Yahoo Finance

Also purchase grocery items in large quantities to take advantage of discounts and save on gas!

5. Observe good grooming and dress appropriately but don’t spend a fortune on clothes.

Elegance can still be found in simplicity. Search outlets that offer designer clothes at a good discount such as T.J. Maxx. As Tim Gunn would say, buy more classic pieces that fit right and you can update using accessories.

6. Be more conscious of your usage of electricity, water and gas.

Properly insulate your windows.

Drop unnecessary services such as call-waiting and 3-way calling. You can even drop your long-distance call carrier service and just buy pre-paid cards.

Shop around for phone carriers that offer the lowest rate.

7. Decrease your car expenses by proper maintenance.

Check the pressure of your tires regularly.

Change oil when needed.

Don’t skip bringing in your car for its regular maintenance.

8. Be more creative when it comes to entertainment and vacations.

Going to the restaurant and movies are expensive but somehow boring ways to spend your special time with your partner. So work on your massage technique, romantic home-cooked meal skills, your R&B singing and slow dancing instead.

9. Increase your practical skills such as reformatting your computer, repairing your washing machine and dishwasher.

Let go of the ‘disposable mentality’. Learn to care and repair the things you have right now. Ask a friend or relative more highly- skilled than you in these matters for initial help. I learned this lesson when I paid a repairman $200. to fix my washing machine when the only problem was a pair of socks that got stuck!

Information in the internet can also help you get started. I learned a lot of things on how to fix my computer from the internet and posting questions on forums

You can even start trading your skills and expertise. Check the bartering program in your community. You can tutor for academic subjects or music lessons; care for elderly parents or kids, write resumes, do marketing or sales letters; haircut, hair coloring and nail salon service and etc.

10. Start saving even small amounts. Let compound interest work for you.

Be skeptical about quick-get-rich money schemes and be tight-fisted with your cash but don’t miss out on good investment opportunities, especially sound long-term investments in well-managed companies with growth prospects (stocks are cheaper now!) and conservative investments such as bank certificates of deposits.

Don’t get too complacent and assume that high market declines and returns will go on indefinitely.

But how do you get that extra income?

Thank gawd if you still have your work. Be more efficient and work longer.

Get temporary or freelance jobs (check job postings in elance.com and odesk.com).

Continue your education or take advanced courses to increase your income- generating capabilities. Protect yourself from future slowdowns by increasing your high-value skills and relevance to your industry.

Make money out of your hobby if your friends, relatives have expressed interest in it and there is market for your work (for e.g. sewing, jewelry–making, fixing meals or catering, furniture refurnishing). Don’t do it if there is no market or demand for your product!

Talk to your spouse if he or she needs to go back to work.

Do jobs that others won’t do such as doing babysitting and laundry and ironing and etc.

If you are naturally empathetic and nurturing, you might consider taking classes on how to care and teach special-needs children. There is a rising demand for this healthcare profession. However, if your values and personality are not suitable for a service profession, this may not be an option for you.

11. Do not make new debts.

12. Review your credit report regularly and check for inaccuracies.

13. Live wisely by not being easily influenced and attracted to advertising, media, and valuing the opinion of the ‘joneses’ about your simpler lifestyle.

Try to find somewhere else to relax and spend your family downtime than in the shopping mall!

14. Avoid violations to cut down cost on speeding and parking tickets.

15. Learn to negotiate with your dentist, doctor, chiropractor, collection agency for a discount or less burdensome payment plan.

These tips were collected from the experts during the economic slowdowns in the 80’s, 90s, 2008. Since economic slowdowns are inevitable don’t let yourself get caught unprepared in the next one and start your financial education and savings right now !!!

Posted in Personal Finance | 4 Comments »

Improve Your Credit Fico Score In No Time!

November 12, 2008 – 12:00 pm

Raising Your Credit Score (FICO)

Just in case you didn’t know; your FICO (Fair Isaac Credit Organization) score is equivalent to your credit score. Good credit must be above 700. Excellent credit is above 800 and lousy credit sinks to 599 or lower. You can easily find out what your actual score is, but be careful to choose an instrument that doesn’t tie you down with a hefty membership fee. They offer free credit score and hit you after 30 days because you forgot to cancel.

Go And Raise Your Credit Score

There are some ways you can raise your credit score, but you probably know some of them already. The problem is to find the will and the way to increase your FICO. If your score is below 600, you are paying more for credit (if you can get it at all in this recession); your credit cards probably raised their interest because of your bad credit score (they have the legal right to do so). If you can’t make ends meet, I strongly advise you to seek help through a legitimate credit counselor (beware of the phony ones who only want to take whatever money you have left).

A Useful List To Raise Your FICO

Let’s assume that there is a way for you to get organized and change your bad spending habits and so raise your credit score:

1) Pay off credit cards as soon as possible. Do not cancel them; that would actually lower your score. Destroy the paid off card by shredding them (yes, your wife’s (husband’s) card too).

2) Pay your bills on time. Some people wrongly assume that a couple of days late doesn’t matter. It does and the creditor doesn’t care if the post office was late in delivering the payment. Some credit cards will charge you outrageous late fees (they can do it legally, so stop complaining).

3) Collection History. It will remain on your credit file for seven years (red flag for anybody wanting to give you credit). So don’t wait for the collector to knock on your door. Negotiate with your creditors or seek help to go back and raise your credit score.

4) Shopping for a new car. Credit score companies will flag your file if they suddenly see five different requests for credit from five different dealers over a period of 2 or 3 months. Do your car shopping in a short period of time so it will be seen as one loan which won’t affect your credit score (unless you have too many unpaid loans already).

5) Checking your credit. You have the right to check your own credit (score) without being penalized. You can do it for free once a year or pay a small fee to the credit bureaus.

6) A high score guarantees a loan. Wrong! Credit bureaus look at the overall picture. A high credit score coupled with a high total debt may get your loan application denied.

You Can Will Your Credit Score Up

Now is the time to find that willpower to acquire good spending habits and raise that credit score or FICO. Keep a log of all your credit cards debts, all your revolving accounts (stores), and most important, sit down with your wife (husband) every Saturday morning to look at the family budget. Allocate money to priorities first (mortgage, credit cards, stores, car payments, light bill, food, schools, insurance, etc.). Whatever is left over, if any, will be divided between entertainment and savings. Think of the many ways you can save money and start doing it to raise your credit score (FICO) to 800. It will take time, like all good things, but a good credit score means paying less interest.

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Cars and Finance

October 23, 2008 – 11:40 pm

With the recent credit crunch, everyone is hurting, especially sales. I dare you to find one sales institution that hasn’t felt the negative impact of what has been going on lately. The automakers are currently feeling it the most. Recently, Ford Motors announced that their stock was selling for $2.50 a share. When the shares of the company that make the cars are cheaper than a gallon of the gas that powers the cars, you know things are tough. In fact, it was recently announced that in 2009, one in five car lots will be shutting down due to cutbacks and losses from the big three companies. This has already been seen around the country with Lincoln/Mercury dealerships and with Buick dealerships closing up left and right. Keeping this in mind, it’s an awesome time for you, the consumer, to buy a car.

When buying a car, there are a few key things to keep in mind. One is to buy from a sponsored dealership and not a second hand used lot. Sponsored dealerships have something going for you; they need to meet a quota of sales to keep their sponsorship. If they can’t sell so many cars, they don’t get any more new cars, period. These quota numbers are usually reported at the end of the month, so try to shop on the last day of the month if you can.

Secondly, car dealerships traditionally close early on a Tuesday. Tuesdays see a typical closing time of 6:00 PM, so get there around 4:00 PM. By the time you’ve seen the car you want and taken a test drive, the salesperson and manager will be anxious to get out of there, and therefore more likely to deal.

Third, many car lots will hold competitions with their sales teams on Saturdays. Sometimes to make sure that everyone makes a sale, managers may be willing to deal more than normal. This goes double in the afternoon when numbers may be getting tight. Don’t be afraid to stay late, and take your time.

Fourth, take a trade, but don’t tell them that until you’ve gotten the price down as far as it will go. Don’t ever believe a car lot when they say the price is fixed. If you put $2,000 down in cash on the table and tell the sales attendant to take it to a manager with your offer, I think you’ll find them willing to negotiate.

Finally, even though popular thinking is to avoid new, don’t be shy to look at the latest models… from six months ago. New cars can see instant discounts that can go as high as $6,000 if you stick to your guns. Again, they need to move new, and they never move as much new as they do used. Show them you are serious, bring money and never let them rush you.

In the end, remember that the choice to buy a car is your decision, so if you want to walk out, walk right out. There are plenty of dealerships out there, and one of them is bound to work with you.

HW

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Today’s Real Estate Market…..Good or Bad?

October 22, 2008 – 10:48 pm

Real Estate: Time To Buy and Time To Restructure

The southern part of California, one of the areas in the U.S. that was hit the hardest by foreclosures, saw a 65% jump in housing sales in September 2008 compared to the same month last year. Does it mean that the market fall has hit bottom?

Real Estate Recovery?

The answer to that question is still murky; was this jump a fluke, some people with liquidity taking advantage of low prices? Or was it an early indication that the housing market is slowly getting out of the doldrums? As a comparison, in the state of Texas (my state), a snapshot of the area around Houston indicates that listings of homes for sale has dropped 10%, a good indicator that the crisis has abated.

Troubled Future in Real Estate?

Drawing conclusions from the data available today is a risky business, since we don’t know what the impact of national lay-offs will have on the housing market (i.e., people with no job forced to go into foreclosure). But lest we forget, 2007 was the banner year for the housing market debacle. The blog Inman News said in December of last year “Subprime lenders started going belly up this year as they lost access to funding in an avalanche of delinquencies and foreclosures on loans that were packaged and sold to Wall Street investors.”

Help For Real Estate

In other words, there is a good chance that the housing freefall will soon recover, thanks to the recent bail-out package passed by Congress to bolster credit by banks. The economy cannot improve with a depressed housing market, hence the efforts by lawmakers to afford distressed homeowners some measure of relief. One law signed in July 2008 by President Bush is called “The Hope for Homeowners Act of 2008.” The Act is only for those lenders who wish to participate voluntarily in exchange for FHA backing of the restructured loan, and if all conditions are met. Check this site for detailed information: http://www.nobullmortgage.com/cl/mras/

Fight For Your House

So if you are a homeowner who is about to default on your mortgage payments, make sure you check the conditions of the Relief Act before being hit by foreclosure. It is always better to keep lines of communication open with your lender, but remember that the bank that receives your money is not necessarily your lender. They may be just an intermediary and they will not be able to negotiate anything with you. Your mortgage was probably repackaged with hundreds of other loans and sold to the highest bidder long ago. Investigate who can make a decision on your mortgage and start negotiating.

House Payments On Hold

Some people say that help comes faster to those who stopped paying their mortgage for at least 60 days; it may be true, since lenders are aware that foreclosure is next and everybody loses. But it is a risky move to deliberately stop payments in order to get immediate help. You may end up losing your home if help does not materialize. If you have difficulties now but believe that your financial situation will soon improve, talk to your lender immediately or to a credit specialist (beware of bogus credit specialists who take your money and solve nothing). There is always a solution.

HW

Posted in Real Estate | 2 Comments »

How To Build Corporate Credit 101 (Part#1)

August 2, 2008 – 6:46 pm

The subject of corporate credit covers a lot of information. So, this will be my first post of many topics dealing with business credit. I will simply pick-up where the last post left off. Okay, let’s get started.

Well, let’s start with the basic and work our way to a more advance level. Okay, so what is a corporation anyway? The simple answer is that a corporation is a legal entity that exists separately from its shareholders (i.e. owners). As a separate legal entity, a corporation can legally acquire real estate, purchase equipment and other goods and services necessary for the effective and efficient running of a corporation, and enter into any and all transactions permitted under law. As a legally established entity, the corporation can also litigate (i.e. sue) and be litigated against (i.e. sued). It’s important to recognize that the personal assets of the corporation’s shareholders (the owners) are shielded or protected by the corporation, provided that that legal shield is never punctured. Commingling of funds would be an example of how you could “puncture” your shield. Once you have commingled your personal funds with your corporation’s money, your personal assets are no longer protected. Keep your personal funds and bills separate from your corporation’s. As inconvenient as it may be, pay your corporate bills from your business checking account, and pay your personal bills from your personal checking account.

What is corporate credit? Corporate credit is the opposite of personal credit. It’s the same concept, except instead of establishing credit under your personal name (personal profile) you will establish credit under your business name (business profile). A corporation is considered its own entity. When building corporate credit, your main objective should be to have your business or corporation obtain loans, real estate, vehicles, etc. on its own; without your personal guarantee. I will show you how to accomplish this.

Your initial step is one of the most important, and that is to make sure that you establish the proper structure for your business. You may have many questions about what type of entity to form. For instance, should you establish a C-Corporation, S-Corporation, or an LLC? Which state should you incorporate in? Each person situation is different, but I recommend you set-up your corporation as either an LLC or C-Corp. I also recommend you form your corporation in the State in which you do business in. I will discuss why in more details later on.

Initially, most small businesses are financed by the personal savings or assets of the owners, but they can and usually do rapidly reach a stage of growth where the company is compelled to seek credit or investment solutions to fund the growth. I will teach you how to build your business credit profile in order to obtain the financing your company needs to grow and succeed.

Why do you need a corporate credit profile? Well at the very least, so save money. For example, when you apply for a business loan, most lenders look at both your personal credit history and the business credit profile of your company to make a determination of whether or not they will make the loan available to the company, the loan amount and what the loan terms will be (interest rate, loan duration, etc.).

Let’s say you have an “average” personal credit history (which would be a FICO score of about 625), but no “established” business credit profile and you apply for a business loan. Based primarily on your own average credit, your company may be approved for a loan of $100,000 with terms of 12% interest over a 10 year period. On the other hand, you have an established, favorable business credit profile the terms on the same loan might instead be 7% interest over 8 years, which would result in the savings of tens of thousands of dollars over the life of the loan.

Whatever the financial needs of your company may be, it is possible to obtain a loan for your business. Poor credit, average credit or good credit, getting the financing that you’re looking for is a matter of knowing how to go about it and where to go. I intend to teach you how to go about it the right way, improve your chances of success, build your business credit profile, and be able to get a loan on great terms.

I have to run now, I will add on to this post later, bye!

Posted in Corporate Credit | 1 Comment »

If you dropped me off in any city, here’s how I would get rich!

August 1, 2008 – 1:34 pm

Posted in Make Money | 1 Comment »

Lexus, Mercedes, or BMW?

July 31, 2008 – 6:51 pm

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Is Google Stock the big dog or not?

July 30, 2008 – 1:30 pm

Well, the simply answer is YES! Now that I got that out the way, allow me to explain. I realize Google stock price is very expensive, but it’s still very profitable. Have you ever driven by a beach neighborhood and you were just amazed at the home prices? If you seen a beach house for sale, chances are it will sale within weeks at or close to it’s asking price (even in our current down real estate market). Beach property is prime location and people with money are willing to pay a premium for prime (high desired) locations. Well, Google is a prime stock and investors with money and who wants to make more money are willing to pay a premium price for this stock. You see, it’s rare for beach property to decline in price and if it does, it isn’t by much. The same with Google. Their stock price may fluctuate a bit, but before you know if you are going to be beating yourself up, because you didn’t buy Google stock at $485 last month and now it’s trading at $650 a share. Even if the price decreases, chances are it will never come back down to $485. Missed opportunity! To be continued…

Posted in Stocks | 1 Comment »

Can anyone out there qualify for a real estate loan?

July 27, 2008 – 1:23 pm

I mean this is ridiculous. I know we’re in a down market, but what the hell is going on? To be continued….

Posted in Real Estate | No Comments »

It’s not about the bling anymore people; it’s time to scale back!

July 27, 2008 – 1:20 pm

Tough times causes for tougher measures. It’s time for a financial check-up. I ask myself, where and how can I save more money? What can I cut or eliminate from my current lifestyle? For example, I don’t have to eat out as much or maybe not at all. I don’t have to travel as much or maybe not at all. As far as the movies, that’s out. Cable TV, well, you have to keep something right; I mean at some point you have to have some type of standard of living; if not, what are we working so hard for?…….(to be continued)

Posted in Rand Thoughts | No Comments »