Simply Junior

Building and maintaining a savings cushion is vital for your financial health. Most financial experts recommend having a minimum of three months’ worth of living expenses set aside in case of an emergency, but many people may find it difficult to build up that much money in savings. If you think that you might have difficulty in building up the savings that you need, you might want to consider some of the following ideas.

Focus your spending

Create a budget and track your spending. After seeing where your money goes, it’s much easier to decide where you can cut. Then live by it.

Treat saving like a bill

Consider your monthly savings amount a bill that has to be paid. Pay your account every month or every two weeks.

Think small

Many people don’t think their budget allows room to save, but even a small amount adds up over time. Depending on the size of your family, skipping a meal out each week could result in a $160 per month savings deposit. Take a good look at your spending habits, and you probably can find $150 or so each month in extras that you could do without to build up savings.

Save your raise

The next time you get a raise at work or a tax refund, consider directing half to savings. If you’re not used to the money, you won’t miss it.

Continue paying

When you pay off a car or other loan, consider making half of the payment to yourself and put it into your emergency savings account. You will not miss the money if it is in savings, but you will find a way to spend it if it remains in your checking account.

Turn off the TV

Don’t listen to the advertisements, Ignore sale flyers or mail-order catalogs. The latest sale tempts you to spend money unnecessarily.

Think before you charge

Unless you’re in the habit of paying your credit card bill in full each month, don’t use the cards for anything you can eat or wear.

Consider a refinance

Shop for loan quotes and see if interest rates are lower than they were when you took out some of your major loans. Consider refinancing your mortgage and your car loan.

Alternate your commute

If you live in an area that has good public transportation, see if you can get around without the car. Maybe you can get by on one car instead of two.

Conserve energy

Do an energy check on the house. Replace cracked storm windows and renew the weather stripping.

Java-jolt savings

If you’re a coffee drinker, don’t stop at the coffee shop each morning. Make your coffee at home.

Participate in a 401(k) or 403(b) plan

If your employer doesn’t offer these plans, then you could start saving in a tax-advantaged IRA or Roth IRA account.

Involve the whole family

Even the youngest child can contribute change to the savings goal. It is easier for children to get involved if they understand why they must give up pizza night (or at least cut down the number of toppings!). Also, you are setting a good financial example for your children.

Savings rewards

Plan a treat for you, your family or both when you reach your emergency savings goal. Make it something everyone will look forward to, but not something very expensive, like a day at the zoo or at the beach. The important thing is to mark the occasion and congratulate yourself and all those who helped!

I recently read this headline and thought is this a true statement? After pondering the question “Why is it smart to buy real estate now” I concluded that in fact this is a true statement. Here are the reasons why.

1. Prices of most homes have dropped significantly and in some areas as much as 75%. What this means is the only direction for prices going forward is up. Will prices of homes drop lower, perhaps, but just like trying to time the stock market, it is difficult to time the real estate market.

Here in California and specifically in Contra Costa County (where I live), prices data shows we hit the bottom in 2008 and have been going up ever since. Inventories in certain price ranges have dropped and we are seeing days on market decreasing to less than three months.

That doesn’t mean that we will see home prices skyrocket to unrealistic levels as we had in the mid 2000′s. But what it does mean, those in the know and are buying homes now.

2. Interest rates are the lowest they will ever be. They can’t and won’t stay in the 4% to 5% range forever and the prediction is that interest rates will start to go up on 2011. Looking back to 2003 thru 2007 interest rates were in the 6.25% range and actually crept close to 7%. At that time, everyone was excited because just a few years prior to this time period interest rates were up to 8.5%. So when the rates dropped under 7%, it caused a big stir in the market. So rates in the 4% range are unprecedented and should be taken advantage of right now.

Real Estate is an asset and a valuable one which savvy investors understand. There are investors in our area in California that are buying blocks of homes. It was unheard of to find homes in the $200K range, but there were plenty to go around over the past year to year and a half. These investors may rent them now, but look to reap the fortunes in the future – and probably not the too distant future – when prices go back up.

This is also a fantastic opportunity for the first time home buyer. You can get so much more home for your money and in areas that may have been out of reach for many.

If you are on the fence waiting for the right time, this may be the right time.

As the credit crunch is upon us people are being increasingly more careful about how they spend their money. Yorkshire Bank recently carried out a survey showing that 3 in 4 people are more conscious of their spending habits, and are no longer tempted by the “buy now, pay later” offers. They go on to say that they would rather save up for a purchase as opposed to having it instantly on credit. This is largely due to the lack of cheap credit currently available.

84% of the people that took part said that they enjoy a purchase more when the payment has been made outright, as they feel they have earned it and can better justify the need for the purchase.

Psychologist Phillip Hodson commented on the recent changes in buying cultures, saying “People are often happier in times of austerity. It is a well known psychological trait that delayed gratification can generate a deeper sense of happiness – we might call it ‘saver satisfaction’ or the ‘joy of thrift’, yearning makes the heart grow fonder.”

The age of spontaneous buyer is over. As prices have increased people have become thrifty with the purchases they make, no-longer buying on a whim, but shopping around to find the best deals. This is actually a good thing from the customers point of view, because they are becoming more aware of the savings that can be made, which naturally transfers to all areas in which savings can be made, such as utility bills at the best price, or savings accounts that pay the highest interest rates.

Managing time is saving money. When we have control of our time, it makes our load easier, and our lives stronger. When we are achieving a financial limit, we need to understand the value of a dollar. If you are saving money to achieve a goal, it is always smart to store your funds in accounts that include interest on the dollar. Some banks offer more interest rates than others do, so it pays to shop around. If you are investing in short-term goals and saving money for the occasion, you might want to open a different account.

For example, if you intend to take a Holiday Vacation, you will save funds, but keep it separate from your business account. If you have a Mortgage Loan, you might want to review your terms & agreements, since some loans offer vacation packages. In addition, you might want to note that money market accounts and saving accounts are great for short-term goals, such as vacations.

By saving your money in accounts that include interest, it allows you to accumulate addition savings, and your ‘principal is secure.’ If you are opening, accounts to save money for long or short-term goals, be sure the accounts do not have hidden fees, charges, or ‘penalties for early’ withdrawals. Saving money is managing time, so if you are paying fees and charges, or penalties you are spending money and burning time.

No matter what you goals are, it takes money to obtain them. There are no exceptions to the rule. If you are saving for retirement, or to send your kid to college, it is wise to set a goal in the short-term range for one goal and a long-term for the other goal. For example if you are saving funds for college tuitions, you want to set a five-year term agreement with yourself, unless your child is going to college next year.

If you are saving for retirement this is a long-term agreement that you want to invest wisely. Remember times are constantly changing and prices are soaring, so calculate the increases in your time management scheme for the best turn around. This will help you save money and time. Be sure you know what you are getting into to reduce your risks if this is your lifestyle. If you investments are an opportunity to achieve long-term goals, then be sure that you realize that no investment is sound proof. Make sure you keep savings in an account that are not used for your investments, since you will need a backup plan when all else fails.

Likewise, if you are investing your money in lottery tickets, you are wasting time. Unless you are lucky, most people only win a few dollars, so do not include this in your time management scheme, because it will only bring you down once you realize you are wasting time and money. Time management is the process of making wise decisions to achieve goals and flexibility as well as saving money. When you create a good time management scheme, you are well on your way to success.

We are in one of the worst recessions in the history of America. Money is tight for everyone. Home-equity lines of credit are shriveling up faster than you can blink, and credit cards for cracking down and raising interest rates, making it harder than ever to borrow money. And with the unemployment rate skyrocketing, many people are finding it hard to make ends meet.

So where can you find money when you need it? In this article today I’m going to talk about a really cool way to borrow money quickly without the hassle of banks or credit card companies, and at a lower interest rate than you might expect…

Most people don’t know that you can borrow money against your retirement plan. If you have a retirement plan that you’ve been paying money into for years, then you’ve got an untapped source of credit right at your fingertips. Most retirement plans will NOT allow you to cash in the plan and take money out directly, but many if not most will allow you to borrow against your retirement plan; and that is what I’m going to talk about today.

There are several things to consider before borrowing against your retirement plan. First, all loans must be paid off at a steady rate of interest over a period of five years or less. Most of the time, you cannot borrow for longer than five years from your retirement plan. There is one exception, and that is if you are borrowing in order to purchase a primary residence house; then you may be able to create longer loan terms.

Next, it is important to know that you cannot deduct the interest that you pay on this loan. This is not always the case, but it is so often that you might as well think of it as occurring all of the time.

All loans taken out against your retirement plan must be written down into an actual loan agreement with interest rates stated and the loan terms stated. You have to treat this like a regular loan that you would get from a bank and that means keeping the paperwork and making your payments on time. If you miss payments there may be tax consequences involved.

It may be possible for you to do this all on your own, but I highly recommend that you contact a certified public accountant, or CPA for short, to make sure that you do everything correctly. You’re also going to want to discuss any tax implications your loan may have as well as any tax reporting requirements that the loan may create.

There you have it, an easy and safe credit source right at your fingertips by tapping in to your pension plan.