Month: October 2011

Debt Management Credit Counseling Corp http://www.dmcconline.org, a nonprofit credit counseling organization (“DMCC”), awards Endowed Scholarship to Ricardo Wehrhahn, a student from The Harriet L. Wilkes Honors College of Florida Atlantic University (FAU). The DMCC scholarship fund has awarded an FAU student for 11 consecutive years. The scholarship was established in 2001 to help students strive for excellence and achieve academic success.

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FEATURE ARTICLE:   Evaluating life insurance needs.

Because life insurance typically becomes more expensive as we age, many people may believe they can’t afford to purchase coverage later in life. However, considering that life insurance is significantly less expensive today than it was a decade ago, you might be able to purchase new coverage and pay premiums comparable to those that were available when you were 10 years younger.

It’s a good idea to review your life insurance situation on a regular basis. Here are some reasons why your coverage may need to evolve to keep pace with your life.

Life Changes

If your income and/or net worth have increased significantly since you purchased your policy, ask yourself whether your current coverage would enable your survivors to maintain their current standard of living. Major life events such as birth, marriage, death, and divorce may also affect the amount of coverage you need.

Inflation

Because of inflation, a policy purchased years ago may no longer offer the same level of protection. For example, a 3% inflation rate can cut the purchasing power of a death benefit in half in about 24 years, based on the Rule of 72 (72 ÷ 3 = 24 years).

Estate Conservation

One popular reason for owning life insurance is to provide liquid funds to help heirs pay estate taxes and any other debts. Considering that the estate tax has changed several times over the past decade, it’s a good idea to review your coverage in light of current estate tax laws and your net worth.

As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable.

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

This material was written and prepared by Emerald. © 2011 Emerald Connect, Inc.

MONEY SAVING TIP:  Save with a purpose.

Don’t save in pursuit of a general desire to “get ahead” or to “have something to show for your years of work” or to “do the responsible thing.” Save in pursuit of a particular change that you want to make to enhance your enjoyment of life.

Reporters often begin their newspaper and magazine articles with anecdotes. Why? Because the specifics of a story possess an emotional pull that abstractions do not. If you save “to be responsible,” you will not save. If you save because you want to attend a family reunion, and saving is the way to get there, you will.

Many people look askance at those who don’t want to make contributions to buy a gift for the boss’s birthday because the amount of money involved is small relative to what must be saved to finance a retirement. It is better to save for lots of little things over the course of a lifetime, just as you spend for lots of little things. To make saving matter, direct your mental energies to the small things that saving can do for you at all stages of life instead of the big dramatic thing (financing an old-age retirement) that it will do for you only once near the end of your active years.

DID YOU KNOW…you can ask for a ‘good-will deletion’?

If you only have one or two bad marks on your credit record, you may be able to get them expunged, says John Ulzheimer, president of consumer education for SmartCredit.com, based in Costa Mesa, Calif.

Say you’ve paid late, but have an otherwise spotless credit history. You can ask your lender for a “good-will deletion,” he says. “It doesn’t mean it is wrong or was reported incorrectly. Essentially, what you’re doing is asking the creditor to cut you some slack.”

The good news: “You’ll be surprised how many times they will,” says Ulzheimer.

The bad news: “If you’re habitually late, it won’t work,” he says. This is strictly for folks who err rarely.

As for whom to ask, start with customer service. But you may have to go up the ladder. And make your request as soon after the error as you can. “The sooner, the better,” he says.

But it can make a difference in your credit score. “If you have two or three bad things on (your) credit report, and you get one or two removed through good-will deletion, you will be surprised how quickly your score will go up,” Ulzheimer says.

bankrate.com

Debt Management Credit Counseling Corp. http://www.dmcconline.org, a nonprofit charitable organization (“DMCC”), has published free tips for consumers to prepare for a possible pay cut. As the economic instability of our nation seems to threaten the financial well being of many individuals and families, it is essential that consumers plan for any potential reduction in their income. Consumers may view free educational article with tips at http://www.dmcccorp.org/how-to-prepare-for-a-paycut/.

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FEATURE ARTICLE:  What Are Some Smart Ways to Refinance?

Recently, fixed mortgages were near their lowest rates in almost 30 years. And if you are one of the many people who took out mortgages in the few years prior to that, you may be wondering if you should look into refinancing.

If your mortgage was taken out within the past five years, it may be worthwhile to refinance if you can get financing that is at least one to two points lower than your current interest rate. You should plan on staying in the house long enough to pay off the loan transaction charges (points, title insurance, attorney’s fees, etc.).

A fixed-rate mortgage could be your best bet in a rising interest rate environment, if you plan to stay in the house for several years. An adjustable mortgage may suit you if you will be moving within a few years, but you need to ensure that you will be able to handle increasingly higher payments should interest rates rise.

One way to use mortgage refinancing to your advantage is to take out a new mortgage for the same duration as your old mortgage. The lower interest rate will result in lower monthly payments.

For example, if you took out a $150,000 30-year fixed-rate mortgage at 7.5 percent (including transaction charges), your monthly payment is now $1,049. Refinance at 6 percent with a 30-year fixed-rate mortgage of $150,000 (including transaction fees), and your payment will be $899 per month. That’s a savings of $150 per month, which you can then use to invest, add to your retirement fund, or do with it whatever you please.

Another option is to exchange your old mortgage for a shorter-term loan. Your 30-year fixed-rate payment on a $150,000 loan was $1,049 per month. If you refinance with a 15-year fixed mortgage for $150,000 — including transaction costs — at 6 percent, your monthly payment will be $1,266. This payment is only $217 more than your previous mortgage, but your home will be fully paid for several years sooner, for a savings of more than $150,000! And some banks around the country are beginning to offer 10- and 20-year mortgages.

Either way you look at it, it’s an attractive idea.

If you’re considering refinancing your mortgage, consult your financial advisor and determine whether refinancing your home would be a good move for you.

MONEY SAVING TIP:  Translate dollars spent into hours worked to earn those dollars spent.

Money in itself means nothing. It’s little green pieces of paper. It is what money stands for that means something. When you go to work, you are trading the power to control what you do with the hours of your days to an employer in exchange for those little green pieces of paper. To save well, you need to keep in mind what it is that is at stake when you spend some of those little green pieces of paper. The real cost of buying stuff is losing power over what you do with your time.

 If you earn $25 per hour, a $50 expense is really the loss of control over two hours of time. Money can’t buy you love in a direct sense, but not spending money can buy you back control of your time, and you can then use your time to do things you love.

DID YOU KNOW…how to tell when BOGO and 2-fer deals are good?

BOGOs (buy one, get one), two-fers (two for the price of one) and bundled-item promotions successfully tempt you into shopping more often and spending more to raise the store’s number of sales as well as ticket averages, or amount of each sale. They’re not always a good deal for you if you’re not familiar with the store merchandise and its regular prices. “You’re not saving if you are actually spending more than you planned,” says Underhill.

Resist the urge: “Know your favorite retailers, brands, regular prices, promotions and discounts — and always check the clearance area first to find a similar item on sale to avoid buying two of anything and spending more,” says family financial expert Ellie Kay, author of “The 60-Minute Money Workout.“

“Ask yourself, ‘Do I really need two sweaters or two of the same jeans?'”

www.bankrate.com