More Than Finances

Get your finances in order!

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Take Advantage of the Housing Market to Become a Landlord

One way to build wealth is to become a landlord.  As you gain rental properties, you will have more and more passive income at your disposal, which can help supplement your day job income and increase your cash flow.

Take, for instance, Matt and Jessica who bought a home 10 years ago and have been aggressively paying down their mortgage.  Now, they only owe $50,000.  Despite the market, their home has retained its value, and they have $155,000 in equity in the home.

Since they bought the home 10 years ago, they have also saved aggressively by working side jobs in addition to their day jobs—Matt is a D.J. and Jessica is a photographer.  They have banked all of their side job money and now have quite a large amount.  They have decided to take advantage of the historically low interest rates to buy a bigger home.  However, they won’t be selling their current home; they will instead rent it out and become landlords.

If you are in the market for a new, larger home, there are a variety of home loans available to you, so when preparing to buy a bigger home, you need to determine what mortgage is the best fit for you personally.  Should you take out a 5 year adjustable rate mortgage (ARM) and take the chance that mortgage rates will be lower than they currently are, or should you take out a fixed rate mortgage with the assumption that today’s rates are quite good and locking in those rates would be wise.  Using  mortgage calculators as well as talking to a mortgage broker or loan officer can help you choose the mortgage that is right for you.

With careful planning and the right mortgage, you can find yourself in the enviable position where your tenants pay for your own mortgage payment through their rent payment.  Then, you can continue to grow your own wealth and, if you are interested, buy additional properties.

While being a landlord is sometimes difficult, such as when you have tenants who cannot or will not pay or when your property needs to have expensive repairs, it also has many financial perks.  You can grow your wealth and develop a passive income stream that can give you a good return on your money for years to come.

People enter the rental market through a variety of means.  If you are thinking about becoming a landlord, consider waiting until you plan to move to a larger property.  Then, you can use your former home as your first rental property.  You will know exactly how the property has been taken care of and what condition it is in, so you will not have any surprises as you might if you were buying a new property.

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Consider Cash Flow When Investing in a New Company

If you are new to investing, you may wonder how to successfully analyze a company’s financials.  Many people look at the company’s net income, which is an important factor.  However, you should also consider other numbers such as the company’s statement of cash flow.  A U.S. or U.K. based company’s cash flow management can tell you a great deal about the company, and, therefore, whether or not you want to invest in the company.

What to Analyze on the Statement of Cash Flow

When analyzing the company’s statement of cash flow, there are three important parts to consider—operations, investing and financing.  Each piece gives you a separate piece of the company’s corporate finance strategy and analyzing all of them together helps you determine if the company is financially strong and a company you would like to invest in.

The operations piece of the cash flow report tells you how much money the company can generate internally.  The investing piece shows you how much the company is spending for acquisitions, investments, property and equipment.  It also shows you how much the company is bringing in through their investments.  Finally, the financing piece shows how much the company is spending to service their debts as well as the debts they have recently paid off.

Another important piece to consider is how often the company is issuing cash dividends as it takes cash to do so.

When you consider net income as well as the company’s statement of cash flow, you can get a fuller picture of a company’s stability and financial success, which in turn will help you determine if you want to invest with them.

Steps for an Investing Novice

Of course, a new investor may want to think twice about investing in individual companies without guidance.  A better strategy for a first time investor may be to invest in mutual funds so the risk is spread out over several companies.  As you invest more and become more comfortable with investing, you can begin to invest small amounts into individual companies that you research careful.  As your confidence and, hopefully, investments grow, you can begin to invest larger sums.

Likewise, you can hire a financial planner, but it is still in your best interest to do your research and feel comfortable with the company you are investing in because it is your money.  If you lose that money due to a bad investment, you will suffer the financial consequences, not your financial planner.  When investing, no one cares about your money as much as you do, so invest wisely after careful planning and research.

Post by Melissa

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5 Ways to Pay Your Tax Bill If You Don’t Have Enough Cash

For many, tax season is a relief because they know they will be getting a large tax refund.  However, a few people are hit with an unexpected tax bill.  If you have to pay a tax bill this year and don’t have the cash available to pay the full amount, pay what you can.  Beyond that, you have several options:

  1. Take a loan from the bank.  If you have good credit, you may qualify for a loan from your bank.  However, this process may take a few days, and not everyone will qualify.  If you do qualify, the bank will probably offer you a lower interest rate than the other options listed below.
  2. Pay with your credit card.  True, you will be paying for your tax bill at up to a 19.99% interest rate, depending on your credit worthiness, but it may be worth it to avoid paying late penalties to Uncle Sam.  If you have good credit, you could always try to open a credit card account with a 0% introductory APR and pay it down before the introductory APR expires.
  3. Get a cash advance.  A cash advance can be a good source for short term loans.  However, make sure you understand the terms and be sure to compare interest rates to make sure it is better to pay the interest rather than the penalties you may have to pay the government.
  4. Take out a peer-to-peer lending loan.  You can apply for a loan through Prosper or Lending Club.  You will need to submit some paper work detailing your current credit worthiness, and then members can choose to “invest” in you and fund your loan.
  5. Borrow from friends or relatives.  If you have no other options, borrow from friends or relatives.  Make sure to make timely payments so you don’t affect your personal relationship due to borrowing money.

Tax season typically causes a great deal of stress, especially when you discover you owe money and don’t have the money to pay readily available.  If you owe a large bill, you may want to gather money from a number of sources.  While you can make payments to the government, there are hefty fees to pay, and the consequences for not paying your tax bill can be severe.

Once you have made your tax payment, you will want to pay off the loans as quickly as possible, especially since many of the sources of quick money have high interest rates.  You may even consider taking on a second job until the loans are paid.  While facing an unexpected tax bill can be stressful, there are ways to pay.

Post by Melissa 

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Cheap Apartment Pitfalls to Watch For

If you see a sign for an apartment that you really like, and the price is affordable, it might not be the deal you imagine it to be. Many apartments out there tout great prices and claim that they have the best deal out there. While the value might not be terrible, the apartment might have a lot to be desired once you actually move in. There could be a disquieting reason the rent is so low.

Bugs

The rent price might be really cheap and the apartment layout is amazing. You sign the lease immediately and can’t wait to move in. However, you quickly realize that there are a million bugs and there is no one to deal with it, or staff doesn’t really care. So, while your rent is really low, you are not sleeping at night because ants are crawling everywhere and the spiders are meeting in the corner of the room for drinks.

Noisy Neighbors

There might be a reason why the rent was so low. The apartment wasn’t rented because it is just so loud. Maybe the neighbor plays music all night long and you can’t sleep. If you live in a city, you could be living in a bad part of town where you hear nothing but gunshots and loud arguments all night long. Certainly, cheap apartments can never compensate for this pitfall.

Poor Landlord

After a few months, you realize you aren’t staying any longer than the lease states you have to. However, your landlord is so cheap you don’t get your security deposit back despite having an immaculate apartment when you leave. While you can take your landlord to court, are you willing to invest that time and money into doing so?

Most landlords are going to come off as nice and appear to be your best friend until you sign your lease. Make sure you take pictures and fill out a condition report so that your landlord doesn’t come up with an excuse to keep your money, or try to evict you for some nonsense reason.

Keep in mind that you should never ever rent an apartment without seeing it first. If the landlord won’t let you see it, do not send any money or agree to take the apartment!

Your landlord might also pull a nice little trick where they don’t pay the mortgage on the house you live in, so you are foreclosed on without any recourse. It would be hard to get your rent back, or at least any of the rent you paid, so you are stuck looking for a new apartment on short notice.

Lease Terms

Most leases are one-year deals, but watch out for special deals that lock in your rent for longer than one year, or will have increases after the first year. This isn’t really bait and switch, but some creative language that makes the deal sound better than it really is. Make sure you are reading your lease and understand what you are signing before you move in.

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Is the poor economy eating into your savings?

There is no escaping the fact that these are tough financial times and many Americans are finding it difficult to survive on the money in their checking account.

While everyone knows how important it is to have savings, it can sometimes be impossible to get through the month without dipping into them.

With interest rates so low, it is undoubtedly a better idea to use savings than to take on extra debts such as credit cards to pay for essentials.

But the real question remains, are there alternatives to constantly spending money from the savings account in order to have enough money to survive?

The first step may sound obvious but few people take the time to do it properly and that is to plan a budget.

Sit down and write out your household expenditure and work out where you are wasting money. Looking at the last three months of spending from your checking account can be a good way to work out where the dollars actually go.

Once you have identified any areas where expenditure could be cut out, the next step is to make some savings.

Research has shown that most people are not very good at shopping around to get the best deal; once they have signed up with an insurer for example, they tend to stick with them at renewal.

Switching insurer or even changing to online shopping with a cheaper grocery store can bring considerable savings yet few people bother because of the effort involved in researching. A quick way to bring some of the best results is by using comparison sites to find the best deals.

Many experts recommend paying for everything with cash rather than charging it when you are trying to save money. This is a great idea as it helps give you a better idea of how much money you are spending but sometimes, a credit card can actually save you money.

This may sound like a contradiction but using the right kind of credit card could end up not costing you a cent and actually earn you money or bring savings.

Shop around the market and find a credit card that offers good rewards that would be useful with either cashback or discounts at your grocery store for example. These are things that would save money on basic living essentials rather than luxury items such as cheaper vacations or flights.

Once you have your card, use it for everything you can that month. Charge everything rather than paying cash. Just keep track of how much you spend and don’t go over budget.

When the bill arrives, pay it off in full so you do not get charged any interest. The money you have spent on your card will quickly earn you discounts or cashback, depending on the card you chose and as you paid the bill in full, you will not have any interest charged. Hey presto, you have a credit card that actually bring you savings!

The other way to protect your savings is by increasing your income. Is it possible to get some overtime at work or help out another department to earn some extra dollars? You could also think about taking on a small part-time job in the evening or weekend; this will help pass the time without spending money as well as providing more income.

Another option to boost your income without taking on more work is by selling unwanted items you may have around the home. Try advertising in the local paper, have a yard sale or even sell them online. One man’s junk is another man’s treasure and this not only de-clutters your home but also boosts your savings with the minimum of effort.

There is no escaping the fact that these are tough financial times and many Americans are finding it difficult to survive on the money in their checking account.

While everyone knows how important it is to have savings, it can sometimes be impossible to get through the month without dipping into them.

With interest rates so low, it is undoubtedly a better idea to use savings than to take on extra debts such as credit cards to pay for essentials.

But the real question remains, are there alternatives to constantly spending money from the savings account in order to have enough money to survive?

The first step may sound obvious but few people take the time to do it properly and that is to plan a budget.

Sit down and write out your household expenditure and work out where you are wasting money. Looking at the last three months of spending from your checking account can be a good way to work out where the dollars actually go.

Once you have identified any areas where expenditure could be cut out, the next step is to make some savings.

Research has shown that most people are not very good at shopping around to get the best deal; once they have signed up with an insurer for example, they tend to stick with them at renewal.

Switching insurer or even changing to online shopping with a cheaper grocery store can bring considerable savings yet few people bother because of the effort involved in researching. A quick way to bring some of the best results is by using comparison sites to find the best deals.

Many experts recommend paying for everything with cash rather than charging it when you are trying to save money. This is a great idea as it helps give you a better idea of how much money you are spending but sometimes, a credit card can actually save you money.

This may sound like a contradiction but using the right kind of credit card could end up not costing you a cent and actually earn you money or bring savings.

Shop around the market and find a credit card that offers good rewards that would be useful with either cashback or discounts at your grocery store for example. These are things that would save money on basic living essentials rather than luxury items such as cheaper vacations or flights.

Once you have your card, use it for everything you can that month. Charge everything rather than paying cash. Just keep track of how much you spend and don’t go over budget.

When the bill arrives, pay it off in full so you do not get charged any interest. The money you have spent on your card will quickly earn you discounts or cashback, depending on the card you chose and as you paid the bill in full, you will not have any interest charged. Hey presto, you have a credit card that actually bring you savings!

The other way to protect your savings is by increasing your income. Is it possible to get some overtime at work or help out another department to earn some extra dollars? You could also think about taking on a small part-time job in the evening or weekend; this will help pass the time without spending money as well as providing more income.

Another option to boost your income without taking on more work is by selling unwanted items you may have around the home. Try advertising in the local paper, have a yard sale or even sell them online. One man’s junk is another man’s treasure and this not only de-clutters your home but also boosts your savings with the minimum of effort.

 

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