3 Ways to Save Money Towards a Mortgage

With the economy recovering steadily after the debacle of 2008 and income in a majority of sectors rising nicely, it’s as good a time as any to start working on your financial goals and improve on any areas that may require your attention. Although paying off your mortgage might sound like an overtly ambitious plan, especially if you’re recently gone for a long term refinancing, it makes sense to give serious consideration to paying off your home loan since it can have a positive impact on your finances in the long run.

Mortgage

Not only can an early mortgage payoff ease off a lot of burden off your shoulders, it’ll also net you considerable interest savings over the course of time since you’ll be free from scheduled monthly payments over the next couple of decades or more. However doing this not only requires a lot of discipline and intrinsic motivation, but also some smart moves from your side. Since it might be hard to cut down on expenses for most of you, we’ll cover some innovative ways of saving money that can help you put extra money towards your mortgage:

1. Check out Cashback Cards

Thanks to increasing competition, companies today are coming up with newer and better products in order to win over customers. Since this ends up benefitting end users like us, this usually results in savings over conventional products. Take for example cashback credit cards that offer you Cash Back on your everyday spending, thus lowering your expenses indirectly and resulting in considerable savings over a period of time, allowing you to put extra money towards your mortgage payments. This is exactly the reason why cashback schemes are becoming so popular these days. If you haven’t looked into them yet, then you should do that soon!

2. Find Good Deals

Another interesting way of lowering your expenses and augmenting your savings is by looking for good deals on products that you regularly consume. Even on medium to high ticket items, this can end up saving you substantial amounts – directly or indirectly since you could either get decent discounts on most products or other lucrative deals in the form of special offers. Usually it’s best to compare the prices of the items you want to buy online since you would be able to come across sites that offer the same product for much lesser prices than the others.

3. Opt for Alternative Products

While the above two methods would work well for most of you in saving money towards a mortgage, if you can combine it with this third one, it would be even better. Since there are alternative products available that are almost equivalent in quality to those manufactured by the top brands, you could look into buying these as there is usually a premium charged by the best companies for their products, which means if you switch over to an alternative brand or product, you could save considerable amounts. While these savings might seem small to you initially, they keeping accruing over a period of time and you end up saving a decent sum month over month!

Top 3 Money Saving Tips for Young Adults

Being a young adult, we have a lot of luxury to mould our future and do things that only our age group can afford. You can not only decide to embark on whatever journey you want, but also manage to shape the direction of your efforts, unlike sometime in the later years when people start feeling they cannot afford to take the same risks because of the position in life they find themselves to be at.

However in order to make the most of these years, you should ensure that you not only live to your utmost potential but also save as much as you can, for the amount you save right now would turn out to be extremely handy in the years to follow. So here are some tips that you can implement right now to have a good time later on:

 1. Set up Automatic Savings

Whenever we tend to get a paycheck, we end up spending most part of it, knowing that another one will be on its way soon as a new month starts. This is exactly the thinking that turns out to be the biggest obstacle in the way of saving money, especially in the case of young adults as they are all too keen on having a good lifestyle, without worrying about saving money for the rainy day. So the best way to keep this in check is by setting up automatic savings that will ensure a certain part of your income automatically ends up being saved, while you can do whatever you want with the best (though I’ll advise you to be prudent about it)! Talking about paychecks, on a sidenote you can even order checks online in case you want to go for uniqueness and are looking for something customized.

2. Look for Discounts Online

A few years back I used to order stuff whenever I felt I needed it, without bothering to search for the best deals. However as time passed, I realized if I had not been that naive, I would have managed to save up a substantial amount over time, thanks to the dozens of offers available at different times on the same products. So I would recommend looking for the most lucrative offers online on whatever you intend buying, and also comparing the prices on different websites in order to find the lowest prices. Trust me, you’ll be able to find some really good discounts at times that can significantly lower your expenses on purchases.

 3. Cut Down on Cellphone Expenses

As young adults, one of the biggest expense for us turns out to be our cellphones, with dataplans and call charges costing a decent amount every month. Since nearly all network providers have special deals that allow more minutes of talktime for a reduced sum, it’s wise to go for that as you’ll manage to save some decent money every month just because of that.

The Best Free Online Tools to Manage Your Finances

With all the technological advancements in the last few years, coupled with the rise in efficient online services in diverse sectors, users now have more choice than ever. As with many other domains, a host of impressive online tools are available for managing your finances. If you are not using them, you’re missing out on an excellent opportunity to better manage your financial life.

So here are some of the best free online tools that not only provide a great medium to keep track of your finances but are also free to use:

1. Mint.com

online money management tools

Perhaps the most popular and widely used tool for the amount of features it offers. And rightly so. Very few, if at all, other online tools come close to offering such a complete set of money management tools that not only help your keep track of your expenses but also let you plan goals and budget if you wish to do so.

Mint has recently come up with its own Android app as well, which means it is easier than ever to manage your finances right from your smartphone! Of course the best part is both the online service as well as the app are 100% free!

2. SmartyPig

Another one of my favorite online tools, SmartyPig is a simple yet effective service focused on helping users accomplish their specific saving goals. Essentially it is a free online piggy bank that lets users design their own financial goals, by way of saving up money for specific items and helps them reach that goal. Although it is not a complete money management tool per se, but it is extremely effective when it comes to creating and reaching your financial goals.

The best part about this tool however is that if you save up money in an online account with them, you can redeem it for cash for a gift card at specific stores that offer you great deals and discounts.

3. Buxfer

A lesser known, upcoming online money management tool that is nonetheless feature rich and easy to use. It comes with a nice user-friendly yet modern interface and offers effective features to help users manage expenses and group their finances. The tool uses Google Gears to store account login and credentials on your computer so if you’re one who doesn’t like to trust new companies with their credentials, this one might be perfect for you.

Apart from offering usual money management features like credit card and bank account linking options, the USP of this service is that it lets you manage your shared expenses with friends and divides up each person’s shares and alerts the other group members as well, something that some find awkward to do in person.

Best Budget Exercise for Saving on Gym Costs

Save money gym

Image taken by 401(K) 2013 on Flickr

Getting fit and keeping fit has a wide range of benefits in terms of overall health and general well-being. It doesn’t have to involve a lot of money either, there are plenty of exercise options for those whose budget doesn’t stretch to the gym.

Walking

Walking is possibly the most basic exercise of all and it’s very good for you. For those who want to keep track of their fitness, pedometers can be bought very cheaply, in fact people with smartphones can download them for free. Other than a pair of sensible shoes, walking requires no special equipment and can be done anywhere at any time. You can even walk on the spot indoors if the weather is bad or if you’re really short of time.

Cycling

For those who haven’t been on a bike since their childhood, there is thankfully a lot of truth in the old saying “It’s like riding a bike, you never forget once you’ve learned”. Many people find that they can literally start peddling again as if they’d never taken a break. While buying a bike is an up-front cost, it needn’t be an expensive one. There are plenty of second-hand bikes available at reasonable prices and these are typically more than adequate for general leisure cycling and gentle commuting. Bicycles can also be bought with the help of the “Cycle to work” scheme, so if you are in employment, it’s worth asking about this, even if your company doesn’t already offer it as it’s very easy to set up. Cycling is not only good for you, it can save you money. For those looking to keep costs down, this site has a wide range of resources on how to budget.

Skipping

Boxers have used skipping in their training for years as it is a great form of aerobic exercise. It’s become increasingly popular as a general workout and there are now a variety of DVDs and online videos available to inspire those who want to do more than just jump. The best way to find these is to search under the U.S. term “jump rope” rather than the British term “skipping rope”. The great news for those with limited exercise space is that there are now ropeless skipping ropes, which have weights attached instead of a rope. This gives users the same workout as with a standard skipping rope but is much better for smaller spaces. The best search terms to use to find these are “cordless skipping rope” and “cordless jump rope”. These often have digital meters in them to count the calories burned for extra motivation.

Gardening

If you don’t have a garden, or if you’ve created a low-maintenance garden, then it’s still possible to get some free, green-fingered exercise by signing up as a volunteer in a public garden. There are plenty of them around the country, even in the middle of cities and they welcome extra help. Alternatively, you could just offer to help out those who find it difficult to do heavy work such as digging, for example elderly people. Again, there are often local charities who can help co-ordinate this.

Exercise DVDs

Workout DVDs cover all kinds of exercises from straightforward aerobic workouts to stretching and many different kinds of dance. It’s worth looking at reviews before buying one since the sheer volume of them means that there is wide difference in the quality of the best and the worst. The best DVDs will have instructors who understand that people exercising at home may need a bit of extra motivation to keep going on their own and will have a good presenting style as well as a good workout.

There are lots of ways to keep fit without having to spend a lot of money on monthly gym memberships. Keeping a tight budget will help you make the most of your money and adding exercise to your daily routine will help keep you healthy too.

This site has a wide range of resources on how to budget

About the author:

Jordan is a keen blogger who enjoys writing about money and finance topics.

Saving For The Future: What We Can Learn From The Chinese

Saving for the future

“A penny saved is a penny earned.”

–          Clichéd but true.

There is an extremely strong case to be made philosophically for saving money. All the ancient wisdom the world over is geared toward emphasizing on saving for the rainy day which never announces its arrival. Because who knows what tomorrow may bring? Today is all we have, and this day is our best chance to take care of tomorrow.

See? Even a mere reference to the time-tested method of saving can’t be pulled off without devolving into platitudes.

And yet it is proving to be extremely difficult for people in this country to make any substantial savings for the sake of their own future. In this post we take a look at why that is and how to get around it. Furthermore, since there are countries on this very planet that are able to save impressive amounts of money year after year, it only makes sense to take a leaf or two out of their books and examine if their methods can help us too.

It is no secret that the Chinese are master savers. China’s national savings rate is extremely high, for a number of reasons – cultural, socio-economic, institutional, and governmental.

The big nations of the West, however, seem to be at the opposite end of the spectrum when it comes to saving. I’m only stating the obvious when I say that the Americans and the Chinese are culturally poles apart. Next to the Chinese an average American looks extremely wasteful, and next to us the average Chinese looks rather stingy.

But without being judgmental, if one is to go by the amount of money in the bank balance of an individual regardless of where they are from, it’s easy to see that those who save more are likely to be better off in the future than those who don’t.

So the first step for the Americans interested in improving their rate of saving is to bring about a change in their mindset.

They need to go from thinking that spending $$$ = cool, to saving $$$ = super cool.

How to do it?

1. Resist being easily manipulated by the media.

Buying an endless number of new shiny things is NOT the best use of your heard-earned cash. Yes, we need to keep spending in order to keep the economy moving but nobody said we needed to splurge on mindless purchases. Don’t let the advertisements tell you what you need and what you don’t. You be the judge of that. Keep non-essential stuff at a minimum, especially if you have a big family to support and loans to pay off.

 2. Distance yourself from the spending culture.

The institutions in China encourage their citizens to save, whereas the American ones encourage us to spend, spend, and spend.

While it is not desirable for the consumers of a free market economy to not loosen their purse strings at all, the problem with encouraging people to spend is that some of us do not realize that spending is just one part of the overall financial equation, the other parts being earning and saving. All three of them together keep your financial life in balance.

When the government asks you to spend, it is not meant to be taken as a license for you to be reckless. They assume you know what is and is not within your reach, and also the consequences of forgetting that.

3. Think solid numbers instead of wishy-washy goals

Your disposable income and the saving rate both need to be defined and set at a percentage.

To give you a suggestion, save 30% of your monthly income. Put half of that away in a long-term saving instrument and forget all about it. (Whether to choose stocks, bonds, or anything else for this purpose would be your decision and would depend on your goals and the risk appetite. Treasury bonds, however, are always a safe bet.)

On top of your fixed monthly costs like the rent, food, gas, commute bills, etc., give yourself 20% of your total monthly income to spend.

The rest should remain in your bank account. You need to stick to this month after month, year after year because savings aren’t built in a day.

4. Encourage your family members to save as well.

If you have spendthrift individuals in your household, you need to rein them in urgently. As important as personal saving is the concept of household saving. The Chinese on an annual basis achieve an average household saving of almost 25%. The Indians save even more — 32% of their disposable income. That’s an impressive rate and let that be your goal too.

Whether it should be 25% or 32% is up to you. You can choose to save only 20% of your disposable income each month, but whatever percentage you choose, stick to it and make sure you end up achieving it.

Keep in mind that expenditures wary from month to month and sometimes big expenses come calling out of nowhere. It is also safe to assume that you would achieve an actual saving rate merely in the region of your targeted saving rate. For example, if you aim to save 20% of your monthly disposable income, you may actually end up saving 15% of it. So keep the target figure high for you to keep your real savings high, too.

5. Save as per your family needs.

The Chinese have small families, which translates into fewer people to spend on per family, thus directly affecting their savings rates.

For bigger American families, at least when the children are growing up, a high savings rate may not be feasible. But soon as any of the children start earning, say around mid-teens, jack up your monthly saving goal.

 6. Get a purpose in life

Working long hours to earn your money and then spending most of it on things you absolutely do not need is NOT what you were put on this planet for.

For people to have a healthy attitude to money they need to find some purpose in life, or you will keep turning to food and online shopping to while your time away and to make yourself feel good about a persistent emptiness in life.

A purpose, on the other hand, will give you something to look forward to and take your focus away from the ‘spending mode’ that seems to be the default setting for most of us.

 7. Think of saving as the best defense for yourself.

There is a “precautionary motive” to the high rate savings found in certain eastern countries. In both India and China, their respective governments do not sort their citizens out in terms of healthcare, housing, or education.

Besides, in developing countries inflation has the habit of going in only one direction – upward.

People who have lived in these fast developing countries for any considerable time, have seen their surroundings and economic realities change stupendously and in a very short time.

When your reality changes beyond measure and all you see are rising costs and government structures you cannot rely on, saving as much as you can is the best defense against an uncertain future.

Author Bio: 

Tracy is a Community Manager at The Hartford, which offers sustainable multifaceted financial services, including fidelity bonds. She’s @TracyVides on Twitter.

Can You Use Your 401(k) to Buy a Car

While taking a loan from your 401(k) is certainly frowned upon by most financial advisors, there are certainly some occasions where even the most stringent of advisors would give you a pass. It’s not recommended, but financial hardship does come knocking and your 401(k) could help soften the blow; it could also come to the rescue should a car desperately need to be purchased, a home, or if substantial, and expensive, repairs need to be done on your home. You can find out how much super you need to retire by checking out the new Suncorp site.

Regardless of the reason why you’re considering borrowing from your 401(k), there’s a lot for you to consider before to dive into the deep end with your retirement savings. Below, I’ve compiled a list of commonly asked questions, or simply questions that should be asked, on the subject of borrowing from one’s own 401(k) to assist in your decision.

Q: Will my employer allow me to borrow against my 401(k)?
A:
It completely depends on your employer and the plan that they have in place for their 401(k) program. You’ll need to contact your plan’s administrator to find out what the ins and outs of the plan are and see what stipulations they place upon loans – for instance, some employers only allow loans in the case of extreme financial hardship.

Q: How much can I borrow from my 401(k)?
A:
There will almost never be a case where you’ll be able to borrow the entirety of your 401(k), but generally, you can expect to be able to take $50,000 or less, or one-half of the vested plan benefits – whichever happens to be less. However, if your account only has $20,000 to its name, your borrowing power will be capped at $10,000.

Q: Do I have to repay this “loan”?
A:
Yes, of course; it’s a loan and just like any other loan, it needs to be repaid or you’ll face penalties. For a 401(k), you typically have around 5 years to make good on the loan and are required to make regular payments to cover both the principal and the interest quarterly. An exception would be if you used the funds to purchase a home; in this case, you would be allotted more time to settle the loan.

Q: What happens if I don’t repay the loan?
A:
It’s highly important to repay all loans borrowed from your 401(k) in the exact manner that it calls to be repaid. If you don’t follow through on repayment – and are under the age of 59 ½ — the loan amount will be marked as a taxable distribution and you’ll be saddled with a 10% federal penalty tax; this is in addition to income tax on the outstanding balance.

Q: Are there any advantages to borrowing money from my 401(k)?
A:
There sure are, but only if you repay the loan. As long as the loan gets repaid in full, you’ll enjoy taking out a loan that is tax and penalty free – all for the same competitive interest rates as banks that offer similar loans. However, instead of those interest rates going to the bank, you’re simply paying them back to yourself – they go right back into your account, since you borrowed against yourself.

Q: What are the serious disadvantages?
A:
As mentioned, if you don’t repay the loan, you could face some serious taxes and penalties – that’s the big one. Also, you need to make sure that you’re happy with your job before you borrow. Should you leave your job with an outstanding balance, you’ll only have 60 days to repay the loan in full. Finally, by dipping into your 401(k) early, you’ll lose all tax-deferred interest that may have built up on the funds in your 401(k).

How to Sell Your Unwanted Stuff For Cash

With people being made to believe that buying stuff is good, almost everyone these days wants to get hold of the latest things in the market, be it the newest cellphone, the trendiest clothes, or the swanky new gadget that just hit the stores. Even though people get a high after buying things, it only stays for a few days and most of the stuff we end up buying impulsively tends to remain unused most of the time, due to which later we repent why we took the decision of buying it in the first place.

However not all is gloom and doom – especially if you’re one who has started realizing the need for smart spending and becoming financially independent. If you’ve made a vow not to repeat the financial mistakes that you’ve made in the past, you can take the reign of your life in your own hands and start controlling your decisions instead of being lured by things and getting swayed easily.

The best way to go about it would be to determine what things that you own are you not currently using or would only be using very rarely in the near future. Since they are not of much use to you anyway, you should immediately try to sell them off before their value goes down in the years to come. Since most of us are entertainment freaks, you would most probably be owning dozens of movies, games or music DVD’s. Clothing & misc. gadgets would also probably be on top of the list. If you’re thinking that it’s going to be a big hassle to sell all this stuff, you should stop worrying about it as now you can sell most of your online, without having to search for buyers by running an auction outside your house. For example, if you’re looking to sell DVDs online, then you can find several sites that make it a breeze for you to sell them off.

Similarly, you can also sell other items such as clothes, electronics, games, furniture etc. online and declutter your life, while getting some extra cash in exchange, which you could use to further improve your financial situation. Although it entirely depends on your what you want to sell, I would advise you to think with a clear head and get rid of anything that you haven’t used for a decent period of time. Though it would probably be hard to do that since most of us feel uneasy in letting go of things, just go for it since ultimately you would be the one who will benefit from it.

Five Strategies to Establishing an Emergency Fund

An emergency fund is something that everyone should have in order to secure that finances are taken care of in the event something unexpected happens. An emergency fund may also be referred to as a certain type of savings and you may designate your savings account to start establishing this fund.

Urgency Fund

There are several reasons why you may need this type of fund. Loss of a job, unexpected injury or car repairs could set you back financially if you don’t have money set aside. If you are working on credit repair, many credit repair companies will suggest that you set aside money for emergencies. The reason for this is mainly because you may not have access to credit cards or be able to raise your credit limit with an existing account. Here are five strategies for establishing an emergency fund and creating a nest egg for the future.

Set a reasonable goal

In order to make sure the right amount is being funded to your emergency fund, you need to take a look at the big picture of your overall finances. First, write down all of the income that you know will be coming in each month. List all of the expenses you have including utility bills, gas, household expenditures, mortgage and groceries. Any money left over after the bills are paid can be used for your emergency fund. Stick to a minimum amount and build from there until you reach your goal.

Cut back on extras

Be sure to cut back on all extras until you reach your goal amount. This means cut your entertainment bills and switch to free items, such as watching cable movies through wireless internet. Start clipping coupons for your next purchase and only buying expensive items on sale. Eliminate eating out until you have enough money to reach your emergency fund is also a good option.

Ask for help

If you are not the only person in the household, ask everyone to contribute a certain amount each week. This is a great way to teach children the value of a dollar and how to reach a financial goal. Have them do chores and contribute a certain amount to the fund. Explain to them the added security involved with having the emergency fund in the bank.

Automatic withdraw

To make sure you are not tempted to spend your money as soon as you get your monthly salary, set up an automatic withdraw through your employer and your bank. This way, you won’t ever see the money pass through your hands and it will start improving your financial health greatly and your emergency fund will have grown considerably as well.

Separate accounts

While an emergency fund is a type of savings account, be sure to keep your regular savings account and the fund separate. Your savings account should be used to build up household savings or for a specific event. Keep the emergency fund separate so you can really keep track of how much money you are putting toward your goal and how long would it take for you to reach it.

Following these simple steps will assure you have easy access to the cash you need, when you need it.

Valuable Tips to Keep Your Finances Under Control

Living a good and problem free life has a lot to do with effective finance management. Whether your income is a small or a big one, proper management of finance will surely save you from a many financial trouble and worries. You need to have good knowledge of managing finance efficiently.

Tips on Keeping Finances under Control

  • Set Your Priorities– You need to plan about your finances carefully. It is important for you to be clear about your needs and wants. If you really want to make some big purchases such as a car or a home, then careful planning is of utmost importance.
  • Prepare a Budget– It is extremely useful to prepare a guide on your expenses for the coming few months. It is extremely important to have a plan on your expenses. A proper plan will help you to chalk out how much amount you can spend in one month. You need to prepare a list when you go for shopping or to a grocery. You need to keep telling yourself that you must stick to your list. Sticking to the budget is always a good way in which you can stay away from financial concerns and troubles.
  • Your Spending Must Not Exceed Your Earning– It is never wise to spend in excess of your earning. You should not spend in excess with the credit card you have if you are not sure of getting payment for it in the month to come. It is utterly foolish to spend huge amounts thinking that you will be having a job in the next month.
  • Managing Your Debts– You need to pay the credit card with a lot of promptness. It is never wise to go over the credit limit. Late payments will cost you in excess. When the credit card providing companies are providing you with low rates of interest, it might happen that you end up paying higher fees at the end. Overspending and late payment will most likely put a stain on the credit report. Knowing the trick of managing a debt is truly a huge step that you need to take for managing your finances.
  • Know How to Save– You must make saving a habit. Infact, savings should be included in your budget. A certain percentage from your income should be kept aside as savings. Having sufficient amount of savings will always provide you with the confidence you need in the future and will help you to stay away from financial crisis.
  • Be as Informed as You Can– When you are making an investment or borrowing money, you need to be informed about the terms and the rates of interest. This will help you to keep yourself away from the financial troubles in the future.

On a concluding note, it can be said with certainty that the tips mentioned above will help you a lot in managing your finance. If you follow them seriously, it will not be a problem for you to live a life that is free of financial concerns.

This is a guest post by Alisa Martin who is a freelance writer, professional blogger, and social media enthusiast. Her blog Foreign Currency Exchange Rates focuses on Finance bloggers.

The Best Way to Save For Retirement

Personal loans for people with bad credit can greatly aid one financially as they approach their sunset years. Such loans will no doubt help you to get your investment plans on track and help you to meet your saving target. Note however that the loans come with high interest. If possible, it is better to free oneself from bad credit loans or multiple loans in order to secure a strong financial base.

Even people who don’t save know that spending all income is a misinformed lifestyle. This is because with time a person’s productivity goes down and as they become less industrious their lives become increasingly harder to bear as health begins to fail them. As the scale of productivity against needs go down, the savings one made in the better days come in to save the day.

The best way to go is having an automated deduction from the paycheck. The 401(k) plan deductions are usually done before taxation making the plan better than other personal savings. This denies the person liberty of spending what is meant for saving and enhances financial discipline. A figure of about 10% of the gross income is a safe way to go.

Whether one saves individually or to a retirement plan like the 401(k), the saving should be invested to yield some increase which is what stands for the gap of general devaluing of money that usually occurs with time. A diversified plan of investment is the best to ensure safety of the funds. However a person’s age should determine the kind of investments one chooses. Long term investments have better returns while the short term investments tend to gain less although they rapidly make the returns.

Can one take a loan and use it as an investment? Personal loans for people with bad credit are very much encouraged as long as you have a solid plan to invest the money and are sure of repaying the loan. People running a good credit history can borrow low interest loans to grab opportunities that would otherwise pass by if they don’t have the cash. Whether or not taking a loan to invest is a wise move entirely depends with the cost of the loan and the benefits of the investment.

One is encouraged to contribute the maximum allowed by 401(k). Beside that there are other investments to which a person can direct any extra coin they wish to save. The mutual funds one chooses can be in the following distribution; aggressive growth 25%, mid growth 25%, growth and income 25% and a balanced international fund 25%. The short term yielders should be reinvested again and again to create a continually growing equity. This way one can even incorporate short term and low cost personal loans for people with bad credit to boost the investment and help in achieving an already set aim rapidly.

There is a need to take charge of the investment plan because the social security alone cannot be sufficient in affording one a comfortable life in old age. Just remember to remain calm and well composed even when stocks you invested in seem to dwindle. Retirement investments are long term ventures and the day’s activities should not worry you.