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September 2019

Common Investor Mistakes

  • Believing one guarantee covers everything. When you hear, “Your investment is guaranteed,” you’ve got to ask yourself, “What is guaranteed? Is the return guaranteed? Is my principal guaranteed?” Don’t take the word “guaranteed” at face value. Make sure you understand what’s guaranteed, then question who’s guaranteeing it. You don’t want your guarantee in the hands of Conned You Company.
  • Making a purchase or sale based on a previous price. “Picture framing” is an interesting and potentially dangerous behavior. It works like this: You believe an investment has a certain value. You’re so proud of that beautiful value that you take a mental picture of it, frame it, and hang it on your mind’s wall. Every day you look at that picture. You love it. Then one day the market goes down, and now your actual value is less than your picture. But you decide not to sell your investment until it matches that beautiful number that’s in your framed picture. You have to look at the investment and its future. Its past worth is not important. The picture you framed is irreverent. You have to look at the probable future of that investment, and sell if need be.
  • Owning too much of the same thing. Some people think they’re diversified, but in reality they are not. Make sure you have different things in your portfolio, so that some zig when others zag.
  • Not having an exit strategy. A rising market raises all ships, but it will go down eventually. If you don’t have an exit strategy, the market could take away all your gains when it falls. If you want financial peace of mind, you have to know in your heart that you have a strategy that can protect you from bear markets.

Debt Settlement Trap

Debt settlement may be a good option for some debtors but usually by the time a person end up in my office it is no longer an option. The credit cards are out of control or the mortgage is too far in arrears to save the home through a repayment plan. There are also a lot of companies marketing to debtors the virtues of debt settlement. These advertisements rarely explain the negative aspects of this process.

Debt settlement doesn’t usually mean that a debtor pays a small fraction of the principal to satisfy the creditor’s claim. Debts are usually settled for lump sums that are still substantial amounts. What the creditor doesn’t explain is that at the end of the year the forgiven portion of the debt is reported to the Internal Revenue Service as income and the debtor pays taxes on it, so in the end there is very little net savings.

Taxes aren’t the only problem though. Creditors offering debt settlement usually require that the debtor pay off the debt in a lump sum. If the debtor had the money to pay off the debt they probably would have paid it. Since the debtor doesn’t have the money he has to save it over time, and during this time the debtor’s remaining debts are still accruing interest, so that once the original claim is settled the remaining debt has continued to grow so that the debtor hasn’t reduced the amount still owed.

There are some instances when debt settlement may work, but for most people the math simply doesn’t work. Before settling a debt it is a good idea to seek help from a professional with experience in financial issues. Bankruptcy attorneys often represent debtors in other types of financial matters, such as loan modifications and debt settlement, so they may be a good advisor on these types of matters. An accountant may also be able to advise you whether your budget can be adjusted to make paying off the debt possible.

Get Rid of Your Debts

Get a Credit Report

For those that are currently struggling with debts, you may find that some debts you may not even owe. Since the government allows you to receive a free credit report each and every year, it’s best to request a credit report to make sure that everything on the credit report matches up to what you owe. If you see any discrepancies or errors, it’s best to call up the credit reporting agencies to get these issues fixed as soon as possible.

How Are You Going to Pay?

After you have glanced over your credit report and you have created a spreadsheet on all the creditors that you currently owe, it’s time to sit back and think about how you’re going to pay off each and every bill. What you’re going to want to do is take your highest interest rate account and put it at the top of the list, and from there you’ll want to list each and every account after that in interest rate order. While getting rid of the highest interest rate based account first is ideal, another strategy is by attacking the smaller debts first, making it seem as if more debt is disappearing.

Attack the Debts

Now it’s time to attack the debts. What you’re going to want to do is put as much money as you can toward account number one while paying the minimum amounts toward the rest of the accounts. Remember that you’ll never want to skip a payment because late fees will only make the debt pile up higher. It might help if you to write out a personal check for each bill at the beginning of the month and then mail them as the funds become available. That way you know that have accounted for everything. Continue to do so until the list starts to dwindle down. Remember that while larger lists may seem like they are going to never end, they will come to an end sooner or later if action is taken.

Earn More Income

Now that you’re ready to attack the debts and you have your list in hand, you’ll want to make sure that you’re bringing in enough money to fight off these debts. Since money doesn’t grow on trees, it may be ideal to pick up a second job or even consider investing into an education if your current job just isn’t cutting it. When it comes to the career world, the possibilities are endless.

About Gold Coins and Rounds

The reason why all round shaped pieces of precious metal aren’t called coins, but also rounds, is that the word “coin” is reserved by the United States Mint for circulating currency minted by government mints world wide. Most investors that buy gold coins, does that because they consider them as a more secure product to invest in, since the coin is backed by a government and will most likely be in production for a long time.

The purity standard for these coins is somewhat different from silver. Since it’s such a malleable and soft metal, pure gold coins are very fragile and sensitive to mechanical wear and impact. In the old days when real gold was actually used to make circulating currency, the gold purity was lowered by adding silver and copper to the gold. This alloy is commonly know as crown gold and are still used today in some popular gold coins, like the American Gold Eagle (which features the statue of liberty on the obverse and a soaring eagle on the reverse). To compensate for the lack of gold in this alloy (91.67%), the American Gold Eagle is heavier than other coins. This makes the total amount of pure gold contained in the American Eagle coin exactly 100% of the weight stated on the reverse side of the coin.

Other gold bullion coins usually have a purity of about 0.999. In other words, they have less than 0.1% impurities. Canadian gold coins, like the Gold Maple Leaf made by the Royal Canadian Mint (RCM) are sometimes made with a purity of 0.9999, which is amongst the finest of all mass produced solid gold coins in the world. All of these coins are strictly for investing and collecting, and must be handled with the utter most care, since damaged, scratched, or otherwise out of state conditioned coins will have a reduced value.This will again affect the price of his investment, once the investor advertises his gold coins for sale.

Picking the Right Mortgage Advisor

  • Bank – The first tip is that you should not use a bank. You might be shocked at this but this is what people usually do, but then, they haven’t got all the information about the financial services that are available to them. A bank advisor will want you to choose the financial services that they offer. They have to meet targets and sell the banks services. So, they might not listen to your requirements as much as an independent advisor. They will just be interested in selling the banks financial services.
  • Independent Advisor – Your best bet would be to go with an independent mortgage advisor. This is because they will have access to everything that is available to you. They don’t have any allegiances to one service over any others, so they will listen to the requirements that you need, and then put you in touch with a service that is right for you. They won’t push you in one direction over another because it is better for them, or they get more commission. They will do their best for you, to make sure that you have a mortgage that is better for your circumstances.
  • Interest Rates – One of the most important things about your mortgage will be the interest rates. You need to make a choice between having fixed interest rates or variable interest rates. With fixed interest rates, you will pay the same amount of interest on your mortgage, so the monthly payments will be the same for the duration of your mortgage. This is better for some people because they are able to better plan their budget because they know how much will be coming out each month. However, other people will opt for variable interest rates. This is where the amount of interest that you will pay, will change depending on the market. So if the market is going well, then the interest will be lower. Therefore, your payments will be lower. But, if the market is bad, then you will pay high interest and your payments will be higher. Therefore, you won’t know how much the payment is per month. Some people choose variable rates because they think that they will have lower interest and so their payments will be less. But, they are taking a gamble because they might find that one month, their payments are incredibly expensive.
  • Comparison – It might be easier for you to use a comparison company because they will have access to all the services that are available to you. They will be able to key in your requirements, to their computer and with a simple push of a button; they will be able to find you the exact service that you need.

Setting Realistic Financial Goals

The first step in seeing yourself out of trouble is to estimate how big the trouble is in the first place. You need to create a spreadsheet containing your monthly net income and your expenditures. Be as detailed as you can, because it is important to see exactly why you can’t make ends meet and where you could possibly cut from in order to be able to recover.

The main rule of a healthy family budget is to always spend less money than you make. You should setup a savings account and direct 5%-10% of your earnings into it prior to paying any bills. Even 2% of your monthly income could be something if you stick to this habit long enough. The key thing here is to set this money aside before spending on everything else, otherwise your best laid plans won’t work, especially if you are already in trouble.

Entertainment is good, but it shouldn’t throw you into even bigger debt. Budget for some inexpensive entertainment every month, but consider cooking with friends rather than going to expensive restaurants, for instance.

When you make your family budget, don’t forget to include expenses that occur only once or a few times a year. Insurance, car maintenance or medical expenses may fall into this category. Don’t overlook them, because they are important and they will ruin your budget if you don’t expect and plan for them.

If you don’t make enough money to cover all your current expenses, consider what you could be cutting without suffering too much. You may be able to take the bus instead of driving your car, for instance, or maybe you could ride your bicycle. When shopping for groceries, you could watch and take advantage of special discounts, promotions or coupons. When you are at home, maybe you have the habit of keeping the lights on in all rooms, even if nobody stays there. Consider switching off what you don’t need. It’s good for your finances, as well as for the environment.

Create Holiday Financial Blueprint

  • Determine your large holiday occasions: Your large festive occasions: The holidays provide various favorable circumstances and the question become which event to attend. Selecting your major holidays assists you in assigning your money properly in your financial plan. Potentially, it also makes certain that a little part of your holiday financial planning is saved for unexpected occasions like spontaneous dinners or cocktails with friends.
  • Place your attention on experiences rather than things: We are in a buying culture where we regularly are barraged to spend money. Television, radio commercials or even emails inform us of a sale and now while we are in stores flashing announcement highlights more products to purchase. For this reason, I encourage you to consider if a gift is what you really want to give. I have noticed that people desire mostly to connect and feel that they their lives have purpose. Think if you can provide human connection and meaning for those you love. An example is that your family can volunteer at a holiday soup kitchen and then have an intimate meal at home. Another example is to ask all family members to bring a dish in December to the family dinner. Also, one of my favorite things is to donate to a charity that has meaning for a loved one and give in their name. My uncle for instance is my Godfather and annually I donate to an organization in memory of my aunt who passed from Lupus complications. My uncle is not interested in gifts, but he enjoyed receiving the card acknowledging the gift the organization received in memory of his wife.
  • Intentional Giving: The song says “He’s (Santa) making a list and checking it twice”. I ask you to consider doing the same action. List the people you want to give including those that service your needs like the US Postal worker and your hair stylist. After making this list reviewing it see if someone on your list would benefit more from step 2, of connection and meaning. For those that remain on your list for a gift, decide the amount you are going to spend for each gift. Come up with an idea of how much you want to spend and finally seek promotional codes and coupons online that can help you save.

 

Consolidating Debts

One best answer to demanding financial debt difficulties will be debt consolidation. Debt consolidation is the process where your debts are guaranteed by the property in trade of a discounted interest rate. It can be similar to getting a new loan to repay the multiple financial loans like generating your unprotected loans into collateralized types. Collateral helps to make the interest low.

There are lots of rewards as you contact a debt support management team to control your debt troubles. One is the reduction of monthly repayment. Managing debt will unquestionably decrease your monthly fees by way of a settlement with the mortgage lender. They can evaluate your debts, interest and monthly instalment. From that, they will examine your periodic salary, your cost of living and obtain an inexpensive means of paying your debts as never to unfavorably affect you money wise.

Another is getting rid of calls and harassment from your numerous loan companies, which most of us are generally irate about. All these loan companies will no longer bother you with telephone calls demanding premiums. These people are mandated for legal reasons not to call at the time you sign the power of attorney with your consolidating debts firm. The debt assistance management group will contact them; will collaborate with the conditions and range of payment. You rid yourself from the need for dealing with your financial obligations.

Debt support management can even tackle your outgoings jointly. Even with multiple debts with different lending providers, they will all be handled together. You don’t have to pay all of them separately since the debt assistance agency will pay them all together.

You certainly realize that default and overdue impact your credit ranking. The monthly installment of debt support agency will eventually increase your credit ranking as your obligations are paid in a timely manner. At the completion of the repayment, your debt consolidator will petition to report your timely repayment to Credit Reference Agencies in your favor.

Most importantly, your debt consolidator will provide no charge debt advice regarding consolidation of bills and loans. They’ll make sure 100 % payment, making you debt free. Debt advice incorporates analysis of the current fiscal status plus your selections for debt payments, ensuring that each and every action done is in your favor.

Free Up Money in Your House

Re-mortgage to release equity

When you buy a house, you get a mortgage for the amount of money that you need to buy the house. That is the way it works, but if you bought the house 20 years ago, then the house will be worth a lot more than when you sold it.

Therefore, you will get a new mortgage on the amount of money that the house is worth now. You pay off the old mortgage and then you have the difference left over for you to do what you want with.

Now, you will have to pay the money back on the new mortgage, but it is just a way of having the money now. Yes, you will have to pay the mortgage payments for a bit longer, but you have a lump sum in your pocket now.

You will have to think long and hard if this is something that you want to do because you will have to pay interest on the mortgage that you arrange to free up the equity.

Payments

If you have decided that you want to get a new mortgage, to access the equity, then you should be careful which mortgage you chose. You should look to keep the payments the same, so that you will still be able to afford the repayments.

If you end up with more expensive payments and you haven’t used a mortgage calculator to make sure that you can afford it, you might end up missing payments and if the worst comes to the worst, then you could end up losing the house and you will have nothing.

Interest Rates

When choosing a new mortgage to get access to the equity, you have to choose the mortgage wisely, based on the interest rates. For example, if you have $50,000 worth of equity in the house, so you re-mortgage the house, so that you can use the money for something else, but you have to pay $60,000 in interest, then you won’t have made a wise decision.

You would have leant more than you needed and you wouldn’t have made a single penny for yourself. You will have made the bank $10,000 though. Therefore, you have to make sure that the re-mortgage is worth it for you in the long run.