Don’t Lose the Farm at an Investment Seminar

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Attending seminars and training sessions to learn about a topic of interest to you is a worthy endeavor, but you have to be careful about taking action based on those seminars.

Some are entirely legitimate and you might find the perfect financial resource to accomplish your goals.  Financial advisors come in all shapes and flavors – some are just broker house representatives, others are highly trained and certified professionals and some are just shady dealers trying to get your money.

Often my spouse and I get invitations to attend investment related seminars – including a free dinner.  We get them more often now that we are over 65.  Typically they are for dinner at a popular local restaurant with pretty good food.  Headliners have included things like:  “Come learn how to make your money last in retirement”.  “How to invest in a down market”.  “Plan your retirement income” and etc.

It’s not surprising that we receive these invitations. Forbes article Beware The Free Lunch (Or Dinner) Investment Seminar reported:

“According to FINRA research, 64 percent of those responding to a survey of people age 40 and over had been invited to an “educational” seminar with a free meal offered.”

The North American Securities Administrators Association says:

“State securities regulators warn senior investors to be aware that a combination of “free lunch” seminars, misleading professional “senior specialist” designations, and abusive sales practices can create a perfect storm for investment fraud. Remember: there’s no such thing as a free lunch.”

The Alberta Securities Commission has a list of various types of scams including these.  They note some red flags – such as:

• “Above average returns with little or no risk. No investment is risk free.
• Offer of loans to cover both the investment and further investment seminars.
• Claims of a secret or exclusive technique for building wealth. The salespeople at seminars can make misleading claims that entice you to sign up right away.
• Limited time offer that discourages investors from getting independent advice.
• Promises to ‘be a millionaire in three years’ and ‘get-rich-quick’.
• Sales pitches of no cost involved or free attendance at seminars. The first session you are invited to attend may be free, but you may have to pay fees and commissions that the promoters did not tell you about beforehand”

A few years ago, we (my spouse and I) actually attended one of these free dinner investment seminars.  The dinner was hosted by a broker (supposedly associated with one of the big wire houses – I don’t remember which).  The event took all evening, from about 5 pm until about 9 pm.  It was at a nice steakhouse in my home town – one that is on the upscale side of the price range.  We did get a nice dinner.  After dinner, there was a presentation and a long sales pitch.  We listened and squirmed, wanting to leave and get home so we could get some rest for the next day.  We bought nothing and we gave no information.  We were not contacted much afterward.  Overall, it wasn’t an unpleasant experience.  We felt we paid for our dinner by listening to the pitch, but didn’t feel obligated to buy because we had a ‘free’ dinner.  We’ve never been back, preferring to rely on our own research and studies to figure out our investments.

Junk mail isn’t the only avenue used by brokers and other’s dealing in securities investments for a living to offer free seminars.

You can find one in most local ‘communiversity’ classes (classes taught by community volunteers, usually held at a local school and charging only a small fee for participants).  Heck, your company may even host one.  Mine did.

My company brought in local financial advisers to teach a course that covered retirement saving and investing.  The company offered it only to people 55 and over.  As part of the course, the advisers offered to do a free financial plan – a value (they claimed) worth hundreds of dollars.  At the seminar the advisers really played up the benefits of variable annuities.  They did such a good job that one of my co-workers fell, hook, line and sinker for the pitch.  She turned over her entire retirement savings to them to invest.  I’m pretty sure she is back at work now!

Even Vanguard offers a ‘financial planning’ service.  They, however, are very up front on their web site with the fact that their recommendations will put you into Vanguard mutual funds only – so if that’s not what you are looking for, don’t ask them to do a financial plan for you, even if it is free!

So, if you read your junk mail, and want that free dinner, be prepared to invest your time to pay for it and don’t feel obligated to buy something just because you got dinner!

• You don’t owe the broker a sale for the dinner.
• You don’t owe the charity a donation for the return address stickers.
• You don’t owe the company a response because they sent you a dollar in the mail – unsolicited.
• Heck, you don’t even have to get the junk mail (but it does help the USPS stay afloat).

How about you all? Have you ever attended a financial seminar? Did you feel pressured to buy any of the products?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/ctbto/7995586057/in/

How to Painlessly Switch Mortgages When You Need a New Home

The following is a guest post by George. George writes at Sobredinero.com, a personal finance site for Latinos in the US. Enjoy!

Let me tell you about a man named David. The first thing that attracted David to his condo when he first bought it was how close he was to his job. On top of that, it was near a trendy area packed with nightclubs, bars, and fancy restaurants. It was perfect for David when he was single with no kids. However, David started a family and his housing needs changed.

With a wife, one child, and another child on the way, waiting 10 years to build equity and then liquidate that equity in his condo was not an option for David. He was ready to trade in his two-bedroom downtown condo for a three-bedroom home in the suburbs.

Analyze the Options

David knew which house he wanted, but like most people, he could not afford to pay for two mortgages at the same time and even though he was fairly certain that his condo would sell quickly for the asking price, he did not want to risk his family’s financial security.  He thought about moving to the new house and renting out his condo to cover the mortgage while he had the condo on the market. However, after speaking with the condo board president and reading the homeowner’s association paperwork, David discovered that renting out his home would require a lengthy and rigorous vetting process with the board.  He did not have the time or money to do that.

David also considered borrowing against his 401k for the second mortgage, but if he were to leave his job before paying back the loan, he would be obligated to pay the outstanding balance of the loan within 60 days or be hammered with taxes and penalties. He learned fact by reading through the 401k materials he’d received at orientation three years earlier and he also learned that those terms were common for 401k plans. That was a dicey and expensive option.

After thoroughly weighing all of the possibilities, David decided to put his condo up for sale and simultaneously file for a second mortgage. This sounds risky on the surface, but David knew that the bank would only grant the second mortgage after the condo sold. This practice protects the interests of both the lender and the borrower.

Factor in the Real Cost

Once David decided on the list and file simultaneously route, he put in some research on mortgage terms. Taking on a mortgage is not just about paying back the amount of the loan itself. Smart borrowers also consider the interest rate, total annual cost, monthly payment terms, and the total payment. Additionally, ancillary costs such as bank fees, housing association requirements, taxes, and transportation need to be factored into the real cost of a new home purchase. David used a mortgage calculator to help him understand the true costs of his mortgage options.

Time It

David had everything in place and the only thing left to do was to sign the paperwork. To cancel a mortgage and acquire a new one requires the bank as well as a notary public, so David made sure to schedule the two transactions in one meeting and ensure a smooth process.

This didn’t always used to be the case. Historically, purchasing and selling a home at the same time was a long process. Say for example if David had purchased that condo recently to “flip” (buy for a low price and quickly re-sell at a higher price with inexpensive upgrades), he might not have been able to sell the condo because of restrictions that prevented a home sale if the home been had purchased within 90 days. However, the Federal Housing Administration has eliminated this restriction.

Get the Happy Ending

At the end of everything, David and his family turned out just fine. The condo sold, the mortgage terms for the new home were agreeable, and everyone settled into a more comfortable arrangement. Gone are the days of being tied to a house simply because you signed a mortgage. Granted, it’s not as easy to move when owning a piece of property as it is for renters, but it is certainly possible in today’s modern housing market, and the last thing you want to do is be unhappy with your home. Happy house hunting! Be sure to check out more advice about mortgages here, or here.

How I Afforded Christmas as a Single Mom

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

Single moms have a lot on their plate especially since they usually act as the single source of financial support for their family.

I was a single mom for about 6 years and I recently got married. Before I met my husband and back when I was still working on establishing my career, I remember that tense feeling I would get whenever the holidays came up.

I know that the holiday season is not just about money and gifts, but I still wanted my son to have a nice Christmas and have all his needs met. Luckily, I was able to meet all my holiday expenses and more while being a single mom and here are a few things I did to make it more affordable.

I Started Saving Up Ahead of Time

I’d recommend that everyone start saving up for the holiday season early especially if you are a parent. I never really spent a ton of money throughout the year so holiday gifts were always a mix of things we wanted and needed.

I kept holiday expenses in the back of my mind as early as July of each year and started to sock away a little cash every month. Sometimes it was small amounts like $20 each pay period, then I gradually increased the amount to $50 and son on. By the end of the year, I had quite a bit of money saved up.

I Picked Up Extra Work

I worked a part-time job with very limiting hours when I was a single mom and this was partly because I was juggling college at the time. During the holiday season, hours at my job picked up a bit and I always volunteered to work extra hours for Black Friday and on special weekends when there was in–store promotions.

Another thing I did was pick up extra shifts doing in-store demonstrations to promote certain products. Being a brand ambassador was a great side hustle for me because the pay was always more than minimum wage and the shifts were short and flexible.

Some days, I’d host alcohol tastings in popular stores for $20/hour. After a 4-5 hour shift, I had made quite a bit of extra money to put toward holiday expenses.

I Joined Holiday Sponsor Programs

The holiday season is all about giving. When you don’t have a lot, it’s okay to be open to receiving help as well. When I had a low income and was a single mom, I would sign up for holiday gift programs where sponsors help provide Christmas gifts for kids in the community.

There were quite a few groups and organizations that provided kids with gifts like local churches and the Salvation Army. Some programs had income limits for families to meet since they wanted to make sure they were serving families in need but for a lot of programs, household income didn’t even need to be disclosed.

At my college, there was a program called Christmas for Kids and it allowed kids to create holiday wish lists that would be matched up with a sponsor so they could receive Christmas gifts. The gifts were given at an annual event that included dinner so kids could meet with their actual sponsors and take pictures with them.

These events and programs were super helpful when I was a single mom because they helped provide my son with gifts that I might not have had the means to buy.

Now that I am in a better place financially, my family actually gives back by sponsoring a child for Christmas each year through our church.

I Participated in Gift Exchanges and Gave in Other Ways

Buying gifts for my child was one thing, but exchanging gifts with other people like family and friends also weighed heavy on my wallet. When I couldn’t afford to gift everyone, I decided to form a holiday gift exchange as well similar to a Secret Santa where each person was assigned someone to get a gift for instead of buying something for everyone in the group.

I usually didn’t stress about giving a bunch a gifts when I couldn’t afford to do so and focused on showing my appreciation for people and giving in other ways like baking special treats, doing a favor for someone, sending a holiday greeting card, etc.

I Accepted Gently Used Things

To stretch my budget even more so I could make ends meet and have a pleasant holiday season, I accepted some hand-me-down items especially holiday decor. Decor can be expensive so when my mom offered to give me her old tree and all her ornaments and decorations for it, I couldn’t pass up the offer.

Decorating our home for the holidays and putting up our tree is an important tradition we have that it a lot of fun. I’ve replaced the tree my mom gave me after a few years but we still use the decorations year after year which saves me a lot of money.

I also wasn’t (and I’m still not) opposed to picking up used toys and clothes depending on what they were. I’ve already shared my strategy for saving money on clothing, and I realized that young kids will play with just about any toy thanks to their imagination.

I’ve found some really nice thrift store finds for my son including toys he absolutely loves so mixing in something used with new items is just another way I liked to keep holiday expenses affordable.

The Holidays Don’t Have to Be Super Expensive

Christmas in my house has always been bright and special no matter what my financial situation was. It’s so fun to see how excited my son is each year and be able to create some special memories with him.

As you can see, the holidays don’t have to be so costly as long as you know your budget, can utilize local resources, and start saving up ahead of time. Worst case scenario, there are plenty of ways to earn extra money so your finances aren’t super tight around this costly time of year.

The tips and strategies I used can be used by anyone to make Christmas more affordable.

***Photo courtesy of https://www.flickr.com/photos/pagedooley/3132286400/in/

4 Ways to Minimize Your Tax Burden Before Year-End

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

We’re into the last quarter of the year, which means that personal finance buffs like you and me are getting our year-end money ducks in a row, figuring out how we can end the year on a high note from a personal finance point-of-view.

With that in mind, I thought I’d share some year-end money moves for helping minimize your tax burden. It’s a smart money move to keep as much of your own money as possible in your pocket so that you can increase your ability to care for yourself and your family, and so that you’ve got extra money to give away where you see a need that tugs at your heart. Making smart year-end tax moves helps ensure you put yourself in a better position to care for yourself and those around you.

Here are some ideas for making your own financial situation more secure and helping increase the money you have to give to causes you’re passionate about.

Contribute to an IRA

Go Banking Rates reports that nearly a third of Americans have nothing saved for retirement. When you get to retirement age you’ll not only need cash for basic necessities, but potentially for rising medical costs as well. One way to save more cash for expenses during the retirement years is to sock some cash away in an IRA.

Those under age fifty can put as much as $5,500 per year in either a Traditional IRA, a Roth IRA or a combination of the two. If you’re over age fifty, you can put away up to $6,500 per year into one or more IRA accounts.

Putting additional monies into a Traditional IRA when possible will help reduce your taxable income and help you save more money for your retirement years at the same time.  It’s important to note too that you can make a current-year IRA contribution as late as April 15^th of the following year.

Max Out HSA Contributions

If you know you’ll have some upcoming medical expenses before the end of the year – or even for next year – now’s the time to start contributing more to an HSA account.  For us it’s kids’ braces. Although our dental insurance plan pays up to $2,000 for each kid’s braces that still leaves nearly $3,000 that we need to pay out of our own pocket. As such, we’ll be ramping up HSA contributions in order to deduct as much money as possible before the end of the year for HSA contributions.

Current annual HSA contribution limits are $3,350 per individual and $6,750 per family. Those age fifty-five and older can make an additional catch-up contribution of up to $1,000.  Since HSA monies don’t expire, you can even save them to use toward medical expenses during retirement, and the distributions are tax-free as long as they’re used for qualified medical expenses.

Give to Your Favorite Charity

Qualifying charitable contributions can consist of up to fifty percent of your income in some cases. If you’re looking to reduce your tax burden and do some good in the world, consider making a cash donation to your favorite qualifying charitable organization.

You can also gain a deductible contribution by clearing out the clutter in your house (up to $500 worth without a receipt) and donating it to a qualified thrift store or clothing/household item operation that has 501(c)(3) status.

Contribute to a 529

If you’ve got kids, grandkids or even nieces and nephews, consider opening up a 529 account with them as beneficiaries in order to ease your tax burden and help your family members save for college at the same time.  Here is the general rule on 529 contribution limits for 2016, according to the IRS.

Are there contribution limits?

Yes. Contributions cannot exceed the amount necessary to provide for the qualified education expenses of the beneficiary. If you contribute to a 529 plan, however, be aware that there may be gift tax consequences if your contributions, plus any other gifts, to a particular beneficiary exceed $14,000 during the year. For information on a special rule that applies to contributions to 529 plans, see the instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

If you’re looking to reduce your taxable income and do good by helping a family member save for college, 529s are a great contribution option.

How about you all? What steps are you taking to help ease your tax burden before the year is out?

Share your experiences by commenting below!

5 Money-Saving Hacks for Your Student Loans

The following is a guest post. Enjoy! 

Taking out student loans can provide you with the opportunity to earn a degree, learn a trade, and improve job prospects. In other words, the benefits you’ll gain in the long run make borrowing well worthwhile.

What’s even better is that there are myriad ways to save money when you take out student loans, as well as when you start to pay them back. Here are some money-saving hacks every student should know about.

1. Be frugal

It’s always best to borrow as little money as possible. There’s no shame in taking advantage of any student loan funds you’re eligible for, but the less you borrow, the less you have to repay down the road. Sure, it’s tempting to use your extra funds for a spring break vacation, but remember you’ll have to pay interest on that trip later on.

2. Refi high-interest loans

When you apply for and accept student loans to pay for college, you may end up with a combination of both federal and private loans at a variety of interest rates. If you can, it’s best to pay off the high-interest loans first to avoid extra expense.

However, you might also consider refinancing your student loans. You just have to make sure it makes sense to do so. This means crunching numbers to see whether or not the savings you’ll enjoy are worth the expense of refinancing.

3. Automatic payments

Many lenders offer incentives to borrowers that set up an automated payment schedule and allow funds to be automatically withdrawn from their bank account each month (or more frequently). To find out if you’re eligible for any discounts associated with automatic payments, simply check in with your loan service. Then there are companies like Ameritech Financial that help you to lower and refinance your student loan debt which is gaining a lot of popularity with recent college graduates.

4. Paying on principle

There’s absolutely nothing wrong with paying the minimum on your loan payments every month. This is the required amount to avoid delinquency and paying it diligently is essential to improving your credit rating.

You may not realize, however, that you can also apply additional funds to the principle owed in order to reduce debt faster and shave some money off your interest payments over time. You just have to make sure to note that any extra you pay should go toward the principle so that it isn’t mistakenly applied to your next payment due (including interest).

5. Taking advantage of applicable benefits

You may be able to take advantage of tax deductions based on your interest payments on student loans, so you should definitely discuss the prospect with your tax advisor or contact the IRS to ask if you are eligible.

You might also qualify for federal or state repayment forgiveness programs, depending on your major and where you live. In addition, many companies offer some form of education reimbursement as part of a benefits package. You may be surprised by the benefits available to you through government programs and employment opportunities, and all you have to do is look for them.

5 Unexpected Benefits of Earning a Finance Degree

The following is a guest post. Enjoy! 

For most people who choose to study finance, their reasons are simple: They enjoy working with numbers, and there is significant earnings potential in the world of finance, making it a very attractive option for those who want to bring home a decent salary.

However, in addition to those benefits, there are others that you might not expect when you earn a master’s degree in finance. As it turns out, a healthy salary is only the tip of the iceberg when it comes to careers in finance, and most find that their investment in advanced education pays off in several ways.

1. A Wide Range of Career Options

The term “finance” is an umbrella covering a range of diverse career options. You can opt to work in personal financial services, which might mean working in insurance, real estate, or financial planning. You may opt to go into a financial analyst role, working as an underwriter or a manager for a business, or even work as a budget analyst, helping either the government or private enterprise develop and maintain workable budgets. Finance also encompasses investment banking, accounting, economics, and even entrepreneurship, but the bottom line is that nearly every industry and every business (and most individuals) has a need for a financial expert on staff, creating a diversity of opportunity for anyone with a finance degree.

2. Improved Personal Money Management

It only makes sense that after spending several years studying the principles of financial management and how the economy and markets work, you will have a better understanding of how to effectively manage your own money. While a finance degree is by no means a requirement to becoming financially sound, it certainly helps. You can put your knowledge to good use creating a personal financial plan and making good decisions to ensure that you have enough money both now and into the future.

3. The Chance to Help People

In some cases, financial professionals don’t always have the best reputation. However, getting a degree in finance actually opens up a number of opportunities for you to help others and make a difference in their lives. Whether you are a Realtor helping a young family purchase their first home, a financial planner working with older adults to ensure that they have all of the resources they need to retire comfortably or a financial analyst with a major corporation identifying potential cost savings that can be passed on to customers, your skills can be used to help the greater good. Your degree will give you the knowledge that can ensure financial security for others, and that is a major benefit for many.

4. Extensive Opportunities for Growth

It’s not difficult to move up the ladder in a finance career. Not only does the U.S. Bureau of Labor Statistics predict that the number of new job opportunities in the financial industry will increase by as much as 32 percent between now and 2024, there is also a great deal of potential for those working in the industry to move forward. If you do not already have a graduate degree in finance, earning one can make you eligible for new positions, as well as for advanced certifications, charters, and other distinguished designations, which can help you move into higher positions and earn more money.

5. The Ability to Stand Apart From Others

Earning an advanced degree is a powerful way to set yourself apart from the competition. Not only do you gain advanced knowledge and build your skills, going back to school and committing yourself to the investment of time and money to earn the degree tells employers and clients that you are serious and committed to the field. In fact, one of the most sought-after qualities among financial services firms is a willingness to continue learning and growing. While a master’s degree isn’t the end of the road in terms of your education, the fact that you put the effort into the degree is strong evidence that you want to be the best you can possibly be in your work.

The personal benefits of earning a degree in finance — or any subject, really — go well beyond the few listed here. The sense of achievement and pride in your accomplishment cannot be understated. However, if you are considering whether to go back to school or not, keep these benefits in mind and remember that it is about much more than the money.

Don’t Get Trapped into Buying Credit Life Insurance

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Have you ever made a major purchase, and been told that you must pay for a credit life insurance policy in order to get a loan to make that purchase? It’s a common practice, and even though it’s usually not a true requirement, it is almost always presented as though it is. But in most situations, credit life insurance is not a requirement, and represents little more than an extra expense for you.

What is Credit Life Insurance?

Credit life insurance is a form of life insurance that has a single specific purpose. Regular life insurance is usually taken out for a general purpose. The insured purchases a policy for a certain amount of money, which is then paid to his or her beneficiaries at the time of death, and can be used for any purpose.

Credit life insurance, on the other hand, is taken out for the purpose of paying off a single loan upon the death of the insured. The proceeds cannot be used for any other purpose. And in fact, the proceeds don’t even go to the insured’s beneficiaries. Instead, even though the policy is paid for by the insured, the beneficiary is the lender. The proceeds will go to the lender to pay off the remaining balance of the loan at the time of death.

Now even though credit life insurance is for the direct benefit of the lender, there is a secondary benefit to the insured’s family. Because the policy will pay off the loan on the asset, the insured’s heirs will be able to retain ownership of the asset, free of the loan that was used to purchase it.

Credit life insurance is most commonly used in connection with the purchase of a major asset. This can include a house, a car, a boat, furniture or appliances, and computer equipment. Any time an asset is purchased using credit, credit life insurance can enter the picture.

Why Credit Life Insurance is Such a Bad Deal – For You

There are several reasons why credit life insurance is best avoided:

Credit life insurance is expensive. It costs significantly more than an equivalent amount of ordinary life insurance. This is partially true because the amount of the policy is generally small, and life insurance costs proportionally more for smaller amounts.

It is also because credit life insurance comes under the category of guaranteed issue. That’s a term used to describe a policy that does not require you to disclose the condition of your health, nor does it require a medical exam. The insurance company is issuing the policy with no knowledge as to any factors that might affect your mortality.

Declining balance of death benefit. Since credit life insurance is tied to a loan, the death benefit declines in value as the loan amount is paid down. This means that as the loan is amortized, you’re paying proportionately more for less coverage.

Single premium payment. The lender will often require you to pay the full cost of the policy at the time you purchase the asset. In doing so, the premium will be financed into the loan amount. That means that you will be paying interest on the amount of the premium.

Worse, should you pay off the loan early, it is unlikely that you will get a refund of the unapplied premium. More likely, you will forget all about the life insurance policy, and assume that the remaining portion of the premium is simply part of the loan balance that needed to be paid off.

Why Are Companies So Aggressive in Promoting Credit Life Insurance?

Though few lenders or product dealers will admit it openly, it’s extremely likely that they are receiving some sort of incentive in order to promote the use of credit life insurance in conjunction with the purchase of their products. In the simplest terms, credit life insurance represents an additional revenue stream for both the company and its sales staff. They will be strongly encouraged to add credit life insurance to the purchase.

It may also be that in some cases the existence of credit life insurance might help to enable a marginal borrower to get a loan. This is a common requirement with various types of subprime loans. The existence of credit life insurance will eliminate at least one potential risk for the lender, which is the death of the borrower before the loan is repaid.

There may also be certain situations in which a product vendor and the insurance provider are related organizations. It could be that one owns the other, or that they have a common corporate parent. Any of those connections could result in an attempt by each subsidiary to promote the products of another.

Credit Life Insurance is Usually Not a Requirement

Credit life insurance is not supposed to be a requirement for obtaining a mortgage. And depending upon what state you live in, it may not be required for any other type of loan, including auto loans.

But that won’t stop a vendor from selling you a credit life insurance policy. They may even press the notion that it is a requirement. Even though state law may require some sort of disclosure or waiver, the sales staff may bury the document in a thick bundle of paperwork, in the hope that it will be ignored.

They tend to be most successful in promoting credit life insurance in connection with subprime loans. For example, if a person has less-than-perfect credit, they may just be happy to get a loan – any kind of loan – even if it has some expensive requirements. That can include credit life insurance.

How to Avoid Being Trapped into Buying Credit Life Insurance

One of the best ways to avoid being trapped into buying credit life insurance is to maintain good credit. Since the competition to make loans to people with strong credit profiles is so heavy, neither lenders nor vendors will risk including credit life insurance for prime borrowers, who always have the option to go to another source. Maintaining a high credit score will likely prevent the topic from ever even coming up.

You can also check with laws in regard to credit life insurance in your state. The laws vary in each state, and you can never expect a vendor or a lender to tell you what the law is if it doesn’t work in their favor. You need to do your homework and know what the laws are. Get a copy of them, and be prepared to present them when you make your purchase, in the event that anyone tries to push credit life insurance as a requirement.

Another option is to shop. Even if you fall into the subprime credit category, the knowledge that you are working with two or three different vendors could force one of them to drop the credit life insurance requirement in order to win your business.

Credit life insurance is expensive, and works primarily for the benefit of the lender or vendor and not you. For those reasons, you should do everything you can to avoid having to take a policy.

How about you all? What are your thoughts on credit life insurance?

Share your experiences by commenting below! 

Cooking Holiday Meals on the Cheap

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

It’s that time of the year again. The food and wine are flowing and people everywhere are gathering for merriment and gift-giving. The holidays can be a real budget-crusher if you let them. There are gift lists, holiday clothes shopping and of course, parties to be given.

If you’re one that likes to host holiday gatherings you might be freaking out about what your entertaining expenses are going to do to your budget, but there are ways to entertain frugally. Check out these tips.

Keep Alcohol Purchases to a Minimum

Alcohol costs are a huge part of holiday entertainment costs and the expenses can add up quickly. You can save on alcohol costs for holiday meals a couple of ways.

The first choice is to throw a BYOB meal and provide only soda and mixers for guests. The second option is to have only a few bottles of inexpensive wines and/or beers served at your holiday party. Beer and wine vendors often promote specials on prices during the holiday season, and there are many small-time beer and wine producers that have great products but charge lower prices due to the fact that they’re still so little-known. By looking for that diamond in the rough you can get a good wine or beer for cheap.

Allow Your Guests to Share in the Meal Choices

Guests love being able to contribute to meals at parties and family gatherings. Simply write “bring your favorite appetizer/side dish/dessert to share” on invitations and let everyone have a hand in creating a bountiful holiday feast.  If you’re not comfortable requiring guests to share in the meal prep, be sure to say “yes” to anyone who asks you if they can bring anything.

Avoid Expensive Menu Items

Don’t serve prime rib roast for $10 a pound when you can serve turkey or ham for a buck a pound. Don’t buy a cake from the high-priced bakery down the road when the warehouse clubs have them for half the price. With a little creativity, you can put together a wonderful meal without spending too much.

Shop the Sales

There are a number of food products that always go on sale during the holiday season. Some include:

• Meats such as ham, turkey and prime rib roast
• Baking items such as flour, sugar and butter
• Side dish items such as potatoes, rolls and breads, vegetables and canned pie filling

If you’re serving a holiday meal, make your menu plan early and start checking your local grocer ads in the first week of October, buying early when possible if you can get something on sale. Remember that canned goods and other processed foods last for many months, and that many other items such as meats and breads can often be frozen for later use.

Also, don’t be afraid to go generic. Many generic items are simply name-brand items repackaged in different packaging, but you might want to do a trial taste-test run if you’re concerned about quality and/or taste.

For instance, Aldi sells a variety cracker pack that tastes nearly identical to the similar name-brand pack, but there are other generic items we won’t touch – such as generic macaroni and cheese – because the quality sacrifice just isn’t worth it.

When you’re shopping for list items, pay attention to the sales and the generic brands and save money when it doesn’t sacrifice quality.

Cook From Scratch

There is SO much money to be saved when cooking from scratch instead of buying menu items already prepared. Look online or ask friends for recipes for desserts and appetizers. Make your own stuffing and homemade mashed potatoes instead of using the boxed stuff. Put together your own cheese/cracker/meat trays and your own veggie trays instead of buying the pre-prepared ones from the store deli. Your meal will taste better, be healthier and you’ll save money in the process.

Decorate Thoughtfully

Decorating for holiday parties can be a huge expense if you’re not careful. Instead of decking the house out with oodles of flower arrangements and other expensive décor, simply use a few well-placed decorations to make the house feel special. Here are some ideas:

• Find décor at shops such as Michael’s and Joann Etc., but be sure to use their 40-50% off coupons
• Focus on decorating the tables with colored napkins and homemade place cards
• Get one or two silk flower arrangements to brighten up the dining or buffet table and the great room, provided you can find a great sale or find them for sale on eBay or Craigslist
• Add small, inexpensive touches such as themed salt and pepper shakers from Walmart

With a little forethought and planning, hosting a holiday meal can be an awesome experience that doesn’t break the bank.

How about you all? What is your favorite frugal holiday meal hosting tip?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/55935853@N00/5882056608/in/

Top 5 Roles of Frictionless Banking in Financial Services

The following is a guest post by Ryan. Enjoy! 

The evolution of online banking solutions in the last couple of decades has been phenomenal. It has changed everything right from the way we shop to the way we bank. For the banking and finance industry – the evolution of online banking has brought its own share of benefits and challenges; however, there is one thing which is clearly noticeable now – the players in the industry can no more survive without keeping pace with the ever-evolving digital world.

The digital revolution has influenced all aspects of the banking and finance industry – from how customers avail banking services to how the financial market operates. The tech-savvy millennial generation doesn’t simply choose a bank because of its fiscal and social status but also looks for a seamless financial service experience. Banks are, therefore, in need of keeping pace with the digital world and competing to innovate, collaborate and increase their focus on providing superior digital services to their customers.

The need for frictionless banking experience  

The customer footfalls in the bank branches have drastically reduced and most of the customers are now fully accustomed and comfortable with a contactless world. The new banking experience is all about clicking few buttons or tapping the cards.

Despite these improvements in card transactions and mobile banking experiences, customers are left asking for more. For example, to access a bank account, a customer still needs to remember a PIN, a password or details to authenticate the transaction. Now with growing number of platforms requesting for similar access details, the customer starts feeling the pressure of remembering too much and verifying too many details. The situation in the mobile banking domain, therefore, is less than ideal.

This is precisely the reason why the concept of frictionless banking has come in to picture. Frictionless banking is the next big thing in the mobile banking domain.  Frictionless banking, as the name suggests, is about providing seamless access and hassle-free authentication by using verification features other than PIN, passcodes, and passwords. With customers getting more and more demanding about superior customer experience – the new rule of customer engagement for all types of financial institutions is to keep transactions simple and straightforward, without any friction at the customer’s end.

With the advent of new digital technologies, banks and other financial institutions are constantly looking for new ways to interact with customers and provide them with a more frictionless experience.  Biometric data such as iris, fingerprint scanning or facial and voice recognition are now being used as a part of verification processes for a transaction. Location data, digital fingerprints, online behavior of the customer are other ways in which verification processes for a transaction are being conducted to provide frictionless banking experience to customers.

Frictionless banking is the future

Frictionless banking will play a great role in the future because,

1. Retaining and attracting customers: Frictionless banking will redefine banking experience for customers; and therefore, it will play a great role in retaining old customers and attracting new ones. With customers finding simpler and hassle-free platforms to conduct transactions, they will come back to the bank again and again. This will translate into growing customer base, increasing number of patrons and, of course, more business for the banks.

2. Reducing frauds and forgery: With lesser dependency on the manually fed information, the chances of forgery and manipulation of the system will go down. As frictionless banking platforms are mostly biometrics-based, mistakes such as the customer divulging the password to someone, entering the wrong passwords and any similar manual error will have lesser or no impact on the banking experience. Frictionless banking will, in fact, make banking safer, secure and error-free.

3. Making banking faster: With password-free logins, banking would become much faster – it will just be a matter of swiping the fingerprints through a device or tapping the smartwatch. Peer-to-peer transfer, bill payment, and other such transactions will be possible without remembering a single password. Such password-free transactions will be possible 24 hours a day, 7 days in a week.
4. Streamlining customer records: With biometrics verification in place, the need for collecting too many identification documents for customers will be redundant. The customer records with banks would be limited to necessary biometric details. This will reduce the piles and piles of unnecessary customer data that a bank has and streamline their records.

5. Reducing operational cost: With remote banking experience becoming so seamless, there will be no need of walking into a bank for any transaction. This will bring down the needs of the banks to create more infrastructure, have more staff on the ground to manage the customers and hire additional help to assist the existing staff. Frictionless banking will also allow the customers to be onboarded remotely.

Creating a frictionless banking experience 

Banking, now, with the advent of highly evolved technological platforms has become much faster than one could have imagined about a decade back. Several IT and software companies now specialize in assisting banks and financial institutions in innovating newer platforms and making banking more and more customer friendly every day.

From designing customized core-banking platforms to different mobile banking platforms for different operating systems – these companies have evolved with the needs of the customers. With ‘frictionless banking experience’ becoming the buzz word of the future, there are several companies that have come up with innovative solutions for that as well.

7 Ways For New College Grads to Avoid Sabotaging Their Credit

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Credit problems often start early in life, and it’s not just a coincidence. New college graduates can easily get involved in credit situations that can have very negative unintended consequences. Part of it is simply not knowing exactly how the credit world works. But another part is overconfidence – the assumption that you will be able to overcome any problems you can face.

But the best way to deal with problems, especially credit problems, is to not get into them in the first place. That’s because credit problems are much more easily avoided then they are repaired. Here are seven ways for new college grads to avoid sabotaging credit.

1. Learn the Fine Art of Delayed Gratification

Otherwise known as you don’t have to have it now! If you’ve struggled financially while you were in school, you may be tempted to “live a little” after graduation. After all, you worked so hard to get your degree, you deserve some of the finer things in life, right?

Wrong. You don’t deserve it until you can afford it. Commit that concept to memory. There’s nothing magical about landing your first job. Sure you now have a steady income, and hopefully a generous one at that. But you’ll also begin to watch your expenses rise in tandem.

It will be tough enough to pay for the necessities in life, let alone luxuries. Buy what you absolutely need to survive right now, and don’t begin living the life until you have the salary and bankroll to pay for it directly. A lot of young people go horribly wrong on this front when they begin paying for luxuries using plastic and various types of creative financing. It can end up being the beginning of credit hell. Don’t get into that trap.

2. Work Off the Debts You Already Have Before Racking Up New Ones

There’s a better-than-even chance that you already had debt when you graduated. There’s probably one or more student loans, perhaps a modest car loan, and maybe even a credit card balance or two.

Before you begin adding any more debt to the list, first concentrate on paying off the debt you already have. If you don’t, then you will end up stacking debt on top of debt. Even if you have a healthy income, debt has a way of outstripping income, at least in part because it’s so easy to get into it.

Once you clear the deck of existing debt – with perhaps the exception of your student loans – you can then begin to contemplate the conservative use of credit going forward.

3. Make Sure You Pay Your Non-Loan Obligations on Time

If you’ve read many articles on credit, you are aware of how important it is that your debts are paid on time. But debts aren’t the only obligations that need to be paid when due.

There are other expenses you are likely to incur that may not show up on your credit report if you make your payments on time. But if you leave a bill unpaid, the vendor might report it to the credit bureaus. It’s unfortunate but true.

This is not at all unusual when it comes to utilities and cell phone companies. It can also happen when it comes to rent. If you leave an unpaid balance on an account, perhaps after making a move, the account can go into collection, and that will show up on your credit report. If the balance is particularly large, it could even become a judgment.

Whether it is a collection or a judgment, it will hurt your credit score. Do your best to make sure this doesn’t happen by paying all bills.

4. You Know Those Credit Card Offers Flooding Your Mail? Ignore Them

Many credit card companies aggressively court new college graduates. They are willing to ignore the financial stresses that come with transitioning from student life to adult life, in attempts to get into the new graduate’s financial life on the ground floor. They assume that as your financial situation improves, their business relationship with you will expand.

That may be good for the lenders – and it might even make you feel good on an emotional level. But by accepting too many of these offers it can be a one-way ticket to bad credit. The temptation to run up the balances may be too great to resist.

You should be able to get by with just one or two credit lines early in life. If you already have those, throw all of the new offers in the trash.

5. Never Assume a Lender Will “Understand” Why You Can’t Make a Payment

As a student, you may have grown accustomed to begging off mercy with teachers and professors for late or insufficient assignments. But the credit world is not so forgiving. Never assume that a lender will understand, and agree to float you through a lean time or two. Yes, they may agree to it verbally, but they will almost certainly give a negative report on your credit report nonetheless, hurting your credit score.

6. Never Let Credit be a Substitute for Income

Speaking of lean times, should you fall into one you must resist the temptation to use credit to make up for the lost income. The problem is that when you rely on credit to replace income, your debts grow much more quickly than you can imagine. And once you do get back on your feet, your progress will be slowed by all of the new debt you acquired when your income was soft or nonexistent.

The better route is to make sure that you have emergency savings to cover income disruptions. You should also have some sort of Plan B in regard to income. That isn’t to say that you need to be perpetually working a second job, but it will help to have one ready just in case.

7. Never – Ever(!) – Cosign a Loan for Anyone

When you cosign a loan for someone else you effectively concede your credit performance to that person. How so? If they have a late payment, you have a late payment. If the account goes into collection, you have a collection. To add insult to injury, if the lender comes after the primary borrower for the balance, and the primary borrower can’t pay it, they’ll come after you next. That’s the whole purpose of having a cosigner on a loan in the first place.

Cosigning a loan for another person is an outstanding way to get a bad credit rating through no fault of your own. Think deeply about that the next time you’re persuaded to be the nice guy/girl in someone else’s life.

I realize that all seven of these strategies kind of go against the natural flow of life. But understand that when you are young, the potential is great to do long-term damage to your credit. And if you do, it can haunt you for years. Do your best to stay out of these situations, and you can avoid the worst of it.

How about you all? What mistakes have you made regarding your credit score / credit history?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/83633410@N07/7658305438/in/