Generation X Finance

Friday Finance Findings for September 3rd

Jeremy — Fri, 03 Sep 2010 13:48:24 +0000

It’s been a while since posting a roundup of great finance links, but things have been pretty busy around here. Between trying to get the new website design launched, a funeral, having guests over, and preparing for a new baby in just 24 days it’s been a little hectic. By the way, if you are reading this via RSS or email, I encourage you to come to the site and check out the new design if you haven’t done so already. I’m still making some tweaks here and there and listening to reader suggestions, so if you have something that might help or see something wrong, just leave a comment or contact me and I can get it squared away.

But let’s not waste any time and get right to the links. If I don’t post them now, they will never get posted since it’s college football time!

The Pros and Cons of Being Self-Employed – This is something I obviously struggle with on a daily basis now. Being self-employed is great in many aspects, but with the good obviously comes the bad. Here’s a good breakdown of some of the pros and cons of working for yourself.

When Is The Right Time To Apply For Social Security? – We all know what the age is we can begin taking Social Security, but is that the best time? Should you take it a few years earlier than your full payout age or should you wait until you’re older and collect even more? Here are some things to consider.

Do You Have to Pay Taxes on Unemployment? – A lot of people are collecting unemployment these days, but what about taxes on that money? Is it counted as income and therefore taxable, or does the government give you a break since you don’t have a job? You’ll have to read on to find out.

5 Frugal Chicken Dishes You Can Make Out of One Chicken – They took this post right out of my mouth over at the Digerati Life. I love buying whole chickens and stretching the meals out because it’s quite affordable, but I never got around to putting together the recipes. Either way, here you go!

MonaVie Blackmails Lazy Man? – Those MonaVie scammers have gone too far. Now they are blackmailing Lazy Man just for spouting the truth. Go read the saga and see how low some people will go.

Why the Long Term Growth of the Economy is Not Relevant to Investing – Here’s an interesting take. We are obsessed with the economy. Just turn on the news for five seconds and you’re sure to hear about it. So it only makes sense that it’s important for our investments, right? Not so fast.

Top Bloggers with Books – A lot of bloggers go on to write books and Ben has put together a nice list to highlight some of the best. I’ll let you in on a little secret, but you can probably add me to that list next year. More to come at a later date.

Do Your Kids Have Too Many Toys? – We spoil our kids. If we don’t, their grandparents do. That can mean a lot of unnecessary toys sitting around the house. Is it possible for your kids to have too many toys? And what kind of problems could that cause?

How to Get Two Free Credit Reports a Year – We talk a lot about getting your free annual credit report, but can you get more than one each year? Surprisingly, the answer is yest for some people. Find out how.

5 Ways to Recession-Proof Yourself – The recession can take its toll on your finances, but instead of letting the economy control you, how about taking action ahead of time so you don’t feel the effects of the recession nearly as much? Here’s how to recession-proof yourself.

How to Support a Family on a Single Income – The reality of this recession and high unemployment rate is that some families are having to get by on a single income. That can be a tall order, but it is often doable. Here are some tips to help you ease the transition from two incomes to one.

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Friday Finance Findings for September 3rd

Flexible Spending Accounts: Is a FSA Right for You?

Jeremy — Wed, 01 Sep 2010 14:19:53 +0000

Flexible Spending Accounts Provide an Easy Way to Save Money and Pay for Health Care Expenses

One unfortunate result of rising costs associated with health care and health insurance is that employers are now looking for ways to trim employee health benefits. This usually includes increasing co-pays, out-pocket-costs, and deductibles. The good news is that employers are also conscious of the burdens such benefit cutbacks could potentially have and are thus introducing new services to offset the increased costs shouldered by their employees.

Flexible spending account plans are just one such product intended to minimize the strain employees face while their employers transition to a different, more affordable health benefit program for the company. These plans are meant to act as sort of a personal insurance paid for by the employee with the benefit coming in the form of a tax break.

Moreover, in contrast to a health savings account, a flexible spending account is a program through which employees set aside money which they predict will be spent in the upcoming coverage year. Under a flexible spending account plan some predetermined amount of money is automatically deducted from an employee’s pay check and deposited in an account. These funds are then to be spent on a qualifying expense in that same plan year.

More specifically, flexible spending account plans are aimed at partially covering the gap in out of pocket expenses created by higher co-pays and deductibles. The kinds of expenses which may be covered under a flexible spending account plan are limited to health care costs and costs associated with caring for a dependent. Although employees must still assume the responsibility for these increased expenses, under the plan it would be possible for plan members to use pre-tax dollars for some expenses. Generally speaking, the savings when participating in a flexible spending account will be anywhere from about 20-35%.

Joining Your Employer’s FSA

With a flexible spending account employees are given the opportunity each year to opt-in to the plan. Each employee carefully determines how much of his or her salary will be directed to the plan at the beginning of the coverage year. it is It is especially important to estimate your costs wisely because an FSA is a use it or lose it plan and money leftover in the account after the plan year ends will be forfeited.

The funds to be dedicated to the plan are called “benefit elections.” For medical care and dependent fare flexible spending accounts, the coverage period is 12 months, although there may be a brief extension in some plans. Sometimes employers will begin plan benefits at an irregular time of year for the first coverage period with the intent that the first year will be a “short plan year,” and that the next plan year will begin on the normal starting date. In such cases the period of coverage must be the entire short plan year. If employee voluntarily terminates employment during a coverage period they may either forfeit all available funds or discontinue making contributions or they may continue making contributions through the end of the plan year through COBRA. The deadline for qualifying expenses to be used before forfeiture is typically either December 15 or March 15. Employees should seek information from their employers or plan providers to be sure about the correct date. Also, only services which have been performed after the start of the coverage period are reimbursable. Hence, bills or records from before the coverage period are not eligible for reimbursement.

Deductible Expenses

Many, but not all medical expenses are potentially reimbursable from a flexible spending account plan. The expenses which may be excluded from gross pre-tax income according to tax code Section 213 may be reimbursable; however, any expenses reimbursable through any other health care plan of which the employee is a participant may not be reimbursed through a flexible spending account.

Typical reimbursable health care expenses:

Ambulance services
Coinsurance
Contact lenses
Dentures
Eye exams
First aid supplies
Lab tests
Physical therapy
Mental health expenses
Smoking cessation
Substance addiction treatment
X-rays

Health care expenses generally ineligible for reimbursement:

Cosmetic surgery for appearance only
Dental bleaching
Ear piercing
Health club memberships
Life, LTC, or disability insurance premiums
Marriage counseling
Massage therapy
Tattoo removal
Weight loss treatments (unless specifically prescribed by a doctor)

For more information about expenses which may be reimbursed under a flexible spending account plan, see “Medical and Dental Expenses” which is also known as IRS Publication 502. The document provides an exhaustive list of eligible services and expenses. Expenses which are typically not reimbursable under most plans are generally cosmetic or services and products not usually considered to be health care related.

Despite the fact that the decision to participate in a flexible spending account plan is made annually, in certain circumstances it is possible for plan sponsors to permit employees to alter benefit election requirements. For example, an employee who either marries or divorces during the coverage period may be permitted to alter the amount of his or her salary that must be contributed to the flexible spending account. Other conditions under which the terms of a plan may be changed include a change in the number of dependents and a significant change of residence or work location.

Changes for 2011

Starting January 1, 2011, you will need to be careful when planning your FSA deduction amount because there are changes in what can be reimbursed when it comes to over the counter drugs. In most cases, regular OTC drugs will not longer be eligible, but there are exceptions on insulin for diabetics and if your doctor prescribes a specific OTC drug. So, keep that in mind when making your elections for the 2011 plan year.

Poll: What’s Your Take on the Hindenburg Omen?

Jeremy — Wed, 25 Aug 2010 14:17:52 +0000

If you’ve been listening to the media lately you may have heard something about the Hindenburg Omen. It sounds kind of ominous, and I guess it should because it predicts a severe market crash. The Omen has been behind every market crash since 1987, but significant stock-market declines have followed only 25% of the time. So there’s a high likelihood that the Omen could be nothing more than a false signal.

Who is Behind This Technical Indicator?

The Hindenburg Omen (not originally given that name) was dreamed up by Jim Miekka, a blind mathematician who edits a newsletter called the Sudbury Bull & Bear Report. Though Miekka put this out there a number of decades ago, it stems from an indicator called the High Low Logic Index, which Norman Fosback, editor of Fosback’s Fund Forecaster, devised in the 1970s.

Miekka himself likens the appearance of the Hindenburg Omen to a funnel cloud sighting. Not all funnel clouds turn into tornadoes, but all tornadoes come from a funnel cloud. So, if you see a funnel, there’s a strong possibility of a tornado forming. He says the omen is the same, and while it may not mean a devastating market crash is certain, but it’s like an ominous storm cloud that signal a crash is possible.

The market saw the Hindenburg Omen tripped back on August 12, and again just last Friday (August 20). Because of this, Miekka acknowledged he has pulled out of stocks entirely.

How the Hindenburg Omen is Calculated

The Hindenburg Omen is calculated using data from the Wall Street Journal. It makes sense to use one data source so that you’re comparing apples to apples, but other sources can be used. The criteria for the Hindenburg Omen is:

The daily number of NYSE new 52 week highs and the daily number of new 52 week lows are both greater than or equal to 2.8 percent (typically, 84) of the sum of NYSE issues that advance or decline that day (typically, around 3000).
The NYSE index is greater in value than it was 50 trading days ago. Originally, this was expressed as a rising 10 week moving average, but the new rule is more relevant to the daily data used to look at new highs and lows.
The McClellan Oscillator is negative on the same day.
New 52 week highs cannot be more than twice the new 52 week lows (though new 52 week lows may be more than double new highs).

What Do You Think?

So, where do you stand? Is this just a fancy way to play with numbers and get the media buzzing, or is there some still unknown science behind this that means we should really buckle up for a rough ride? Personally, I’m a bit torn. On one hand it’s hard to deny the fact that the omen was behind the market crashes in recent history, but at the same time it has only accurately predicted significant crashes 25% of the time. So, this may certainly mean we’re in for a downturn, there’s also a greater possibility based on historical accuracy that it won’t indicate a full-blown crash.

The real problem is that things like this often turn into a self-fulfilling prophecy. A relatively benign technical indicator shows up and people start talking about it. Then more people begin believing what it is predicting, so they start selling off their stock. This creates downward pressure in the market that just reinforces the fears that others might have, so they too sell. Before you know it, a snowball effect has started and in the end people make the omen come true on their own. We all know how irrational most investors can be, so that’s the real danger in my opinion.

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

Book Review of Leah Ingram’s Suddenly Frugal

Charissa — Mon, 23 Aug 2010 15:08:38 +0000

I consider myself a lifetime learner. Maybe that is one of the reasons why I feel compelled to read anything I can get my hands on. My past experience as a book reviewer for an arts and entertainment magazine put me into contact with nearly every publishing house in the United States. I will be the first to admit how exciting it can be to get a box full of books to read in the mail.

I am really drawn to instructional books on the topics of personal finance, self-sufficiency, and saving. Maybe that is one reason why Leah Ingram’s Suddenly Frugal: How to Live Happier & Healthier For Less appealed to me. As a woman who has seen what kind of devastating effects a recession can have on the economy firsthand, what better way is there to prepare myself for what is yet to come than to pick up some pointers on cutting back and saving more?

Although I like to consider myself a bit of an expert when it comes to living on a dime, I often find there are others out there that can offer a piece of advice or two that can really help me financially. Leah Ingram happens to be one such person. The mother and author made some drastic changes in her life in 2007 in an attempt to secure a better future for her family. Not only did she revolutionize her relationship with money, she had a lot of fun in the process. Rather than do without “luxuries”, she suggests several cost effective alternatives.

For example, did you know that a night at the movies for a family of four can cost over $50? Now talk about a budget buster! Rather than be in the red at the end of the month, many families use Redbox which holds up to 200 different movies. To rent one, it costs $1 a night plus fees which you pay for with your choice of credit or debit card. You can purchase a box of microwave popcorn, a bottle or two of soda, and theatre sized boxes of candy for less than $10. That’s what I call savings!

Suddenly Frugal was written with budget-consciousness in mind. The chapters address most subjects that are of concern in recession-hit households—clothing, transportation, food, entertainment, and special occasions. Although many people associate frugality with being a miser, this book dispels that myth by being informative and insightful. It provides realistic solutions to everyday needs and even provides information about groups and organizations that are designed to help people save.

At $12.95, purchasing a copy of Adams Media’s Suddenly Frugal won’t break the bank. It is a quick read, well-organized, and can help save families up to $25,000 in a year’s time. That’s why I chose to read it and pass its knowledge on. In today’s world, you can never be prepared enough financially.

Emergency Preparedness: How Does Your Family Rate?

Charissa — Wed, 18 Aug 2010 17:39:45 +0000

Emergency situations often catch people off guard and leave them feeling devastated. From financial difficulties incurred from a layoff or an unforeseen medical expense to fires and natural disasters, one thing is certain. Without a rock solid back-up plan, the chances of your family weathering a storm are next to zero.

So, what do you do to prepare yourself for the unexpected? You open the doors of communication with your partner and you come up with a way to get out of any pickle you might find yourself in. This might sound easier said than done but it is of vital necessity.

Preparing for future scenarios, although scary, can help your family survive the harshest conditions yet. The following advice has been collected from books written on the topic of survival. The situations described throughout the article may or may not apply to you and your lifestyle. Nonetheless, it never hurts to be prepared. In fact, the safety and security of your family may one day be dependent on your ability to adapt to a stressful situation.

Financial Devastation and Dealing with Joblessness

It isn’t a secret that today’s economy is a far cry from what it used to be. Joblessness is a concern of every American pounding the pavement. Unemployment benefits, although useful, are often not enough to save your home from foreclosure or your vehicle from be repossessed. It is seldom enough to put food on the table and warm clothes on the backs of your children. With that being said, you should start now by putting your budget on a diet. Couple that with building an emergency fund that can get you through a few months can go a long way in keeping you afloat.

You do this one of two ways. You either increase the income coming into your home by taking on a part-time job or selling things around your home or you cut back on unnecessary expenses. The latter is the more likely scenario as finding work is difficult in even the most plentiful cities. Make it your mission to save as much of your paycheck as you possibly can. Get creative. Use coupons when you grocery shop and bank the savings. Get to know the free section of Craigslist and sign-up for notifications from Freecycle. Repeat the following mantra, “When in doubt, do without.” Before you know it, your newly found thrifty lifestyle will allow you to maximize your savings and prepare for the worst.

Natural Disasters and Other Forms of Devastation

I recently read two good books on survival that I would like to recommend. Cody Lundin’s When All Hell Breaks Loose and Kathy Harrison’s Just In Case: How To Be Self-Sufficient When the Unexpected Happens. Both books offer practical advice on how to secure food, water, and shelter during unforeseen events like natural disasters, pandemic breakouts, and power failures.

The underlying theme of each book is that families should be self-sufficient. Chapters concerning preservation are incredibly helpful. Step-by-step instructions on how to purify water, unfreeze pipes, locate shelter, and protect your most precious assets are worth looking into.

Disaster strikes when you least expect it. Prepare yourself for the worst by hoping for the best. A positive attitude coupled with knowledge and determination can help you get through the toughest of times.

Charissa Arsaoui is a freelance writer for ChickSpeak, Buzzine, DisFUNKshion Magazine, Student Stuff, and a guest contributor for Wisebread. She loves thrift related topics and can spot a bargain a mile away.

10 Ways to Make Money Online from Anywhere

Guest — Tue, 17 Aug 2010 13:16:43 +0000

Working and making money from anywhere – if you haven’t yet tried, might seem like a distant world or something you could never do. The thought of having more control of your lifestyle by be able to work from home or any location you choose might not even enter your reality. Perhaps you can’t fathom a lifestyle where you don’t have a place of work to show up every day. Maybe the thought of going it on your own as a freelancer or entrepreneur scares you to death.

But with an ever expanding global communication and social network – the reality of working from anywhere is becoming an everyday occurrence for those who want a more flexible lifestyle. Yes, it is very possible to join the droves of global citizens that have this lifestyle – but it won’t be without sacrifices – especially in the beginning. You’ll have to change your mindset about how you currently live and work; and you’ll probably have to reorganize your lifestyle – perhaps by cutting back on luxuries and expenses to make the transition possible. You’ll have to think differently on how to approach your day to day schedule, and because though it will be more flexible, you’ll have to also be more focused and directed with your time to be successful as a mobile freelancer or entrepreneur.

Ready to dive in? If so, read on.

Basic Tools You’ll Need to Make Money from Anywhere

Whether working at home, the local coffee shop or in a country of your choosing, the idea is that you need to be two things: 1) connected; and 2) mobile. All the basics here revolve around these two factors.

Whether you can convince your current company to let you work with a “remote work agreement” or you choose to go it alone as a freelancer/entrepreneur, you’ll need some basic tools.

Here are four basic tools you’ll need to get started:

A Sturdy Laptop: you need something that’s fairly durable as it will be your workhouse traveling with you everywhere. I recommend something sturdy with a great warranty package – I suggest 3-yr full coverage plan if you can afford it, and especially if you are mobile. I don’t recommend a netbook because the hard drives tend to be much smaller and also have tiny screens that strain your eyes and small keyboards that strain your hands. You’ll want as large of a screen as possible. You might complain about the weight of it, but remember this is your mobile office, so the extra weight is worth it. Make sure that both a webcam and mic are built in, and most laptops come with these integrated.

External and Online Backups: I can’t stress this enough – DO BOTH. That means buying a spare external hard drive for local backups, and also using an online backup service like iDrive which gives you up to 2.0 GB for free. Do both types of backups daily. Losing your work, particularly if you freelance or run your own company can be devastating to your business.

NOTE: if you have sensitive information on your computer always make sure to password protect or encrypt those files, especially if doing online backups. You may not want to back up those online for security reasons.

Solid Internet Connection: This usually isn’t an issue in modern countries, but it may be if you are in a remote location or a country with a lesser infrastructure. If you are really serious about connecting from anywhere, you’ll want mobile broadband card. Mobile broadband cards will be cheaper in whichever country you are living/travelling. For most situations for connecting to email, chat and basic VOIP, you don’t need more than 1.5 to 6.0 Mbps anyways which mobile broadband can get you. Obviously, the more bandwidth you have the better.

Yourself: yes, you and your trusty skills, and don’t forget your brain, please!

If you work with small business owners or become an entrepreneur yourself, you’ll have a lot more flexibility with using some of the free tools like VOIP. In working for a corporate company/clients you might have a more difficult time being able to use some of these tools, because of corporate standards so make sure you know what those standards are.

Now that you know what the basic tools are – let’s take a look at some of the jobs and business ideas that can potentially allow you can work from anywhere.

1) Writer/Editor: With so many websites out there needing content, with more and more magazines and newspapers going online, there’s no shortage of requests for talented writers. Being a writer is also great for a mobile lifestyle because you can be totally offline until you need to submit your work. You’ll just need to gather your research and resources ahead of time to work offline.

2) Web Developer: Got a knack for or an interest in programming for websites? This is quite easy to do from anywhere unlike a number of other jobs in the IT industry. Everything a web developer does is code-related and can be done remotely. As a developer, you will most likely interface with clients over the phone for more advanced requests, so investing in a Skype or similar VOIP service will be very handy.

3) Virtual Assistant: This is great for stay at home mothers, but also people who want to be their own bosses. There’s no limit to what tasks you’ll be asked to do, so be prepared for requests from the mundane to the zany – like customer services call, making reservations, research, data entry and more. Some even move on to managing their own teams of virtual assistants and outsourcing to other VAs.

4) Blogger: Ah, the ever popular blogging profession. Not a business for the faint of heart. A blogger is not just a writer, she is a business owner. As a blog owner you will do your share of writing, but also a large part of your time will be spent networking with other bloggers, posting on both your blog and theirs, and doing whatever you can to attract readership and traffic. How you do make money with blogging? The most popular form is by selling advertising. You also might be able to sell your products or other people’s as well. At some point, when you start making money at blogging, hiring writers and editors to help will probably be a good idea as you grow.

5) E-Commerce Store: Have a product line or industry you are passionate about? Maybe a product of your own you want to develop and sell? Opening an E-Commerce store online could be the way to go. You can often find someone willing to drop ship products you’d like to sell, so you don’t have to store inventory anywhere. You will be taking orders online (possibly by phone), handling customer service requests and returns.

6) Graphic Designer: Now that virtually all graphic design is done on a computer, this is a perfect mobile job or business. Everyone needs a logo, ads designed, website images and more. If you’re artistically talented and can deliver to client specifications, graphic design might just be for you.

7) Translation (Writing): If you are a linguistic expert in one or more foreign languages, then you can do written translation work from anywhere quite easily. Many businesses from those that sell products to finance companies to law firms need translators for such a purpose, and if you can charge a lower rate by telecommuting or by the fact that you live in country where the cost of living is lower, you can probably beat the local guy who needs to be there in person.

8) Virtual Project Manager: With Outsourcing being such a thriving industry these days, you could be a remote team manager for a variety of different businesses that have projects in the works. Check out oDesk.com for a look into this type of work, they actually are seeking people just for this role. This might be something you could do along with freelancing on a site like oDesk.

9) Bookkeeper: If you’ve a talent with numbers and enjoy math, why not be a remote bookkeeper? Take some accounting courses and learn how to do the books. Or maybe you’ve been working for the man as an accountant for too long and know you can go it on your own. Although be careful about giving tax advice if you are not a CFA (certified financial accountant).

10) Data Entry: Probably the least glorious of all, but still always a necessity for businesses – someone’s data always needs to be entered, combed, adjusted and cleaned up. Just make sure that the data entry opportunity is legit and there are no upfront fees for it – sometimes these jobs can be scams. Again a freelance job website like oDesk or Elance is a great place to start finding legitimate work.

“Scammy” job listings to avoid: filling out online surveys, assembly jobs (assembling gifts, etc), multi-level marketing, anything that asks you to pay upfront “training costs”, envelope stuffing, certain data entry jobs. There might be some legit opportunities with some of these, but be careful in general.

Remember – if you live in an area with a lower cost of living – or even another country, you have an advantage over the local workers as far as cost is concerned. If you can provide quality service and product to your clients, you’ll be in the running for sure.

When to Form Your Own Business

Once you begin to make money regularly, you’ll probably want to consider setting up an LLC, S-Corp or other business entity to protect you and your work. You can do this beforehand as well, but that all depends on the type of work you are doing and your financial resources at the time. You can save money by forming an LLC or other simple business entity online – just make sure you do it correctly. If you are unsure, it’s always great to check with a local business or entrepreneur organization for some free advice.

So let’s wrap it up.

Now you know the basic tools that you’ll need to begin a work from anywhere lifestyle, along with some job or business ideas to get you started. Rest assured there will be a lot of work involved, and it may not be easy. But that never stopped anywhere from doing what they really wanted, now did it? So don’t let it stop you if you really think it’s right for you.

Have ideas that weren’t covered here? Feel free to comment below for any ideas, questions or experiences you’d like to post about making money from anywhere.

David Hamilton (aka FPT Guy) is owner and author of Financial Planning Tips (Twitter follow: http://twitter.com/fptguy) – where you can find sensible information on personal finance for the Average Joe or Jane. Besides being passionate about his finance blog and helping others keep their finances in check, David also enjoys playing music, staying healthy, spending time with family and friends, and traveling the world.

Making an Offer on a Home: How to Negotiate a Deal

Jeremy — Mon, 16 Aug 2010 13:39:07 +0000

Buying a home has to be one of the most exciting, yet stressful financial decision that most people will have to deal with. You can spend years saving up for a down payment, months touring homes looking for the right one, and weeks trying to find the best mortgage. With all of the effort going into this single decision it’s obvious you want to avoid any mistakes. Even once you find the home of your dreams, your job isn’t done yet.

It’s time to make an offer. This part of the process is not to be taken lightly because an accepted offer becomes a binding contract. If you realize too late that you may have made a mistake you could end up losing your deposit or earnest money at the very least. So, before you make that offer it’s your last chance to negotiate the best deal. Don’t squander the opportunity. Here’s what you need to know before making an offer.

1. Never Fall in Love With a Property

This is the cardinal sin of buying real estate. When you’ve spent a month or more walking through countless homes and finally find the one that’s perfect you’ll obviously be excited. Your hard work and patience has paid off so you’re thrilled to be moving forward with the process. The problem with falling in love with a house is that you become emotionally attached to it and that can cloud your decision making process. The seller has you right where he wants you.

Once you’ve emotionally committed yourself to a particular home you’ll stop at nothing to make sure you get it. This might mean stretching your budget more than you had planned, getting a mortgage that isn’t ideal because you don’t want to wait, and most importantly, you’ll lose the negotiation game. Rather than trying to get a better deal for yourself you’re far more likely to take whatever the seller is offering just to make sure you get the home. This is a mistake that could literally cost you tens of thousands of dollars. Don’t fall in love with a single property, and even if you did find the perfect home, keep a clear head and make sure you do what you can to get into the home with the best deal possible.

2. Find Out What You Can About the Property and Owner

The listed price isn’t always what the home is worth. It’s that simple. Homes go up for sale for a variety of reasons. Some need to move out of necessity, some people simply want to upgrade to a bigger home if they can, and others might be just looking to cash in on the equity they’ve built. You could take the same exact house and a seller in each of those situations would value and price their home at very different levels.

Someone who needs to sell their home because of a financial hardship or relocate for a new job is usually going to price their home far closer to the true market value than someone who really has no need to sell other than to hopefully make a little money on the sale. This can also help you identify areas to negotiate on.

Granted, you may not be able to just flat out ask the owner why they are selling, or even get a true answer if you were able to, so it’s up to you to do a little detective work. Start by looking at the history of the listing. When was the house listed and how long has it been on the market? Has the seller reduced the price over the months or has the price remained firm? These two pieces of information alone will tell you a lot about the owners. A home that’s been on the market for six months and seen little if any reduction in price is more than likely owned by someone who isn’t in a rush to sell and isn’t likely to negotiate much. It’s also a sign that they have put a price on the home that isn’t in line with reality. On the other hand, if you come across a property that’s only been on the market for six weeks and the seller has already reduced the price a few times you could be on to someone who really needs to get out as soon as possible and they are likely willing to negotiate.

Have a little spare time on your hands? Try searching your county’s public records for information on the property and the owner. When it comes to things like property title transfers and deeds most of it is public record. A lot of cities and counties even provide free searches on their websites. With this information you can obtain details such as when the previous owner bought the property and if they took out a mortgage, how much they borrowed. This information can be quite valuable. You may find that someone purchased the home five years ago with little or no money down and then see that their asking price is almost exactly what they probably still owe on their mortgage. Now you’ve discovered why the home is priced where it is. It’s not because it’s worth that much, but instead it’s because the sellers simply don’t want to resort to a short sale. Knowing this information ahead of time will give you an idea of how much potential room you have to negotiate down.

3. Get Comparable Sales Data

When you are ready to make an offer that’s lower than the listed price it’s good to back it up with facts. If you make a lowball offer just for the sake of trying to get a good price you’re probably only going to insult the seller and you may never even hear back. If you want to make a low offer and can support it with detailed information about recent sales of other comparable homes you stand a better chance of getting a response and maybe even some ammunition for negotiating. Remember, just because they may have a real estate agent working with them doesn’t mean the listing price is in line with actual value. So, it’s up to you and your agent to do a little homework and get as much information as you can about similar properties so you can spot a true deal.

Another tool that can help you determine the value of a home (or at the very least compare relative values) is to dig into your local property tax data. This is public record and these days most counties have free online property tax searches available on the web. You have to take some of the data with a grain of salt since appraisals and property tax adjustments haven’t been completely in sync with market values, but it can help you compare similar properties in the area. For example, you may see that the house you are looking at has a value $50,000 more than almost identical homes on the same street. Why? Has the property been significantly improved? Is there something different about the lot? Was the house last purchased at the height of the real estate bubble therefore resetting the taxable value and making it look like it’s worth more? The tax data won’t give you explicit answers, but it should point you in the right direction so you know the questions to ask.

4. Price Isn’t the Only Thing Negotiable

We bought a house about a year ago and we were able to negotiate a few thousand dollars worth of electronics and appliances as part of our offer. In the offer we asked the sellers to leave the 50″ plasma TV that was mounted on the wall in the basement, the wired surround sound, a plasma TV in the bedroom, really nice garage shelving, and a $1,500 wine fridge. Did we get everything we asked for? No, but we got most of it. We were left with the 50″ plasma TV, the garage shelves, the surround sound speakers (not the receiver, though), and the wine fridge.

We only made this part of the offer because we did our homework first. We knew these were the original owners and they built the home just a few years ago. We knew how much they financed and built the house for, and learned that one of them received an irresistible job offer halfway across the country and they had to move almost immediately. We also knew they were going to be having a moving sale and wanted to get rid of as much stuff as possible so they wouldn’t have to haul it across the country. So, why not see if we could get them to just leave it in the house for us? Luckily for us, it worked out great.

It’s not just about getting free stuff. A lot of aspects of the offer are negotiable. Things like minor repairs, closing costs real estate agent commissions are all negotiable items as well. Also, don’t forget to mention things that the buyer may want that can help you get a better price. If you’re in a situation where you don’t have to wait to sell your own home before buying this new home, that’s a very attractive proposition for a seller because they know they won’t be waiting for months. Because of this they may gladly come down a few thousand off the price because you’re likely one of the only offers coming in that doesn’t have a home sale contingency.

Making an Informed Offer

As you can see, there are a lot of different opportunities to save money when making an offer on a home. The worst thing you can do is simply go in and make an offer a few thousand less than what they are asking and expect to get a fair price. You still might, but if you do your homework you could find that you’re really not getting that great of a deal or you may miss an opportunity to negotiate even more of a discount. It isn’t an exact science, but the seller wants to get you to pay as much as possible and you want them to sell it for as little as possible. With the right information you can likely find a reasonable middle ground.

Friday Finance Findings for August 13th

Jeremy — Fri, 13 Aug 2010 13:51:48 +0000

It’s Friday the 13th. Are you scared? I’m not. In fact, I’ve always viewed 13 as a lucky number, so I’m guessing it’s going to be a good day. Although, I guess there is one unlucky thing going on at the moment. If you recall last week, I mentioned the site had a new design in the works and should be up today. Well, as you can see, it isn’t. It seems that every time I mention something early like that it comes back to bite me, and this time is no different. So, I won’t be giving any further predictions as to when it will go up, but I can assure you that it will be soon. The new design is already up and working behind the scenes, but it needs a few tweaks before it’s ready for the prime time so I hope to get it ready to roll as soon as possible.

I thought I had some other news to share, but I guess not. So, I’ll leave you to this week’s articles. There’s nothing unlucky about them.

Tax Refund Anticipation Loans – If you’re reading a personal finance blog then you’re probably not one to take out one of these loans, but did you know how bad they can really be? There’s also some possible good news that these may be a thing of the past starting next year.

How To Find Coupon Codes Online – I recently had a post about coupons, so this is a great followup. Not all coupons come in your weekly paper, so it pays to know where to look online. There are a lot of deals out there.

What to Expect When You File for Unemployment – Hopefully you never have to file unemployment, but what’s the process if you do? If you can prepare yourself and know what to expect before going in, it will make that transition that much easier.

What Wall Street Reform Holds For You – We’re hearing a lot about Wall Street reform in the news, but what does this really mean for you and me? We’re not fat cat bankers toying with millions of dollars in the market, so will we really see any changes?

How to Develop Good Habits – Developing good habits is at the root of making any change in your life. Whether it’s getting out of debt or saving for retirement, or changing your eating and exercise habits. It all starts with developing good habits.

What Will Retirement Look Like for Younger Generations? – Is retirement just sitting on the porch collecting Social Security while waiting for your number to be called? Hardly. Retirement has changed, and that also means we need to find new ways to fund it. So, what are the younger generations facing when it comes to retirement?

Why the Economy is Not Relevant to Investing – If you watch the news you’d probably think all of the economic news has a direct impact on your portfolio. Well, it’s interesting to note that in the long run it really doesn’t matter.

What Color is your Inflatable Slide? – I’m sure by now you’ve heard about the Jet Blue guy and the whiteboard girl hoax making a dramatic exit, but have you stopped to think about what you’d do? Or what you want to do other than work?

FHA Loans vs Conventional Loans – What is the difference between a conventional loan and a FHA loan? Good question. We found out last year when we were shopping around for a mortgage. Here’s the skinny.

How to Deal with Losing Your Wallet While Traveling – Talk about a financial nightmare. Can you imagine losing your wallet away from home? I haven’t lost an entire wallet, but I did lose a credit card in Scotland. Not fun, let me tell you.

7 HUGE Benefits to Downsizing into a Tiny Home – The McMansion days are over. Well, for the most part. A lot of people are now seeking smaller homes. But there are more benefits to a small home than just the smaller mortgage payment.

5 Ways Social Media Can Cost You Money

Jeremy — Wed, 11 Aug 2010 14:25:06 +0000

Social Media is Fun, But if You’re Not Careful it Can Cost You

Everybody seems to be jumping on the social media bandwagon these days and in just a few short years sites like Facebook and Twitter have hundreds of millions of users. Most people are aware of the fact that the things you talk about on these sites can often be viewed by a lot of people, so other than the occasional embarrassing photo getting out, most users refrain from posting detailed financial information for obvious reasons. But did you know that even if you aren’t posting your bank or credit card account information you can still be hurt financially by using social media sites?

Some are obvious, like not posting your bank account information online or badmouthing your boss, but there are a number of things that can come back to haunt you even if you feel as if you’re taking care of your online presence. Here are a few reasons why you need to be extra careful.

1. Employment

Employers are now using social media sites to check up on both current employees and prospective new hires. All they have to do is use Google to find your page on Facebook, MySpace, Twitter, or almost anywhere else. They will take a look at what you post on those sites and it can come back to haunt you if you post something they would disapprove of. In the past you just had to worry about keeping updated job skills and a clean resume, but things have changed.

Remember the famous incidents such as the infamous KFC Girls who took a bath in the restaurant sink or the Florida sheriff’s deputy who admitted his drinking problem and fascination with breasts on his MySpace page? These are some of the more extreme examples and I know most people wouldn’t go this far, but you don’t have to do something that outrageous to have it hurt your job prospects.
Especially if you’re trying to get a new job, just posting things that may even remotely cast a negative light on you, your personality, or work ethic can keep you from getting a job. If they don’t like what they find on your Facebook or Twitter, they won’t even hire you. If your current employer catches wind of a comment you made about your job, co-workers, or supervisor, it could lead to losing your job or be enough to keep you from getting a promotion or raise when the time comes.

To make matters worse, the very nature of these sites mean something you post could go viral, meaning that the entire world can hear about it. A random outburst, an embarrassing photo, or anything can spread across the web reaching millions and haunt your prospective employment opportunities forever. That picture of you with the lampshade on your head at the Christmas party might end up biting you somewhere besides your head.

Think twice about what you do on social media sites and understand that everything you say can have a huge financial impact on your life for years to come.

2. Tax and Debt Collection

While hurting your employment picture may pose a problem, there are new methods being used to hunt down people who aren’t paying their fair share. The IRS and debt collectors are scouring social media sites. If you’re cheating on your taxes or trying to escape a debt, the last thing you want to do is bring attention to it online even if you think only your friends are listening. In Minnesota, the IRS levied back taxes on the wages of a man who announced on his MySpace that he was moving back to his hometown as a real estate agent, and gave his employer’s name. So, the state was able to collect those back taxes by garnishing his wages. Oops.

Even if you aren’t trying to run from the IRS or debt collectors you should refrain from bragging about your financial situation. If you’re getting a significant tax break or talking about freelance income that you may not be fully reporting you’re opening yourself up for an audit.

It isn’t just people looking to get money from you that are watching. Insurers are also getting in on the act. If you’re collecting on a disability or any other insurance claim, don’t give the insurance companies any ammo that could prove otherwise. You may not deliberately be trying to commit insurance fraud, but even a slight embellishment can be a big problem.

3. Friends and Family

Most people use social media to keep up with friends and family. That’s great, but think about what you’re saying on there that you might not say in real life. Making a good money or get a raise and want to brag about it on Facebook? Don’t be surprised if friends and family start looking for you to pick up the check when you’re out to eat. Not only that, but if you come across as having money you could have relatives that are in need coming to you for help, and those requests are hard to resist. At the very least, they may ask you to co-sign a loan with them, which can mean big trouble for your credit if they don’t pay.

Another big mistake is when spouses aren’t completely honest with each other about money. You might think telling your girlfriends on Twitter about the new $300 purse you bought was a great deal, but when your husband finds out about your purchase online instead of from you directly you can probably expect an argument.

Be smart. If you wouldn’t say something to your friends over dinner, don’t say it online for the entire world to hear.

4. Online Scams

In the past, email was the preferred method of scamming people online. You know, the Nigerian prince who left you millions of dollars, fake online lotteries, and people posing as friends in need. Most of us wised up pretty quick when it comes to our inboxes, but now people are targeting social media sites.

There are Facebook viruses and people posting fake contests on Twitter every day, and it’s easy to get caught up in these scams. Sometimes they aren’t as blatant asking you to send money to some offshore bank account, but the information they can obtain from you just by clicking on a link can be devastating.

Even if you aren’t scammed out of money directly, the repercussions can go far beyond that. A hacker could take over your account and start posting messages as if they were coming from you. This could lure friends and family who may not be as savvy and they could wind up in trouble. Even worse, the remarks this person makes could scar your online identity forever, leading us back to the employment problem mentioned in the beginning.

5. Advertising

Finally, the world of advertising is changing. It’s not just about TV commercials and magazine ads any longer. Instead, you’re being peppered with ads on all of the social sites you visit. What makes this dangerous is that these sites know you and what you like, therefore giving you very targeted ads. In the past you may have flipped through a magazine only to find one or two products that really pertained to you. Now, almost every ad you see is being shown for a reason and you’re getting different ads than your friend who might be sitting in just the other room.

For instance, If you’re interested in sports, you’ll often see ads from sporting goods companies. It may go one step further and if you visit a lot of golf sites you may see nothing but golf ads. They’re startlingly effective. If you have a soft spot for a particular type of product and you’re getting bombarded with these targeted ads on a daily basis it can be hard to resist the urge. This can be costly.

Wrapping Up

In closing, it’s important to utilize these sites the best you can, but you do have to be careful and consider how it will affect your bottom line. From the completely benign new ads that you’re seeing online to the obvious mistakes where you talk about how drunk you got on a work night, these sites can prove costly if you’re not careful. Treat these sites like you would any other real social interaction. Behave online how you’d behave in person and project the right image on these social media sites.

All that being said, you can follow me on Twitter or follow this blog on Facebook.

Poll: Do You Use Mobile Banking?

Jeremy — Tue, 10 Aug 2010 14:57:41 +0000

We’ve come a long way in just a few years. Not long ago banking consisted of having a local branch that you used and the idea of mobile banking was to use an ATM or your debit card. Then, we saw a flood of what were considered online banks hit the market in the past few years. Banks such as FNBO Direct and ING hit the web and in a sense created virtual banks. Instead of using a branch you managed your money entirely on the web and money magically changed hands electronically. In addition, even the typical brick and mortar banks have now added a wealth of online banking tools that allow you to do almost all of your banking from the comfort of your computer 24 hours a day.

Now banks are taking things one step further with mobile banking. Instead of relying on your computer, many banks now have the capabilities to allow you to transact bank business right from your cell phone. In its earliest form this was little more than receiving text alerts regarding account status, but today you can actually send text messages to your bank and instruct it to provide a balance, transfer funds, or even pay a bill. Forget to pay the cable bill before heading out on a camping vacation? Pay it on the road with your phone!

Beyond banking by text, the popularity of powerful web-based phones has also introduced full mobile versions of a bank’s online banking site. With the ability to surf the web from your phone you can essentially get everything in the palm of your hand that used to take a computer. Some banks have even gone as far as creating custom iPhone or Android apps specifically for their banking platform. This makes it incredibly easy to stay on top of your money at any time.

Mobile Banking Risks

Although this can be a useful feature, do you trust that your information is secure? This is one area that is still somewhat up in the air. Granted, banks typically use secure and/or encrypted transmission methods when dealing with information over the web, but given you’re using a cell phone that’s broadcasting packets of information through the air can you be certain that the information isn’t being picked up elsewhere and somehow exposed by someone else? While experts suggest this is unlikely, hackers are always finding ways.

But what’s even more of an issue are phones that utilize WiFi. You may not think twice about it, but if you frequent a coffee shop or something that has an open and free wireless connection and your phone decides to use it, that banking app running in the background could be transmitting data that someone can get their hands on.

Or what about if you just use your mobile browser to login to your bank and have the login/password automatically saved? If you lose your phone or even leave it unattended and don’t have the phone locked down someone could easily pick it up and get into your account, or at the very least get some personal information.

Do You Use Mobile Banking?

Given how convenient mobile banking can be it’s no wonder people are quick to use it. I’ve done some mobile banking myself, but usually it’s just to get a quick balance when I’m not around a computer and don’t feel like waiting on hold. I also like the text alerts that Chase has where you can monitor your accounts and set alerts when they fall below a certain amount. I tested this last week and I set an alert to notify me when a checking account went under $500. I moved money around so that the balance in that account was about $550 and then went grocery shopping. The total came to about $80 so I swiped that debit card so that it would put me under my alert limit. Amazingly enough, my cell phone buzzed with a text alert from Chase before my groceries were even bagged! I thought that was pretty handy.

So, what about you? Are you a fan of mobile banking or are you a little uneasy about conducting financial business wirelessly from the palm of your hand?

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