Personal Financial Management Review

LendingTree Empowers Consumers with New Range of Personal Finance Tools

2009-07-20T14:28:00.000-07:00

As part of a major company expansion, LendingTree, the nation’s leading online lender exchange and personal finance resource, today launched a new feature-rich website, including a suite of easy-to-use, comprehensive financial services, making it the premier solution for all personal financial needs.

LendingTree has already helped over 28 million customers search for the right loans, and now the company is leveraging its experience and knowledge to help consumers with other aspects of their financial lives. The redesigned site now offers products and services in all financial categories – from mortgages and insurance to credit cards and money management.

“Consumers are facing a new economic reality in which they've been challenged to rethink the way they manage their finances and whom they can really trust,” said LendingTree founder and CEO Doug Lebda. “And just like we have done in mortgages, the new services at LendingTree provide consumers with the tools to make intelligent financial decisions and take charge of all their personal financial decisions.”

Investing in Real Estate Investment Trusts (REITs)

2009-06-02T13:53:00.000-07:00

With the drammatic decline in housing prices in the past year is now a good time to explore investing in Real Estate Investment Trusts?

Let's start with a definition of REITs provided by REIT.com. A real estate investment trust, or REIT, is a company that owns, and in most cases, operates income-producing real estate. Some REITs also engage in financing real estate. The shares of many REITs are traded on major stock exchanges.

To qualify as a REIT, a company must have most of its assets and income tied to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends. A company that qualifies as a REIT is permitted to deduct dividends paid to its shareholders from its corporate taxable income. As a result, most REITs historically remit at least 100 percent of their taxable income to their shareholders and therefore owe no corporate tax. Taxes are pad by shareholders on the dividends received and any capital gains. Most states honor this federal treatment and also do not require REITs to pay state income tax. Like other businesses, but unlike partnerships, a REIT cannot pass any tax losses through to its investors.

Morningstar's "Investing Classroom" provides in-depth information on the various types of REITs, their advantages and disadvantages

Reverse Mortgages ... A Primer

2009-06-01T15:16:00.000-07:00

Reverse mortgages are becoming popular in America. HUD's Federal Housing Administration (FHA) created one of the first. The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more. You can receive free information about reverse mortgages in general by calling AARP toll free at (800) 209-8085. See the US Department of Housing and Urban Development web site for full details

First-Time Home Buyer US Tax Credit

2009-05-29T11:14:00.000-07:00

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit:

Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
Applies only to homes used as a taxpayer's principal residence.
Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

The credit is claimed using US IRS Form 5405.

For 2008 Home Purchases

The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.
For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.
First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.

Reducing Your Real Estate Property Taxes

2009-05-26T14:42:00.001-07:00

Given the decline in housing prices during the past 1-2 years homeowners likely qualify for a re-assessment of their property taxes. While each state and county regulations will vary homeowners can simply contact their county or city tax collector's office (on-line, via phone or in-person) to request a re-assessment.

In the case of San Mateo County in the San Francisco Bay Area the representative at the county tax collector's office will direct you to an online web-based form used to submit your request. Typically within 4-6 months the county will send out an appraiser to assess your property value. Any change - quite likely a decline in property value - is reported to tax collector's office and a revision to the semi-annual property tax bill will be made. This simple and quick approach potentially can lead to a reduction - in this housing market - of hundreds of dollars, giving you and your family more cash to invest, tithe or pay down debt.

Net Worth Assessment Tools

2009-05-26T14:23:00.000-07:00

Assessing your financial net worth in this challenging economic environment is vital to understanding your current status relative to your long-term financial goals. Comparable to a company's balance sheet a net worth assessment provides a snapshot of your current financial situation and is the first step in resolving any financial problems. In essence, net worth is your total assets minus your debts or liabilities {Net Worth = Assets - Liabilities}.

Most investment and financial management companies provide automated net worth assessment tools. Moreover, determining changes to your net worth over time (1-10 years) gives an even better picture of whether you are gaining or loosing ground. Kiplinger's on-line net worth assessment tool is an excellent place to start.

What is a 529 plan?

2009-05-23T13:27:00.000-07:00

A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996.

529 Plans can be used to meet costs of qualified colleges nationwide. In most plans, your choice of school is not affected by the state your 529 savings plan is from. You can be a CA resident, invest in a VT plan and send your student to college in NC. See SavingforCollege.com for complete details

Develop and Manage Multiple Streams of Income

2009-05-21T17:17:00.000-07:00

Too many individuals, professionals and families consider the employment-related income as their primary if not only source of income. In fact there are three fundamental sources of income which - when managed properly - can yield long-term financial stability.

Earned Income: Yes, this is your "paycheck" from your job or profession.

Portfolio Income: Income generated by your financial portfolio. This includes dividend income from stocks, distributions from mutual funds, interest income - typically from cash accounts or money market funds and bond yields.

Passive Income: Income generated by rental real estate properties, franchise businesses which you may own yet have hired someone else to manage and Internet-based businesses (whether affiliate marketing programs, Internet advertising, etc.). Think of passive income as providing you with a medium-long term annuity income.

Given the high unemployment rates in the US and other developed countries in 2008-2009 most people are fixated on their "earned income" alone. In fact, now may be the time to more proactively manage your portfolio-investment income and seriously considered pursuing one or more "passive income" opportunities. Here is an article from the Motley Fool that may offer some initial ideas.

Credit Card Overhaul Passes House Vote

2009-05-20T14:08:00.000-07:00

Legislation to overhaul credit-card industry practices cleared the U.S. House on Wednesday, after an unusual two-part vote that has paved the way for the bill's quick enactment.
A 361-64 vote to approve a bundle of Senate-passed credit-card provisions was followed by a 279-147 vote to approve a measure allowing people to carry loaded, concealed weapons into national parks and wildlife refuges.

The two disparate measures were packaged into one bill by the Senate. But House Democrats opted for splitting them into two votes to avoid forcing liberal Democrats to vote in support of the gun measure. See the Smart Money article for full details

Managing Your Credit Score Produces Big Results

2009-05-19T12:59:00.000-07:00

Pro-actively managing your credit score has a major impact on your future mortgage, HELOC and credit card rates. The overarching goal for all consumers is to reduce their cost of capital (aka. borrowing expenses) thus freeing up more of your personal budget for investing, tithing or reducing existing debt.

MyFICO.com is an excellent online resource for tracking your credit score, mitigating any unresolved credit glitches and ensuring you qualify for the most favoring lending terms. See MyFICO.com for details

Getting Out From Under Credit Card Debt

2009-05-14T13:03:00.000-07:00

With interest rates on some credit cards surpassing 20%-30% consumer debt remains a classic "ball and chain" around the legs off too many adults in North America and Europe. The ability to consolidate balances into card or cards with the lowest interest rate(s), reduce the number of cards you carry and pay down principal are critical to your long-term financial success.

Yes, credit card companies seek to bait consumers into an "instant gratification - live beyond your means" culture which has become the death knell for countless adults, families and increasing students. During this major economic downturn many legitimate businesses, whether car dealers and electronics stores, are offering 0% financing and no payments for 12+ months.

Instead of viewing your next paycheck or tax refund as an opportunity to "spend and consume" it is time to change our mentality to "save and invest" in long-term appreciating assets such a real estate and education. More on these investment opportunities to come. See this excellent article from Kiplinger.

Here’s a Big Tip: TIPS Aren’t Perfect In Battling Inflation

2009-05-12T13:16:00.000-07:00

Inflation-protected securities are often seen as an easy way to defend against both rising and falling inflation. But that may not always be the case for those who invest in them through mutual funds.

The most common inflation-protected securities are U.S. government-issued Treasury inflation-protected securities. TIPS offer coupon payments and a yield at maturity that changes along with the consumer price index. Essentially, investors get paid more as inflation rises.
They also provide a defense against deflation, a subject now on the minds of many investors with the CPI heading into negative territory. If the CPI adjustment takes the principal at maturity below the bonds’ face value, the Treasury will still repay par value. For these reasons, individual TIPS held to maturity make sense for many investors. Wall Street Journal article

Seniors to Start Receiving $250 Economic-Recovery Payments

2009-05-12T13:10:00.000-07:00

The federal government made 24 million older Americans $250 richer on May 7 -- a single-day, $6-billion mainline injection into the economy. And about 30 million more seniors will get a similar boost to their personal economies by the end of the month.

The Social Security Administration says that on Thursday issued nearly half of the more than 52 million stimulus payments that are going to Social Security and Supplemental Security Income (SSI) beneficiaries. Identical $250 payments will go to those who receive U.S. Department of Veterans Affairs pensions and Railroad Retirement benefits. Kiplinger article

101 Ways to Cut Expenses

2009-05-12T12:47:00.000-07:00

Proper budgeting and cost-cutting can help you free up funds for investment, emergency accounts, or debt-paydown. And today, we've revived our 101 ideas to help you stretch your dollars to the max. If you follow through on them, you'll make significant progress in cutting costs in your day-to-day life.

1. Watch out for shipping costs when buying via the Internet. Use the Internet to comparison shop, then pick up the item locally.
2. If you see something in a catalog that you want to buy, wait a week before ordering to see if you still really want it.
3. Use the public library to check out movies or books for free.
4. Consider dropping your land line phone at home. Your cell phone may be all you need, and some come with free long distance services.
5. When traveling, look online before you leave for ideas and/or coupons. Once on site, ask the locals for low-cost favorite spots.
6. Try a vacation at home (stay-cation). See and do the things you've always meant to do and save on hotel costs.
7. Compare rates for cable and satellite. Go with the less expensive option. Only sign up for the channels you know you'll watch.
8. Send free e-cards and save on postage.
9. Consider buying a certified preowned car instead of a new one.
10. Cut back trips to Starbucks or other premium coffee shops.

Excellent Morningstar personal finance article - see the complete list of 100 cost-cutting tips.

How to Start a Personal Finance Strategy

2009-05-12T12:46:00.000-07:00

The economic storm is not over, but there seems to be a light at the end of the tunnel. Federal Reserve Chairman Ben Bernanke issued a statement last week saying that the U.S. economy is stabilizing and will begin to rebound later this year, but the recovery will be slow and cautious.
So what does that mean for us? This is actually the perfect time to set your personal financial strategy so you are well positioned to obtain your goals and priorities once the market does recover.

The financial strategy process is based on you as an individual -- you and your spouse, or your immediate family. Think about your life goals. Do you want to purchase your first home? Are you hoping to retire in the next few years? Once this is determined, you should analyze your portfolio and compare it to your current personal or household strategy. Is it aligned? Is your portfolio consistent with the life priorities you just laid out? CNBC On the Money article