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As of this week, new SEC rules are now in effect as part of the Credit Rating Agency Reform Act of 2006 that require credit rating agencies to register themselves with the SEC. These are not consumer reporting agencies, such as Eperian or Equafax, but the agencies such as AM Best and Moody’s, that rate securities for investors. How will this new legislation affect you as an investor?

The intent of the legislation is to increase competition among the agencies. The agencies are also required to submit more documentation to government regulators so the agencies have less rope with which to hang themselves. It creates a new set of rules for registering a class of companies known as “nationally recognized statistical rating organizations”, or NRSROs. It makes my brain hurt just saying all that. It’s been so complicated to register such companies, that only 6 such firms are with us, but that number is now expected to grow.

What the new SEC rules will not do, however is to demand that the individual ratings companies use common standards for metrics they use in their evaluations. That was because the different firms don’t use the same systems to derive their ratings and default definitions, and it would create problems for them. It also requires that the agencies make bond rating and default information available to the public for free or for a reasonable fee, but fails to disclose what reasonable means. I’m sure reasonable for you and me isn’t the same as reasonable for Raymond McDaniel or Kathleen Corbet. Just a thought.

These new rules were originally released 9 months ago, but made some changes after comments on them were evaluated. It’s thought that these new rules have the potential to increase the umber of credit ratings firms doing business from the current 6 to somewhere around 30. This could enable the small investor to more easily obtain detailed information, and for a more reasonable cost.

Other SEC rule changes coming late this month include the reduction of the capital reserves required of investment banks. This is great for the banks and their shareholders because they can now use this for additional investments, bonuses and profit. Since 2004, investment banks have been able to use non-cash assets for the purposes of calculating capital reserves. The new calculation requirements are called Basel 2. The GAO released a report in February stating that this new rule would mean “large drops in minimum required risk based capital” held by the banks. As of this time, only the 6 banks that petitioned the SEC for the change are affected.

Lastly, on Wednesday, the SEC announced new rules aimed at making things easier for investors. YEEHA! Oh, wait! They didn’t mean easier for us to make money, although it could help. The new ruling forms the SEC Advisory Committee on Improvements to Financial Reporting. It’s hoped that they’ll find ways to “make financial reports clearer and more beneficial to investors, reduce costs and unnecessary burdens for preparers, and better utilize advances in technology to enhance all aspects of financial reporting” according to SEC Chairman Cox’s press release.

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First, the catches to the use of these cards –

#1 - It only allows you to purchase merchandise from the vendor who issued the card.

#2 – You have to pay a fairly large deposit on the merchandise you purchase using these cards. It's usually a catalog or website, and the prices can be somewhat less than competitive. Another problem is that some of the companies that issue these cards tend to fall on the wrong side of the tracks. You should choose carefully. It's essential to check them out carefully before applying. Don't worry about actually getting the card however, because when they say you absolutely can not be turned down, they're not kidding. If you can fill out the app, you'll get the card.

Ah, but the benefit can be huge. The cards are looked at by the credit agencies as is any other revolving account. In addition, their limits tend to be rather large. So, for the purposes of calculating your credit score you have, a revolving credit account with a relatively high limit. That raises your aggregate credit limit while only raising your outstanding limit a small amount. If your credit utilization score is too high, this will help bring it back in line. In addition, it will show up as a revolving account with a “paid as agreed” notation on your credit report. The key is to use it only for the purposes of raising your credit score, not as a card with which to by things. If you've had problems in the past with restraint, this may not be the strategy for you.

This is another strategy, that can fairly quickly raise your credit score, but, as happened with the piggybacking technique, it could one day be eliminated. There are signs that some of the credit reporting agencies are looking at not including the effects of this type of credit the way they do now.

For some more “underground” credit improvement techniques, see the Credit Secrets Bible. It will help you get a better understanding of how credit really works and some great ways to improve your score that can save you thousands of dollars on mortgages and other major purchases by getting you lower interest rates on the loans.

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I mean, come on! Saving money is great, but at what real cost? It's patently obvious that the Chinese need more oversight in their economy if they are going to be exporting products to other nations. If they want to poison themselves, more power to them, but keep that crap at home, please! With new tales of Chinese product recalls, from pet food to tires, surfacing on an almost daily basis, you should think next time you decide to grab that can of fish from Wal-Mart.

According to news reports, Chinese director of quality control, a Mr. Han Yi, said “These are not isolated cases” when describing the number of illegal production facilities uncovered during a recent investigation. Why did he say this? Because they found an astounding 23,000 different products that were substandard or out right contaminated. What did they find in the foods? Oh, nothing, really, unless you worry about industrial chemicals in your chicken and veggies. If you're a fan of imported victuals from our red friends west of Taiwan, you should know the actual contaminants found include formaldehyde, mineral oil and paraffin.

Mr. Yi's right, these are not isolated incidents. According to the New York Times (as much as I hate to give them any credit) in 2005 companies were found to be repackaging food waste products and selling them as fresh. Yum! If you feed your baby Chinese milk powder based formula, know that problems were found with that as well.

If American consumers, and those of every other nation were smart, we'd stop buying Chinese food products at once. It's bad enough to sabotage our economic futures by relying so heavily on (mostly one way) trade with China, and sending so much of our money there, but we could at least hope our people won't be poisoned for their troubles. You may think you're getting a great deal and saving money, but what's the real cost?

That ignores that many Chinese food products are produced using slave labor, which is the primary reason they are so inexpensive. The largest cost component of many products is labor. It stands to reason that if you can reduce that (or eliminate it entirely), you'll be able to undercut your competition. Yes, China has a huge market that American companies would greatly benefit from tapping. It would help our trade imbalance tremendously if we could get some of our money back for a change, but if the cost of our firms doing business in China is that we must import the crap they are sending us for dinner, the cost is too high.

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It’s on the verge of collapse for much the same reason as any other business goes away; their business model was flawed to the point where it wasn’t really viable on a long term basis. Once the assumptions that the model was founded upon changed, the whole thing collapsed like Galloping Gertie. In this case lenders were too easy with credit and weren’t asking for enough money down to ensure there was at least some equity in the property. In addition, too many of these mortgage banks had virtually nothing in reserve to tide them over in the case their default rate got a bit out of hand for a while.

Many of these mortgage lenders used up most of their working capital repurchasing bad loans from their investors. Presto! - another mortgage lender out of business. This problem is being compounded by the reluctance of the remaining lenders to give mortgages to buyers with bad credit. The result of this is a reduced pool of homebuyers. With fewer buyers homes take longer to sell and tend not to bring as much money. Ironically, a percentage of these homes are those that have been foreclosed upon by the banks that got stiffed. If they foreclose on too many properties that take an extended period to sell, their financial worries deepen.

Where does that leave you? If you’re a homeowner with bad credit, it may leave you in the rental market, due to the difficulty finding a mortgage lender willing to take your business. If, however you’re a real estate investor with an eye on the long term, you may be finding the silver lining in this cloud. According to the latest Mortgage Bankers Association report, the number of loans entering foreclosure in Q1 2007 was up 14 basis points from the previous quarter and 20 basis points from the same quarter a year ago. Furthermore, FHA loans, typically used by those in the lower end of the lending pool set a new foreclosure record last quarter.

This points to a nice opportunity for the foreclosure and pre-foreclosure investor. You’ll have a large number of properties to choose from. If you’re in position to expand your portfolio, now could be a great time. You may have a larger pool of renters to rent your properties to as well, due to the number of people renting rather than buying.

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There are several techniques that work well to raise your credit score. One of these is called piggybacking. As you might have guessed from the name, piggybacking refers to the practice of using someone else’s credit to help your own. It works best in situations where you have very little credit history. In suchb cases, your credit score will be fairly low, because payment history comprises roughly 35% of your credit score, and how long you have used credit makes up an additional 15%. So, if you haven’t used credit much, either because you’re young, or because you’ve been married and most of your credit has been in your spouse’s name, about half your credit score can be helped by just adding something. Anything. Really.

You just need to have a credit history that your score can be based upon. Piggybacking is typically used by getting added as an authorized user on someone else’s credit card or other revolving account. When you try this, make sure you check with the credit card company to be sure your payments will be reported.

This technique has worked so well that companies were started just to match up people in piggybacking relationships (for a fee, of course). It’s gotten so popular that the popularity of this credit boosting technique could very well be its downfall. FICO has indicated it is going to deemphasize piggybacking effects from their credit scores on it’s newest credit scoring algorithm. That will get rid of those who have been getting a big boost to their credit scores by essentially renting other people’s credit histories, but it will also tank legit users of the piggybacking strategy, such as college kids being authorized users on their parent’s credit cards. This has been done for years to help kids develop a solid credit history. What to do now??

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The bad news is that, unless the lower tax rates are extended by congress, they’ll revert to where they were in 2003. That means you’ll go from paying no capital gains taxes to vaulting right past the 5% rate, and jumping up 100% to 10%. For those in the “no more Bush tax cuts for the wealthy” crowd, these tax cuts definitely don’t apply as “for the wealthy”. If you’re single and earn over $31,850 in 2007 (more for 2008), you’re ineligible for the 0% tax rate.

You’ll be stuck paying the higher 15% capital gains taxes. If a $31,850 makes you feel wealthy, you’ve elevated frugality to whole new level and are to be congratulated. The income level is effectively less than $31,850 because the sale of stock bonds and mutual funds will generate income that’s added to your other earned income. Together, the combined dollar amount can easily be over $31,850.

How else can you save capital gains taxes besides cutting your income below $31,850 a year? Capital gains taxes will be owed any time you sell a highly appreciated asset, weather it’s a collector car, investment portfolio or real estate. In addition, you’ll have to pay capital gains taxes on the sale of your business. The last one really hurts. You work hard for decades, put in blood, sweat, and tears, and then owe the government around 25% of the profits on the sale.

Capital Gains Tax Savings Strategy #1
Hang around for a while. To avoid paying capital gains taxes on a piece of real estate, you must live in it as your primary residence for at least 2 years. If you’re single or married and filing separately, you’ll get to exclude $250,000 of capital gains on that property. If you are married and file jointly, the exclusion jumps to $500,000. That means no flipping if you want to avoid paying your 15% to Uncle Sam. That works great for single family residences, but that strategy is harder to apply to commercial property or multi-family complexes.

The one thing that may people fail to realize is that it doesn’t matter when the property appreciates, as long as it is the primary residence for at least 2 of the last five years of ownership. This means you could buy a house then live in it for 2 years and sell it, or buy a house, rent it out for 3 years, move into it for 2 years and then sell it. There are many combinations that would qualify. If you owned 2 or more properties, you could live in one of them for two years, sell it and move into another for 2 more years, sell that one and move into another of your properties……you get the picture.

Capital Gains Tax Savings Strategy #2
Trust me. One Time honored strategy to defer capital gains taxes is through the use of a irrevocable domestic non-grantor trust. Such a trust is a legal entity that will allow you to defer capital gains taxes according to IRS supplied mortality tables. For domestic trusts, this time period can be up to 20 years and for international trusts, the time period can be up to 30 years. This is a vehicle that requires an advisor well versed in all its idiosyncrasies. Such tax deferment vehicles are extremely complex, yet very effective.

To ensure you not only receive the maximum benefit, but also that a trust is correctly set up, you need to spend time with someone other than your uncle Harold that has an account in the U.S. Virgin Islands. When done correctly, these trusts will also allow you to defer not only capital gains, but also all income taxes on reinvested assets. “Done correctly” is the operative phrase here. An additional benefit is the possible elimination of inheritance and transfer taxes.

Capital Gains Tax Savings Strategy #3
Plan for success. You have to plan for your capital gains taxes in order to properly, and legally defer or avoid them. Often a good plan hinges on legal structures that must be in place before you make your gains. In addition, you can make decisions that, once made, cannot be undone and can cause you to be facing a hefty IRS payment. This definitely applies when deciding on a time to sell or convert assets.

For example, if you have a large block of stocks or funds purchased at various times throughout the past few years, you may sell a portion of them. If you inadvertently sell assets purchased recently, rather than those purchased farther back, you can be facing a hefty tax bill. To avoid this being treated as a short term capital gain you must notify your broker of your intention to divest yourself of a block purchased farther in the past. The broker must be notified before you place your sell order, unless you’d rather pay income tax, rather than be liable for capital gains taxes, which are not only lower, but can then be deferred according to your capital gains tax strategy.

Capital Gains Tax Savings Strategy #4
Double Down. No, not in Vegas. Doubling down refers to the practice of repurchasing a stock after selling it at a loss for tax purposes. If you have an unrealized loss, but feel the stock is sound, and will turn around, you can sell it and take the loss for the purposes of reducing your capital gains taxes. You must then wait more than 30 days before you repurchase it to avoid the sale being termed as a “wash sale”. A wash sale is when an investor sells an investment only to repurchase it again within 30 days. In such cases you must deferred and, to make matters worse, the cost basis of the investment is raised to reflect the new amount. This can easily cause you to lose out on a loss you were counting on to reduce your tax liability.

Capital gains taxes are a very complicated subject. There are some very effective tax reduction, avoidance, and deferment strategies available that apply to capital gains taxes, most of which are not mentioned here. They are best left to experts in this specific field. Many accountants and attorneys haven’t the expertise to tackle capital gains taxes to ensure you have the most advantageous result. Here’s hoping you need one of them.

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Although the bill passed the Senate by a wide margin, 65-27, it has yet to pass the house or the president's desk. Maybe he can pull out one of his (far too rare) vetos. Here is one area where the market will do a great job on its own. We will do just fine controlling the fuel economy of our vehicles without congressional members sticking their noses into an area where they have neither the expertise nor the directive to be sticking.

For those that aren’t sure what the hell the whole CAFÉ thing is and why an eatery should elicit such venom, C.A.F.E is the corporate average fuel economy. It’s a mileage figure that, as the name suggests, an auto manufacturer's vehicles are required to meet. It currently stands at the same place it's been since the first Die Hard movie, 27.5mpg.

As fuel prices increase substantially, consumers will turn to more fuel efficient vehicles on their own, with out congress legislating their personal choice right out the window. Witness the sales figures for hybrids, light trucks and SUVs so far this year. According to R.L Polk, the information source of record for all things vehicle related, sales of hybrid vehicles for Q1 2007 increased a healthy 31% over the same quarter of 2006, while new car dealers sat on a whopping 102 day supply of new Chevy Silverado pickups.

The proposed CAFE number is 40% higher than the existing standard by the year 2020. From the manufacturer's perspective, it's actually even higher as the current 27.5 mpg standard doesn't include trucks and SUVs, which are required to attain only 22mpg. The new standard makes no such distinctions, and so is even tougher to attain than it would first appear. In addition, beginning this year, the EPA milage figires are being revised to more closely reflect the kind of mileage you can expect, instead of the, uh, optimistic figures we’ve experienced in the past.

While it’s certainly well within reach, is this economy goal realistic? Who will pay to meet the new standards? You will, of course. There will be a price to be paid on the dealer's lot and possibly in safety, to meet the new standards. In addition, the healthy power output we've been enjoying from our new vehicles is sure to be reduced dramatically. For those of you that thought the high performance car was dead in 1979, you may be right this time around.

Our vehicles could get much better fuel economy right this minute, if that was the type of vehicle you, as consumers wanted to buy. One only needs to look at the average vehicle leaving the dealership these days to see that it would be no stretch to grab a few extra mpg without breaking a sweat. Two main predictors of fuel economy, horsepower and weight, are up substantially from 20 years ago. According to the U.S. DOT the average new car in 1978 weighed in at 2805 lbs. For model year 2004, the same figure jumped to 3235.

This, despite the growing use of materials such as carbon fiber, other lightweight materials, and computer optimized designs. Simultaneously, horsepower, that elixir of driving fun, rose from 3.43hp/100 lbs in 1981 to 5.54 in the 2004 model year. Without the effect of modern electronics and power plant design, fuel economy figures would be truly abysmal. It really says something that modern vehicles, using basically highly developed versions of 100 year old power plants, can be so laden with heavy options, yet perform as well as they do.

There is a definite safety cost to reducing vehicle weight. A study by the National Academy of Sciences indicated that the downsizing in vehicles in the 1970's and 1980's, likely caused between 1,300 and 2,600 motor vehicle deaths in 1993. There have been substantial safety improvements since that time, ironically, given the tone of this post, many have been legislated. However, the reduction of weight will cause vehicle crashes to be more deadly. This will partially offset by the increased ability of a lighter vehicle to avoid crashes because of their greater agility and shorter stopping distances.

We can only hope the technologies required to meet these new fuel economy goals will be developed here, using American engineering talent. It will be a real shame if not only do we lose tens of thousands of high paying manufacturing jobs, we fail to capitalize on the opportunity to create new industries and technologies. Let’s hope we are not driving small, lethargic technological wonders we can not afford to pay for, developed by the growing cadre of “smart guys” working in the engineering firms of China and India. It's your money!

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1 – Taxes. Hard to avoid, those nasty taxes. Remember when setting a budget they can add 10% onto every purchase, depending on where you happen to be. Sales taxes, B&O taxes, property taxes; you know the drill. They either take away from your bottom line or from your purchasing power, so don’t forget to include the effects of taxation when setting your budget.

2 – Parking. Just going downtown for that big sale? What about a game? Well don’t forget to add $10 - $15 to you spending total for the day, depending on the city you’re out spending money in, so you can have the privilege of parking your vehicle.

3 – Miscellaneous charges – As I noted in my post on Monday, you’re often hit for miscellaneous charges on things such as car repairs, and you can sometimes get them reduced or eliminated. This practice isn’t limited to car repairs however. Contractors and other businesses frequently use them as well. If they are on the estimate or contract up front, that’s one thing, but if they mysteriously appear on your invoice at the end of the job without your prior knowledge, raise a fuss.

4 – Tolls – If you’re from the northeast, you figure these in automatically, but for those in the rest of the country or Canada, you may not count on the occasional toll that can add $1 - $5 to the cost of your trip that you hadn’t figured into your budget. As more state and county governments try to find the money to pay for construction costs that are spiraling out of control (In large part due to the ridiculous number of costly studies that must be performed on any transportation project these days. Enough is freakin’ enough, already!), expect to see tolls on more roads and bridges throughout the country in the future.

5 – Parts and Maintenance – You may expect to pay maintenance costs for your vehicle, but in reality, you’ll probably have to do so for many other things as well, such as your appliances, computer and TV. For example, when buying a laptop, don’t forget that over its lifetime chances are good you’ll need to buy at least one battery, maybe more. Have you priced a laptop battery lately?

The same is true with many digital, rear projection TVs. Those of the DLP variety, both rear projection and front projection, will require an expensive bulb every 2,000 to 8,000 hours, depending on the specific model. (There are a few models that will not require this, because they use LED light engines rated to last for the life of the set. Two of these are from Samsung and NuVision. An added bonus is instant start up times.)

There is a chance many of your appliances, such as your dishwasher, will need at least one repair during its lifetime. You can help reduce these costs by doing a bit of research on the Internet before calling the Maytag Man out for a visit, unless you really need the company. Many problems are common with a particular model and are fairly easily fixed by someone with a modicum of ability. If your dad’s a TV repairman and you have the ultimate set of tools, so much the better.

When choosing a new job, keep in mind things such as transportation and other related expenses that may reduce your take home pay. If you need to park in a downtown parking garage for instance, that could cost you $200 – $300 a month. If you have to seriously upgrade your wardrobe, especially of it will now require dry cleaning, don’t forget to include those costs in your financial analysis.

Just remember when making a purchase, planning a trip, or choosing a new job that there will be those little, associated costs that can really add up.

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So, if you are one of those that got a HELOC in the last few years to use for paying off high interest credit cards, real estate investing, the kid's college, or just fun money (not a great idea), what should you do, if anything, as the Fed raises interest rates? Because HELOCs are an indexed, variable rate, financial product, that has caused rates on home equity financing to steeply climb, with the interest rates on some borrower's credit lines increasing by 2 points or more. According to HSH Inc, the nation's leading publisher of consumer loan information, the average HELOC rate has jumped up from 6.75% in 2004 to the current average as I write this of 8.71%.

If you find yourself with a HELOC in such an environment, how should you handle it? You can run screaming through the neighborhood, but that might frighten your neighbors and probably won't do much to help your financial situation. You do have some options.

HELOC option #1
Refinancing – You can refinance your HELOC into a fixed rate product such as home equity loan. That will stabilize the interest rate you're paying and help stop the bleeding. Another HELOC refinancing option is to refinance your mortgage and pay off all or part of your outstanding credit balance. There are some things to remember if you pursue the refinancing strategy, however. The main thing is that you'll lengthen your mortgage.

When you refinance, you are resetting the mortgage clock back to the beginning. If you've paid down a substantial portion of your principal, you will end up paying up more in total interest due to the new, longer term of the loan. Something else to think about is the possibility of a prepayment penalty. Look at your loan agreement to see weather or not you you are eligible to pay the lender their bonus or not.

HELOC option #2
Sit tight and keep your HELOC just as it is. If you have relatively low balance on your credit line, it make more sense to just hang on for a while. The rates for many other forms of financing has risen in recent years as well, so a HELOC is still a comparatively inexpensive form of financing. If you plan on using your line of credit for home improvements, you should investigate the availability of companion programs offered by various retailers. These will give you discounts if you have a HELOC with certain lenders. If you have a HELOC and you're contemplating a remodel or other home improvement project, check with your lender for the availability of such programs. You could get substantial savings on need products.

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You may not be able to do anything about such charges as the ubiquitous “core charge” found on so many auto repair invoices. That's the fee charged for your old, crappy components they're pulling out if they're too badly decomposed to rebuild or remanufacture. If the parts can be rebuilt, you usually get a credit for the core charge. Ditto the environmental and disposal fees. Those are imposed by the EPA, state and local jurisdictions. These days, to help mitigate the costs of responsibly disposing of everything from old oil and coolant to tires and batteries, you'll usually be charged a disposal fee of a few dollars. It's probably a small price to pay to help avoid a big environmental mess down the road, don't you think?

There are some fees you might be able to do something about, however. That's especially the case for those mysterious “miscellaneous” charges often found on auto repair bills. Just what are they, anyway? Well, usually they are a bit of extra profit for the repair facility to make sure they make money and to help cover those extra parts they needed for the repair and couldn't bill you for. These include all the various things such as wire ties, paper floor mats, miscellaneous screws and nuts, and connectors that may be needed to complete the repair.

In many cases, however these extra fees on your auto repair can be substantial. To make matters worse, you're probably completely uninformed beforehand and unprepared for them. When you agreed for the $149 transmission service special, they probably failed to mention that there would be another $9.96 on your bill in such charges. Now it's a $158.96 transmission service special.

This is an area where, if you're not one of the “why can't we just all get along” types, you have a good chance of getting the repair facility to drop the charges. You need to point out your dissatisfaction and explain that a satisfied customer will be a repeat customer, while a dissatisfied customer won't. That usually does the trick, but if it doesn't, you can get a little more forceful in your request. To avoid putting your foot in your mouth, however, make sure you read the fine print on the offer and the scope of work before the work begins to make sure it wasn't stated you'd receive such charges. $9.96 saved is $9.96 earned, right?

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NOTE: It amazes me how many people don’t control the moss on their roofs. In some locales you’ve no doubt observed so much moss on some of your neighbor’s roofs, it looks like they’re conducting some kind of sick science experiment. Hey! Moss is too easy to control to neglect doing so. Neglecting this little bit of inexpensive home maintenance will make sure you’ll be buying a new roof instead of that sports car you’ve always wanted.

Okay, enough of that little digression. Insurance is like a trip to the dentist; it’s expensive, painful, and you hate it. Here are some easy ways to make sure you’re not spending more of your limited cash on your home owner’s insurance than you have to.

#1 Way to Save Money on Your Home Owner’s Insurance
Raise your deductible. In many cases, your deductible is just too high. You probably don’t want to file a claim for trivial losses anyway. They’ll just come back to haunt you in the form of increased insurance rates or blacklisting anyway. Make your deductible at least $1,000. It could save you up to 25% with some insurers. That trick works great for your car insurance too.

#2 Way to Save Money on Your Home Owner’s Insurance
Get a home security and fire alarm system. Some insurance companies are really starting to give large discounts for monitored security and fire alarm systems. The discounts can run into the 1,000s of dollars per year, depending upon the size and location of your home. In fact, some insurance companies are requiring their insured to have a monitored fire alarm system in some areas.

#3 Way to Save Money on Your Home Owner’s Insurance
Get the multi-insurance policy discount. It’s standard practice to offer a nice discount for getting all your insurance through the same firm, especially your auto and home insurance. Check into this. Sometimes, even if you may find one or the other for a little bit less with one company or the other, the discount can more than offset the savings from the individual carriers.

#4 Way to Save Money on Your Home Owner’s Insurance
Maintain a good credit score. Oh! There it is again; your credit score, affecting other parts of your life besides your interest rates and loan availability. As with many auto insurers, it’s fairly standard to somewhat correlate home owner’s insurance rates to the insured’s credit score. Keep your credit score up and your insurance payment low.

#5 Way to Save Money on Your Home Owner’s Insurance
Think before you lift a hammer. Before you start on a home renovation or remodeling project, find out how certain modifications will affect your insurance rates once the project is completed. You may be surprised how much of a difference certain things can make. Also, make sure you get a permit for the remodel. Failure to do so can result in your insurance not covering the completed project.

#6 Way to Save Money on Your Home Owner’s Insurance
You should just ask. Ask your insurance agent what else you can do to help lower your rates. If you have a good agent, and a good relationship with them, they should help review your policy, requirements and your property to see how you are getting the necessary coverage for the best value.

#7 Way to Save Money on Your Home Owner's Insurance
Shop around. There are places that will provide you with free quotes from multiple insurers, greatly helping you to find the lowest rate. A great place for this is InsightQuote.com.

Have a great weekend. If it applies; Happy Father’s Day.

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Posted by debtblog at 02:34 PM | Permalink | Comments (0) | TrackBacks (0)

One of the best ways to get debt free is to take a step up the employment ladder. Here is another resource that can really help you do just that. There are hundreds of marketing, sales and finance jobs to choose from. Employment experts recommend always being on the lookout for the next job opportunity in order to maximize your earning and benefit potnetial. You never know what's out there until you test the market to see what you're truly worth. I hope this new resource will help you make more money, find interesting fullfilling employment, and get debt free.

Employers, if you’re looking for great finance or marketing employees, you’ll get your job posting in front of 1,000’s of savvy, informed, and targeted prospects (I mean really, Debt Free does have some the most intelligent readers anywhere!)  every week. It’s inexpensive and super easy to post a job, too. To make it even better for your business, your job posting is through SimplyHired. It will be posted not only here, but on all the other sited on their network, including MySpace Jobs, LinkedIn, and MyWay, in addition to SimplyHired. If you’re looking for select, financially talented people that can help elevate your business; this is where you’ll find them.

See the Debt Free Finance and Marketing Job Board. 

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Posted by debtblog at 01:46 PM | Permalink | Comments (0) | TrackBacks (0)

If you’re like most Americans, that would be a pretty unpleasant check to write every 3 months. If you made around $60,000 a year, that’s what you’d be looking forward to. Sure, you could do it monthly and make the check out for $1,500. If you waited until the end of the year, you’d cut the IRS a check for $18,000. Ouch! Not only would it be hard to write those checks, many Americans wouldn’t have the financial discipline to actually have that much money in their checking accounts. Boing, Boing. Boing. You’d have checks flying around the country like so many super balls.

That’s just what Americans did until 1943 when congress approved the federal withholding system for income taxes. Until that year, you actually had to write the IRS a check for your income tax. There was no such thing as the withholding system for your taxes. The withholding system was a nefarious system designed to enable the federal government to extract a greater sum of tax revenue from the people with a minimum amount of fuss.

Even then, before the advent of the 3,000 credit card economy we know today, Americans thrived on convenience. If it was sold as a convenience, it was an easy sell. For many the same is true today. The brilliance of the plan on the part of the federal government is that not only is the system convenient, it’s much more painless for the taxpayers to never even see the money, yet alone actually write the check. That enables them to extract a larger amount of money before the tax paying public will miss it. It’s much the same if you invest a portion of your paycheck every month (like you should). If the cash is diverted straight to your retirement account, whatever that may be, you never even miss it.

The man responsible for this little bit of fiscal psychology was a gentleman named Beardsley Ruml. He was many things, among them chairman of Macy’s department store and chairman of  the New York Federal Reserve Bank from 1937 to 1947. He had a PhD in psychology from the University of Chicago, which he put to good use throughout his career, with his most lasting achievement being the tax withholding system we so love today. You know the feds love it. Imagine how difficult it would be to tax the public if they actually felt the money come out of their pockets. The taxpayer might actually demand some accounting of how their money was being used. Wouldn’t that be a fiasco?

To find out how tax friendly your member of congress is, you can go to the National Txpayers Union, an organization of 350,000 members looking out for your tax health. Here are their tax ratings on congressional members.

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You can rent it out and take advantage of the rental income, appreciation and tax benefits you receive by renting the property out. Many people however, just don't want to be landlords, no matter the financial incentives. You can mitigate some of the problems faced by being a landlord by hiring a property management company, but most investors would like to cover that expense in the rental cost. That depends on what the rental market is in your area.

You can sell the unwanted property, and hopefully make a profit after you selling expenses and taxes are paid. Part of the equation rests upon the current ownership structure of the property. Do you own it alone, or are you part of a partnership or investment group? What are the feelings of the other parties involved? If you want to sell, could they be the buyers?

How should you decide weather you should sell the property or rent it out? Part of that depends upon what your personal and investment goals are. Another part depends upon the way the property is financed. Do you have an ARM or interest only mortgage on the property? If an ARM, is it going to adjust soon? Is there a balloon payment in your future? If it's going to adjust, what will the post adjustment payments be?

You need to sit down (or hell, maybe you think better standing up) and do a financial analysis. Try and take the emotion out of the equation entirely. Will it be profitable to keep the property and rent it if you want to become, or remain a landlord? Can you sell it for a profit? Is the real estate market appreciating in your area, or has it hit a bit of a snag? In this situation, much depends upon the conditions of the local real estate market. In many areas right now, they are pretty abysmal, but some areas are still going strong.

Look at it this way. At least you are fortunate to have an extra property that requires you make such a decision. Many people would love to be in that position.

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This dichotomy was very interesting to me. These 2 individuals were obviously at very different places in their financial lives. It brilliantly illustrates the importance of proper financial health. The young man was, from outward appearance, not much different economically from the woman. In fact, the woman was more nicely dressed than the man was, yet was seemingly a gnat’s whisker away from financial disaster, living paycheck to paycheck. The other person however, was exploring the best way to deposit fairly large amounts of money on a regular basis. One would expect he was doing something differently financially than the woman who was living paycheck.

From what I was able to discern (not that I was listening, but when you hear “regular $25,000 deposits” from someone that age, it makes your ears perk up), he ran his own small business. That brings up the statistic that 80% of American millionaires started their own business. Actually, Georgia State University marketing professor Thomas Stanley, who has been studying the affluent in America for about 30 years, says his research indicates you are an astonishing 10 times more likely to become a millionaire if you own your own business.

According to a Wall Street Journal report, small business owners are the largest class of millionaires; larger than investors, executives and those who got lucky and inherited their money. The report also had this little tidbit if information. It wasn’t the running and profiting from the operation of their small business that made most of these business owners wealthy, although the man at the bank may achieve that status. Actually, most of the small business owners made their fortunes when they sold all or part of their businesses. Now that typically requires years of very hard work in order to make the business worth enough that you’ll get that kind of profit from it’s sale.

Many of these businesses are being bought by retiring baby boomers who are cashing in their retirement plans to be their own bosses, after toiling for years under the thumb of corporate America. Some of their hard earned cash also goes into other venues. According to a CNN/USA Today poll last year, in addition to their small business holdings, 46% of American millionaires also held investment real estate, even though that was not their primary source of wealth.

So get out there and look at the numerous small business opportunities to be found. Maybe one day in the not too distant future, you’ll be debt free and asking your bank teller how to make regular $25,000 deposits.

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The C.L.U.E. report is the Comprehensive Loss Underwriting Exchange report. It lists insurance claims made against a property and can provide valuable information about recent problems in the home's history. A C.L.U.E. Report will list all the data associated with any claim made in support of the property, including the insurance company, type of loss, weather the loss was related directly to the property itself, dollars paid on the claim and the cause.

Needless to say, this kind of information can be extremely valuable to you when looking at a prospective home to buy. It will show such things as serious mold damage, damage from fire, flooding, accidents, and so forth. There are a few caveats to the report though. One is that it is standard industry practice to only have data for the previous 5 years. After that time period, claims are deleted from the report.

The other major caveat is that a C.L.U.E. Report is only available to the property owner or insurance company. To obtain such a report you or your agent must make a request to the property owner, and they must purchase the report for you. It'll set them back $19.95. One would think this is a small price for them to pay if it will facilitate the sale of their property.

If you're selling a house, and your house has a sparkling record for the last 5 years, you can use the C.L.U.E. Report as a marketing tool. It's just another method you can use to instill confidence in the prospective buyer. For you, as the seller, it just takes a simple visit to www.choicetrust.com to order your report. In many locations throughout the country right now, it's a buyer's market. Competition for home sales is getting tighter. The number of new home sales in April showed a decline of 2.6% over the previous month, ending at 5.99 million homes sold throughout the nation. Interestingly, that is also paired with a drop in prices of about 11% over this time last year, the largest drop in this indicator in more than 30 years. Nationwide, April was the 9^th consecutive month of declining home prices. This trend is not happening everywhere, but where it is occurring it is severe enough to offset the locations in which home prices continue to rise.

If you're a buyer, you may have less inventory to choose from, but as sellers clamor for buyers, you should use everything at your disposal to negotiate your best purchase, and ensure you're buying a quality house. If you're a seller, you need to differentiate your house from the others on the market. In both cases a C.L.U.E. Report may help you achieve your real estate goals.

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When purchasing a new laptop computer, make sure that you are able to use widely available replacement parts, such as batteries and especially power supplies. Some manufacturers, notably Dell, require the use of a like branded power supply otherwise the computer will run at about one third normal speed and the battery will fail to charge. All other power supplies will only allow the computer to run, not charge the battery. You will get an error message informing you of this fact when using any other supply, except the factory supplied unit (in some cases you'll get the message even when using the factory [Dell] supply).

In the interest of keeping my readers informed so they may make a good decision when purchasing their next laptop, I advise you check such things thouroughly. My advice is that you be aware when purchasing certain laptops you may incur the additional expense and inconvenience of having to buy only factory supplied parts, rather than readily available replacements. After all, there are many companies out there that produce fine batteries and power supplies. As is evidenced by the battery recall fiasco of a few months ago, simply buying a factory supplied replacement is no guarantee of quality.

Caveat Emptor.

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Investing strength – You need strength, good solid investments you can bank on to support your portfolio. Weather you are primarily in equities, debt, real estate, commodities, or some other investment instruments, you absolutely must have pillars to support your portfolio. It’s much the same in athletics. You usually need some strength to achieve high levels of performance.

Investing balance – In your portfolio, balance helps keep you moving ahead. In this case I’m speaking of balance in the sense of some diversification to mitigate risk. You usually don’t want to put all your investment eggs in the same basket, lest it topple to the ground. In sports, it’s often those with great balance that perform stellar athletic feats.

Investing speed – When you are investing you want to be able to both recognize trends early, and move quickly when it’s required to take advantage of great investments. That speed can serve you well if you’re able to jump into the game early and in the right place. Again, in sports, it’s often the athlete that exhibits impressive that gets to the goal, base or finish line in first place. The athlete that can rapidly move and change direction when it’s required is better able to avoid the tackler, fist, or foot that’s coming their way, and deliver a strike of their own.

Investing coordination – All the speed and strength in the world is no good if you’re unable to use it as you desire. In sports you’ll often find those with outstanding coordination are often able to prevail over those that are stronger and/or faster than they. After all, you have to make contact with the ball in order to get the base hit. All the strength and speed in the world will do you no good if after your powerful swing all you hear is STEE-RRIKE! Likewise in your investment portfolio, you must coordinate the various parts to work effectively together. The whole should be greater than the sum of their parts, and able to ride out little problems like the ones plaguing the Dow for the last 3 days.

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Well, think again my deluded friend! It most definitely will affect you, and not in a positive way, either. Let me state right up front that I think illegal immigration is an extremely serious problem facing our nation, possibly the most serious, and I’m on record, here and elsewhere, as stating such. I am all for “the fence”, cracking down hard on employers that flaunt immigration laws, and toughening the laws to preclude the current illegal alien practice of multiple illegals using the same SSN.

What I’m not in favor of is the implementation of the Employee Eligibility Verification System in its current form. I mean, come on! You’ve got to be kidding me! Every citizen of the United States, even if you’ve lived here for your entire life, will be subject to a requirement that you prove your eligibility to both live here and hold a job. To do so you will be required to submit biometric information that will be included on the new social security / national ID card.

With the new system the Department of Homeland Security will grow into an agency that wields immense power, possibly more than has been accorded any other agency in the history of our nation. As we know the government never makes mistakes, this shouldn’t concern us in the slightest. If you actually hold this view, maybe a head-from-the-sand removal procedure is in order, post haste. Maybe the following aspect of the new legislation will make your little ears perk up, my deluded friend. There is no provision for judicial review on the decisions the DHS makes when using the EEVS.

For those of you that haven’t had your morning Starbucks this morning, I’ll say that again; no provision for judicial review. Think about what that means for just the briefest period time, please. If the government screws up (What, they do that?????), you could be deemed unable to hold any gainful employment, or earn any money whatsoever, when in fact you are an eligible U.S. citizen or resident alien. So beyond the indignity and inconvenience of being forced to prove your right to work in your own country, you may be unable to do so, through no fault of your own, and have no recourse to rectify the situation.

The amendment to the legislation proposed by Sen. John Cornyn (R-Texas) would do just that. It would impose impossible timetables and restrictions on such reviews, effectively rendering them unavailable when needed. He terms his amendment the Fairness in Immigration Litigation Act (FILA). I wonder of the athletic clothing manufacturer knows about the acronym? You’ll find my usual practice of inverting the names of most legislation to get the true meaning is definitely applicable here. One more thing; there will be an injunction against suing the federal government to recover lost wages or other legitimate damages incurred when the system makes a mistake (and it most definitely will).

You’ll be required to carry the new biometrically enabled social security card on your person at all times. Any time you change employment, you’ll have to prove your worth all over again. Not to the employer, to the feds. That’s right, to change jobs, you’ll actually need government approval.

I’m sure the government will only be only too happy to relieve you of any possessions they feel you might have obtained while illegally employed. That may not be a provision of the bill yet, but I’m sure it’s entered the peanut sized brain of a legislator somewhere.

Excuse me, I’m not a member of the Libertarian party or some civil rights extremist, and I’m completely against illegal immigration, but this stinks like a feedlot in July. For those you fortunate enough to never have experienced such a stench, believe me, the comparison’s valid. All your personal information collected for the EEVS will be stored in yet another huge, federal database controlled by the DHS to do with as they see fit. I hope that makes you feel like you have more security in your homeland.

In addition, the vast bureaucracy will be growing yet again, as countless federal employees will be added to support the requirements of the measure. So, not only could the proposal cost you money by prohibiting you from working (You’d be relegated to a “No Work” list, similar to the no fly list), it’s sure to vacuum countless tax dollars from your wallet in support of additional federal government expansion. Rest assured it will be a vast expansion indeed. Great, another reason to let those tax cuts expire, and keep more money out of your pocket and into theirs. Not only will the agency grow, it will likely grow far more than needed due to the inefficiencies sure to be present. I’ve been unable so far to find an estimate of the additional employees required to support such an operation, but that’s probably by design.

A far better system, and one that would probably be almost as effective, without the privacy and other negative implications of the EEVS as it is currently proposed, would be one proposed by Seattle radio talk show host Kirby Wilbur. Using something similar to the background check system required when someone attempts to purchase a firearm, SSNs would be checked to be sure they were valid and only issued to, and in use by, one person. That alone would crack down on the number of illegals getting jobs using current practice of multiple individuals using the same SSN. That could be added to the current firearm background check system to check for a criminal record or outstanding visa violations.

This could be implemented much more quickly and cost effectively, without incurring the privacy and other penalties that legitimate citizens would suffer under the currently proposed legislation. It might also be as effective when the inefficiencies sure to be present in the proposed system are factored in. Then again, no price can be too large to have homeland security. Papers please!

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Posted by debtblog at 02:29 PM | Permalink | Comments (0) | TrackBacks (0)

If you found yourself in such a position, what would you do? Maybe you're there now, with that fat check burning the proverbial hole in your pocket. What would you do? I have a friend who's got a great, commission sales job. He just bought a Porsche 911. Would you do the same?A new boat perhaps? He is financially able to make the Porsche purchase without harming himself due to a high income and some good real estate deals in the past. Many people are not so fortunate.

The car dealerships in coastal towns thrive on fishermen, especially young ones, returning from the sea and heading straight on over to by that new 4x4 or Mustang GT they've always wanted. I worked for a company some years ago that had just such a dealership, and the end of the various fishing seasons were much anticipated events. They created a large percentage of the annual gross profit for the dealership as the fishermen rolled in with fat checks from their share of the catch.

It's tragic in a way that the youngest among us are least equipped to handle such windfalls, but most able to benefit from them. Due to the effect of compounding, such a large sum could be a life changing event if it's handled correctly. For the young athlete or fisherman, going to the Chevy dealership for a new $40,000 4x4 Silverado isn't the most fiscally responsible choice. Here is how that cash could affect the future of the same individual if it was invested in some other ways.

2007 Chevy 2500 4x4, ¾ ton with the Duramax Diesel engine and full power options retails for $39,703. Figure another 7% or so for taxes, to bring the total price to $42,482. According to the Automotive Lease Guide, it rates 4 stars for expected depreciation, so you'll lose comparatively little there, compared to many other vehicles. Still, figure in 10 years, it'll be worth around $15,000.

Index mutual fund – Put the same $42,482 into an index fund such as the Vanguard 500 (as the name suggests, it tracks the S&P 500), and you'd likely see the following. Of course predicting future stock market performance is a bit dicey, and if you could do it accurately, we'd all be buying your book on Amazon, but here goes. From January 1997 to January of this year, the fund gained about 80% in value. The $42,482 you put into the truck would be worth approximately $76,638 if it performed similarly over the next 10 years.

Perhaps you'd rather invest in real estate. Here is gets trickier, due to the local nature of real estate markets. You could get a 400% return for the 10 years, or you could get no return at all, depending on where you put your money. The one advantage you get to real estate you don't get with the stock market is the power of leverage. That $42,000 could purchase property worth about $420,000 if you put 10% down. Assuming an annual real estate appreciation rate of 6%, you'd turn that $42,000 into a property value of $752,156. Take out the original purchase price of $420,000, less any principal paid to date, say $20,000, and you'd have a gain of $352,000.

This ignores the mortgage payments made in the interim, so we'll factor those payments in. Assuming a 30 year, 6.5% mortgage (that may not be the best choice in this instance), your monthly P&I payments would be about $2,401. Your payments for the 10 years would be $288,120. $211,000 of that would have been interest. You'd get a mortgage interest deduction as well, so if you are in the 35% tax bracket, that's a savings of roughly $73,000 in income taxes. You would, however have to pay property taxes during the 10 years. $2,500 a year for taxes sounds about right, so there's about $25,000 in property taxes paid over the 10 year period.

If you sold the property after 10 years, your original $42,482 would have turned into $111,880. This ignores the fact you’d probably have to pay for a place to live during the 10 years anyway, and that lodging has some value that would add to your return. In addition, you’d have selling expenses associated with realizing your gain that would have to be deducted from your return.

So, you could choose the stock market, real estate, or perhaps some other investment. Any way you slice it, they’d probably outperform the Chevy, except when it came to towing.

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What Tiger and many of these other athletes have done is to leverage other attributes into impressive income. It was interesting how many had also not done so. Some of those who had better name recognition did relatively poorly in endorsement income relative to their peers, while some who you’d expect to earn relatively little in endorsements had handsome endorsement paychecks. For example, Shaq made a reported $20 million in endorsements last year. You’d expect that. Shaq’s very popular and has been so for a very long time. Jermaine O’Neal and Chris Webber however, 2 other NBA players who have been at a high level in the league for quite some time, earned a relative pittance in endorsements. While you wouldn’t expect them to make anywhere as much as Shaq, they made only $750,000 and $500,000 respectively. Their agents need to get them some better endorsement contracts. Not that they really need the money. Their agents did get them each over $18 million in salary for the year.

It got me thinking even more than I normally do about diversifying one’s income. Obviously multiple streams of income are better than one. If you rely on your job for 100% of your annual income and something happens, you’re screwed. You could get laid off, fired, your company could go out of business, there could be an economic downturn and your accounts could stop buying from you, or any one of a myriad of reasons could pop up to deny you your employment. If your income was diversified, you’d at least have some other income to keep you going while you found another job.

If, heaven forbid, Tiger Woods was hit by a Buick while crossing the street tomorrow, and unable to play another round of golf for the rest of his life, he would continue to have a (to say the least) very attractive endorsement income stream for years to come. Tiger may be a poor example, because if he’s invested even a small fraction of his income so far, he still wouldn’t need to work, ever. But the point is that he would have other income to sustain him. You should do likewise.

Weather you start your own business on the side, begin investing with an eye toward producing income, or get a second job (my personal least favorite choice), you shouldn’t have to rely on your primary employment as your only income. The personal financial security you experience by not having to rely completely on your primary job is enlightening as well. That being said, you should do as much as possible to ensure you indispensable at your place of employment. Do whatever it takes to not only maximize your income, but make sure your employer will go out of their way to keep you, even if they have to lay off everyone else.

How can you accomplish this feat of magic? It’s not as difficult as you may think. You need to have exemplary performance, sure, but you need to become great at important job functions that everyone else hates to do. If you can become great at doing the things that others either go out of their way to avoid, or just hate to do, you’ll do very well. It’s a little secret of how to do well in the workplace that many people never learn. It can even move you farther in the organization than many people who have otherwise excellent job performance.

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For some smaller cars you’ll spend less, while for Corvettes, Porsches and any vehicle that needs larger, ultra high performance tires you’ll spend more; for example, the original equipment 285/35ZR19 RunFlat Goodyear F1 Supercar tires found on the rear of the ‘Vette run about $475 each! Watch those burnouts, they can get rather pricey. Same with large trucks and SUV’s, their treads can cost a bundle. One other thing; you should always get an alignment when replacing your tires, lest an alignment problem rob you of half your tread life. $75 dollars now is better than $250 in a year, when you’re replacing those almost new front tires.

The proper tires are an integral part of the cars handling and safety, so don’t skimp when you’re replacing them, either.  The reason your high performance car stopped so well and cornered like fighter jet is largely due to the tires that were engineered to work with the suspension system. Don’t get the cheapest tires you can find at Larry’s Bargain Basement Tire Barn.

Other maintenance is just as important. One thing that gets overlooked too often is a transmission service. Have you priced a modern automatic transmission lately? Well, you best be sitting down when you get the quote, weather it’s for a rebuild or a whole new trans. For your average car, a rebuilt tranny costs $1,000 - $2,000, without the labor to remove the old transmission and install the new one. Figure another $1,000, there. If you’ve got a vehicle that’s at all heavy duty or exotic, you can easily double or triple those figures. Many small businesses that have fleets neglect them in this regard as well. In that case, you not only have the cost of the repair, but the cost to have the vehicle out of service.

In this hectic world in which we live, there are so many things competing for our time. Proper home and automotive maintenance are only two of them. Forget the proper maintenance, and it will be like the old commercial “You can pay me now, or pay me later.” Given that you’re going to pay anyhow, wouldn’t you rather choose the time and place, rather than being stranded on the shoulder of I-70 somwhere.

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Debt consolidation is great because it allows you to use a secured loan, with subsequently lower interest rates, to pay off higher interest financial obligations. Debt consolidation sucks because the reason the interest rates are so much lower with a debt consolidation loan is because it is a secured loan. A secured loan represents a much lower risk for the lender and that is reflected in the interest rate. That security is, more often than not, your humble abode. You also have to be aware that the longer term on some of these loans can have you paying more in total interest payments even though the interest rate is much lower.

As you’re using your home for the security on your loan, you had better be damned sure the circumstances that conspired to deliver you into your current deep debt situation are resolved. If they rear their ugly head again, you could be living under an overpass on US1. It comes down to debt management. Proper debt management draws from a toolbox in which a debt consolidation loan is but one tool to be considered. According to many industry insiders, many people who avail themselves of a debt consolidation loan find themselves worse off than when they started. By some estimates, this number tops 75%. Why?

Why, you ask? It’s simply because they thought they could make the debt problem go away by using a debt consolidation loan. As I noted above, that only works if you’re financial habits are good ones and you’re spending less than you make. Many debt consolidation customers just don’t have the financial discipline to rein in their spending hence they wind up in the financial dog house once again.

Before you jump onto the debt consolidation bandwagon, you need to make a solid debt management plan that you can follow to get yourself permanently out of debt. Yes, it’s true, you may have to skip a few sale days at the mall, but hey, you just went to all the Memorial Day sales last weekend, what better time to quit? So, maybe a debt consolidation loan is the best course of action but you better really have your ducks in a nice, neat row first.

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