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Education Articles

What is Daylight Saving Time?

November 5, 2011 | Education | Videos | No Comments

Twice per year most people in the U.S. have to change their clocks.  But most people have no idea why.   Below is a very good video explanation of daylight savings time.

Credit Repair, Personal Loans, Debt Reduction Education

October 15, 2011 | Credit Repair | Debt | Education | Personal Loans | No Comments

A new “Education” section has been added to Money-Cake.com to help people looking for information about Credit Repair, Personal Loans and Debt Reduction.  Each Section includes:

   
Credit Repair Education 

 

1 – Introduction to Credit

 

2 – Repairing Your Credit

 

3 – Protecting Your Credit

 

4 – Consumer Credit Laws

 

5 – Resources Extra Resources

 

   
Personal Loans Education  

 

1 – Home Loans

 

2 – Student Loans

 

3 – Personal Loans

4 – Other Loans

 

5 – Resources

 

   
  Debt Reduction Education   

 

1 – Your Debt

 

2 – Your Budget

 

3 – Reducing Your Debt

 

4 – Debt Consolidation

 

5 – Federal Student Loans

 

6 – Avoiding Debt

 

7 – Resources

Parent’s Guide To Teaching Your Kids About Money

February 6, 2011 | Education | Guest Post | 1 Comment

There is one really good reason to teach your kids about money; so that you do not have to support them. You have probably heard loads of stories or maybe even know someone who is still financially supporting their adult children. I have heard these same stories. I even know a couple who overextended themselves in order to bail out their child to such an extent that they wound up losing their house. While we all want to be able to help our children out in an emergency situation none of us want to have to support them after they leave the nest. That is why it is important to teach them good money management skills at home. You can start when they are very young and continue the lesson on into their years at college.

Tips For Teaching Kids About Money

Check Yourself First – Before you can start teaching your children about the importance of saving money and spending wisely you have to make sure you are doing it yourself. Kids are smart, they will pick up on the fact that you are not following your own advice. Once they know that your finances are a mess they will simply shut down and ignore all of your advice. Lead by example and have your finances in order at all times.

Share Money Decisions – Once you know that your finances are in order you can help your kids learn about the value of money by sharing financial decisions with them. Do this at an age appropriate level. For small children you can explain how much things cost and have them help you count out the money to the cashier when you make purchases. As they get older you can talk to them about how many hours you have to work to earn the money for the things you want and need.

Have Them Earn An Allowance – Allowances are not just rewards for existing. Kids should be given an allowance that is actually earned by doing household tasks. This teaches them about earning money and about the value of working. Even very small children can do things like clear their own dinner dishes and pick up their toys. The tasks and the money should be proportional to their age. It should also reflect the quality of the work, so if a teen does a shoddy job mowing the grass they should get a pay cut too.

Teach Them About Saving And Spending – Sometimes parents only focus on one of these things, but really they go hand in hand. Your child is going to want to spend their money, and they should be able to do so. Help them understand that they do not need every new gadget and how to make smart and responsible choices about spending. They should also be encouraged to save some money. You might add some incentive by matching a portion of their savings or allowing them extra privileges for leaving money in an account. After a while they will take pride in how much money they have set aside and can even imagine saving for something really valuable.
Teaching your children about money is something you can do every day in all kinds of different situations. It does not have to just be about setting up a budget and sticking to it or boring lessons on economics. Once your child understands that everything costs money and that it does not simply come from a tree in the backyard they will be more responsible with every dollar that they earn.

This article was written by Timothy Ng. You can read more of his work at Credit Card Finder, where he has a number of comprehensive guides to all types of credit cards.

Most Common Mortgage Loans

May 7, 2010 | Education | Mortgage Loans | No Comments

If you are in the market for a mortgage, you’ll soon realize that there are several different types available.  The question is which one is right for you.  (Note. You can use a mortgage calculator to compare loans.)  Some of the most common mortgages are as follows:

Fixed-rate mortgages are the most popular because it protects homeowners from increased payments and is very straightforward.  With this mortgage our monthly payment and interest rate stays the same for the entire term of the loan which makes it easier to budget.  Most loans are taken for 30 or 15 years, however, other fix terms are available.

FHA mortgage loans are fixed-rate mortgages back by the Federal Housing Administration (FHA), which is government agency.  FHA loans maybe a good option for first-time buyers.  FHA loans allow lenders to offer lower down payment options, however, with the lower down payments require mortgage insurance.  Additionally, lower the lower the down payment, the higher your monthly payment will be.  So be careful to review the extra costs when considering a FHA loan.

Adjustable-rate mortgages (ARM) have an interest rate that adjusts periodically, usually every 6 or 12 months. When the loan adjusts, the payment will adjust with market interest rate movement. Most lenders also offer a “hybrid ARM,” also known as a “fixed-period ARM”.  This is a mortgage with an initial fixed period of 1, 3, 5, 7, or 10 years, and has an adjustable rate and payment after the fixed period. Fixed-period ARMs are often named by the length of time the interest rate remains fixed.  

A 3/1 ARM, means the “3” is for a three-year introductory period, during which the interest rate remains fixed. The “1” means the interest rate will adjusts once per year after the introductory period.

Introductory period rates are lower during the introductory period, which can mean a lower starting monthly payment. However, when the introductory period ends, your rate will go up or down depending on the market rate. When considering an ARM, you should carefully consider your ability to handle potential increases to your rate, and consequently, your monthly payment.

ARMs caps are available in 2 options. Adjustment caps limit how much your rate can go up or down in any single adjustment period, which limits how much your loan payment can change when it adjusts. Lifetime caps have a maximum interest rate over the entire life of a loan. You should find out what the caps if you’re considering an ARM, and then determine to see if you can handle rate increases.

Interest-only mortgages (I/O) are mortgages that contain an interest-only payment option during a set period in first years of the loan, often the first ten years. Interest-only mortgage payment options can be available on ARMs or fixed rate loans.  During the I/O period, borrowers can delay making principal payments and make monthly payments that include only the loan’s interest. After the interest-only period ends, however, if interest-only payments were made (you can choose to make regular principal + interest payments during the I/O period) your monthly payments will significantly increase when your required monthly payments start to include principal, plus interest.

Adding any unpaid principal from the first 10 years to the principal due on the remaining years of the loan plus interest due on the remaining portion of the loan can result in what is commonly referred to as “payment shock.” You should carefully consider payment shock when considering an I/O payment option. Interest-only mortgages start with monthly payments that include only the loan’s interest.

After this initial interest-only period ends, however, the monthly payments can significantly increase when these payments then start to include the principal. This is called amortization. When an interest-only loan starts amortizing, the monthly payment amount increases, as you begin repaying principal in addition to interest.

Chase has introduced a unique cash back offer for home mortgage.  If you get a new Chase mortgage or refinance, you can choose either a 1% cash back or a 1% payment against your principal balance annually when you sign up for automatic payments on a new Chase Mortgage.  That’s not a bad deal!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The 1% Mortgage Cash Back works with any new Chase mortgage or refinance.  The cash back is deposited into your Chase checking account OR applied as a payment against your mortgage principal.

At your loan closing, complete your enrollment in our automatic mortgage payment service with your Chase personal checking account. Your monthly mortgage payment is automatically deducted from your checking account.

For more information visit https://www.chase.com/chf/mortgage/mortgage-cash-back.

Is Your Debt-to-Income Ratio Manageable?

May 7, 2010 | Education | Financial Tips | No Comments

A good measure to determine if your debt is getting out of control is determining what your debt-to-income (DTI) ratio is.  If your DTI ratio is close to or higher than 36% then you should be working to reduce it.  Lenders use DTI to determine if a potential customer can afford to take on extra debt.  The preferred maximum DTI varies among lenders, however, 36% is often used as the maximum.

So how do you determine your debt-to-income ratio?  You first have to determine what your monthly payments are to service your debt.  For example, let’s assume your monthly debt is as follows:

Car loan = $300
Mortgage = $1,100
Credit cards = $500
Other debts = $400
=============
Total debts = $2,300

Now let’s assume you earn $60,000 per year, which equates to $5,000 per month.  You debt-to-income ratio is $2,300 divided by $5,500 which equals 0.46 or 46%.  This is very high and a person in this situation needs to take quick action to reduce their debt.

So what can you do to reduce your DTI ratio?  You can take the following steps:

  • Increase your monthly payments to service your debts. Applying extra payments to the principle will lower your overall debt faster.
  • Stop taking on additional debt.  The more debt you take on, the higher your DTI ratio.
  • Delay large purchases until you have more savings. The larger your down payment, the lower your monthly cost, thus decreasing your DTI ratio.
  • Calculate your DTI ratio monthly to determine if you are making progress.
  • Earn extra income by finding a new job or additional work (part time) to pay down your debt faster.

 

Keeping your DTI ratio at a manageable level is one of the foundations of good financial health.  A manageable DTI ratio also gives you peace of mind that you can handle your financial responsibilities and will help you qualify for credit to purchase things your really want like a new home.

Chase has introduced a unique cash back offer for home mortgage.  If you get a new Chase mortgage or refinance, you can choose either a 1% cash back or a 1% payment against your principal balance annually when you sign up for automatic payments on a new Chase Mortgage.  That’s not a bad deal!

 

 

 

 

 

 

 

 

 

 

 

The 1% Mortgage Cash Back works with any new Chase mortgage or refinance.  The cash back is deposited into your Chase checking account OR applied as a payment against your mortgage principal.

At your loan closing, complete your enrollment in our automatic mortgage payment service with your Chase personal checking account. Your monthly mortgage payment is automatically deducted from your checking account.

For more information visit https://www.chase.com/chf/mortgage/mortgage-cash-back.

Test Your Knowledge of Insurance

April 15, 2010 | Education | No Comments

How knowledgeable are you about insurance?  You can test your knowledge via The Insurance Intelligence Quiz.  It’s a fast quiz; however, the majority of Americans who took the quiz only answered 40% of the questions correctly.   The questions test your basic knowledge of auto and health insurance. I took the test and scored a 70%.  How did you do?  Leave a comment below.

Chase has introduced a unique cash back offer for home mortgage.  If you get a new Chase mortgage or refinance, you can choose either a 1% cash back or a 1% payment against your principal balance annually when you sign up for automatic payments on a new Chase Mortgage.  That’s not a bad deal!

 

 

 

 

 

The 1% Mortgage Cash Back works with any new Chase mortgage or refinance.  The cash back is deposited into your Chase checking account OR applied as a payment against your mortgage principal.

At your loan closing, complete your enrollment in our automatic mortgage payment service with your Chase personal checking account. Your monthly mortgage payment is automatically deducted from your checking account.

For more information visit https://www.chase.com/chf/mortgage/mortgage-cash-back.

What is Forex Trading?

April 9, 2010 | Education | No Comments

The foreign exchange market, or forex, FX, currency market is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world act as anchors of trading between a wide range of different types of buyers and sellers 24 hours per day except weekends.  The foreign exchange market assists international trade and investment by allowing businesses to convert one currency to another foreign currency.  As an example, a European company can import U.S. goods and pay dollars, even though the business’s income is in Euros.  The foreign exchange market is the largest and most liquid financial market in the world where traders include currency speculators, corporations, governments, large banks, central banks and other financial institutions.

Forex trading, or foreign currency trading, is when a trader will pair 2 types of currency (i.e., British Pound and U.S. Dollar) that requires more of one currency to purchase another that loses value.  Traders from all around the world monitor currency fluctuation to accumulate currency when it weakens in hopes of selling it when it increases in value.  Forex trading isn’t much different from stock trading where traders try to buy low and sell high.

Traders on the forex market exchange acquires currency by giving a bid/ask quote which states he/she is will to buy for example 2 marks per dollar and sell them at 2.125 per dollar.  Most people who are traders buy the currency via a bank that is paid a commission which has to be taken into consideration to calculate their spread or profit margin when they sell.

Anyone with a computer and some training can become a forex trader.  However, forex trading isn’t an easy way to get rich.  Many people have lost a considerable amount of money miscalculating the market.  There are many training classes and software (or robot trading) promising to help you make money!

Forex trading has increased in popularity over the years and on some days the forex market exchange witness more than one trillion dollars exchanged.

Chase has introduced a unique cash back offer for home mortgage.  If you get a new Chase mortgage or refinance, you can choose either a 1% cash back or a 1% payment against your principal balance annually when you sign up for automatic payments on a new Chase Mortgage.  That’s not a bad deal!

 

 

 

The 1% Mortgage Cash Back works with any new Chase mortgage or refinance.  The cash back is deposited into your Chase checking account OR applied as a payment against your mortgage principal.

At your loan closing, complete your enrollment in our automatic mortgage payment service with your Chase personal checking account. Your monthly mortgage payment is automatically deducted from your checking account.

For more information visit https://www.chase.com/chf/mortgage/mortgage-cash-back.