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Financial Tips Articles

Can Leasing a Car Save You Money?

February 17, 2011 | Financial Tips | Guest Post | No Comments

Purchasing a used vehicle is often perceived as buying someone else’s problems. As a result, when it’s time to get a different car most people prefer a new one. Once the choice to get a new car is made there is still one more decision to make: buy or lease.

Owning a Vehicle

With an outright purchase you own the vehicle. Once it’s paid for no one can tell you how to treat it, or how it can or should be used. If you plan on keeping it for decades it doesn’t really matter what it looks like. Not washing or waxing it is irrelevant because you’re simply going to keep it until it stops running. The number of miles you put on the car is also strictly up to you. Of course, if you care about the trade-in value, you’d be smart to take care of the car. Its value may remain high if it is well taken care of and has low mileage.

Leasing a Vehicle

Taking out a lease it’s a slightly different story. You never really own the vehicle. The very definition of the word says you are merely entitled to the use of it for a specified period of time–provided certain conditions are met.

With an auto lease you’re obliged to take reasonable care for the duration of the lease. Turning the vehicle in with a lot of damage could very likely result in having to pay a penalty. You’re also limited on how many miles you can put on the car during the lease period. If you go over the allotted miles, you pay a penalty.

Trade-in value is not a consideration. You just turn the vehicle over to the leasing company. If there is no extraordinary damage and the miles are within the allowed maximum the deal is simply over with.

Financial Considerations

For some the choice of buying or leasing comes down to one basic consideration: which is cheaper in the long run? There are a lot of factors involved and both methods have their merits.

Leasing

  • If the percentage rate and down payment are the same, you’ll end up paying less per month with a lease.
  • When the payment period is ended you simply walk away from a lease, in which case you owe nothing, but have no vehicle. If you like the leased vehicle, you’ll have the opportunity to purchase it. Otherwise you’ll have to either lease or buy a different car.
  • Leases carry conditions, such as a limit on the number of miles you’re allowed during the lease period. If you exceed the limit it will cost extra.
  • As long as you take care of the leased vehicle it will retain its value and won’t cost you anything extra for damage at the end of the lease.
  • By continually leasing you can always be driving a new vehicle.

 

Owning

  • If you paid cash or have your vehicle paid off when you trade-in your car–in other words, if you own it outright–it will probably cost you less to buy than to lease.
  • If you own your car, you can put as many miles on it as you choose, but remember, a high mileage vehicle is worth significantly less at trade-in time.
  • Owning a vehicle means having value in the car to use toward a down payment for another vehicle.
  • You can trade-in the car at any time. However it may not be a financially sound decision unless the car is worth more than you owe on it.
  • Buying a vehicle is less complicated than leasing. Simply put, as long as you make the payments on time the car is yours to do with as you will.

 

Can leasing a car save you money? As you can see, there are pros and cons to either choice. The bottom line is you’ll have to negotiate with the dealer, discuss all your options, and then decide whether buying or leasing is the best choice for you. Like any other decision you make in your life, gathering as much information ahead of time is the intelligent thing to do.

Guest post from Bailey Harris. Bailey writes on many topics, including Auto Insurance Quotes for www.carinsurancequotes.net.

How Much of an Emergency Fund Do You Need?

December 29, 2010 | Financial Tips | Guest Post | 1 Comment

Let’s face it, emergencies seen to happen at the worst possible time. Whether it’s an unplanned medical procedure, a car repair or a lost job, not being prepared can leave you in a very scary financial position. That’s where an emergency fund can come in.

But how much money do you need to save in your emergency fund? And, in what type of savings account should you keep it in? According to most experts, it’s important to keep between three to six months worth of your living expenses in an emergency fund. That way if you or your spouse suddenly loses your job, you’ll have ample time to get back on your feet before you run out of money. That way, even small emergencies, such as new tires or a home repair, will be covered.

Your line of work, and city that you reside in, will help you determine whether you need to be on the higher or lower end of that three to six month recommendation. For example, if you live in a city where there are many jobs in your industry, then three months may be enough. If not, you may want a bigger fund that will allow you more time to find the right position.

Another important rule of thumb in preparing your emergency fund is to take a close look at all your living expenses. Simply add them up and multiply that number by number of months you’d like a cushion for. So, if your living expenses are $4,000 a month, and you want an emergency fund for three months, you’ll need a $12,000 cushion to keep in the bank.

Also, you’ll want to get immediate access to your emergency fund, if necessary. That’s why you should keep the fund in a savings account at your local bank or credit union. Having it tied up in a CD or an IRA makes it harder to access quickly, and can incur taxes upon withdrawal.

When it comes to starting your emergency fund, the sooner you begin the better off you can potentially be. Therefore, if you’re on a limited budget you’ll want to start small by saving at least hundred dollars each month. You can do this simply by having small automatic transfer made from your checking account to your emergency fund – so you won’t even notice it.

It’s also important to keep in mind that you’ll want to balance your debt with saving for an emergency fund. If you have high-interest credit card debt it’s vital that you build your emergency fund at the same time you pay down your debt. A good rule of thumb is to pay down 70% of your high-interest debt while putting 30% to your emergency fund. That way as your debt decreases, the amount you can save will increase. And in time you’ll find yourself debt-free and well-prepared for the next emergency that always seems to be right around the corner!

Bio: Maria Rainier is a freelance writer and blog junkie. She is currently a resident blogger at First in Education, where recently she’s been researching kinesiology degrees and programs and blogging about student life. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

The 10 Best Jobs for College Students to Reduce Debt

October 13, 2010 | Financial Tips | Guest Post | Loans | No Comments

With tuition, books, room and board, transportation, and all the rest, the costs can really add up. Having a job during this time can help you cover some, if not all of these costs, and hopefully keep debt to a minimum. Here are some options for jobs that are often well suited to students and might offer an opportunity for employment at or near your school or maybe when you go home for the summer.

1. Bartender: Taking on the role of bartender while away at school might not be for everyone, but the money can be good and the work exciting and entertaining. Depending on the state or location in which you attend school, you may or may not have to be 21 years of age to serve alcohol. It you do end up at as a bartender, you may find that several hours of work here and there on the right days and at the right times (Friday and Saturday nights are often most busy at many bars, especially on college campuses), can have you raking in some pretty good money.

2. Waiter/Waitress: Similar to bartending, working as a waiter or waitress could have you making some serious cash while minimizing the number of hours you work. Often, the key to making good wages at this type of work (besides providing good service) again may depend upon the restaurant at which you work as well as the days and times you work.

3. Golf Course Employee: Many college campuses have golf courses in close proximity to campus and that may be associated with the school itself. Working at a golf course in a position at the pro shop or in concessions may provide a pleasant, often relatively stress free environment that might offer a lot of down time that could allow for a bit of studying. This type of work can also make for a good summer job.

4. Delivery Driver: If you have available transportation while away at school, you might consider working as a delivery driver. Depending on the type of food being delivered, you could make decent money. The downside to this type of work is that you will need reliable transportation, which will come with the usual associated costs (insurance, upkeep, etc.), and how much money you make may largely depend on current gas rates and customer tips. On the upside, there is typically a lot of this type of work in college towns during the school year.

5. Work Study Program Through School: Work study can provide a variety of roles that allow you to make money while still keeping an eye on your studies. Consider checking your school’s Internet website to search for available work study program opportunities.

6. Lifeguard: While the pay may not always be great as a lifeguard, it could make for a nice break after an exhausting school year. Depending upon the geographic location in which you attend school or live during the summer, this could be solely a summer gig, or it could be an opportunity for five or six months in a warmer climate, or even all year long if you work at an indoor pool. This job can be a great way to stay in shape and help others.

7. Coach: If you’re into sports, you might find that coaching could be a good way to earn money for school. Whether it is by way of coaching baseball, basketball, soccer, tennis, golf, swimming, etc., there could be a variety of options that might meet with a sport skill that you have.

8. Summer House Manager: If you are a member of a fraternity, being the summer house manager (if your house remains open over the summer) could be a great way to live rent free or receive discounted rent over the summer. You might serve as the summer caretaker with duties involving tasks such as cleaning, cutting the grass, general maintenance and repairs, and similar activities.

9. Internship: While an internship might not make you much money toward paying down college related debt, it could help you earn at least a few bucks. More importantly, if you can get an internship related to your degree work, it could provide valuable experience for getting a better paying job after school that could help you pay off your school related debt more quickly.

10. Zoo: The zoo can be a fun and relaxing environment in which to work during school. This work however may be seasonal, and more zoo positions may open up as summer nears and the zoo heads into its peak season.

Tom Becker works at Money Choices, a comparison service where you can compare savings accounts and keep track of interest rates.

Be Skeptical, Scammers Prey on the Unsuspecting and Educated

September 8, 2010 | Financial Tips | Guest Post | No Comments

In these difficult economic times, it is easy to let our guard down and accept for the moment that an unsolicited offer promising easy wealth at little risk may be the answer to our daily prayers.  However, the preponderance of scams in the marketplace suggests that the latest get-rich scheme has only the swindler in mind when it comes to filling his wallet with the content of yours.

None of us ever expects to be the victim of a cleverly designed con.  That kind of thing is reserved for the movie theater that “cons” us out of money for overpriced tickets and popcorn.  Department of Justice studies also point out that those of us with either a little or a lot of education are also the ones that are most often defrauded.  We all must be ever vigilant and alert to fend off these thieves.  Healthy skepticism is a must if we are to protect ourselves from the criminal element in our society and the scams they promote.

The Internet has been the great facilitator of our age, enabling online shopping and commerce to flow, while providing additional opportunities to earn and work from the convenience of our own homes.  Trust is often too easily given where anonymity is the name of the game and business partners never have to reveal their true identities.

While much has been done to police the Internet for commercial and investment fraud, the long arm of the law still has difficulty reaching across borders to stop a crook.  One must remember that a “.com” address does not mean that they are located in the United States and therefore subject to our laws.  Many of the online scams today take advantage of this geographical conundrum.

The latest case in point is the email or ad that entices your response, only to load a “malware” robot on your PC.  You are suddenly informed that your computer is loaded with many ferocious viruses.  Lists of horribly sounding worms are presented.  The robot freezes your PC’s operating system and demands that you pay for their service online to receive the “PIN” that will make everything work again.  The graphics appear convincing, but spelling or grammar errors suggest otherwise.  A visit to your local “Geek” will clear up the problem.  However, the crook is in Russia or Nigeria, free to approach his next “mark”.

Forex scams are another problem area where genuine offshore service providers abound, but where swindlers can roam about freely, touting their outrageous offers.  The cons here revolve around unscrupulous brokers that attract your money and then disappear, or fund managers that promise incredible returns, but who also depart once they have your good funds wired to their offshore account.  Lastly, are the purveyors of the latest forex trading software that will release trading robots that will make oodles of money for you while you sleep.  What could be easier than that?

The Commodity Futures Trading Commission, or CFTC, has managed to return $476 million to 26,000 defrauded forex customers over the past decade.  We can only guess at the amounts that were never recovered.  Due diligence in selecting your broker and staying onshore are two lessons to take from this.  

The major lesson, however, is to be extremely skeptical of any unsolicited offer that may come your way via email, the phone, or from a friend.  Crooks know how to use cyberspace and telemarketing techniques to their advantage.  If the offer sounds too good to be true, then, most likely, it is.  Stay alert, be skeptical, and be safe!

Get Some Pocket Money Completing Online Surveys

June 14, 2010 | Financial Tips | No Comments

Get paid completing online surveys.  One of the better online survey companies is Pinecone Research which pays $3 (by check or PayPal) for each 15 minutes survey.  Getting accepted into Pinecone maybe difficult because at times they stop taking new members.  However, you are in luck, Pinecone is currently taking new members.

Five other survey companies that are good are SurveySawy, MySurvey, Opinion Outpost, BzzAgent, and GlobalTestMarket.  These companies will consistently send you paid opportunities.

Remember to never pay to do online surveys.  There are many companies charging one time fees or membership fees to give access to online surveys.  They may also promise that you can make a lot of money completing online surveys.  This simply isn’t true.  These companies are scams.  

Completing online surveys can’t replace your income and you will never get rich doing them.  However, if you want an extra $30 to $50 per month, then you may want to complete online surveys.  Of course the more online survey companies you apply to, the more opportunities you will have.  So if you have time and don’t mind completing surveys apply to as many as possible.

Get Your Financial Questions Answered Using Mint Answers

May 13, 2010 | Financial Tips | No Comments

Mint.com has launched a new service called  Mint Answers to help you learn how to save and do more with your money .  You can ask questions such as “Should I buy or lease a new car?”, “How should married couples divide their money and expenses?” and “What retirement account is best for me?”

Answers are provided for free from a panel of professional advisors and from other users.  Questions are grouped by topic, Budgeting, Debt Management, Future Goals, and Savings. The forum is open to anyone, with answers screened by the MintLife editorial staff and ranked by other users based on the usefulness of the response.

“Because of the recession, people are talking more openly about money, a once-taboo topic,” said Aaron Patzer, general manager and vice president of Intuit Personal Finance and founder of Mint.com, citing results from a recent Intuit Money Matters Town Hall Survey. “Mint Answers helps them make informed decisions about their finances. They get real-time access to experts and peers to answer their money questions.”

For more information visit Answers.Mint.com.

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.