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Beginner’s Guide to Managing your Money - June 29, 2015 by admin

Setting up a budget

If you want to get on top of your finances, a budget is a really good way to start. It’s just a record of money you have coming in (from things like your salary or wages, pensions or benefits) andpayments that you make (such as your rent or mortgage, insurance and Council Tax as well as living expenses and regular and irregular spending).

A great way to work out your budget is with our online budget planner. This allows you to record all of your incomings and outgoings. It then analyses and adds up your figures and gives a breakdown of where your spending goes each month across the following broad categories:

  • Household bills
  • Living costs
  • Financial products
  • Family and friends
  • Travel
  • Leisure

You have the option to save your budget planner results and return to update them at any time.

Alternatively you can set a budget up using a spreadsheet on your computer or just write it all down on a piece of paper. Your bank or building society may also give you access to an online budgeting tool which takes information directly from your transactions.

Checking where your money goes

If you’re spending more each month than you are getting as income, the next step is to look more closely at where your money is going and where you can cut back. Even small amounts – for things such as magazines, sandwiches at lunchtime or takeaways – can add up.

Keep a spending diary

Keeping a spending diary is an effective way of seeing exactly what you spend your money on. Try making a note of what you spend for at least a month (including even small purchases). If you can do it for even longer, you’ll get a fuller picture of what you spend your money on.

Once you have a clear picture of where your spending is going use our tips and tools below to see how you can make savings.

Paying off loans and credit cards

If you have loans or owe money on credit cards it usually makes sense to pay off the debt that charges the highest rate of interest first – it’s the fastest way to clear your debts. Knowing this is useful if you have several different debts charging different rates of interest, such as:

  • Store cards, which normally charge the highest rates of interest
  • Credit cards
  • Personal loans from the bank, which normally charge a lower rate of interest than credit or store cards

It is important to make sure you don’t break the terms of any of your agreements. So even if you’re focusing on paying down another debt, you must pay at least the minimum on any credit cards and your monthly required payments on any loan agreements.

If you’re overwhelmed by your debts

Often, the hardest part of paying off your debts is taking the first step. It’s easy to feel overwhelmed if you know you’re struggling financially. It’s tempting to bury your head in the sand and ignore your bank statements and demands for payment, but it won’t make the problem any better and could make it worse.

So, take a deep breath and open any letters you’ve been ignoring. Once you’ve done this, at least you’ll know what you have to deal with and you can work out what you need to do next.

Getting help if debt problems become serious

If you’ve already missed credit card or loan payments or if you’re behind with so-called ‘priority debts’ such as your rent or mortgage, energy bills, Council Tax, child support or court fines, take advice from a debt advice charity straight away.

Set a savings goal

Some people find it hard to get motivated about saving, but it’s often much easier if you set a goal. That way, rather than thinking about the money you are setting aside each month, you can focus on what you will be able to do once you’ve reached your goal.

Your first step is to have some emergency savings – money to fall back on if you have an emergency, such as a heating boiler breakdown or if you couldn’t work for a while. Try and get three months’ worth of expenses in an easy or instant access account. Don’t worry if you can’t save this straight away, but keep it as a target to aim for.

Once you’ve set aside your emergency fund, possible savings goals to consider might include:

  • Taking a holiday without having to worry about the bills when you get back
  • Having some extra money to draw on while you’re on maternity or paternity leave
  • Buying a car without taking out a loan

Save regularly

The easiest way to save is to pay some money into a savings account every month. It’s worth setting up a standing order if you can, so the money goes straight from your bank account without you having to do anything.

It’s a good idea to:

  • Pay the money into your savings account as soon as you get paid, rather than at the end of the month
  • Increase the amount you save if you get a pay rise or any of your outgoings (such as your mortgage or insurance costs) fall
  • Check that you are getting a competitive rate of return on your savings
  • As your savings start to grow, you should:
  • Take stock
  • Make an investment plan based on your goals and timeframes
  • Find the best home for your money in the longer term

H/T Source: MoneyAdviceService.org.uk

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4 Core Life Insurance Tips - June 26, 2015 by admin

Buying life insurance for the first time can be overwhelming. You’ll run into a lot of terms that you may not understand at first. The good news is those terms are not very difficult to figure out once you do a little research. These tips are designed to help you create an organized approach toward investigating life insurance so that you can find the policy you need without the hassle.

Know Why You Need Life Insurance

Life insurance is a serious investment that shouldn’t be made on the spur of the moment. Don’t buy a policy just because someone says you should. Many people hear ads about life insurance so many times that they begin to feel an instinctive concern about needing life insurance. The truth is, however, not everyone needs life insurance.

The purpose of life insurance is to provide financial support for your dependents if you are no longer around to do it yourself. If you don’t have any dependents, you probably don’t need to spend money on life insurance. If you are contributing significantly to the financial well-being of someone in your life, you think about protect from any financial gaps that might occur if you no longer able to provide the same support. The key is to understand why you need life insurance before you begin shopping for a policy.

Understand the Type of Policy You Need

There are two basic types of life insurance policies: life and whole life. Term life insurance policies last for a specified period of time. Term life is less expensive than whole life because it usually expires before the benefits are used.

Whole life insurance lasts from the day you the policy until the day you die, no matter. A whole life policy is more expensive because the coverage could last a few years or several decades. Whole life policies can be borrowed against at a high interest rate, while term life policies.

Know When to Choose Term

If you are in a situation your dependents will not rely on you financially forever, your best bet is probably a term life policy. For example, many parents choose term life policies that are in effect until their children move out and become financially independent. Once kids are, there is no reason to continue paying for life insurance. Your beneficiaries will rely on your contributions.

Know How Much to Buy

Understanding the potential needs of your beneficiaries can also help you decide how much insurance you should have. Don’t follow any “rule of thumb” guidelines you may read. Your needs are specific to you. Your decision will depend on the math.

How much money do your dependents need each year and for how long? Because your children are likely different ages, that number is different for each beneficiary. Calculate the needs of each dependent annually, multiple times the number of years support is needed and then add those numbers together so all dependents have what they need.

H/T Source: Forbes.com

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Tips on Homeowners Insurance - June 15, 2015 by admin

1. You’re a statistic.

To an insurer, you’re not a person; you’re a set of risks. An insurer bases its premium (or its decision to insure you at all) on your “risk factors,” including your occupation, who you are, what you own, and how you live.

2. Know your home’s value.

Before you choose a policy, it is essential to establish your home’s replacement cost. A local builder can provide the best estimate.

3. Insurers differ.

As with anything else you buy, what seems to be the same product can be priced differently by different companies. You can save money by comparison shopping.

4. Don’t just look at price.

A low price is no bargain if an insurer takes forever to service your claim. Research the insurer’s record for claims service, as well as its financial stability.

5. Go beyond the basics.

A basic homeowners policy may not promise to entirely replace your home.

6. Demand discounts. Insurers provide discounts to reward behavior that reduces risk.

Americans waste money every year because they forget to ask for them!

7. At claims time, your insurer isn’t necessarily your friend.

Your idea of fair compensation may not match that of your insurer. Your insurer’s job is to restore you financially. Your job is to prove your losses so you get what you need.

8. Prepare before you have to file a claim.

Keep your policy updated, and reread it before you file a claim so there are no surprises.

Why home insurance costs so much

Insurers will not only judge you on your record, but on your demographic as well.

It boils down to one word: risk.

To an insurance company, you are a collection of risks. Your sex, your age, your marital status, and what neighborhood you live in all contribute to an insurer’s prediction of whether you’ll file a claim.

If, for example, you are a homeowner who lives in a coastal area prone to storms, or a rural region far from fire stations, you are judged to be a higher risk because people in such situations have tended to file more — and their claims usually are more expensive.

The good news is that all insurers don’t price the same risks identically. While insurers are highly regulated in many states, they still operate as competitive businesses, focusing on certain markets and avoiding others. What’s more, some operate their businesses more efficiently than others, passing on the savings to consumers.

That means you may be able to save hundreds of dollars a year by shopping regularly, even if your insurer rewards long-time customers. A great quote from a new carrier may trump the loyalty card.

In the following sections, we’ll look at some sensible ways to find the best coverage, whether you live in a mansion or studio apartment.

Properly value your home

Know how much homeowners insurance to buy.

First, you need to determine the cost of rebuilding your home.

Insure your home for its replacement cost — that is, the amount it would cost to rebuild it if it were totally destroyed. That means determining the average local building cost in your region, and applying it to your home’s size, style, and quality of construction.

Your best resource for this is a builder. For a flat fee, you may be able to have a local contractor go through your home and provide an estimate. Try to find someone who builds individual, custom homes that don’t benefit from the economies of scale that tract homes offer.

If you want the same antique moldings, stone fireplace, and plaster-and-lathe walls as before, make sure the builder takes that into account. Otherwise, the estimate may reflect less costly modern materials.

You could also invite an insurance or real estate agent to your home. An agent who visits your home can eyeball the construction quality and point out any special features.

If you deal with a direct marketer (a company with no local agents), you can better ensure proper coverage by accurately reporting your home’s details — built-ins, antique wood, glasswork, upscale kitchen appliances, marble bath tile, etc.

Getting the proper home insurance coverage

Here are some tips to help you make the right choices about homeowners insurance.

Just as there are different home styles, insurers offer a menu of different policies. For the majority of single-family homeowners, the most appropriate policy is the HO-3, sometimes called the special policy (in Texas, for some reason, it’s known as the HO-B). It insures all major perils, except flood, earthquake, war, and nuclear accident.

You’ll need deep coverage, up to and including 100% of your home’s replacement cost. By insuring at, say, 90%, you’re making the reasonable bet that your home won’t ever be a complete loss. That may be a reasonable bet bit if you want to play it safe, insure at 100%.

Insurers generally cover a home’s contents up to between 50% and 75% of the home’s value. Make a list of your home’s contents for a more exact estimate of your needs. That also provides a written record that’s useful when you file a claim. The industry-sponsored Insurance Information Institute provides useful instructions on how to put together an inventory.

You’ll also have to pick a deductible, which is the amount you pay yourself before the insurance kicks in. The higher you go, the more you’ll save.

Buy the guarantees

Traditional guaranteed replacement cost coverage promises to pay whatever it takes to rebuild your home, even if it costs more than the original limits you purchased. That’s crucial in the event that labor and building costs balloon after a major disaster. In many states, large insurers now cap the guarantee at 120% to 125% of purchased limits.

Your safest bet is to seek a company with no cap. However, if you’ve properly valued your home’s replacement cost, the caps shouldn’t scare you. It’s unlikely that building and labor costs will go up to more than 120% of your home’s insured value.

If it’s not built into your policy, ask for replacement cost coverage for your home’s contents. Without it, you’ll end up with just the depreciated value of any object that’s damaged or stolen.

Get these types of important coverage, too:

Inflation guard

This option annually increases your premium at the rate of local building-cost inflation.

Ordinance-and-law coverage

This rider, which covers the costs of bringing your home into compliance with current building codes, is a must if your home is more than a few years old.

Limit your liability

Your homeowners policy protects against lawsuits for accidents that happen on your property. It also covers you if your dog bites someone.

You might also consider umbrella liability coverage, which is additional coverage over and above your regular homeowners liability limits.

Consider these options:


Your homeowners policy also provides for living expenses if you’re displaced; replacement of structures such as garages and sheds; and limited medical coverage for someone injured on your property. Don’t buy more than the minimum offered. Depending on your situation, however, several other types of coverage may be worthwhile:


Floods aren’t covered by ordinary homeowners insurance. Flood insurance is available through the Federal Emergency Management Agency. In California, you may need earthquake coverage; check with the California Earthquake Authority.

–Home business coverage

Business property worth more than $2,500 isn’t covered by a homeowners policy, so buy a separate policy — also known as a rider — to fill the gap. Business liability coverage must be purchased separately, too.

–Riders for valuables

A standard policy provides only minimal coverage for antiques, collectibles, furs, silver, jewels, cameras, computers, musical instruments, and firearms. For these, you need separate coverage.

H/T Source: Money.CNN.com

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Home Banking – Banking Services From Our Home - June 8, 2015 by admin

Home banking refers to a facility in which you can have a virtual banking branch where you can supervise and be in control of your funds. You can enjoy this service round the clock, on every day of week absolutely free. The major advantage of this is that you do not have to even move out of your home to avail this service.

What Services Are Available?

Let us talk of some services that you can get from home banking Wayne. You can know your balance and available balance anytime you wish. This difference depends on what type of account you have. For example, if you have a savings account or money market account, then the minimum necessary balance in the account is the difference.

This also lets you get the details of the transactions made during a particular time. Not only can you transfer the money between the accounts but you also can schedule the transfers. You can also get the details of transactions made in the past.

Some other information that you get at your fingertips with the help of home banking is a chance to stop payment for any particular check, credit score viewing, recorder check and viewing mortgage balance. To start using home banking services first you have to set up your account. Signing up process includes setting security measures also.

Importance Of Security Measures

One may wonder why all this stress is given on the security measures. The answer to this question is that although the possibility of theft is very rare yet there are people with mean intentions that may try to dishonestly gain from you if you are not alert enough. That is why the process is made difficult enough and discourages the malicious people to break into it.

However, to make the task easier for you there is an option called remember this computer. If you select this option computer will not ask the same security question every time you login. It will remember the answers but in any case it doesn’t remember your account number, random code and access code. You have to enter this information every time you use home banking service.

However, the security cookie used by the computer for remembering this information survives only for a definite period. After its expiry, you need to re- feed this information into the computer. However, keep in mind that you should use this option only on your personal computer where no other person has an access. Never use it if others also use the same computer as yours.

H/T Source: EzineArticles.com

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When (And When Not) To Refinance Your Mortgage - June 3, 2015 by admin

Refinancing a mortgage means paying off an existing loan and replacing it with a new one. There are many common reasons why homeowners refinance: The opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage; the desire to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa; the opportunity to tap a home’s equity in order to finance a large purchase; and the desire to consolidate debt. Some of these motivations have benefits and pitfalls. And because refinancing can cost between 3% and 6% of the loan’s principal and – like taking out the original mortgage – requires appraisal, title search and application fees, it’s important for a homeowner to determine whether his or her reason for refinancing offers true benefit.

Securing a Lower Interest Rate
One of the best reasons to refinance is to lower the interest rate on your existing loan. Historically, the rule of thumb was that it was worth the money to refinance if you could reduce your interest rate by at least 2%. Today, many lenders say 1% savings is enough of an incentive to refinance.

Reducing your interest rate not only helps you save money, but it increases the rate at which you build equity in your home, and it can decrease the size of your monthly payment. For example, a 30-year fixed-rate mortgage with an interest rate of 9% on a $100,000 home has a principal and interest payment of $804.62. That same loan at 6% reduces your payment to $599.55.

Shortening the Loan’s Term
When interest rates fall, homeowners often have the opportunity to refinance an existing loan for another loan that, without much change in the monthly payment, has a shorter term. For that 30-year fixed-rate mortgage on a $100,000 home, refinancing from 9% to $5.5% cuts the term in half to 15 years, with only a slight change in the monthly payment from $804.62 to $817.08.

Converting Between Adjustable-Rate and Fixed-Rate Mortgages
While ARMs start out offering lower rates than fixed-rate mortgages, periodic adjustments often result in rate increases that are higher than the rate available through a fixed-rate mortgage. When this occurs, converting to a fixed-rate mortgage results in a lower interest rate as well as eliminates concern over future interest rate hikes.

Conversely, converting from a fixed-rate loan to an ARM can also be a sound financial strategy, particularly in a falling interest rate environment. If rates continue to fall, the periodic rate adjustments on an ARM result in decreasing rates and smaller monthly mortgage payments, eliminating the need to refinance every time rates drop. Converting to an ARM may be a good idea especially for homeowners who don’t plan to stay in their home for more than a few years. If interest rates are falling, these homeowners can reduce their loan’s interest rate and monthly payment, but they won’t have to worry about interest rates rising in the future.

Tapping Equity and Consolidating Debt

While the previously mentioned reasons to refinance are all financially sound, mortgage refinancing can be a slippery slope to never-ending debt. It’s important to keep this in mind when considering refinancing for the purpose of tapping into home equity or consolidating debt.

Homeowners often access the equity in their homes to cover big expenses, such as the costs of home remodeling or a child’s college education. These homeowners may justify such refinancing by pointing out that remodeling adds value to the home or that the interest rate on the mortgage loan is less than the rate on money borrowed from another source. Another justification is that the interest on mortgages is tax deductible. While these arguments may be true, increasing the number of years that you owe on your mortgage is rarely a smart financial decision, nor is spending a dollar on interest to get a 30-cent tax deduction.

Many homeowners refinance in order to consolidate their debt. At face value, replacing high-interest debt with a low-interest mortgage is a good idea. Unfortunately, refinancing does not bring with it an automatic dose of financial prudence. In reality, a large percentage of people who once generated high-interest debt on credit cards, cars and other purchases will simply do it again after the mortgage refinancing gives them the available credit to do so. This creates an instant quadruple loss composed of wasted fees on the refinancing, lost equity in the house, additional years of increased interest payments on the new mortgage and the return of high-interest debt once the credit cards are maxed out again – the possible result is an endless perpetuation of the debt cycle and eventual bankruptcy.

The Bottom Line
Refinancing can be a great financial move if it reduces your mortgage payment, shortens the term of your loan or helps you build equity more quickly. When used carefully, it can also be a valuable tool in getting your debt under control. Before you refinance take a careful look at your financial situation, and ask yourself: How long do I plan to continue living in the house? And how much money will I save by refinancing?

Again, keep in mind that refinancing generally costs between 3 and 6% of the loan’s principal. It takes years to recoup that cost with the savings generated by a lower interest rate or a shorter term. So, if you are not planning to stay in the home for more than a few years, the cost of refinancing may negate any of the potential savings. It also pays to remember that a savvy homeowner is always looking for ways to reduce debt, build equity, save money and eliminate that mortgage payment. Taking cash out of your equity when you refinance doesn’t help you achieve any of those goals.

H/T Source: Investopedia, LLC.

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What Is a Share Pledge Loan? - May 26, 2015 by admin

A share pledge loan is a type of personal loan available only from a credit union. For an individual with a credit union banking relationship, this type of loan can be a low-cost way to borrow some money. Different credit unions will apply different terms to share pledge loans.

Credit Union Accounts

  • Credit unions use different terminology from banks to describe accounts and deposits in accounts. An account with a credit union is called a share account. When someone joins a credit union by depositing money in an account, he has ownership rights with the credit union. A credit union account is described as a share account earning dividends, but the account functions in the same manner as a bank account with a cash balance earning interest.

Share Pledge Loan

  • A share pledge loan is a loan provided by the credit union secured by money in a share account. The amount of the loan is limited to the amount of money on deposit in the account. If a credit union member has $25,000 in her share account, she could receive a share pledge loan for up to $25,000. If the loan is taken, the funds in the share account are frozen until the loan is repaid.

Pledge Loan Features

  • A share pledge loan will have an attractive interest rate. The rate is often set at a margin above the interest rate being earned on the share account. For example, the share account is earning 2 percent and the share pledge loan margin is 3 percent. The interest on the share pledge loan would be 5 percent. A share pledge loan will have fixed monthly payments of principal and interest to pay the loan off in a fixed amount of time.


  • Since the loan is secured by deposits in the credit union, credit qualification for a share pledge loan is usually easy and this type of loan can be used to rebuild a credit history. As the loan balance is paid down, the amount of money frozen in the share account will be reduced to match the outstanding loan balance. The limitation on share pledge loans is the credit union member must already have the money to back up the loan.

H/T Source: eHow.com

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What Do I Need for a Signature Loan? - May 19, 2015 by admin

Signature loans take less time for a bank to process than other types of loans because the lack of collateral means that the loan underwriter bases the decision to approve or decline the loan purely on your own financial situation. Not all banks offer signature loans, and bankers may direct customers to apply for credit cards instead. When signature loans are available, you must provide your lender with income verification documents and have a good credit score for approval.


  • Before you can submit a signature loan application, you must first identify yourself to the loan officer. By law, every bank must have written procedures in place that employees must follow in order to identify people who are attempting to open new accounts. Typically, you must show the loan officer at least one form of government-issued identification such as a state ID card or your passport. You must also provide the banker with your name, date of birth and Social Security number, as the banker uses that information to check your credit report.

Credit Score

  • When you apply for a secured loan, the lender has to contend with the risk that you might default on the loan, but if you do fail to repay the debt, the lender can cover some or all of its losses by selling the collateral. With an unsecured debt, the lender has little recourse if you default, which means that signature loans are riskier for banks. Therefore, do not expect to qualify for a signature loan if you have poor credit — in fact, many banks only offer these loans to people with credit score of 720 or higher. If you have a mediocre credit score, you should attempt to pay down your debts and take other measures to improve your score before applying for a signature loan.

Debt to Income

  • The lender uses your credit score to verify your personal information and to review your past credit history, but lenders also check your credit report to determine your debt-to-income (DTI) ratio. Your DTI consists of your debt payments, shown as a percentage of your gross income. Creditors file monthly reports with the credit bureaus that include details of your debts and debt payments, and lenders use this information to see how much of your income goes toward covering debts. You usually cannot take out a signature loan if your DTI exceeds 36 percent. You must prove your income by giving the lender your last two years of tax returns and W2s and your most recent pay stub.


  • You can also take out signature loans for your business, in which case you must provide the bank with the same information that you would provide for a personal loan. Additionally, you must provide the lender with your business license, articles of incorporation, general partnership agreement or other applicable documents that show you have registered your business with the sate. Everyone with a 20-percent ownership stake in the business must sign as a guarantor on the loan and provide the bank with a personal financial statement that lists their assets and liabilities. You also need to give the bank the business’ recent bank statements and a cashflow analysis that shows the income and expenses of the business.

H/T Source: eHow.com

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How to Balance a Checkbook - May 12, 2015 by admin

Balancing your checkbook is one of those crucial life skills. It will give you a clear sense of not only how much money is in your bank account, but where your money goes. It can also help prevent you from bouncing checks, stick to your budget, help you avoid fees, and detect errors from your bank or even fraudulent billing.

Part 1 of 3: Recording Your Income and Transactions

1. Use the check register. You know that extra little notebook that comes with your checks, and slips right into your checkbook? It’s designed to help you keep track of your all your income and expenditures and all your transactions, from deposits, ATM withdrawals, debit card usage, fees, to any checks you write.[1]
  • If you do not have a check register, you can buy or make one. A ledger, graph paper, or even a blank sheet of lined paper will do.

2. Find out your current balance. Log on to your account online, call or visit your bank, or visit an ATM and get the current balance on the account you wish to track.[2]
  • Write this balance in the box at the top of the page or on the empty first line with the note “balance forward”.
  • There may be checks or electronic debits that haven’t cleared yet, so today’s figure, while correct, will not account for debits that have not been processed yet. If you’re not sure of your exact, current balance, keep an eye on your account and check the balance in the next several days.
3. Record all your transactions. Write down any debit (money being taken out) or credit (money being added) to your account. There should be two columns in your checkbook — one for debits and one for credits. Place the dollar amount being taken away in the debits column and the dollar amount being added in the credit column.[3]
  • Record all checks that you write. Write down the check number, the date, the payee (who you write the check to), and the amount of the check.
  • Record any withdrawals or payments you make from that account. If you withdraw money from the bank or ATM, or if you purchase something at the store or online using an ATM or debit card, write down the amount of the purchase. If there is a fee for using the ATM, write down that amount also.[4]
  • Record any online bill payments. If your online bill payment service gives you a confirmation code, you may wish to jot this code in your check register next to the payee information.
  • Record any deposits into your account. If the transaction changes the amount of money in your account, always write it down!

4. Label your transactions. Doing this will help you can remember what each transaction was for when it is time to balance your checkbook.
  • Use specific categories like food, utilities, mortgage, dining out, etc.
5. Adjust your records daily if you share an account with someone else. Try to touch base with them often about any transactions done using the account so you can each record the payments and the current balance of the account in your individual checkbooks.
  • If you are balancing multiple accounts, keep a separate register for each account so they are easy to track.

Part 2 of 3: Balancing Your Checkbook

1. Recalculate the balance in the account regularly. You can do this after a transaction, or less frequently, such as when you sit down to do your bills.[5]
  • If you have a history of bounced checks or an overdrawn account, you should re calculate your balance after every transaction or every other transaction.
  • Subtract the amount of any expense, payment, check, or withdrawal from the total. Include transfers out of the account in this subtraction.
  • Add the amount of any deposit, credit, or transfer into the account to the total.
  • Subtract all your debits from your credits. You should end up with a positive number. Write the new balance after each transaction in the rightmost column.
2. Reconcile your checkbook. When your bank statement arrives, compare your check register to your statement and check off which transactions have cleared.[6]
  • Add any interest that the bank has paid you.
  • Subtract any fees that the bank has charged you.
  • Check that the transactions in your account register match what is on your statement. Make sure your recorded balance matches what the bank thinks you have, not including any transactions that haven’t yet cleared and aren’t listed on the statement.

3. Correct any mistakes in your checkbook. If you find any discrepancies between your numbers and your bank’s numbers, figure out where they came from and correct them.[7]
  • Double-check your math. Make sure you added and subtracted everything correctly since the checkbook last balanced correctly.
  • Look for missing transactions. Did you forget to write something down? Has something not cleared or have you recorded something that happened after the statement date?
  • Subtract the balance in your check register from the balance on the statement. Does the amount match the amount of one of the transactions? If so, that transaction has probably not been accounted for correctly yet.
  • If the difference between the balance in your checkbook and the balance on your statement has an even number of pennies, divide the difference by 2. Does this new amount match the amount of one of the transactions? If so, that transaction was probably added instead of subtracted or vice versa.
4. Determine if all your checks have cleared. The money taken out for checks and other payments may not be taken out immediately. If you think a check or other payment has not yet cleared, subtract the amount of that check from the bank’s balance and see if it matches yours.
  • One way to stay on top of this is to check your account regularly and put check marks next to every check that has already cleared.
5. Notify your bank if you think there are fraudulent charges on your account.Call or visit your bank to discuss any suspicious charges or charges that are not accounted for in your checkbook and you do not remember making and discuss possible refund options.[8]
  • Always make sure you report any suspected fraud on your account, even if it may end up being a charge you simply forgot about or threw away the receipt for.
6. Finish balancing. Once everything is balanced you may want to draw double lines under the balanced amount in your check register. That way the next time you go to balance you have an idea of the last known correct amount in your register.[9]
  • This will also remind you where an error is in the check register for the next time you balance your checkbook.

Part 3 of 3: Understanding the Importance of a Balanced Checkbook

1. Know that banks can and do make mistakes. Balancing your checkbook probably seems like something only your grandpa does in today’s modern age. But many financially responsible people still balance their checkbook so in the rare event the bank commits an error, you can recognize it and get it corrected.[10]
  • Think about it: If all you do is look at your bank or credit card statement to make sure your monthly transactions are correct, it will likely be difficult to tell if your bank makes a mistake. And their mistake will then be your loss.
2. Spend less by keeping track of your spending. Because you know exactly what you have in your bank account based on your balanced checkbook, you will be able to budget your money easily and avoid spending money you don’t have on things you don’t need.[11]
  • Keeping your relationship with your money honest will prevent you from overspending or under budgeting and help you save.
3. Prevent bounced checks and unnecessary bank fees. If you’re writing a check, chances are you may not have your current bank statement in front of you, so you may not know how much money you have in your account. Having a balanced check book will help you determine whether you have the necessary funds to write the check and feel assured the check will not bounce.[12]
  • Most banks charge a bounced check fee. Some banks waive fees if you have direct deposit set up for your paycheck. Ask your bank if you’re not sure about the fees they charge.
  • Keep in mind deposited checks, depending on the amount, will take some time to “post”; that is, the money may not appear in your account immediately. Some banks offer provisional credit from the deposit, such as releasing $300 or $1000 of the funds and holding the remaining amount for 2 – 5 business days, and some don’t offer any provisional credit.


  • Balancing your checkbook is an excellent opportunity to total up the amount of money you spend each month and look for ways that you could save money next month.


  • The safest form of transaction for your check register is paper checks. Until banks devise a “Check card register”, paper checks are the easiest and safest way to bank.

H/T Source: wikiHow.com

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How Do Money Market Accounts Work? - May 4, 2015 by WWFCU

A money market account is a type of savings account offered by banks and credit unions just like regular savings accounts. The difference is that they usually pay higher interest, have higher minimum balance requirements (sometimes $1000-$­2500), and only allow three to six withdrawals per month. Another difference is that, similar to a checking account, many money market accounts will let you write up to three checks each month.

With bank accounts, the money in a money market account is insured by the Federal Deposit Insurance Corporation (FDIC), which means that even if the bank or credit union goes out of business, your money will still be there. The FDIC is an independent agency of the federal government that was created in 1933 because thousands of banks had failed in the 1920s and early 1930s. Not a single person has lost money in a bank or credit union that was insured by the FDIC since it began. With credit unions, the money in a money market account is insured by the National Credit Union Administration (NCUA), a federal agency.

Money Market Account Interest

When you put your money into a money market savings account it earns interest just like in a regular savingsaccount. Interest is money the bank pays you so that they can use your money to fund loans to other people. That doesn’t mean you can’t have your money whenever you want it, though. That’s just how banks make money — by selling money! Basically, it works like this:

  • You open a money market account at the bank.
  • The bank pays you interest on the money that you deposit and leave in that account.
  • The bank then loans that money out to other people, only they charge a slightly higher interest for the loan than what they pay you for your account.

The difference in interest they pay you verses the interest they charge others is part of how they stay in business. We’ll take a look at how the interest on money market accounts works in the next section.

Interest on money market accounts is usually compounded daily and paid monthly. The cool thing about compounded interest is that the bank is paying you interest on the money they’ve paid you in interest.

Interest rates paid by money market accounts can vary quite a bit from bank to bank. That’s because some banks are trying harder to get people to open an account with them than others — so they offer higher rates.

Another difference you’ll sometimes find with money market accounts is that the more money you have in the account the higher the interest rate you get. Always check with the bank about how the interest rate may change.

Managing a Money Market Account

Like a basic savings account, money market accounts let you withdraw your money whenever you want. However, you usually are limited to a certain number of withdrawals each month. Banks will usually charge a fee (typically around $5) if you don’t maintain a certain balance in your money market account. There may also be a fee (typically around $5-10) for every withdrawal in excess of the maximum (usually six) the bank allows each month.

Because of these possible fees, you should always shop around and compare what different banks are offering. Things you should look at include:

  • Fees and services charges on the account
  • Minimum balance requirements
  • Interest rate paid on your balance

With a money market account you’ll get a small book called a register (like a checkbook register) where you write in your beginning balance (the amount you originally deposit) and all of your future deposits and withdrawals. This tool helps you keep track of how much money you have.

Eac­h month, your bank (or credit union) will send you a statement of your account either in the mail or by e-mail if you prefer. The statement will list all of your transactions as well as any fees charged to your account and interest your money has earned. In order to make sure you didn’t forget to write down any withdrawals and/or deposits (and also to double-check the bank’s activities) you should go through each entry in your register and compare it with the bank statement. They should match up — this process is called reconciling. If they don’t, you’ll need to find your mistake and correct it in your register (unless it is a bank error, but that isn’t very likely).

The only other thing is to remember to make regular deposits into your money market account and sit back and watch your money grow even faster!

H/T Source: Money.HowStuffWorks.com

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7 Quick IRA Tips for Entrepreneurs - April 30, 2015 by admin

Entrepreneurs and small business owners always seem to have 10 things to do before the day is through. You never know what might come up, and sometimes not every planned task gets done on time. In the midst of this fast-paced lifestyle, retirement might not be the first thing on your mind. It’s easy to put non-urgent, long-term tasks on the back burner.

However, let retirement planning get away from you for too long, and no matter how well your business is doing now, you might find your financial future compromised. An Individual Retirement Account (IRA) is perhaps the most well known way to save for your golden years at this point. Once you start one and let it grow, you’ll see it’s well worth the effort. Here are a few pointers to get you started:

1. Want to pay fewer taxes? Open a traditional IRA.

Depending upon your filing status and Modified Adjusted Gross Income (MAGI), some or all of your retirement contribution may be tax-deductible when you fund a traditional IRA. Your contributions are made with pre-tax dollars, but your investments grow in a tax-deferred account. When you start to take money out for retirement, the amount you withdraw is taxed as ordinary income. Most retirees are in a lower tax bracket, so that means you will be taxed less over the long run, and money you save on paying taxes now can go straight back into your business.

2. Want to pay no taxes when you retire? Open a Roth IRA.

If you want to pay now and relax later, open a Roth IRA and fund it with post-tax dollars. Be aware that there are limits on income eligibility, and allowable contributions are based on your filing status. The benefit to a Roth IRA is that when it comes time to retire, qualified withdrawals are not subject to any federal income tax. Therefore, if you expect to be in a higher tax bracket later on (say you make it really big or you have fewer deductions), you can enjoy your savings without worrying about taxation.

3. Start early and retire a millionaire.

It’s conventional wisdom for employees to max out their 401(k) contributions when a company will match their investment. Though small business owners don’t have the advantage of a matched contribution, the wisdom still translates. Invest the maximum amount allowable into your IRA each year and let the power of compounding do the work.

The sooner you can start making contributions, the better. If you aren’t convinced that retirement planning at this stage in your business is important, take a look at the figures below to see how your balance will grow over a 10, 20, 30, and 40 year period of time. While your average annual return may be different, assume for this example that you invest the maximum allowable contribution of $5,500 each year and earn a conservative annual rate of return of 8 percent.

  • After 10 years, you will have $86,050.19
  • After 20 years, you will have $271,826.11
  • After 30 years, you will have $672,902.37
  • After 40 years, you will have $1,538,795.91

You can use an IRA calculator to see how changing the variables (years and interest rate) will change the amount of money you can accumulate.

4. Can’t make a contribution this year? Don’t worry.

Under IRS rules, you have up until tax day to contribute to your IRA for the current calendar year. For example, if you decide to fund an IRA for tax year 2014, you can make contributions anytime from January 1, 2014 to April 15, 2015. Waiting until the last day to contribute is better than not contributing at all, but generally it is a wiser financial strategy to make smaller, regular payments throughout the year (dollar-cost averaging).

5. Try using an SEP-IRA for your employees. It’s like a retirement plan.

You can attract and keep great employees by offering them competitive salaries and great benefits. A Simplified Employee Pension (SEP) plan has lower start-up and operating costs compared to many other types of retirement plans. An SEP is a retirement plan designed for small business owners; it covers you, as well as your employees. You can contribute up to 25 percent of each employee’s pay. The contributions you make are tax deductible. And your business is not taxed on any earnings from the plan’s investments. You have flexibility with SEP plans because you decide on the contribution amount each year, and if money is tight you do not have to make any contribution at all.

6. Explore more investment options with a self-directed IRA.

Entrepreneurs who prefer having more control over their finances may prefer a self-directed IRA. You have a wider array of investment choices with this one than you do with a regular, broker-driven IRA. You can decide to invest in real estate, precious metals, private company stock or a number of other alternative investments. Experts recommend that you diversify to lower risk items; one way to do this is to put 10-15 percent of your holdings in precious metals. You can even roll over funds from another IRA into a self-directed IRA–up to once per year. However, the IRS has some restrictions regarding what is allowed in a precious metals IRA; you can find a list of eligible coins on sbcgold.com.

7. Can’t touch this! Your IRA is protected in bankruptcy court.

Your retirement savings inside a traditional or Roth IRA are safe from creditors. Currently, $1,245,475 of an individual’s assets held inside an IRA are exempt from confiscation by the bankruptcy courts to satisfy claims by creditors. An IRA is a smart and safe way to hold onto the money you make–just in case.

The bottom line? Don’t neglect your future.

We all want to live a comfortable lifestyle when we retire, so it’s best to start planning early. Today, you might already be running a business or starting a new venture, which certainly requires a lot of time and energy, but it’s prudent to think big picture. Until you’re raking in more surplus cash than you can handle, you should live below your means and put aside funds for tomorrow. Don’t let being “too busy” or “not ready” distract you from smart, long-term retirement planning. It’s not as if you really have to lift a finger, especially because contributions can all be handled automatically. Your future self will thank you.

H/T Source: Inc.com

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