Money

Interest only loans are a dangerous practice disguised as a helping hand. A lender offers you a home loan, even a refinancing loan, in which you pay only the interest. While this can look like an attractive way out of a financial crisis, it is at best a short term solution and at worst a road to losing your property.

Your payments may be lower in the beginning, but eventually you must pay on the principal — the amount that you borrowed. At some point, often after three years, your payments increase dramatically or may even be due in one lump sum called a balloon payment. Often, people can’t make these increased payments and in many cases, they have trouble refinancing again for a more reasonable loan. People can lose their houses and have their credit destroyed.

Be very careful when considering an interest-only loan. If it is the only loan you can afford, chances are you can’t afford the home at all.

Always use a secure browser that encrypts or scrambles the purchase information you send over the Internet. At this point, Internet Explorer is not considered secure. Try Firefox instead. When submitting information, look for the “lock” icon on the browser’s status bar, and the phrase “https” in the URL address for a website.

When doing business with or through a web site, check the site’s privacy policy. Make sure you understand what information of yours the site might share with others. If you cannot find a privacy policy or are uncomfortable with the policy you find listed on the site, avoid that site.

Go over the refund and shipping policies of any business website you plan to order through. Make sure you are comfortable with those policies before you place an order.

Never disclose personal information such as your phone number, social security number, address, account numbers or even e-mail address unless you feel the site has a legitimate reason to request that information and you know how they plan to use it.

Avoid using sites you don’t know or companies you don’t know to do business with over the Internet. Check out a company’s background and make sure it is legitimate.

Never download files sent to you by strangers. Never follow hyperlinks provided by people you don’t know.

Keep records of your online transactions. Keep track of the e-mail sent by merchants with whom you’re doing business. Merchants often send important information regarding your purchases. Always verify that the e-mails came from the same location as the company’s website.

Track your monthly bank and credit card statements. Check for any errors or unauthorized purchases. If your credit card, debit card or checkbook is lost or stolen contact your bank or credit card company immediately. If you suspect someone is using your accounts without your permission contact your bank or credit card company immediately.

There are advantages and disadvantages to leasing or buying a vehicle. Below is a comparison of the two different systems of acquiring a vehicle.

Ownership
When you lease a vehicle, you do not own it. You must turn the vehicle in or buy it at the end of the leasing period. When you buy a car, you own it at the end of your financing term.

Initial Costs
When leasing a vehicle, your initial costs can include a security deposit, the first month’s payment, a capitalized cost reduction (like a down payment), taxes, registration and other fees/charges. When buying a car your initial costs can include purchase price or down payment, taxes, registration and other fees/charges.

Monthly Payments
Monthly lease payments should be lower than the monthly loan payments on a comparable purchased car. This is because lease payments are designed to cover the depreciation costs of the vehicle plus fees, taxes and the profit the leasing agent is looking to make. When you buy a car your payment divides up the entire purchase price of the vehicle, plus interest and other finance charges, taxes, and fees.

Early Termination
On a lease vehicle there is generally a set cost for the early termination of a lease. When buying a car you are always responsible for the entire purchase price of the car and any pay off fee for early payment of a loan.

Returning the Vehicle
When leasing a car, you return it at the end of the lease period unless you wish to buy it then. When buying a car you have the option of selling or trading the vehicle.

Future Value of the Vehicle
When leasing, the leasing company takes on the entire risk for the future resell value of the vehicle beyond any damage or excess miles which you may be responsible for. When you buy a vehicle, the entire risk for the future value of the vehicle is yours.

Miles Driven
When you lease a vehicle there is a limit to the miles you may drive without penalty, (generally averaged between 12,000 and 15,000 a year. Beyond that you will have to pay for extra miles either by negotiating more miles in your contract or paying a penalty at the end of the contract. When you buy a vehicle,. You may drive it as many miles as you like, though excessive miles may hurt the resale value of the vehicle.

Excess Wear or Vehicle Damage
If you lease, there may be penalties from your leasing company for excess wear or damage to your vehicle. If you buy the vehicle, there are no penalties although it may reduce your resale value.

End of Term
When you lease a vehicle, after you finish your payments and any penalties you give back the vehicle or buy it. If you need a vehicle, you will have to arrange to either buy or lease a car again. If you purchase a vehicle, it is yours to keep after the payments are made. You may keep driving it, sell it or trade it in on your next vehicle.

Make a shopping budget and a shopping list. Decide before you go shopping how much you will spend on each person. When possible, decide what you want to buy before you go to the stores. Take advantage of online shopping sites such as amazon.com or target.com or buy.com to peruse merchandise and make decisions before you get into the rush of shopping. You can buy from these sites too, but the important thing is to decide what you want to get each person and to make sure it fits your budget.

It is ok to change your mind if you find a great deal, but make sure it is a great deal. Don’t go out to shop purely on impulse. Always keep track of what you have spent and make sure you are holding to your budget. Remember that if you overspend early you may end up having to buy lesser presents for the people down the line.

Use debit cards whenever possible. Avoid buying on credit. Buying on credit at Christmas is a common practice, but a bad one. Christmas gifts are about love, family and friendship; they aren’t about showing off or sacrificing your future. Only spend what you can afford to spend.

If you do buy items on credit, make sure you have a plan for paying those items off quickly. Remember that it isn’t just the debt that gets you in trouble; it is the interest on the debt. The longer you have to wait to pay something off with interest, the more that item really costs.

Shop early. When you shop during the Christmas season, you are constantly fighting crowds, traffic, and time. While there are some special deals during the Christmas season, it is easier to save money when you can shop at your own speed. Buying in October and earlier also gives you the chance to space your spending over time instead of depleting your finances all at once.

Consider making gifts. Cookies, bread, photo-albums and scrapbooks make good inexpensive gifts. The key is that you give time and effort instead of spending all of your money.

Remember to enjoy the holidays. Don’t stress over gift-giving. You may not be able to get the perfect gift for everyone, but the important thing is to show you care.

Simplify the business of Payment Processing on your website with ACH systems. An Automated Clearing House network is an electronic Funds transfer system that can set up Recurring Billing Programs and make you accounting process easier.

Lending money to family or friends can be problematic. It is usually done with the best of intentions, but it often turns out badly. Here are a few ways you can reduce the downside of loaning money.

• Don’t lend money you can’t afford to lend. Lending money to friends and family is always a risk; don’t risk what you must have.
• Get a signed, written record of the loan. The formal name for this is a promissory note. Make sure there is a definitive plan to pay back the money.
• Do not obsess over how the money is spent. Once you loan the money to the other person, it is no longer up to you how to spend the money.
• Don’t expect special favors. Do not change the way you treat the person you loan the money to and don’t change your personal expectations of them. Do not use the loan to extract favors from the recipient.
• If you are loaning money for a car, make sure you are the lien holder on the title. If you are the lien holder, the item cannot be resold without your knowledge and permission.
• If you are lending money for a house, get a mortgage.
• For any significant loan (over $10,000) check with a tax accountant to determine any tax implications for the loan.
• If the person fails to pay off their debt, you must try to collect using the same methods that other lenders use. Send letters stating the debt and requesting repayment. The reason to do this is for tax purposes. Within certain limits you can write off uncollected debts, but you must make a formal effort to collect the debt first.

Other options:

Cosigning
Cosigning for a loan is often easier than lending money because the collections are left to the actual lender and people feel more obliged to pay off a third party than a relative. The problem is that you are liable for the debt, and will end up having to repay the debt if your friend or family member does not pay it.

Gifts
Sometimes it is better to give money than to lend it. Collecting debts from relatives is never a pleasant task. Note: Large gifts can have tax implications.

Say No
Sometimes it is better to say no, especially if you don’t think the person will pay you back or if you simply cannot afford it.

Make a shopping budget and a shopping list. Decide before you go shopping how much you will spend on each person. When possible, decide what you want to buy before you go to the stores. Take advantage of online shopping sites such as amazon.com or target.com or buy.com to peruse merchandise and make decisions before you get into the rush of shopping. You can buy from these sites too, but the important thing is to decide what you want to get each person and to make sure it fits your budget.

It is ok to change your mind if you find a great deal, but make sure it is a great deal. Don’t go out to shop purely on impulse. Always keep track of what you have spent and make sure you are holding to your budget. Remember that if you overspend early you may end up having to buy lesser presents for the people down the line.

Use debit cards whenever possible. Avoid buying on credit. Buying on credit at Christmas is a common practice, but a bad one. Christmas gifts are about love, family and friendship; they aren’t about showing off or sacrificing your future. Only spend what you can afford to spend.

If you do buy items on credit, make sure you have a plan for paying those items off quickly. Remember that it isn’t just the debt that gets you in trouble; it is the interest on the debt. The longer you have to wait to pay something off with interest, the more that item really costs.

Shop early. When you shop during the Christmas season, you are constantly fighting crowds, traffic, and time. While there are some special deals during the Christmas season, it is easier to save money when you can shop at your own speed. Buying in October and earlier also gives you the chance to space your spending over time instead of depleting your finances all at once.

Consider making gifts. Cookies, bread, photo-albums and scrapbooks make good inexpensive gifts. The key is that you give time and effort instead of spending all of your money.

Remember to enjoy the holidays. Don’t stress over gift-giving. You may not be able to get the perfect gift for everyone, but the important thing is to show you care.

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Simplify the business of Payment Processing on your website with ACH systems. An Automated Clearing House network is an electronic Funds transfer system that can set up Recurring Billing Programs and make you accounting process easier.

Figure out what you owe. Make an accurate assessment of your debts and liabilities. Get a credit report. Make sure your divorce settlement deals with the issue of your debts.

Plan for your new living arrangements. Will you need to get a new house or new apartment? Do you have mortgage payments you need to resolve? If you have a home, you need to decide how you’ll split any equity in that home.

Make a new budget. Figure out what income you will now have and what existing or new expenses you will have to deal with, such as new furniture or appliances or a car. Make a plan for paying off any existing debt.

Be sure to close any joint accounts such as credit cards, merchant or store cards, or any other revolving debt. Separate all debt so that you can avoid negative repercussions should your ex-spouse run into credit trouble.

Be sure that your ex-spouse is making their payments. Often, even if a debt is assigned in a divorce settlement, your name will still be on that debt. If your ex-spouse fails to make the payments, you may still find yourself in financial distress and have your credit rating endangered.

Deal quickly with any issues regarding back-taxes. No matter who that debt is assigned to, the IRS will go after anyone on the tax statement. You might want to hire a tax lawyer to go over this debt.

Try to move forward with your financial health. Start a savings plan. Build your retirement plan. Remember that you are again alone in your responsibility for your economic health.

• Always be sure your credit and debit cards have theft protection through the bank that issues them.
• Be careful when giving out your personal information online. Make sure a site is reputable and your computer is secure and free of viruses.
• Do not count your money in front of an ATM. Go to a safe place first.
• Get online banking and always keep a close eye on your account.
• Immediately report lost or stolen checks, credit or debit cards.
• Never give out personal information online, in person or on the phone until you have verified who you are dealing with.
• Never let a stranger stand close to you at an ATM and always stand as close as possible to the ATM when giving your pin or other information. Use drive-up ATMs when possible.
• Never leave receipts in public palaces. Keep them and dispose of them only at home.

Excerpt of Article at Newsday.com

The nice thing about a Roth IRA is that since you’ve already paid taxes on the money you’re putting in, you generally won’t have to pay taxes on money taken out.

The money has to be in the Roth for at least five years (and to get the full tax- free benefit you must be 59½ or older). That means if you invest anytime this year, you can begin withdrawing as much as you want starting in 2009.

By the way, if your original investment declines in value, you can liquidate your Roth IRA (no matter how new) and not pay a tax or penalty on the withdrawal, Dianne Besunder, a spokeswoman for the Internal Revenue Service in New York, said. (Note: This rule does not apply to Roth IRAs created through conversion from regular IRAs.)

Excerpt:

You would be well advised to start taking your money out at 62 if the following reasons apply:

• You need the income your Social Security benefits would provide.
• Your health is poor.
• Your break-even point is a decade or more away.

On the other hand, you should wait until full retirement at age 65 (or later, if you were born after 1943) for the following reasons:

• You are healthy, or if your family has a history of longevity.
• Your break-even point is close enough that you could benefit from waiting.
• You are still employed.
• You’re counting on future benefits.

Read full article at Contra Costa Times