Interest rates, UP or DOWN?

So it would appear that our economy is headed back to the positive. Over the last six months the DOW has gained over 2,200 points. Investors are slowly gaining enough confidence in the market to start buying stocks again. But, what about the housing market?

The last few years has given the market in real estate a major beating. Home values have been pounded with little signs of recovery. Just recently the housing market seems to have became somewhat stable. Instead of falling home sales it appears the market has became flat.

So what trend will mortgage interest rates follow? The last week has given way to another slight decrease in the 30 year fixed rates, which brings me to the real reason for writing this article.

A few months ago I wrote an article about buying some land to build a future home. We got a great deal on a foreclosed acre of land in a nice neighborhood. The land appraised for just over $80,000 and we paid $52,000 so a deal that was hard to pass up. When we purchased the land we couldn’t find the developer in the phone book or Internet so we assumed the rules for building would be relaxed. The only rule that worried us was having to build a home within 8 months after purchasing the land.

We were prepared to build the house in the next couple of years, but 8 months would be a little too soon for us financially. Well about a week ago I met the developer while cleaning up the lot. Needless to say he wants us to start construction as soon as possible in order to keep the contract valid. He was very nice about the situation but wants us to start within a year.

With all this said, I’m hoping interest rates continue to stay well below 6% over the next year. A difference of 1% in interest rates will cost us an extra couple of hundred dollars per month. We’re listing our house next month by owner with hopes of a quick sale. We want to rent for 6 to 8 months while saving some money for a good down payment. Hopefully interest rates will stay on our side.

Can you really save by using cash?

Many, many year ago before credit cards were invented people paid for everything with cash or a barter system. I know for most of us it’s hard to imagine not being able to conveniently whip out the plastic at the grocery store, gas station, movies and even fast food restaurants.

For some of us this still remains true. My dad still only carries cash to pay for many common things such as those mentioned above. Even the president of the company where I am employed told me he still only uses cash for most common purchases. I have gotten so used to using a credit card to pay for things it’s hard to imagine life without them.

What would life be without credit cards? So many times I have heard that you can save so much money by using a cash only system. It hurts so much more to pay for something with cash than with a credit card. I’m still not completely convinced this is true for me, but recently I have thought about something that does temp to to test the cash only system.

Let’s assume I went to the grocery store and only took $80 cash to pay for my groceries. I left my wallet at home with my credit cards hidden away to prevent any possible usage. I would think twice about buying those Twinkies for $2, after all that’s 2.5% of my weekly grocery budget! On the other hand if I had a credit card I basically have a $10,000 + limit so buying something unnecessary would be much easier. So using an all cash system in this case would definitely help save money.

Another great example of where I could see an all cash system being successful in our life is with the eating out budget. Sometimes we spend over $400 per month eating out. I know we could easily make it on $200 and put an additional $200 per month in our savings account. If we only brought $20 cash with us for dinner it would be much easier to skip dessert or the appetizer that we don’t really need anyway.

I think an all cash system could definitely save our family money. However, because we have used the “pay your credit card off every month” system for so long I think it will be very difficult to get used to destroying our credit cards. Maybe I will have to create a happy medium to ween ourselves off our addiction!

Before you file for bankrupcy think about debt settlement

Thinking about filing for bankruptcy? I know it may sound like the easiest thing to do and in certain circumstances it may be the only option, but before you give up all hope maybe you should try some type of debt settlement program.

There are thousands of different agencies who are willing to help you settle your debts with your creditors. I’m sure there just as many who are only interested in your money and not at all in actually helping you, but you don’t even have to use a third party to settle you debt.

The term debt settlement simply means negotiating with your creditors to reduce the overall balance of your debt. Debt settlement only works with credit card debt and unfortunately, most creditors won’t negotiate until you’ve stopped making payments on the debt and have racked up hundreds or thousands of dollars in interest.

When you declare bankruptcy you may be hurting hundreds of other people, not just yourself. The money you owe the companies goes to other peoples salaries and helps provide income for many families. Before you make the decision to declare bankruptcy please consider a debt settlement program or at least contact your credit card companies and try to settle the debt by yourself. Many times you can save thousands of dollars with just a phone call.

Your friends and families finances

This is a guest post from J.Scott over at jinij the managing personal financial blog. To add your own guest post please contact me anytime!

Family and friends can be the best and the worst part of our lives at times. I cannot think of any thing better than when the grill is fired up and everyone is enjoying being together. On The other side of the coin, when you owe a family member or a friend and are unable to repay them being together can get uncomfortable to say the least. The best way to avoid these situations is not to borrow from the min the first place.

Knowing how to manage your finances is the best way to keep from borrowing money from anyone. Many people have the mind set that personal financial planning will keep you from enjoying the things you love to do, but it actually does the exact opposite. A good budget should include most of the things you love to do and cut out the things that you don’t realize your doing. Things like buying lunch at work everyday can be cut and replaced with things like a monthly family cookout. It is all about allocating the income you are making to serve you better. The hardest part of budgeting is getting started and since nothing beats undeniable proof , these two simple exercises will prove you either need a budget or you are already great with your money.

1. For the next 30 days write down everything you buy even if its a pack of gum. You do not need to date your purchases just write the item and the price. You can use your phone or a small notepad and a pen.

2. Gather all your bills and write down what you pay for but do not use; such as the other 100 channels of your cable TV.

At the end of the 30 days come back here and leave a comment of how much you are throwing away and if you think you need a budget. If nothing else, you will know where all your money goes at the end of the month and if you find you need a budget use the information to start one. Maybe in a few months the family and friends cookout could be at your house and all paid for by you. (Don’t forget to invite me)

There is power in giving, it’s better to give than receive.

I know you’ve heard the expression, “It’s better to give than receive,”  and hopefully you’ve experienced both ends of the spectrum. The power of giving doesn’t have to be just during the holiday times. There are many opportunities each day to make someone else a little happier.

It doesn’t have to be something expensive or even something that costs money at all. Your time is valuable and most people understand that and will appreciate any effort you give to them.

A few simple examples that cost very little money include a surprise in someones mailbox at work,  buying a friend breakfast or a cup of coffee, bake cookies for your office or friends,.

Don’t have a lot of extra money? No need to worry here are a few simple ways to make someone happy without spending a dime. Send them a nice email, give them a hug, mow their lawn, offer to clean their house,  listen to them.

Want to spend a little extra money to brighten someones day? Buy a stranger a tank of gas, pay for someones groceries at the store, buy a homeless person dinner at a really nice restaurant.

Obviously, there are hundreds of ways to make someones day happier. You don’t have to spend a lot of money just show that you care. A little extra time or effort out of your busy day could be the best thing you can do. Go ahead, give it a try, find out for yourself if it’s better to give than receive.

Don’t rely on family for financial help

Debt can be a very depressing situation. Millions of Americans have a financial deficit each month, meaning they are actually sending out more money for bills and payments they the earn. When faced with a financial tragedy you may think about turning to alternative sources for help. One of the obvious choices for financial help is your family. However, I think relying on family for financial help is a bad idea.

Why wouldn’t you look to your family for financial help? After all, if your family can’t help you then who do you have? That’s my point exactly. The number one cause of divorce in America is financial issues. Money problems break up hundreds of families each day. Those problems however can extend outside marriage to other family members as well.

There are hundreds of examples of how little Johnny or Jill asked mom or dad to co-sign for their first car or house. Johnny or Jill skipped a couple of payments and the creditors came looking for mom and dad for the money. This can cause great tension within families and sometime cause a lot of grief.

If you struggling to make ends meet there are other options than borrowing money from family members. Even if you wreck your personal finances you will still have your family!

There’s no Ctrl – Z in personal finances

If you’ve used windows operating system much you know that Ctrl-Z is a shortcut button for the “undo” command. If you make a mistake in a document or accidentally delete a paragraph you didn’t mean to you can hit Ctrl-Z and it will “undo” the mistake. You can go back to a point in time before you goofed.

Wouldn’t it be nice if life had a Ctrl-Z button. If you goofed or made a mistake in life you could simply get out your personal keyboard and hit Ctrl-Z and undo what just happened. I’m willing to bet that for most of us that keyboard would get a lot of use.

I’m sure many people are wishing they hadn’t bought that million dollar home just before housing prices bottomed out. Maybe you wish you could take back that new car, since you just lost your job. Maybe you should have kept your working washer and dryer instead of buying the new front loaders for $1,500, especially since your boss just cut back your hours at work.

Unfortunately, not much if anything in life works like a Word document including your personal finances. That’s why it’s so important to plan out your finances at least every month. Plan ahead before making any major purchases. Make sure you can actually afford what you are planning on buying and make sure you have all your bills covered for the coming months. A little “thinking ahead” will keep you from wishing you could undo some major financial mistakes.

How much money would it take to change your life.

I’m sure if you are reading this now, you at some point in your life have dreamed about winning the lottery or inheriting a ton of money. You’ve sat around the lunch table or had a conversation with family about how you would spend all that money. Wouldn’t it be great to win a few million dollars? In reality though for 99.9% of us this will never happen. It will only be a dream and we can only hope to save enough money to retire happy.

Maybe some more realistic would be to think about how much money it would take to change your life. Every one’s financial situation is different so maybe $10,000 would make a huge impact in your life. Maybe you would need $25,000 to pay off your debt and feel financially secure. Maybe you wouldn’t be happy unless you were a millionaire. How much money would it really take to make you, just content?

Without throwing out too many specific numbers I would like to be completely debt free, including a paid for house and 2 decent cars and I would like to have about $20,000 saved in the bank. I think this would make me feel secure enough financially to change my life. So for much less than $300,000 I would be very content.

What about you? Remember, it’s just enough money to make you feel very content and financially secure!

Bundle services and waste money

Most cable companies today offer a “bundled service” option. This may sound like a great deal and for some it truly is a deal. However, for many people the bundle may be more service than you actually need.

Many times cable companies put all the fancy added services in the bundled package. This give you the best service possible, but not really the best price. You may not even need unlimited long distance or call waiting. It might be nice to have them but if you never use the services you are throwing away your money.

For many people it is best to pick only the necessary services. If you can live without the fancy add on services you will be better off to save your money.

Another thing to watch for when shopping for bundled packages is to make sure you know all the “fine print”. Many times bundled service packages have an introductory price offer that expire after a certain time. After the introductory period, who knows what the price will be.

Basically, if you don’t use it, don’t buy it. Only purchase the services you need, read the fine print before you buy and save yourself some money.

P90X, increased our grocery bill

I purchased the Beachbody, P90x workout and diet DVD’s almost a year ago. It’s basically a great workout as well as a well balanced diet that spans 90 days. After watching the infomercial several times I decided it was something I wanted to try. Needless to say I never finished the 90 day program but have been wanting to start the program again. Why would I be writing about this on my financial blog? It looks like the cost of our grocery bill is going to increase with the new diet.

Our grocery bill has varied greatly in the past year because of a new baby. Baby food, formula, etc. caused a spike in the bill a few months ago and it was just now starting to decrease again. After grocery shopping this past week it looks like it will increase even more than with the baby expenses.

The diet calls for fresh vegetables, fresh fruits, chicken, fish, egg whites and some lean ground beef, etc. Basically no canned foods, frozen meals or any other type of junk food high in fat, calories, or sodium. Also, the big expense is protein bars, protein shakes, and other diet supplements.

So is it worth saving money on food versus eating healthy? In my opinion your health is very important, if you have to spend a little extra money to be healthy it’s well worth the expense. Try to save in other budget categories and pay a few extra dollars for some healthy food!