August 14th, 2008
As much as possible, even when you are already in deficit on your monthly expenses, put away some amount into an emergency fund. With hard times worsening from week to week, you have to prepare for a future when your finances drop to near zero. Or, worse –if you or a member of your family gets sick or meets an accident or some disaster strikes, immediate funds will be required.
Don’t just keep your emergency fund in a piggy bank, in a cookie jar, or under your mattress. Place it in an earning certificate of deposit, a money market account, or a simple savings account. Even if the yield rate on your emergency fund may be lower than the inflation rate, you are at least mitigating the effects of an erosion of the value of your money and what it can buy.
image from Microsoft Clipart
Tags: bank charges, bank services, checking accounts, emergency fund, interest charges, interest-free money, minimum balanceShare This
By ren -- 0 comments
August 13th, 2008
Banks provide necessary services, but they are there for the money –your money. They are always cooking up new ways to charge you fees: miscellaneous fees, maintenance fees, online banking fees, excessive transaction fees, teller fees, etc.
Do not be taken in by offers of “no monthly fees” checking accounts. You can bet your bottom dollar the bank will make up for this freebie through some other fee.
Take time to shop around for a bank. Scrutinize their fees. Read the fine print. Keep records and study the entries. Avoid the charges that you can do without the next time around. Talk to the bank manager. Choose only the services that you really need.
image from Microsoft Clipart
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By ren -- 0 comments
August 12th, 2008
No such thing as a free lunch, specially in bank services. You do a bank a favor by opening a checking account and letting them earn on your money through loans & mortgages, and it charges you a monthly fee (which, in some banks, can go over $10 per month).
On opening an account, you get a free checkbook. Subsequent checkbooks are charged a fee for which some banks collect as much as $15, and this is for the plain checkbooks. The personalized versions (with background scenery, etc) cost much more –an extravagance and a needless expense. The important thing is that the check is filled out completely and correctly.
You want to make a long distance payment and it won’t get there in time if you send it through the mail. So, you send it through a wire transfer –for which the bank again charges you ($10 for a local bank, $15 or more for an international transfer).
image from Microsoft Clipart
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By ren -- 0 comments
August 12th, 2008
You don’t always have your checkbook with you and you don’t want to carry cash around. So, you use a debit card.
Remember, however, that every time you use your debit card you are charged a fee. The fees vary from institution to institution. Some charge less than a dollar, other charges much more. So, the more often you use your debit card, the more costly this bank service becomes.
How about ATM cards? If you withdraw from the ATM machine at the bank’s premises, you don’t get charged a transaction fee. Outside the bank premises, you are charged as little as a quarter or as much as a couple of dollars (depending on the location).
image from Microsoft Clipart
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By ren -- 0 comments
August 11th, 2008
You receive a check payment which you deposit in your bank account. Don’t assume that you can immediately withdraw or write a check against it.
Out-of-town or out-of-state checks take as much as a week before the amount is actually entered into your account for withdrawals or writing checks against. If you happen to write a check before the amount is actually in your account, your check will bounce –which, in addition to causing much embrassment, will cause a penalty to be charged against your account and do some damage to your credit standing.
To save you from overdrawn checks, banks offer overdraft protection. Fees for every overdrawn check that the bank honors can be costly (in some banks, as much as $35). In addition, interest is charged on the amount of the overdraft until it is fully covered.
The best thing to do is be aware all the time of how much money you have remaining in your account (this is what the check stubs are for). Also, give an allowance of at least a week before you withdraw or write a check against out-of-town checks you receive.
image from Microsoft Clipart
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By ren -- 0 comments
August 11th, 2008
No such thing as a free lunch, specially in bank services. You do a bank a favor by opening a checking account and it charges a monthly fee (which, in some banks, can go over $10 per month).
If you maintain a small balance, the bank will try to seduce you to put in more money by waiving the monthly fees. But –you have to look out for the fee that it will charge if you go below the minimum balance. Those extra charges can add up to a tidy sum.
I think this is an unfair exchange. You give the bank your money which they give to other bank customers as loans or mortgages –from which they earn hefty interest revenues. In effect, you have lent the bank interest-free money and –in exchange– it earns interest on your money.
Of course, if you need to regularly pay out significant amounts, you have no choice but to maintain a checking account –but look out for your bank balance and the fees you are charged. Scrutinize your bank statements and know the expenses you incur for availing of a bank service.
image from Microsoft Clipart
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By ren -- 1 comment
August 10th, 2008
The New Housing Bill gives grants for the purchase and rehabilitate foreclosed and abandoned properties. The subprime tsunami not only has created financial disasters, but has also given rise to suburban blight. Abandoned houses are detriorating and giving many areas the look of a ghost town.
This feature of the New Housing Bill can arrest the deterioration. It also opens up opportunities for fixer-uppers. With properties at record low prices, there is good money to be made. Fixer-uppers, however, have to hold the property until the housing market rises from the subprime depth.
info from FHA website, images from Microsoft Clipart, reconstructed by Ren Garcia
Tags: Fannie Mae, FHA, first-time homebuyers, fixer-upper opportunities, Freddie Mac, housing refinancing, mortgage affordability, mortgages, New Housing BillShare This
By ren -- 0 comments
August 9th, 2008
The New Housing Bill authorizes Fannie Mae & Freddie Mac to take on mortgages at higher amounts, from the present cap of $417 thousand to the higher level of $625 thousand. Ostensibly, this will enlarge the market for housing and hopefully pull the housing industry out of the doldrums.
The Bill also authorizes the Treasury to extend an unlimited line of credit to Fannie Mae & Freddie Mac (which already own or back more than $5 trillion in mortgages) and to purchase stocks in these GSEs, if necessary. These will be increasing the debt exposure of Fannie Mae & Freddie Mac. The fervent hope is, with the learnings from the subprime cirsis, better risks will populate the increase.
The fly in the ointment: Fannie Mae & Freddie Mac are backed by taxes –which backing has been increased by the New Housing Bill. If Fannie & Freddie Mac are hit by another financial tsunami, taxpayers will be saddled with the losses.
info from FHA website, images from Microsoft Clipart
Tags: Fannie Mae, FHA, first-time homebuyers, Freddie Mac, housing refinancing, mortgage affordability, mortgages, New Housing BillShare This
By ren -- 0 comments
August 8th, 2008
The New Housing Bill provides assistance to first-time homebuyers, making their purchases before 1 July 2009. The homebuyers get a tax credit of 10% of the house price, but not exceeding $7500.
The flies in the ointment are:
$7500 is not 10% of the house price in many places in the country
The tax credit has to be repaid 2 years after the purchase. At the tax credit of $7500, the resulting average increase in your tax bill for 15 years will be $500.
info from FHA website, image from Microsoft Clipart
Tags: Fannie Mae, FHA, first-time homebuyers, Freddie Mac, housing refinancing, mortgage affordability, mortgages, New Housing BillShare This
By ren -- 2 comments
August 7th, 2008
The New Housing Bill has a feature for those whose adjustable mortgages have been bumped up to a rate beyond their paying capability. The Bill gives the homeowner a way to climb out of the hole.
Lenders are encouraged to write down the mortgage by 10% of the property’s value. If the homeowner is able to transfer the mortgage and refinance through a new lender (say, a 30-year fixed mortgage), the resulting payments will be more affordable. This refinanced loan will be insured by the FHA.
The flies in the ointment are:
your current lender has to agree
you can persuade a new lender to take over
only loans arranged between January 2005 and June 2007 are eligible.
To qualify, you have to prove that your current mortgage is beyond your paying capacity and the refinanced loan has become affordable.
info from FHA website, image from Microsoft Clipart
Tags: Fannie Mae, FHA, Freddie Mac, housing refinancing, mortgage affordability, mortgages, New Housing BillShare This
By ren -- 0 comments
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