Archive for October, 2009

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Energy Savings Tax Credits, are They for You?

Sunday, October 11th, 2009

Tax credits, which means money subtracted straight from your tax bill, are currently available for energy saving efforts at home.  Eligible purchases include appliances such as water heaters, air conditioners, refrigerators, freezers, washer and dryers.

Other energy saving efforts that may qualify would be additional insulation and insulated windows.  More expensive undertakings such as a solar water heating systems rules are more complicated.

For additional information the  Energy Star website can give you all the details regarding the tax credit  of $1500 available for 2009 and 2010.

When you combine the energy savings from newer appliances, with the additional savings from the tax credit, the payback time-or the time  it takes for the annual savings to pay for itself-is very favorable.  But only if you meet these criteria:

  • you truly need the appliance or upgrade, and it is not just because you love the new features of the latest side by side.
  • you won’t have to go in debt to purchase.
  • Do not be enticed by a no interest loan-if you are a day late with a payment, all the interest from the total amount  is added back, not worth the risk.
  • if you will be staying in the house for at least five years-to get full advantage of the savings on the utility bills.

So, in summary, the tax credits are great, but only if you would be needing the upgrades or new appliances any way.  Make sure you crunch the numbers.  Don’t hesitate to ask your tax advisor for assistance.   The big box stores usually have information available to help as well.

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Credit Reports and Consumer Credit Information, Free, Of Course

Friday, October 9th, 2009

The Wall Street Journal’s Cranky Consumer has written an article today about checking out three different free credit information sites.  The sites, Quizzle, Credit.com, and CreditKarma.com propose to give a comparable score to FICO and the other major credit agencies, Experian, Equifax and TransUnion.  You can obtain a free credit report from those sites 3 times a year by visiting www.annualcreditreport.com .

I have a full-time job, so I did not visit each of the above sites for a test drive.  Please read the professional journalist’s very well reported article linked above for that.

I did, however, visit www.quizzle.com.  The questions required to confirm my identity were not answered to their satisfaction-they were referring to a non-mortgage loan originated about four years ago.  But it was listed as my home mortgage loan,which was refinanced less than 2 years ago. Therefore I failed their identity tests…..

So if this is confusing sorry.  My point is I would have to call an 800 number to allow them to give me a credit report.  Maybe tomorrow after a full nights sleep.

Now, don’t let  roadblocks like these keep you from checking your credit information.  Going to one of the sites above and obtaining information is extremely important, both from an identity theft standpoint, as well as identifying errors.  You want to make sure no one has tried to obtain credit on your behalf.

A low credit score  can cost you thousands in extra interest, and fees -if you are able to obtain a new loan. You also will probably have to take out mortgage life insurance resulting in higher monthly payments.

But keep in mind, all of these reports give their own proprietary information.  The only way to get your FICO score is through FICO.  They now offer a free report as well, but is tied to a monthly service that will be charged to your credit card, unless you cancel it within the first thirty days.

Just keep in mind that FICO’s mathematical weighing of your credit information is not available, anywhere but at FICO.  Although all of the above sites will give you information that will be in the general range.

So where does all this go, for Millionaire Nurses

  • Check your report several times a year-for free
  • Don’t carry a balance on your cards
  • Make all your payments on time, so your score won’t be dinged
  • Keep your balances, if you have them on your credit cards-less than half of your credit limit.
  • Save monthly-so in time, you won’t care what your score is, you will be your own banker….

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Mortgage Rates at Record Lows

Thursday, October 8th, 2009

See this Bloomberg report-   http://www.bloomberg.com/apps/news?pid=20601087&sid=anHHuTYOTmF4

It reports mortgage rates are at a record low of 4.87 % on average for a thirty year mortgage and 4.33% for a fifteen year mortgage.

There is no doubt that it is a great time to buy a home if you have your finances in order.  What does “in order” mean to “Millionaire Nurses”.

I advocate:

  • making sure you have a 20 % down payment.
  • have been married at least a year and not be a newlywed.
  • have been pretending to pay your mortgage and estimated taxes and insurance for several months-make sure it is not a strain
  • have a 4-6 month emergency fund available in savings
  • Have studied the local market-know where the best schools are and that you are not buying too much house for the neighborhood.

These rules  will insure that you will not join the millions of people now facing foreclosure.  What they thought was going to be the American Dream is now Nightmare on Their Street!

So, if you are ready-make the call -have the mortgage rate frozen by your banker or mortgage broker.  If you are not ready now, it looks like rates will be staying low for a while longer, unless the economy picks up-so get cracking on that down payment.

Remember, a home should be a home, not an investment.  But is also shouldn’t be a ball and chain.

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Will and Power of Attorney Kit, Better Than Nothing

Thursday, October 8th, 2009

Will and Power of Attorney

Many of you don’t have a Will or Power of Attorney.  Just too busy or costs are too high, are the most common excuses.  Well here are a couple of options for inexpensive Will’s and other legal documents.

ILRG Legal forms has a site with many available legal templates for inexpensive download.

An inexpensive kit is with many similar documents to help with end of life decisions are available  from Suze Ormans site.

Having a Will and Durable Power of Attorney are both extremely important for all adults:

  • Do you want the probate judge, and your federal and state government to decide what to do with your assets when you die?
  • Do you want some say in what type and to what extent resuscitation is performed in case of brain death or other significant illness?

So please take the time to execute these documents. If you have any significant financial wealth, equity in your home, other property, you probably need an attorney or financial planner to make sure your wishes are carried out.

If not,  these kits/inexpensive documents are way better than doing without!

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Credit Card Savings: Rewards Or Penalties?

Wednesday, October 7th, 2009

Credit Cards

Millionaire Nurse wannabes’ know intuitively that paying fees and penalties on your credit cards are major no-no’s.  I would say that using credit cards at all is not the best road to travel on your path to financial freedom and wealth.

I don’t want to be a hypocrite so I confess I do have a couple of credit cards.  I have a Delta Am-Ex because I travel overseas enough to use the points for plane tickets.

I have a GM Visa card that we obtained years ago-when I would buy a new GM vehicle every coupla years… (that alone should tell you how old the card is.)  I was once a very baaaad boy….

We pay our cards off every month-no balances.

Studies show spending is greater with credit cards rather than when paying cash.  We have replaced our card use with cash over the past couple of years.  We now use cash for purchases-more than 85% of  the time.  I would say we could cut up our cards tomorrow and not miss them.

www.mint.com/blog has posted  a graph and breakdown of credit cards and their various point schemes.   One stat that got my attention was that if you are late with a payment, it will take $3,900 worth of charges to earn enough points to pay for the penalty.

That should be enough reason to not to be late for a payment, and make you wonder about  the true benefit of  the various credit card reward programs.  The bottom line is, unless you fit a very narrow set of criteria, the disadvantages and costs of various card point schemes are not worth the risk of overspending, fees, and penalties.

I have a free ebook for Emergency Money Resuscitation for nurses at my website, www.themillionairenurse.com.  If you sign up for the free ebook, you will receive a free mini-course on money management by email.  In that free mini-course there are several great tips  on credit card management.

So here is your homework:

  • Review all your credit cards-find out what the rewards are, and have you been late with any payments.
  • Begin to payoff your cards monthly.\
  • When you are out of credit card debt-destroy them.
  • Try to keep your balances below 50% of your limit- this helps  your credit score
  • Cancel your store cards-they have higher interest rates and increase your spending temptation.

Good Luck

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Spending or Saving:Choices You Make Daily, Make You!

Monday, October 5th, 2009

Choices

The number of choices any of us face in a day is astounding and can have a profound affect on our life.  The police were chasing a stolen car in my neighborhood.  The thief drove through a neighbors yard to try to escape.  Eventually he flipped the candy apple SUV and was arrested.  The mug shot on the local news showed a kid grinning at the camera-no doubt proud of his little minute of fame.

I make that turn they were traveling on several times a day.  No doubt many of my neighbors do the same.  It was by the grace of God, that no one made the decision to drive to town, or visit a friend,  at just that moment, as they could have easily been T-boned by this idiot.  So we never know what our choices will lead to.

Today, I was searching the net looking for personal finance information for my writing.  A news tidbit or something I could share.

A Sony 32 inch television was mentioned on one of the CNET blog’s for a great price.  I, of course, have been drooling over flat screens for a couple of years.  My wife bought me a small one for Christmas, our first, for the bedroom last November on black Friday.  They were almost giving it away.

It being football season, I would love to have a bigger one for the den.  The TV we watch now is a 26 inch tube model that even the local repair guy, no kid himself, laughs at-it is so old.

My friends will not  come to dinner on Saturdays during football season here at my house because I don’t have a big hdtv flat screen.  (Maybe that is not all bad-I can go to their house and eat their food.)

So maybe this choice isn’t life or death, like the decision to leave my neighborhood at just the wrong time, may have been on Saturday.  But to be able to teach personal finance to nurses, as I have committed to do, I have to practice what I preach.

So, why should I not buy that flat screen?

  • I haven’t made a plan to buy a new television this year.
  • It is not in my budget.
  • I haven’t discussed it with my wife.
  • I haven’t  done an extensive search on features and models to make sure I am making a smart purchase.

So no, I didn’t order the television, even though I could have probably gotten away with it-(my wife likes her NCIS after all).

I will admit, though, I bookmarked the site, just in case….. another Christmas is just around the corner

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