Quick Tips to Ensure Financial Growth
For Homeowners/Homebuyers
• If you are looking for a return on an investment of a home, the best home renovation is to upgrade an old bathroom. Kitchens come in second.
• If you can find an interest rate that can cut your interest rate by at least one point, it's worth refinancing.
• When purchasing a home, it is best to have a down payment of at least 20% and don't spend anymore than 2 1/2 times your income for the home.
• Housing payment totals should not exceed 28% of your gross income. Debt payment totals should come in under 36%.
• Beware of door to door roofers, driveway pavers, or chimney sweeps. You don't want an unlicensed or uninsured worker. If the worker gets injured on your property, you could end up being sued. When you do hire a legitimate worker, don't ever put more than 10% down. As the work is done, you can make payments but always withhold the final 25% until you're satisfied with the completed project.
For Investments
• The best place to invest is a 401(k). You will be shielded from taxes and most employers match up to a certain percent saved. That's free money.
• A little trick to figure out how what percentage of your money should be in stocks, subtract your age from 120. The younger you are the higher percentage should be invested in stocks. The older you get the less you should risk in stocks.
• Do not invest any more than 10% in your company's stock or for any single company's stock for that matter. Stick with the saying, "never keep all your eggs in one basket".
• When it comes to mutual funds, the most you should pay in annual fees is 1% for a large-company stock fund, 1.3% for any other type of stock fund and 0.6% for a U.S. bond fund.
• When building a retirement nest egg, aim for 25 times the annual investment income you think you will need. If a bear market hits early in retirement, you could suffer an enormous lost in your portfolio, and you won't be able to recover in time to benefit when the market rebounds.
• Don't ever buy an investment if you don't understand how it works. You can simply just construct a sensible portfolio with just two index mutual funds — one stock and one bond.
Savings
• If you aren't saving 10% of your salary, you aren't saving enough. The earlier you start saving money, the less you will have to put away every year to reach your goals. If you start saving at 50, you may need to put away 30% a year to and postpone retirement for a few years.
• Always make sure to have three months' worth of living expenses in a savings account or a high-yield money-market fund for emergencies. If you have kids or rely on only one income, make it six months.
• If you are saving for a child's college costs, aim to save enough money to pay for a third of those costs. The rest can be borrowed or you can even use your income to help out when your child is in college.
Insurance
• When purchasing life insurance, you will need enough to replace at least five years of your salary — as much as ten years if you have several young children or significant debts. (Cash-value: cover you for your entire life and includes an investment component. Term: covers you for a specific period of time and provide a death benefit only. Term Insurance premiums are much lower and are most popular.)
• When buying car our house insurance, choose the highest deductible you can afford. It is the easiest way to lower your premium.
Credit Cards
• When shopping around for a credit card, opt for a no-fee rewards card that you pay in full every month. If you carry a balance though, high-interest rates will cancel out the benefits.
• If you are looking to improve your credit score, pay your bills on time and don't borrow any more than 30% of your available credit. Moving your balances around isn't going to help increase that score, paying it off is the key.
• If you receive calls or e-mails asking you for your Social Security number or information about your bank or credit card account, it is a scam artist. They are looking to steal your money, your identity, or both.
Vehicles
• If you want to save money on a car, buy a late-model used car and drive it until it is junk. A car loses 30% of its value in the first year. Always be sure to check out Consumer Reports to be sure the used car you are purchasing is worth it.
• If you are a person who replaces their vehicles within two or three years, then leasing is for you. If you lease a vehicle and keep it at the end of the term, it can cost you thousands more than it would have if you simply bought the car in the beginning.
Airlines
• If you are planning a trip that involves a flight, buy airline tickets early because the cheapest fares are snapped up first. Most seats go on sale eleven months in advance. Airlines like to know how many flights they need for each route so they make it as attractive as possible for people to book early. Sometimes though if there are a few seats left open at the last minute, you can sometimes get a great bargain but don't count on that.
• If you have frequent flier miles, don't redeem them unless you can get more than a dollar's worth of air fair or other items for every 100 miles you spend.
Miscellaneous Purchases
• As soon as a new computer or other gadget comes out, don't run right out and buy it, wait three months and the price will be lower. Let the ones who were first in line discover the annoying bugs. You can check the user reviews on C-Net or Amazon.com later on before spending your money.
• When you purchase electronics, don't pay for an extended warranty. There is one exception to this rule and that would be laptop computers with a warranty from the manufacturer. Laptops have parts like hard drives and big screens that can fail over time. Laptops can cost thousands of dollars to replace. Smaller gadgets like PDA's and MP3 players have few moving parts that are prone to wear and usually if they are defective, it will probably happen within the first three months.
