Archive for May, 2010

Homeowners Guide – Getting a Good Handle of Your Financial Position

Monday, May 31st, 2010

Gaining financial leverage does not necessarily mean that you need to have a substantial pay package, own a large home or drive a high-end car. The critical aspects of your financial management are your competency and capability to handle your personal finances sensibly so that you are able to live a comfortable life. A comfortable living means that you are able to enjoy healthy environment, eating, adequate shelter and clothing. It is important that you are able to satisfy your needs as well as your wants by having sufficient amount of money. The source of funds to support your kind of lifestyle must come from your earnings and not from borrowings. The core foundation of a good financial management is the development of the right habits in handling personal finances. Proper management of personal finances must be second nature to you.

In order for you to have the necessary finances to support your home improvement project or upgrade, personal finance experts recommend that you start by plugging the leaks of your financial portfolio. This means that you must identify the problem areas and start implementing corrective actions to resolve the issues. These “financial cracks” may have different forms for every family.

The following is a quick rundown of the most important tips that you have to follow in order to “plug” those leaks in your financial portfolio:

1. Gather the basic information about your finances

You need to establish a complete profile of your finances. It is also essential that you get data and information that would cover a specific time range. For instance, you have to get hold of your credit card bills and bank statement for the last six months. As soon as you are able to gather all the information about your expenditures and incomes, the next thing that you must do is to group these items into logical categories. You can perform this task by using your own spreadsheet or choosing one of those spreadsheets that are available online.

2. Sum it all up

As soon as you are able to completely organize the expense items, sum up the items in each of the categories to determine what your financial position is in each of the main expense categories. It is important that you don’t under-estimate your income and expense items.

Here are the major items which you need to carefully assess to ensure that you get an exact measure of your financial position:

• Income source – all sources of income, including your salary, bonuses, rental income and benefits.

• Housing expense – utilities and maintenance, insurance, property taxes, mortgage payments or rents

• Communication – internet, home phone, cell phone

• Entertainment and Leisure – vacation and travel, health clubs dues, liquor and beer

• Children stuff – parties, gifts, lessons, clothing

3. Compute your percentages

Use your NET income as your base figure in analyzing the specific items of your personal finance portfolio. Financial experts recommend that your mortgage or rental payments must not exceed 30% of your net income. Other basic guidelines that you have to follow in managing your cash outflow include 10% of income for compulsory savings, 15% of income for debt servicing and 15% of income for transportation expenses. There may be some aspects of your personal finance where you breach the upper limit. This may be allowed for a few items. However, if you are going beyond the limit in almost all of the expense items, then you really have your work cut out for you.

4. Establish your priorities

Determine which items are more important than the rest. In the event that you need to overhaul your expense items, then it is incumbent upon you to make adjustments or give up items you consider of less importance than the rest of the expense items. In most instances, major adjustments are usually done on items involving recreation and entertainment.

5. Formulate your monthly budget

The last thing that you must do once you are able assess the critical aspects of your personal finance portfolio is to formulate a monthly budget. With the proper handling of your expense items, you will be able to come up with a financial template that achieves a perfect balance between your essential expense items and fun stuff.

Learn how to sell your own house here: For Sale By Owner

If you’re looking to buy a home from an FSBO listing check here: FSBO Listing

Personal Finances FAQ:

Question: What personal finance records should we keep at home or in safety box?
I keep everything at home and a lot of it I did not need, but recently moved and somehow lost most of it. Yes, I certainly do blame myself….How many years of tax returns should we keep and where? ( i can only find 2 yrs back) What documents should we have concerning our home (title, deed of trust, etc). Where and how can I get copies of these docs that I need?

Answer: Personally, I keep all tax records for seven years as well as bank statements. In addition, you should keep copies of wills, powers of attorney (medical and general), life, auto and homeowner’s insurance policies, and an extra key for your home and cars – so you know where it always is. I also have a special section for warranty papers on household items we purchase. You can get copies of your titles and deeds of trust for property from the courthouse in your county of residence, or from the lender if you still owe. Automobile title copies can be purchased from the bureau of motor vehicles.

Question: What is the best personal finance book to start with?
I am 28 years old, single and made $41,000 last year. I am struggling financially due to my own ignorance and need to get a hold of the reigns.

Dave Ramsey and Suze Orman have some pretty mixed reviews on how overly simplistic and what a waste of money their work is and Givens sounds too risky. Where should I start? What do you recommend?

Answer: Try the Idiots and Dummies guides on personal finance / money management. Yes, it’s incredibly simple, but it’s a good foundation, and even financially savvy people can pick up a few tips and refresh themselves on good reminders there.

Then move on to David Bach, David Ramsey, and/or Suze Orman. They all give very similar advice, and it’s all very sound. Maybe not all of it will apply to your situation, but you pick and choose the parts that are relevant to you. Remember, you’re not looking for the hot magic stock tip that will make you instantly rich – you’re looking for practical real-life advice on how to maintain and improve your actual finances.

Don’t expect to go from novice to expert overnight, or expect one book to provide you with all the answer. Read several, then mull it all over and form your own opinion of what is best for you.

Question: How can budgets help people to manage personal finance?

Answer: By first tracking what you are spending and what you are spending it on. Then comparing that to a proven program that outlines what percentage of your income should be used for what expenses. That will balance your finances to eliminate debt and live within your means. The good thing about a budget is that you can adjust it based on your lifestyle as long as it remains balanced.

Question: What are the tools of the trade for personal finance?

Answer: You need a personal life plan, a personal budget and a personal balance sheet. After that you may need some financial coaching or financial therapy to help you get past your human foibles and enable you to use these tools rationally.

Question: Personal finance planning?
I am 25 yrs old, and feel its important to start planning ahead of time, but I don’t know what to do. Should I buy stocks? bonds? mutual fund? All these seem confusing. So then I figure why not look for a professional, and saw the Ameriprise commercial on tv, so my question is would you recommend Ameriprise? If so, how much money should I have before I contact them? What other advice you would have for a starter in personal finance planning?

Answer: 1. First you need an emergency fund of 6-8 months’ living expenses (not income, what you actually need to live). Don’t even think about investing until you have this.

2. Then you need to have your various insurances in line: HO or renters, auto, health, life if you have dependents (none if you don’t), personal liability if you own a home.

3. If you have dependents, you need a simple will. IRAs and 401ks and life insurance pass by beneficiary form, not your will, as do joint assets. But if you own a car in your own name, or have personal property, these pass by will. If you’re single, in most states your parents would inherit. If you’re married, your wife and kids. Do a cheap will online or with Quicken Willmaker, then pay a lawyer for one hour to look over it and make sure it says what you want (not what you think it says). Look for a woman atty, they’re cheaper.

4. Only THEN should you think about investing. Ameriprise is fine, but they are “boiler-plate” and they are really looking for people who can invest. You are probably not at that stage yet. Maximize your 401k contributions before starting an outside investment program.

Read, read, read, before investing. Look online: Investopedia.com, morningstar,com, fidelity,com, vanguard.com–all have educational sections and you don’t have to invest anything to access them. Don’t invest in anything you don’t understand, and don’t invest any money you can’t afford to lose. Once you have funded your emergency fund and 401k, start a personal investment program with $10-15,000. There’s nothing wrong with cash in the bank till then. Good luck! Wanting to save is half the battle.

Question: What is a good book on personal finance?
I want to do a better job managing my money.

Answer: Any book by Suze Orman. I would also watch MSNBC. Here is a tip if you don’t want to spend money on a book, go to your local library and they should and almost always have a section with books full of personal finance information. That way you spend no money and have access to several different ones.

Question: From a tax and personal finance standpoint, why should an employee ALWAYS invest in an employer’s 401k?

Answer: That’s only true if an employer offers you a “match” on the 401(k) plan. Matching funds are extra money that an employer gives you as an incentive to save for retirement. However, when there’s no match, an IRA can be a better choice because you have control over it and there’s more flexibility in your investment choices.

Question: How is a spreadsheet superior to a cash book in keeping and analyzing personal finances?

Answer: A spread sheet is better cause it also allows you to determine taxes and multiple other equations allowing you to figure out your balance even easier than calling the bank.

Explaining the Difference Between Automobile Insurance Rates in Canada

Monday, May 31st, 2010

Drivers can save a decent amount of money by comparing automobile insurance rates in Canada. Finding out what factors affect your insurance and how to shop for coverage is the first step to significant savings.

Research insurance rates over the internet or on the phone. Use search engines to find comparison websites or check out the yellow pages for companies that serve your area. One phone call and less than 20 minutes of your time to answer questions and make a few choices can put you on the path to saving money. Get a firm quotation to really get a handle on how much.

Auto insurance rates change based on you, your car and your location. In a few provinces mandatory insurance is issued through the government, such as in Manitoba. Across the country it is the law that all drivers have adequate coverage for property and liability damage. That coverage must be valid at all times. Insurance companies also sell policies that cover drivers well beyond that minimum amount.

If an Alberta driver who is 49 years old drives a 2004 Toyota Sienna, they can expect to pay as low as $1400 and as high as $1700 for insurance. If that driver moved to Ontario and drove a 1999 vehicle, they would save anywhere from $200 to $300 per year.

Your past driving record and the use of your vehicle will also have an effect on the automobile insurance rates in Canada. Using a car or truck for business will result in more distance driven and a higher insurance policy. Also a bad driving record will drive the cost of insurance up and may cause a provider to cancel your policy or refuse further coverage.

Any time you are refused coverage it will have to be reported on subsequent insurance applications. Also any accidents in the last ten years where you were deemed at fault and any claims will need to be disclosed on future applications. Remember to be up front with your record to obtain the most accurate quotation and the best coverage.

Gender is another factor which may increase your auto insurance rates. Whether male or female, if you have taken a driver training course and can provide proof of it, your rates should decrease.

It would seem that Ontario has the highest automobile insurance rates in Canada. An Ontario driver who’s 23 years old and owns a 2006 Chrysler should pay around $1600 annually, while a Quebec driver who’s 19 years old and owns a 2005 Mazda will pay less than $1100 through the same national insurance company. Although other aspects may have affected that comparison, where you live is an important factor in how high your insurance is.

Setting a higher deductible will decrease your annual policy. Also be sure that you are not carrying any excessive or unnecessary coverage. Go over your policy in detail and choose the highest deductible that you are comfortable with. Remember that the annual savings stay in your pocket every year and the higher cost of the deductible is only relevant when a claim is made.

When shopping wisely for automobile insurance rates in Canada, be honest about your record and understand the coverage offered. That will help you to choose the best policy and obtain the lowest rate.

This reliable car insurance in Ontario dealership offers competitive rates along with exceptional customer service, thus providing the best valued car insurance. You are guaranteed a safe driving experience by entrusting us with your auto insurance in Ontario needs.

Auto Insurance FAQ:

Question: How much for basic auto insurance in Canada?
I am driving my car from BC to Waterloo, ON. back for school. I was wondering, in this case, which province’s auto insurance I am supposed to get. Can I drive around in Ontario for more than four months with ICBC insurance? Or Do I have to get the new Ontario insurance? In BC I am still N, which is equivalent of G2, and I currently drove for closely three years. Another thing was, how much would the basic insurance cost a month? Is there any big difference between BC and Ontario?

Answer: The best answer you’re going to get to all your questions is from your own insurance people. Call them and ask them. Anyone other than them who gives you a price is guessing.

Question: Can I buy US auto insurance to cover my Canada vehicle?
I just moved to Canada this month. I have had Geico auto insurance in US more than 4 years. However, there is no Geico insurance service in Canada. Can I continue to use my US Geico insurance and register my car in Canada?

Answer: Not if you live in Canada. Plus, some provinces have their own auto insurance that you must buy.

Question: Which american auto insurance company covers you if you travel to canada?
I frequently travel to canada on weekends. Which auto insurance company covers you for that travel?

Answer: Unlike Mexico which requires you to buy their insurance, Canada will recognize your current policy as a tourist in their country. If you MOVE to Canada, they give you a grace period which varies by company. Now, call your agent & get a Nonresident Interprovince Canadian ID card. This will be in English & French & will be required if you are ever in an accident or get a ticket.

Question: What is the point in adding an occasional driver on my auto insurance (Ontario, Canada)?
Is there a legal obligation? Is there any impact on the auto rate if that person is young or have been involved in accidents? If the occasional driver gets involved in an accident, will it also be on my record? But what is the difference if the occasional driver gets into an accident if she’s on the policy or not?

Answer: Is there a law that says you have to? No, there isn’t. However every insurer requires that you disclose all licensed drivers in the household as well as regular operators of the vehicle. If you fail to do so, and that person has an accident, then the insurer has grounds to deny any claim filed. This means you (as owner of the vehicle) and/or the driver of the vehicle could be financially responsible for everyone’s damages/injuries, which means you could be in debt for the rest of your life. There is an additional premium charged for an occasional driver who is under 25, however an occasional driver over 25 can change your rating as well depending on how long they’ve been licensed, however the additional premium won’t be as much as having an occasional driver under 25.

To answer your second question: regardless of whether or not the person driving is a listed driver on your policy, if that person has an accident which is their fault (even partially), then it will affect your rating. The difference between having them listed and not having them listed is by not having them listed you’re running the risk of not having the claim paid.

Question: When is Geico going to offer auto insurance in Canada so I can switch?

Answer: Why would they? There are several hundred insurance companies in Canada already. Have you any idea how much it would cost them to set up and be licenced in Canada, in each province they wanted to deal in?

Question: Cheap Auto Insurance Ontario Canada!?
I am a 20 year old Female driver. I have never been insured before and looking to buy my first car. Are there any sites where I can get quotes? I am from Hamilton Ontario Canada. I have been in two at fault accidents in the past 4 years.

Answer: With two at-fault accidents you only qualify for three companies: Perth Insurance, Jevco Insurance and the Facility Association. The Facility Association is the insurer of last resort in Ontario, and they’ll insure someone when no one else will. None of these companies will quote you online, you have to call an insurance broker in Hamilton to get a quote with these companies (yes this means actually having to talk to a real human being). I work with all three companies and I quickly ran some numbers through my rating software. Unfortunately I don’t know: the exact date of the accidents; how many years you’ve been licensed; the vehicle you have or where your exact location in Hamilton is; however if one of the accidents occurred within the last year and you had a 1990 Chevrolet Cavalier, Jevco turns out to be the cheapest of $6,100 for minimum coverages. This is not an exact figure, but it will give you an idea. Contact a local insurance broker for more exact figures.

Question: Teen having major trouble getting auto insurance in Toronto, Canada?
It was about 3 years ago today that I started to save up for the car of my dreams. I saved up, with MY money earned from working, not given to me by my parents, and I’m not some rich kid either. I call the insurance company and they quote me for $550.00 WTF?! What are my options? This is disgusting to be honest.

Answer: Your options are: to pay for the insurance; shop around (you might be able to find an insurer who will insure for a few bucks per month less); not drive. You should have factored in ALL the costs associated with vehicle ownership before buying a vehicle, not just the obvious one. Insurance for 18 year olds, especially males, is expensive. If you’re paying cash for the vehicle you can always decide not to take collision and comprehensive coverage, however depending on the vehicle this will not make a huge difference (maybe $50-$75/month less).

Question: What do Americans pay for auto insurance?
From 19 years old; with a bad driving record; to 40 year old with good driving records. What kind of numbers are out there? In Canada, I pay $100 a month for my older truck. I have a good driving record. That can go up to $200 for a new car and an average driving record.

Answer: When I was 18 I bought a z28 Camaro and I had one speeding ticket. My insurance, on my own policy, was $225/mo and that was more than anyone I’ve run across since then. Now that I’m 30, my wife and I insure two cars for only $100/mo.