Shopping for a mortgage can be intimidating. There are thousands of mortgage lenders and hundreds of ways lenders can tweak home loans to distort their real costs. You’re also facing the excitement of buying a new home and you may feel vulnerable as lenders nit-pick your credit report. It’s understandable that many home buyers get stuck with bad mortgages because they just wanted to get the process over with. Unfortunately, that’s no small mistake: On a 30-year mortgage, fractions of a rate point can add up to tens of thousands of dollars.

Want to avoid a similar fate? It’s all about knowing how to shop for a mortgage. Read more…

Feb 26th, 2010 by David Weliver in Credit, Real Estate
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The CARD Act—a set of new regulations designed to limit credit card trickery—went into effect this week even though Congress proposed the act over a year ago. Since then, there’s been a lot of talk about what this all means for people like you and me.

And it’s not all good.

Without prying into painful details, here’s a 60-second run-down of what you need to know about the CARD Act. Read more…

Feb 23rd, 2010 by David Weliver in Credit
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Last week, a long-time reader e-mailed a superb question: If you must choose, should you save first for retirement or save for a down payment on your first home?

Obviously, both are important. The younger you are when you start contributing to a 401(k) or IRA, the longer compounding interest will work its magic. At the same time, many of us want to own a home before we turn a certain age, get married, or have kids. And if we’re able, the money-savvy among us would like to buy our home with a substantial down payment (ideally 20 percent).

That’s no small goal.

But can you save for both retirement and a down payment at the same time? And, if you must choose, which should be your priority? The answer is, of course, complicated, and depends on some individual financial factors. But, in general, save for retirement first. Read more…

Feb 22nd, 2010 by David Weliver in Investing, Real Estate
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Savvy investors know that a single mistake can wipe out months—even years—of solid returns. And beginning investors often make their share of the same four common blunders. In fact, tactics for identifying and avoiding these investing missteps are among the most important things a new investor can learn. Here they are: Read more…

Feb 17th, 2010 by Stan in Investing
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Picture this: You’ve just completed your tax return for the year. You’re stoked because you qualified for a ton of deductions this year, so you’re getting a huge refund. You are about to send of your tax return and sit back and wait for a hefty check in the mail, when someone utters three terrifying words to you: Alternative Minimum Tax (AMT).

If you claim a great deal of tax deductions, beware of this silent killer. The alternative minimum tax can come out of nowhere and require you to pay more tax than you ever thought possible.

Here are some facts on the alternative minimum tax so you know what to look out for if your deductions start stacking up this year: Read more…

Feb 16th, 2010 by Carrie from "Carrie...On The Cheap" in Taxes
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Do you have a credit card that raised your interest rate within the last year? You’re not alone. Credit card companies raised nearly everybody’s APRs because as of this month, the CARD Act prohibits them from doing so again without jumping through a lot of hoops.

But once your credit card raises your APR, how can you get it to go down again? You can always apply for a new credit card with a lower rate, but you need good credit, you may not want another credit card, yadda yadda.

Wouldn’t it be nice if you your existing company would lower your APR on the card you already have? It can be done. Read more…

Feb 12th, 2010 by David Weliver in Credit
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Have you ever wondered if you can itemize deductions on your tax return? Actually, have you ever wondered what, exactly, itemizing means? If so, you’ve come to the right place. I’m going to teach you the basics of itemizing: What itemizing is, whether or not you qualify to itemize and, if so, how to do it.

What Does It Mean To “Itemize Deductions”?

When you’re filling out your federal tax return this year, you’ll be asked to either calculate your itemized deductions or to take the standard deduction—an amount predefined by the IRS and based upon your filing status (e.g., single or married filing jointly). If you don’t qualify to itemize deductions, you will choose the standard deduction.

To find your taxable income, you must subtract the standard or itemized deduction from your Adjusted Gross Income (AGI). To be blunt, these deductions are our friends because they lower the amount of taxes that we have to pay.

Itemized deductions are comprised of various types of certain expenses that you incur throughout the year (things that are—surprise, surprise—“tax-deductable”). If the total amount of these expenses is greater than the standard deduction amount, you should itemize instead of taking the standard deduction.

For example, the 2009 standard deduction for single taxpayers is $5,700. If the amount you spent on qualified itemized deductions (see below) is greater than $5,700, then you should itemize on your tax return. Read more…

Feb 11th, 2010 by Carrie from "Carrie...On The Cheap" in Taxes
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You don’t need a Ph.D. in economics to know that economic bubbles—and their ensuing POPS!—can take us all for a wild ride.

Bubbles occur anytime asset prices appreciate unrealistically; and they happen more often than we think. In the United States alone we have seen two in the past twenty years: The dot-com bubble in the late nineties and the mid-2000s real estate craze that has resulted in today’s downtrodden economy.

Bubbles happen everywhere. Japan, for example, experienced a huge surge in real estate and stock prices in the late 1980’s. Apartment prices doubled or even tripled in value in only a few years. By 1990, the value of Japan’s real estate had grown to five times the value of the entire U.S.; The Imperial Palace alone was valued as much as the entire state of California.

At the end of the boom, however, Japan’s balloon economy became distressed and fell hard, entering into a decade-long deflationary slump. This so-called lost decade is a painful reminder of what can result from such a bubble. In fact, Japan is still struggling to revive its economy today, in part due to the recent global financial crisis. Read more…

Feb 10th, 2010 by Stan in Investing
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There is a thin line that differentiates investing and gambling.

We might consider professional gamblers—poker players, for example—a breed of speculative investors. Of course, we might also call investment professionals who take wild risks in financial markets gamblers. No matter how skilled the card shark or how practiced the investing maven, one thing is certain: in cards, as in the stock market, there are no guarantees.

Whether we gamble or invest, we take risks in pursuit of potential rewards.

We risk a dollar on a lottery ticket for a potential to win ten million dollars, we risk $25 on a hand of blackjack for the potential to double our money, we risk $5,000 to buy a penny stock for the potential it will triple in three months, or we risk our life’s savings in the stock market for the potential to earn consistent annual returns.

Each risk carries vastly different odds (and potential returns). At the one extreme, the odds you will lose your dollar is good; of winning the lottery, not so good. On the other extreme, the odds of making a modest return on a long-term investment in the stock market is good; the odds you’ll lose a chunk of your savings is much lower.

But are investing and gambling the same? Let’s use an example to find out: Read more…

Feb 8th, 2010 by Simon Zhen in Investing
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To make a successful investment, you must know when to buy and when you should sell. The reality is that there are only a handful of companies worth holding onto for long periods of time—and there are very few investors who are perceptive enough to buy only those companies.

There will always be good times to sell stocks we own, and knowing when to sell is just as important as knowing when to buy. Yet we often find ourselves selling our winners too early and holding onto our losers too long.

Here are some questions to ask yourself to help decide when it’s time to sell your stocks. Read more…

Feb 4th, 2010 by Stan in Investing
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