AC Interpreting

Archive for June, 2011

Dave Ramsey calls his book “The Total Money Makeover” “A Proven Plan for financial Fitness” and that’s exactly what it is. The book is simple, straightforward, and full of sound financial advice accompanied with motivating stories of people who followed Ramsey’s advice and achieved financial success. Some have achieved greatness, while others are still on their way, but all are in much better shape than they had been, and all give credit to Ramsey and his common sense approach to getting out of debt and then building wealth.

This book is about getting out of debt first, and then building wealth through basic investments. That’s it. I told you it was simple and straightforward. Right in the introduction, Ramsey says the book is not sophisticated or complicated. He also says it’s not something that has never been said. Very true, you can find similar advice elsewhere. But I do think Ramsey does a very good job at providing the advice in an interesting and motivating manner.

The beginning of the book outlines the problem with debt and money than many people face. Ramsey encourages you to take stock of your personal situation and don’t be in denial. He then discusses many debt and money myths that hold people back from achieving what he calls financial fitness. Besides these myths, he outlines two more hurdles that people need to overcome to reach their financial goals; you must get over ignorance and quit trying to keep up with the Joneses. He then tackles the ignorance problem with his plan of “baby steps.”

First, he wants you to do everything you can to build up a $1,000 emergency fund as quick as you can. Then you will start on what he calls the debt snowball. This same method is found in other plans from other resources, and basically calls for a systematic way of paying off your smallest debts and rolling over the payments into the next debt until they are all paid off. Ramsey does a good job of explaining the plan, and provides a lot of examples for motivation. Once out of debt, he provides solid advice on building wealth, paying off your last debt, the mortgage, and then to live like no one else because you are financially able to.

Again, there is nothing earth shattering in this book. It is simple, solid advice. But guess what? Basics work! Simple works! Now remember, and Ramsey says this in the book too, it’s simple but not easy. The concepts are simple to understand, but not easy to implement if you are in the habit of overspending and using debt for everything. It takes discipline.

Personally, I am not anti-debt as Ramsey is. I understand his position, and I agree with him on most of his points. However, I am one of those that does use the air miles I accumulate with my credit cards, and I always pay off the entire balance each and every month. I’ve also purchased items with 12 or 18 months zero interest and ensured that I paid them off before the period ended and the company zapped me with all that back interest. I say this, because I do believe you can implement Ramsey’s principles and still not be totally anti-credit as he is. However, with the alarming statistics that he provides, for many people the best course of action would be to follow this book to the letter, 100%. In fact, some of the side bars of “Dum Math & Stupid Tax” examples were very eye opening, as well as little things to make you go “hmmmm.”

Bottom line, if you are in debt and don’t know where to turn because you pay checks just don’t seem to be covering your bills, this book has some advice to help you get back on track and become financial fit. Read this book, and more importantly, follow its advice.

Like cars, many new motorcycles depreciate very quickly after they are driven out of the dealership. As a result, if you are a motorcycle buyer looking for a motorcycle loan or financing, it is important you understand that not getting the right type of motorcycle loan can put you in the position of owing more on your motorcycle than it is actually worth if you were to sell it. This occurs with some motorcycle loans because the value of your motorcycle depreciates faster than you are paying down the principal on the motorcycle loan. This makes it very difficult to sell or trade in your motorcycle if you have not paid off the loan.

Most motorcycle buyers feel that they will pay off their loan before they sell their motorcycle, but this is simply not the case. Many motorcycle buyers get loans for 60 months or greater to lower their monthly payments and then proceed to sell or trade in their motorcycle after a couple of years. The longer the term of your loan the higher your vulnerability is to owing more on your motorcycle loan than your bike is worth if you choose to sell or trade it in. This is especially true if you get a zero down payment motorcycle loan, 72 month motorcycle loan or an 84 month motorcycle loan.

In addition to the term on your motorcycle loan or financing, you should watch the type of interest calculation that is used by your motorcycle lender. There are primarily two types of interest calculation used by motorcycle lenders: pre-computed (combined with rule of 78) and simple interest.

A pre-computed interest calculation combined with Rule of 78 is by far the worst for motorcycle buyers. The reason for this is that in the first 24 months of the loan most of the monthly payment goes towards paying off interest and very little of the monthly payment goes to paying down the value of the motorcycle. Therefore, on a 60 month loan with a zero down payment a motorcycle buyer can easily find themselves owing more for the loan than the value of the motorcycle. This makes it nearly impossible to trade in the bike or sell it during the first 24 months of the motorcycle loan.

A simple interest calculation is therefore the best alternative for a motorcycle buyer because it contributes less to interest (than pre-computed interest) in the early years of the loan and more to paying down the value of the motorcycle. However, if you have a motorcycle type that traditionally depreciates quickly you can still be affected negatively with your motorcycle loan especially if you opt for a zero down motorcycle loan with terms of 48 month or more.

Here are 6 steps you can use to help you get the most from your motorcycle loan and to help you get prevent from owing more on your bike than it is worth if you decide to sell it or trade it in during the early years of your loan.

1. Try to avoid zero down payment motorcycle loans, especially if they extend for more than 36 months.

2. Find a lender that uses a simple interest calculation for your loan. Avoid lenders that use pre-computed – rule of 78 interest calculations.

3. Try to avoid motorcycle loans that extend past 36 months especially if you are purchasing a motorcycle brand that is going to depreciate quickly.

4. Always try to make extra payments on your loan towards the principal of your loan when extra money is available.

5. Opt for an installment motorcycle loan before a credit card loan. Installment loans typically provide better terms and conditions for motorcycle buyers.

6. Look for online motorcycle loans to ensure you get the most competitive interest rates available.

Copyright (c) 2006, by Jay Fran This article may be freely distributed as long as the copyright, author’s information and the below active live link is published with the article.

When you are looking for insurance on the vehicle you drive, everyone accepts you could change to a different vehicle tomorrow. It’s the same with a rental home. People who do not own their own homes often move on a fairly regular basis. Put the other way around, many people feel able to change their insurers more or less at will. If one insurer hikes their premium rates, many shop around and find another insurer with lower rates. That’s the way the world works. But, when it comes to buying cover for your life, there’s a big change.

The first policy you are looking to buy may be for a fixed term, making it unlikely you will cancel. If you buy a whole life policy, this is an even more permanent commitment. Given the policy depends on you building up the cash value, you are not expecting to change insurers unless there’s a crisis that requires you to surrender or sell the policy. This means both sides of the proposed bargain are going to look more carefully at each other. You want to feel confident you are buying a policy with the right terms for your particular circumstances. You also want to be reasonably sure the company is financially sound and likely to be around to pay out in thirty or more years from now. On their side of the fence, they want to ensure you are not going to die tomorrow – that means a medical exam.

If all you want is a policy with a short term for a small amount of money, a young man will be waved through with only a nominal check on your health. But if you are older and/or you ask for a larger amount of cover, the checks will get more real. The first rule to understand is that you cannot rely on your regular doctor to provide a medical report. You will always either be seen by an employee of the potential insurer, or referred to an independent person with medical expertise. Depending on the level of protection demanded by the insurer, you may find the exam will come to you. Many life insurance companies operate with mobile testing facilities that will visit your office or home. This provides an opportunity for a detailed questionnaire on your medical history and a basic set of samples for testing. But the more comprehensive tests will always require you to go to a clinic or hospital where you can be put on a treadmill for measurement of your breathing capacity, heart performance, and so on.

Remember you will be subject to a standard range of tests to determine whether you are currently taking any drugs. This ensures your honesty in disclosing existing medical conditions and also looks at your lifestyle to confirm you are not currently taking anything illegal. If any problems are detected, you may be asked for further tests or time may be allowed for you to take remedial action, e.g. to quit smoking, eliminate street drugs or lose weight. Life insurance rates are based on your health as it is. A healthy young person will be offered a low rate. Anyone with lifestyle or health issues will either be offered a high rate (as a deterrent) or refused outright.

When it comes to setting premium rates, the make and model of the vehicle you propose to drive is the most important factor after your own safety record as a driver. Some models attract thieves either because they are easy to steal or provide a thrill factor when driven at speed. But for everyday use, the way the model performs in crash tests is the real issue. Let’s take just two issues. If there’s plenty of metal between you and other drivers, you are less likely to be injured in an accident. So, for example, sport utility vehicles have size and weight on their side. Now that new electronic stability controls have been fitted to reduce the risk of roll-over, these are among the safest vehicles to drive. The only drawback is the gas-guzzler tag. With gas back up to around $4 a gallon, filling up the tank on an SUV means you have to be in good standing with your credit card providers.

So, if the cost of putting and keeping an SUV on the road is too high, what are the safest low-cost vehicles? The answer is provided by two bodies, working more or less together: the Insurance Institute for Highway Safety (IIHS) and the Highway Loss Data Institute (HLDI). The IIHS does the crash testing and general talking with the manufacturers about design to improve the safety of vehicles on the road. The HLDI analyzes all the available data from the insurance industry to put numbers on the human and economic losses that flow from traffic accidents. When you put the two sets of results together, you get a good picture of which vehicles to drive. When the IIHS first started, it preferred bigger vehicles. So long as the driver was wearing a seat belt, driving a truck or stable SUV was always going to give you the most protection. But now the tests have grown more open, measuring front, side and rear strength, as well as the risk of roll-over, small vehicles are outperforming the heavyweights. The top fuel economy cars are now safer than SUVs.

In part, this is due to their speed. You can often move out of the way of danger in a small car. The latest round of results show the Ford Focus, Honda Civic, Hyundai Elantra, Nissan Juke and Toyota Prius as the top safety picks. Note the Prius. The hybrid delivers an estimated 51 miles to the gallon on the highway. If you are going to buy secondhand, check the archives for the listing of makes and models by year. Small vehicles used to lack the safety equipment now supplied as standard. Designs change from one year to the next. So, for example, the Elantra has gone from being one of the worst vehicles to one of the best.

Before you buy, check the lists published on the IIHS site and then get auto insurance quotes to confirm the current premium rates. You are looking for the best balance between price on the road and insurance costs. The good thing about free auto insurance quotes is you can get premium rates for as many different makes and models as you can afford. This lets you make the best overall decision on safety and cost.

In a sense, this is the easiest of all the questions to answer because it all comes down to a choice between two basic types. Term life is what you might call a pure form of insurance. You agree a fixed amount payable in the event of your death during the term set. If you die, the company pays that amount. If you are still alive when the term expires, you are now without insurance cover. Because the majority of people are finding their life expectancy rather better than they had thought when young, the insurers do not pay out on many term policies unless there’s an accidental death. No one can predict a traffic accident. So the premium rates are low, offering potentially very good lump sum payments to your family for a relatively small outlay.

The second major type offers permanent protection while accumulating a cash value. The so-called whole life policy offers a basic minimum lump sum plus a bonus from investments. In the majority of cases, the management of the investment is delegated to the insurer but, if you think you can do better, there can be options for you to guide the investment. We then get into a small jungle in which you have to judge how much risk you want to accept. In a variable life policy, for example, you can abandon the fixed lump sum in favor of greater returns from the investment account. Universal life gives you the right to borrow from the insurer or actually withdraw some of the accumulated cash value should an emergency arise. This also has greater flexibility, allowing you to vary the amount of premium you pay. The maximum control comes to you through a universal variable policy. This has separate accounts and you can manage where your money goes as between stocks, bonds and the money market. If you make good decisions, there are good tax free returns.

When you are young, a term insurance policy can give you low-cost protection during the first years of your adult life. The question you have to ask is whether this represents the best long-term value. Should your health not hold up, renewing the term or switching to whole life may become impossible unless you bought a convertible term policy. The other factor is inflation. If you buy a whole life insurance policy early, the premium may start off higher but, over time, it becomes more affordable as your pay rises. If you delay, the cost of the whole life cover rises as your life expectancy falls. What you may find a slight struggle when you buy during your twenties, will cost you significantly more if you ask to buy the same amount of cover during your forties. Equally important is the question of a medical. As a young buyer, the insurer is likely to wave you through without any comprehensive medical exam. But as the years pass and your weight rises, the risk of different diseases and disorders increases. You may find it more difficult to buy whole life even if you can afford it. Life insurance is all about taking the decisions at the right time. In reality, all this should be discussed with a knowledgeable advisor before you make any commitments. Early mistakes can lock you into unfortunate policies.

What would you do if your financial situation unexpectedly took a dramatic turn for the worse? If you or your spouse lost a job or you had unexpected medial bills, are you in shape to handle it? Or would you have to make some tough choices?

As distressing as it might be to imagine these situations, it’s far worse to face them without having a financial disaster plan in place. Debt can ruin lives; having an actionable plan in place is vital to managing and overcoming debt.

Whether you are in debt already or just preparing for any unforeseen future obstacles, developing a financial emergency plan is essential. To take control of your financial situation, your first step is to create a budget.

Developing and managing a budget

The first step for any person or family trying to get a handle on debt is to determine how much money is coming in and how much money is going out by setting a budget. Start by listing your fixed expenses such as mortgage or rent; utilities; car, loan and credit payments; and insurance premiums.

Then list your variable expenses such as food, gas, entertainment, recreation and clothing. A formal budget spreadsheet can help you clearly see your fixed expenses and your variable expenses, identify necessary expenses and prioritize the rest.

If you find yourself in a situation where expenses are greater than your income, variable expenses are the first things you can assess to immediately gain control of your budget.

If you find that sticking with your budget is difficult, help make your budget work for you by using these three tips:

Set aside funds for each expense category, and don’t overspend. Keep yourself accountable by writing down everything you buy. Stick to your plan; if something is not in your budget, and you can’t afford it, do not buy it.

When cutting your budget just isn’t cutting it

When unforeseen expenses arise, you’ve cut as much as possible from your variable expenses and you still come up short on your budget, you may need to turn to an expert for help reducing or adjusting your fixed expenses. Two possible options include mortgage or loan modification and debt settlement.

Mortgage/loan modification: Loan modifications allow banks to make loan payments more affordable for borrowers. Loan modifications can be temporary or permanent changes to your loan agreement, and may include changes to interest rates, loan terms, loan balances or other parts of the agreement. To get a loan modification, call your bank and let them know about your financial situation. Criteria for loan modification vary from bank to bank, and there is no way of knowing ahead of time if you’ll qualify – you just have to ask. Debt settlement: Debt settlement is an effective means of debt reduction. To engage in debt settlement, consumers can hire a lawyer or a debt settlement company to act on their behalf. A lawyer or debt settlement company negotiates with creditors to reduce the consumer’s overall debts in exchange for an agreement to meet a regular payment schedule. The process can sometimes lower debts by more than 50 percent of the balance. Only unsecured debts, such as medical bills and credit card debts, can be handled through debt settlement.

Financial disasters are fairly common and unload enormous amounts of stress on families. Fortunately, you can alleviate the strain, and minimize the financial impact, simply by being prepared.