Learning about reverse mortgages can get pretty confusing. There are many details you should get acquainted with when decided if this is the option for you. I will point out some of the pros and cons of a reverse mortgages that could help you a little.

Lets start with the good news first:

Pros

1. You will continue to live in your home as along as you want. The comfort of know that you will have a place to live as long as your alive is a huge factor for choosing reverse mortgages.

2. There are no income requirements to obtain a reverse mortgage. The point of the mortgage is so you would have income and since most elderly people are unable to work it makes a perfect match.

3. You will have a new source of cash flow that you can put toward living expenses. This is the number one reason seniors choose to get a reverse mortgage.

4. You will not have to make monthly payments.

5. You will never have to repay more that the property is worth. It does not matter how long you live or how much you borrow, your mortgage insurance is there to cover what’s left after you exhaust the equity.

Now for the bad news:

Cons

1. Reverse Mortgages can be very expensive, even more so than conventional mortgages. This means more commission for the lenders and more reason for you to keep an eye on the fees at closing.

2. You are still responsible for your taxes, home insurance, home repair and an added reverse mortgage insurance. HUD require you to have insurance on your new reverse mortgage, on top of your regular home insurance. It also becomes a requirement to keep you home in good shape.

3. You could lose your medicare benefits if you suddenly acquire a large sum of money. This is a huge factor and should be taken into consideration before you apply.

4. It is possible to live long enough to deplete all the equity in your home. This would leave with nothing to leave the younger generation of your family.

I always encourage you be do some research before you get into and financial dealings. Get yours self an expert to help you in areas you are not familiar and always read the fine print.

I have mentioned a few time about how most of us were never taught money management at a young age. So I wanted to talk about teaching your child how to manage their finances. Since I do not have children and hate talking about things I have not experienced first hand, I will point out the importance of teaching them in a different way.

The reason Americans are so bad with money is not because we can’t save, It is because of two things…

1) our parents never taught us how.

2) There are a million things to spend money on.

The fact that our parents never taught us money management, only shows that they did not learn it themselves. Once you learn the benefits of personal financial management, not passing it on to your children should not be an option. As a parent you should want your kids to be successful in life and being independent is a sign of success. It does not matter how much they end up earning for a living, if they know how to manage it, they can live very comfortable and stay out of the number one pitfall in America…DEBT! Just think of all the time you said to yourself “If I only knew”. Well, now you do and have a chance to break the cycle.

We all depend on money in one way or another, some of us use it to better our lives and some of us get used by it. Some of us work hard for it and some of us put it to work for us. By social standards the ones that use it to better their lives and put it to work for them are the successful ones. It becomes very easy to make your money work for you if you understand how money works. If at age 20 you knew the basics of saving and planning for retirement, it is most likely that you would have started saving for it then. Worst case scenario, when it come time to retire you would have enough to live of the interest. Best case scenario you would have an island next to Angelina Jolie with a private jet to swoop you anywhere you want to go.

The second reason we do not manage money well, is there are so many companies trying to get it out of our pockets. These companies have the best advertising minds and years of research working to get us spending. I have nothing against buying what you want and need but, there are ways to get everything we want. The problems is, we do not want to wait or save for these things. Children’s minds are copy machines, they usually end up doing what they see us do and continue that pattern all their lives. There financial future depends on what they learn from a young age. I was taught by my mother at a young age how to manage my money and because of this, I have always been good at saving and spending. If she did not take the time to teach me, it is a good chance I would not have the skills and patients that I have today.

My rule in life is the save for everything over $10 and before I had a handle on it, I had what I called a $10 sub-savings account. I would keep it at $100 and when I used any of it I would replace it $10 at a time. It is little things like these that I will teach my kids when I am lucky enough to have some. If you do not have good financial habits, start developing some now and teach them to you young ones as you learn them.

I think I went on long enough this post, I hope you got the point and take actions to make it work for you.

Before you venture out on any journey, the first thing you should seek is a little education. A little personal finance training will go a long way in terms of teaching you the best approaches to handling your money. Arming yourself with enough knowledge to help you get started, should be your first priority. There are many blogs and financial sites that will help you get the information you need. Don’t be afraid to read them, the worst thing you can do is expect to succeed in anything without any knowledge of the subject. There are websites that provide training classes in personal finance, some are free while others will cost you a little. Learn as much as you can about personal finance to avoid many of the mistakes and to help you through to problems you will encounter.

Here is a list of things you should study first.

Learn how to cut your expenses:

You cannot expect to become debt free or to save enough for retirement, if you continue on the same path. Eliminating some of your unnecessary expenses will free up more money to put toward savings or overdue bills.

Learn how to use Credit Cards:

Credit Cards could be your best or worst friend depending on how you use them. Many people just swipe their cards without knowing how it effect them financially. There are many types of Credit Cards, if you fly frequently having one that gives you flier miles could be of more beneficial to you.

Learn about savings and checking accounts:

The bank you are using now might not be the right bank for you. There are many types on accounts and you should be sure your money is in the one that will gain you the most benefits.

Learn about long term investments:

Saving for retirement is not an option any more. Companies are cutting back on everything they can, in order to stay afloat. This leaves your retirement planning in your hands and learning about CD’s and IRA’s with help you with your long term retirement goals more effectively.

Many colleges have personal financial training courses that you can sign up for. You local library has many books on the subject that you can borrow at no cost. There are many ways to learn how to manage your money and the more you know the better off you will be.

There are ways to save 50 percent or more on your annual car insurance bill, but they all involve taking on more risk. We buy auto insurance because it protects us in the event of an accident or break-in. But in some cases you may be protecting yourself more than you need, and paying for the extra expense of that in the process.

If your budget is in dire need of trimming, here are a few ideas to consider.

Reduce or drop your collision and comprehensive coverage. If you got your insurance policy when you first got your new car and it’s been several years since you have had it, you may be carrying too much coverage here. As your vehicle gets older you need less collision coverage and may even be able to eliminate it altogether. You may find, for example, that your Toyota Corolla insurance rate may be much lower a few years after you have driven it off the lot.

If you want to keep your collision coverage you should at least consider increasing your deductible to $1000 or more. While this means you will pay more money out of your own pocket in the case of a crash, you will be saving a lot of money on your premiums. If you drive an older car you may well find that the amount you save by eliminating collision coverage more than pays for any repairs you will have to pay for as a result of an accident.

Lower your liability coverage. This can be a scary prospect for many people and if you have significant assets, this option is not recommended. But if your back is against the wall and you have to make cuts, this is one area that can save you significantly.

Many insurers recommend that you carry at least $100,000 in bodily injury liability coverage with a $300,000 limit. If you can reduce those limits to $25,000 per occurrence and $50,000 total, it will save you money. You first need to check with your state insurance office to see what the minimum coverage requirements are for your area. Some states allow you to go even lower than the 25/50 coverage, while others require you to maintain more than that.

While this may seem like a great way to cut back, it is important to understand the consequences of reducing your liability coverage. If you get into a serious accident that injures other people, medical expenses could easily go beyond your lower coverage limits. If this happens, you expose your assets in the even of a lawsuit. So if you have money in the bank or a home, you could lose these if you are sued.

If money is tight, consider dropping your uninsured motorists coverage. As with dropping your liability coverage, you are increasing your risk exposure, but you will be saving money.

For most drivers, maintaining high coverage limits is a good idea. You are exposed to less risk and can drive secure in the knowledge that if you do get into an accident you will be covered. But if money is running out and you need to make some tough choices to stay above water, then cutting back on your car insurance is a viable way to save. Just make sure you are comfortable with the additional risk you will be taking on by doing this.

As I have mentioned many many times before personal money management is very important. Keeping your life and money organized will help you to know exactly where it all needs to go and where it really ends up. This is not an over night process by any means, it will take time, persistence and Patience to get the hang of it all. You have to make it a part of your everyday life by sticking to your budget, monitoring your money and actively working towards your financial goals.

When most people realize the need to learn personal money management they are in a critical situation. I suggest you take baby steps when you first start and try to read and learn as much as you can in order to build a good foundation. Take the time to learn why and how to automate your money before you run to the bank and set up a bunch of savings accounts. Knowing what a budget is and the purpose for one will make it much easier to create one and stick with it. Personal money management is a life skill that you will continue to use for years to come so, rushing and taking short cuts will only hurt you in the long run. There are many blogs/website, seminars you can attend and book you can read to get you started on the road to the riches. The local library has all the book you could ever want for free, all you need is a library card.

I know many will read this and want to take action, but will never take the first step. If you found your way to this site and have read this far it is very likely you need to learn to manage your money better. As far as I know for one reason or another everyone needs money and it does not matter how much you have you will always think you need more. There will always be new things to buy, places to go, bills coming in the mail and they all require money. The more you know about personal money management the easier it will be to buy these things, go to these places and pay your bills on time. So, not taking the time to learn is your option and it will always be true that not knowing is not an excuse. I will even go as far as to suggest a few books for you to read. I will teach you to be rich by Rami Sethi, personal finance for dummies by Eric Tyson, Think and grow rich by Napoleon Hill (Any of his books really) and The millionaire next door by Thomas J. Stanley and William D. Danko the rest is up to you.

Till next time remember money is only a means to an end.

You probably found this page looking for an entry level finance job. Well, sorry this is not about finance positions, but this is still something you need to read no matter what your employment status. Personal finance is a subject everyone should strive to gain as much knowledge and practice in as they possible can. I know people making six figure incomes with little knowledge of money management that are in no better situation than my friends earning little over $30,000 yearly. You cannot tell by looking at them and their expensive cars and home, but their accumulated wealth is not enough to sustain their lifestyle for a full year. With their 5 bedrooms 4 bath homes in up scale neighborhoods comes a hefty mortgage payment due monthly like everyone else. So take the time to learn as much as you can about personal finance and when you get that entry level finance position you will know just how to make your money work for you.

Truth is, the amount of money you earn does not indicate your true status in life. People with high income usually have high expenses from all the thing they buy and people with low income usually have high expenses from buying what they see the broke rich people with. They do not realize that many of these people are struggling themselves. What does indicate how well off you are in life financially is the amount you have invested and saved. A Lamborghini cost much more to fix, use much more gas, burn-out tires much faster, and needs a garage is a safer community than a Ford. Most people will not know its a Rolex until you tell them, they will not know your suite cost $4,000 by looking at it and will not care that your draws are made from chinchilla fur. On top of all that everything I’ve mentioned above are extremely horrible investments and shows how bad high earners can be with their money.

Making long term investments early and learning to manage your money is one of the best things you can do for your future. It is a fact that people that practice financial management are least likely to be in debt and most likely to gain financial freedom. If you take a look at the many Personal financial blogs on the web you would see how many of these bloggers are making great progress in becoming debt free. What they have realized is that accumulated wealth is the key to their future, not the most expensive car or the biggest house in and expensive house in an up scale neighborhood.

Many believe that more income will be the answer their problems, but in most cases it is a lack of management and the unwillingness to Change that is to problem. If you keep doing the same things you will continue to have the same results. I think I have spent enough of my time telling you why you need to make your life better, the rest is up to you. If you need more convincing just ask yourself this. Are you becoming Rich?

]]> http://www.jinij.com/entry-level-finance/feed/ 6 http://www.jinij.com/personal-finance-for-dummies/ http://www.jinij.com/personal-finance-for-dummies/#comments Fri, 18 Sep 2009 00:37:45 +0000 J.Scott http://www.jinij.com/?p=170

I was once a financial dummy myself, the first time my Mom told be about CD’s I told her “they will eventually change to something new like how they changed from cassette tapes so, I don’t think it would be a wise long term investment.” Now I can laugh about it, but I was very serious when I said it back then. Now I have gained enough knowledge and wisdom in the ways of personal finances that I can help you to become knowledgeable as well. If you have no clue what a CD is then you should consider yourselves personal finance dummies and pay close attention to what you are about to read. Personal finance for dummies is also a book that you should consider reading. It is designed for the beginner and has a wealth of information for those new to the subject.

If you are really interested in learning Personal financial management, the best place to start is in your kitchen. The millionaire next door is an excellent book that points out how self made millionaires spend many hours preparing and fine tuning their budgets. They cut coupons, pay their bills and plan their investments sitting right at the kitchen table. I suggest you gather all your bills, income, investments, pile them on the table and get them sorted and organized. I truly believe being organized is the first step to anything you do in life, it sets the foundation for planning and executing your goals. In the Personal finance for dummies book by Eric Tyson mentioned above and in almost every self help book I have read, the author outlines what prevents us from being successful and always in one way or another organization is mentioned. It is a skill you must learn in my opinion and in fact it should be a skill learned from a young age.

You have to remember that managing your personal finances will be a life long process and even though your situation seems urgent you should take it slow. Once you learn and start to implement these skills you will start to see money in a different light. It can become addictive in a good way making you want to learn more and try more. Learning the basic such as organization and budgeting is fundamental. Changing the way you handle your mail by developing a system that easily lets you know what needs to be paid, what has been paid, and what needs special attention is a great place to start making changes. One of my goals on this blog is to help you stay motivated after you have read books like Personal Finance for dummies. Motivation is a very fleeting thing, it takes constant refueling and even with the best of care it will fade.

I will continue this another time as it is getting late and I have a very busy day a head of me tomorrow. It is the opening day for my new company and I have much to do. Wish me luck!

]]> http://www.jinij.com/personal-finance-for-dummies/feed/ 10 http://www.jinij.com/personal-financial-planning/ http://www.jinij.com/personal-financial-planning/#comments Mon, 31 Aug 2009 01:49:50 +0000 J.Scott http://www.jinij.com/?p=163

I am a planner, I plan every little move I make. I am so good at it I only write down my mid term goals and long term goals. This has help me to complete almost every thing I have done through out my life financially and other wise.  If you take a look around you everything you see was planned in one way or another. It was the plan of Sony, Compaq, Gateway, Dell, Apple, or which ever brand of computer you are using to get you to buy it. If Apple had failed to plan its design, manufacturing, advertising, and distribution you would be using another brand right now.

Everyone needs to have a personal financial plan, without it you will be flying blind, you would not know where your money needs to be or where it is going, but amazingly almost everyone I know has a stupid look on their face when the subject arise. Yes, it will take time and research to put together a good financial plan and yes it is just as boring as watching a box of printing paper, but take a minute and think of the alternative. Think about how much planning it takes to put together a decent birthday party, and think what would happen if you did not take the time to plan said party. Your little sister might end up being the DJ, Pizza Hut would be the caterer, your living room would be the dance floor and only the people that feel obligated to celebrate your B-day would drop what they are doing for your last minute invitations. Well, finances are far more important than any birthday party, but most people spend more time planning a party then they do their financial future.

The #1 answer I get when I ask why don’t you have a Personal financial plan is “I don’t know where to start.” In his book I will teach you to be rich Ramit Sethi makes two unarguably point. He states that you don’t need to be a financial expert and starting making your financial mistakes early is better than not starting at all (Not his exact words but I’m feeling too lazy to go and get the book right now). The odds of you making a catastrophic mistake is pretty much the same as not having a personal financial plan at all. So, my answer to everyone that gives me the “I don’t know where to start excuse” is “$1,000 in a Roth IRA will earn you no less that $3000 in profit you never have to worked for In 40 years. If you add another $1,000 a year you will earn over $100,000; now thats a pretty expensive excuse.”

I do not think personal financial planning should be an option, it should be taken out of people salaries along with taxes, but it is an option. It is left up to you to prepare for your future and you can make all the excuses you want because your not cheating anyone but yourself and your children.

I was reviewing some of my future articles and realized that I constantly tell you to start a budget, but never explain how. Well, today I will explain the steps to creating a budget designed just for you… by you of course. You will need pen, paper, copies of all your bills, and to make a list of everything you will spend money on in the next 3 months. It is important to remember that a budget is not meant to restrict your spending, it is to help you become a better spender and a better saver of your money.

Making the list:

The first thing you need to start doing is to make a list of everything you buy over the next 3 months. This is not required to start your budget, but you will need it to help you fine tune your budget later. This will provide a visual of where all your money goes and help you to cut spending. Take a small notepad with you and write down everything you buy and how much it cost. Do not leave anything out, you will only be cheating yourself.

All That You Make:

Now you will need a list of all your income. If you are paid on a weekly or bi-weekly basis, try to add it up so you can view it as monthly amount. Make sure you list all your income, if you leave out any it will throw your budget off. Include your online auctions, stock trading, Adsense, and any other source of earnings you have.

Bills Bills Bills:

You will also need a list of all you monthly expenses. Mortgage, insurance information, car payment, entertainment, utilities etc…. Do not forget to include things that you do not get a bill for, such as church offerings, Starbucks coffee, trading software fees, Itunes and Iphone apps. It is very important to include entertainment expenses, this is a part of your life and should not be left out.

The moment of truth:

After you have all these listed, total the amounts and subtract you monthly expenses from your total monthly income. If your income exceeds your bills, use the extra to pay off your debts faster or add to your retirement. If your bills exceed your income you will need to cuts some expenses. Try starting with the things that you can live with out. If you are paying for things you do not use cancel them and redirect the money towards other bills. The 3 months list of your expenditures will help you to find other places you can cut expenses as well.

Once your income and your bills are equal the next step is to automate the paying of your bills. This will keep your bills paid on time and your savings growing without you lifting a finger. I will get into automating your bills next post, I try to keep my posts short, so they are quick easy reads.

It is a part of our genetic make-up to feel a sense of urgency when we get motivated. When most people realize the need to do something to fix their financial situation, they usually want to take action immediately. Since most of us are not educated about managing personal finance, we seek to get educated when the motivation hits us. They usually head to Google, the book store or find a financial manager if we can still afford one. It does not take long for motivation to fade and by the time they finish reading the book and doing research, they tend to be less motivate than when they started. I have put together a small quick start list to get you moving when your motivation is peaking.

1. Go and get a book on managing personal finance. I was not saying not to read or do research. This is just a list of things you can do to get the ball rolling now, you will need to learn as much as you can about managing your personal finance and as the saying goes… education is fundamental.
2. Gather all the information you can. How much debt you have, your monthly and yearly income, investments, bills, credit debts, Church tides and offerings and especially the money you spend on miscellaneous things. List them by category and be honest. You will only be cheating yourself.
3. Make a list of everything you buy for at least a month (three months is better). It will surprise you what you spend you hard earned money on. This will confirm where every cent of your money goes and where you can start to cut back.
4. Start saving now. Make positive that you put at least %10 of your income in a saving account of some kind. This might seems impossible, but think of the alternative. Not having anything saved at all leaves you wide open to falling right back down. If you get sick, you will have something to fall back on until you are well. Live for today an plan for the future!
5. Saving sooner rather than later is extremely important. Say you just had a child or are planning on having one soon; you’ll want to start putting money away for their education as soon as possible. Open an account like an RESP (a Canadian tax-free savings account that can be used to contribute funds for a child’s post-secondary education) as soon as possible – you’ll definitely thank yourself later.

Get started with this quick list, while you read and do research to gain knowledge. Learning to Manage personal finance will not happen over night. Stay consistent and apply what you learn when it fits your circumstances. Like I have said before, the best tip I can give is to stick with it and it will pay off.