Thinking of Purchasing a Home?

One of President Obama’s priorities in 2015 was to kickstart the housing boom once again and, as the Federal Housing Administration lowered mortgage insurance premiums today, first-time home buyers got an excellent reason to buy a home this year.

Last week Friday the report from the National Association of Realtors showed that, while existing home sales were up, they were lower than expectations and in fact, with a 3.1% fall in 2014, it was the first time in four years that there was a year-over-year drop in home sales.

There was a bit more unfortunate news in the report as well, coming from Lawrence Yun, the NAR’s chief economist. He said that “Housing costs, both rents and home prices, continue to outpace wages and are burdensome for potential buyers trying to save for a down payment while looking for available homes in their price range.”

In other words, the cost of renting as well as the cost of a new home are both beyond the means of the average American. In fact, in 2014, fewer than 30% of existing home sales were first time buyers. One of the reasons is that prices for many consumer goods keep rising but wages aren’t. “Right now a lot of young adults are still living with their parents,” says Jed Kolko, Chief Economics at Trulia, adding that “When they move out, they will rent first before they buy.”

New rates put in place by the FHA have reduced insurance premiums by half a percentage point, something that should save $900 a year for FHA borrowers. The mandatory annual mortgage insurance rate for people who take out a 30 year mortgage and put down less than 5% has dropped from 1.35% to .85%. For those who put down 5% or more on their FHA insured loan, they’ll get a rate of .80% instead of the former 1.30%.

Joining the FHA are Fannie Mae and Freddie Mac, who both announce that new guidelines would be adopted for down payments, including offering qualified buyers the opportunity to get a mortgage loan with a 3% down payment.

The question remains however whether these programs are going to be enough to really give the housing market a kick in the pants. Kolko says that “The housing market isn’t quite yet back to normal,” adding that “Sales prices are getting closer to normal, but there are some parts of the housing recovery but still have a ways to go.” He was quick to note that, while housing is definitely important to the overall economy of the United States, as of yet it wasn’t doing its part to give back to our overall economic growth.

In other words America, get out there and buy a home if you love your country (or something along those lines).

Is it possible to invest in too many mutual funds?

One of the hallmarks of investing is diversification.  Having a portfolio that’s sufficiently diversified means having a wide mix of different assets so that, if some are not doing well, the ones that are will support it, This basically means spreading your money around in different assets and investments so that, should one of them fail, the others will be there to protect your wealth.

On the other hand, some consumers and investors actually spread their money a bit too much, and end up with a portfolio that, rather than being a coherent whole, is a jumbled mess.

The reason that diversification works so well is that, in the long run, it gives your portfolio the ability to generate much higher return with a much lower risk. That being said, there’s no need to get extremely fancy with your portfolio’s assets because it’s quite easy to cover all of the major sectors of the stock market and bond market with only 2 or 3 ETF’s or broad index funds.

For example, you could get a total stock market index fund that covers the US, or do the same thing but make it international stocks. You can even get a target date retirement fund and completely diversify your portfolio in one fell swoop.

That’s not to say that adding some funds, ETF’s, a real estate commodity or even some Treasury Inflation Protected Securities (TIPS) is a bad idea, especially if you want to protect your portfolio from inflation. If you’d like to protect yourself against rising interest rates you could also get a short-term bond fund or, for a little bit of tax-free income, a municipal bond fund.

Want income that’s more assured than what Social Security can provide? Throw an immediate annuity into your portfolio and you’ll be all set.

The point being is simply this; once you have a nicely diversified portfolio, filled with a smattering of asset classes, there’s really no sense to keep piling on more. The first thing it does is make managing your portfolio a lot more difficult and, if you need to rebalance it, a big hassle. Depending on the type of investments that you choose you might also find that your fees go up sharply, bringing down the performance of any assets you have.

If you’re not sure about the health of your portfolio, you can always get MorningStar’s Portfolio Manager. Once you put in the names and/or ticker symbols of all of the funds that you own, you’ll get a great overall view of your portfolio and the different asset classes that you have. You’ll also see what type of expenses you’re paying and possibly where some of your funds might be overlapping.

The best thing is that, when you’re done, you’ll have a much better idea of whether your portfolio is as diversified as it needs to be and also if it falls in place with the risk tolerance that you have. If it does, there’s really no need to do more.

New to Investing? Here are some of the Basics you Need to Know

Today’s blog is for anyone who is new to investing, and will go into some of the most basic terms and tips. The old adage about every journey beginning with a first step begins, if you’re a new investor, right now. Enjoy.

First, when it comes to stocks, over the long haul they have historically outperformed almost every other type of investment. In fact they outperformed practically every other asset class with 10% returns, which is nearly double the next best-performing asset class, long-term U.S. Treasury bonds, at 5%.

However, in the short term, stocks can be very risky. Just ask anyone who was around on October 19, 1987, when the stock market lost 22.6% in one day. In 2009 they lost a heart attack inducing 37%!  In other words, stocks are something that you purchase for the long term and hold onto for many years.

When it comes to risk, the higher the risk an investment has, the more it will return (generally speaking). Stocks have a higher risk than bonds, for example, and tend to return more than bonds as well. Of course, as we talked about in the last paragraph, occasionally those risky stocks end up collapsing and you lose everything. That’s why financial advisors always tell their customers to diversify their portfolios.

Speaking of the long term, when it comes to stock prices, the single most important factor is earnings. If you focus on what stock prices do every day you might just drive yourself crazy because they fluctuate all the time.

When it comes to bonds, rising interest rates have a very negative effect on them. The reason is simply because bond buyers don’t want to pay as much for an existing bond that has, for example, a fixed interest rate of 5%, because the fixed interest rate on a new bond, since rates have gone up, will pay more.

When it comes to a “sure thing”, the only asset that qualifies are U.S. Treasury bonds. The American economy has historically been very strong and, when need be, the government always has the ability to print more money. Add that to the fact that the US government is very unlikely to default on its bonds, and you have what is as close to a sure thing as an investor could possibly get.

We mentioned a diversified portfolio above and, in almost every respect, it’s better to have more diversification than less. While it’s true that a diversified portfolio more than likely will not outperform the market by a very big margin, it will definitely protect your assets much better.

Finally, if you have the choice between mutual funds and actively managed funds, you should probably choose the former because they almost always outperform the latter. In fact, it’s a rare actively managed fund that can consistently outperform the market enough to cover their higher expenses.

Still Drowning in Debt From the Holidays?

Are you the type of couple of starts arguing over holiday spending even before the tree goes up and don’t stop until sometime around the end of March (or maybe longer) when that last credit card payment is finally made?  If you are, then today’s blog is going to show you a couple of ways that you can finally dig out from under that debt without killing each other (or making the other cry). Enjoy.

The first is to simply stop blaming each other and accept responsibility for your debt together. No matter which one of you actually swiped the credit card, the blame falls on both of you for either not discussing your holiday budget or putting the responsibility for purchasing all the holiday gifts on the other’s shoulders. The fact is, that debt isn’t going away and yelling or arguing about it isn’t going to make it go away either. So stop arguing and instead start figuring out what to do to pay it off as quickly as possible. (And make a note to discuss holiday spending in more depth this year.)

Next is to figure out exactly what you can do to pay off that debt and make a plan to do it. One thing you can do, which we mentioned in a recent blog, is get a Chase Slate credit card and transfer all of your debt onto it because, with a 0% interest rate for 15 months and no transfer fee in the first 60 days, it will help you to pay a lot less in interest fees and give you a little bit more time (if you truly need it) to pay off those debts. Just make sure that you get them all paid off before the 15 month period ends.

Another way to pay off that debt is to cut expenses independently and use the extra money to pay it down. What we mean is that, rather than trying to put $200 or $300 aside from the family budget every month, each of you take half of that out of your own personal expenses, in any way that you wish, so that you don’t feel like you’re being bullied into cutting back on things that you want most.

Finally, you can both agree to pick up extra work wherever possible and use that extra money to pay down the debt more quickly. In fact, some couples have made a tradition of working a little bit more just before the holidays start in order to have the extra money they need to purchase gifts for loved ones and friends.

The point being is to work together, rather than against each other, to solve your holiday debt dilemma. You never know, if you do it right you might even end up with a stronger, happier relationship.

Looking for a Store Credit Card? Don’t Look Here

Store credit cards can sometimes seem like the bargain of the month, especially when you’re standing at the cash register, ready to check out, and the pretty cashier tells you that, if you “sign-up today”, you’ll get an extra 10, 15 or 20% off of your total purchase.

While that discount certainly will lower your cost at the register, the fact is that if, you don’t pay it off directly at the end of the month, there’s a good chance you’re going to pay through the nose for those purchases because most credit cards that you get from retail outlets have APR interest rates that are insane.

According to credit card comparison website, in a survey that they recently performed including 61 major retail credit cards, those cards are coming with increasingly high APR rates. In fact, they averaged 23.23% as opposed to a 15.03% for all credit cards in general, which is up over 21% since 2010.

If that doesn’t alarm you, maybe these numbers will; if a consumer spends $1000 on a retail store credit card and only makes the minimum payments, it would take them six years to pay off that $1000 and, by the end of that six-year period, they will have paid $1840 for that item, an 84% markup!

A number of things have brought about this increase in retail credit card interest rates, including the Credit Card Act of 2009,  which put into effect much stricter rules on the fees that retail credit cards can charge their consumers. The industry immediately began looking for ways to make back some of the money that they lost, and even more money that they lost during the recession. Analysts also believe that, as the Federal Reserve rates continue to rise, retail credit card rates will rise with them.

Charles Tran, the founder of, a credit card comparison website, says that “a good retail credit card is hard to find,” adding that “many store credit cards are skimpy on the benefits and loaded with high interest rates.”

Now, to be honest, some retail credit cards do have some benefits to consumers who shop at their store often. Perks like discounts, rewards and special sales for cardholders, and introductory interest rate of 0%, make them very appealing.

The catch however is when you don’t pay your retail credit bill in full at the end of every month or if you happen to miss a payment. As noted in the example above, the interest rates you’ll pay on your typical retail credit card are phenomenally high and, if you miss a payment, you can expect severe penalties.

According to, the 5 retail credit cards with the worst APRs are, in alphabetical order;

  1. My Best Buy Preferred. Between 25.24 and 27.99%, depending on your particular credit score
  2. My Best Buy. The same as #1
  3. Office Depot personal credit. 27.99%
  4. Staples Personal Account. 27.99%
  5. Zales. 28.99%

Unless you’re a consumer pays off your retail credit card balance in full every month, a retail credit card is simply a bad idea. Unless you shop at the store very often and get a lot of different perks and discounts, their interest rates are so high that it makes any discount you might get negligible. Also, even if you do pay your balance in full and on time every month, it might make more sense to use a cash back card instead.

How to Set Your Financial Goals

If you’re wondering exactly how you’re going to finally purchase a home someday, or retire comfortably, and you’re worried that you might not ever be able to do it, it’s probably time for you to set some financial goals.

Trying to figure out how to handle your personal finances can be a bit stress inducing, no question, but the fact is that ignoring your personal finances is about as risky a thing as you can do these days, especially when the economy simply isn’t what it used to be and the job market as well. Setting goals to meet and, if possible, exceed your financial needs is one of the most important tasks that you will need to accomplish as an adult, and so below we’ve put together a number of tips and bits of advice on how to start setting, and achieving, those goals. Enjoy.

First, you simply have to be realistic as well as prioritize your goals. Yes, “setting financial goals” is on your “to do” list but, seriously, you really should be setting some time aside at least once a month, if not once a week, to not only plan but manage those goals. Simply put, if it’s on your calendar or a reminder that you see every day, there’s less chance that you’ll forget about it and instead prioritize it over any other activities or tasks you might have.

Of course taking the time to manage your financial goals, while all good and well, doesn’t do anything unless you actually set some goals and reach them. You should definitely start small with goals that are realistic and “actionable”, which means that you can take action on making them happen. Setting goals that you can achieve using your current budget will obviously help you to reach those goals, and meeting them will not only help you reach future financial successes like purchasing a house and retiring comfortably, but give you a real feeling of accomplishment along the way they can help you to achieve bigger and better financial goals as well.

Once you’ve gotten started the next thing to do is simply to track your progress, something that might seem a bit difficult but, in the end, can make a huge difference in reaching your goals and achieving the lifestyle that you want. Frankly, the difference that tracking makes can be huge and help you to retire comfortably rather than having to work in a low-paying, thankless job as a senior citizen.

That means setting up a budget and tracking what you spend, what you save and your progress towards any goals that you have. If this means putting aside $500,000 in a retirement account, saving $25,000 to put down on a house or simply saving enough money to pay cash for this year’s vacation, tracking those goals is the best way to meet them. There are many different budget tracking programs you can find online, and budget tracking apps that you can use on your smartphone.

Lastly, realize that you might need some financial help and advice along the way and don’t be too full of pride to ask for it. First, there are a plethora of online tools these days that can help you to not only set up but manage your budget and set savings goals for yourself. Monitoring your credit is an excellent idea as well in order to improve your credit habits and make sure that you don’t go too far into debt. Also, if you have high credit you’re going to get lower interest rates when you apply for a mortgage or any other type of loan, something that can help you save quite a bit of money over the lifetime of that loan.

Asking a professional financial advisor for help is a good idea as well, once you put aside a substantial amount of money. In fact, even before you have a substantial amount of money you should probably ask for help so that you know exactly how to get there.

In closing let us give you one simple bit of advice; the best way to accomplish your long-term goals is to accomplish short-term goals along the way.

New IRS scam targeting the elderly

Elderly consumers around the country are being targeted by scammers and, unfortunately, the problem keeps getting worse. A recent news story out of Austin Texas about an elderly woman who was scammed out of $2500 underlines the growing problem.

The IRS is fully aware of the problem and, since it first issued a warning to consumers back in April 2014, has received more than 20,000 phone calls from around the country.

The scam involves callers, who have no affiliation with collection agencies, the IRS or other authorities, calling consumers to tell them that if they don’t pay their back taxes immediately they will be arrested. If they’re successful in convincing the consumer of their lies, they then request that the consumer go out and purchase preloaded debit cards in order to pay their taxes, insisting that this is the only way that they can pay and avoid having the police come out to their home.

In some cases the caller has threatened deportation to legal immigrants as well, something that inspires enough fear to be successful in many cases.

It’s been estimated that victims of the scam have paid up to the tune of over $1 million to these fraudulent “IRS agents”, according to the Treasury Inspector General for Tax Administration. In many cases the calls even show on the phone’s caller ID as coming from the IRS, and the callers oftentimes have the last four digits of their victims Social Security number as well.

In many cases, when victims don’t answer their phone the scammers leave angry phone messages that warn the victim about their impending arrest because of their failure to pay. When authorities have called back on the numbers left by the scammers, the usual response that they get is no response at all.

If you’ve had trouble with scammers trying to pull a scam on you as well, or you have elderly people in your family that might be vulnerable, here are a number of things you can do to protect them and make sure that they don’t unwittingly pay out to these thieves.

First, if you or a family member aren’t sure whether or not you owe money to the IRS, call them directly at 800-829-1040 to find out. Explain what’s happening and IRS worker will assist you with determining whether or not you owe money and, if you do, what payment options are available.

You should also report what happened to the Treasury Inspector General for Tax Administration. The number to call is 800-366-4484. The more that they know about this IRS scam, the better. You can also file a complaint with the FTC on their website,

Finally, keep in mind that if you actually do owe the IRS money in back taxes, the first thing they will do is let you know about it through the US mail. Also, the IRS will never ask you to pay for your tax debt using prepaid debit cards, wire transfers or anything of the sort. If someone is trying to convince you of this on the phone, it’s almost guaranteed that they are scammers trying to steal your money, and using fear of the IRS to do it.

Getting ready to Grill? Here are some Tips to help you Save Money

Another Fourth of July has passed us by, heralding the start of the summer season and the “grilling season” as well. This and every weekend millions of Americans will be grilling hamburgers, veggies, steak, fish and even veggie burgers in what, unsurprisingly, is the most popular day for grilling in the country. In fact, according to a recent study by the Hearth, Patio & Barbecue Association (yes, that’s an actual association) nearly 8 out of 10 homes in the United States have a grill or smoker and 6 out of 10 use that grill or smoker all year ‘round.

For tips on the kind of grill or smoker to purchase, as well as grilling accessories, keep reading below before you head out to your local home and garden center to make your purchase.

First, although they are very much on the “pricey side”, the line of Argentinian inspired grills from Grillworks is one of the absolute best in the industry. Many people use the term “amazing” when describing them, which is quite a word to use for a barbecue grill you have to admit.

Grillworks has a signature cranking wheel that is made of cast aluminum and can double as a rotisserie for chicken and other meats. Fat and juices that drip off of anything being cooked fall into the V-shaped grooves of their signature barbecues, collecting in a small trough underneath so that they can be utilized to make sauces and also for extra basting.

Now, quite frankly, if you think that the line of barbecues from Grillworks is expensive, than the K1000HS Hybrid Fire Grill from Kalamazoo, priced at just under $21,200, is going to probably make you faint. Once you regain your composure, you’ll be glad to know that this revolutionary barbecue will let you cook with either gas, charcoal or wood, it’s easy to clean, it can reach 1000°F and, in the words of many barbecue aficionados, “it’s built like a tank”.

Of course the average homeowner simply doesn’t have $22,000 sitting around to spend on a barbecue and, even if they did, it’s probably not the best financial choice. Frankly, eating barbecued meat to often isn’t exactly recommended by health experts anyway.

With that in mind there are a number of excellent grills made by the classic, Weber. They’re simple, durable and allow you to cook with either direct or indirect heat. Priced between $100 and $400, they are much more affordable for the average homeowner and yet can still be utilized to  grill perfect hamburgers, smoke sausages or roast vegetables.

As for the tools needed, the average grill master must certainly have a good pair of tongs, an instant-read thermometer and a heavy duty set of gloves to protect themselves from the heat. Also, since cooking out at night is definitely a favorite thing to do on barbecue owners, a headlamp to let you see the char on that steak is probably a good idea too.

Once you’ve gotten those tools, and you’ve purchased your barbecue, it’s time to get out there and grill up something fantastic!

Calling and harassing family members the newest debt scam

There’s a new scam being perpetrated on the public and fraud fighting organizations across the country are beginning to report on it with alarming frequency. It involves fake debt collectors who call and harass family members and friends of their “target”. What they rely on is fear of course, including social pressure and fear that a person will lose their job. Unfortunately their scam works quite well and continues to grow.

The biggest reason that they’re successful is that the average person doesn’t know what their debt collection rights actually are. One of the most important rights states that debt collectors are not legally allowed to give any details of their debt collection activities to someone other than the actual debtor him or herself.

Simply put, anyone who calls you and discloses information about a friend, family member or anyone else who isn’t you is using illegal practices to pressure you, even if they are actually a legitimate debt collector. Not only is this a scam but it’s also a violation of that person’s rights, and yours.

The losses aren’t small either, to be sure. Between October of last year and June of this year, victims of this scam lost an average of just over $1700.

In many cases what happens is that a scammer somehow acquires a consumer’s home and work information, oftentimes from bogus payday loan applications. Even worse is that if someone has successfully been defrauded, their information is then sold to other aspiring criminals who are looking for an “easy mark”. These victims are then subjected to repeated fraud attempts because they’ve been put on a “sucker list”.

If you or anyone you know has been a victim of collection fraud of this kind, or suspect that someone has tried to defraud you in this way, you should alert everyone in your circle of friends, your family and your coworkers. That way if they receive any debt collection calls they will know immediately that scammers are trying to put one over on them.

The most important thing that you need to do when you get any type of phone call from a collection agency, or someone purporting to be a collection agent, is to confirm the legitimacy of their collections account before paying any money whatsoever. Also, you should never provide any type of payment information to any debt collector, real or fake, over the phone.

The good people at also warn that applying for so-called payday loans online is extremely risky, because you may expose personal information about yourself to fraudsters. Not only that but payday loans usually carry much higher fees and rates than the same type of loans that are acquired traditionally.

Building Wealth on a Small Salary – Part Three

Hello and welcome back for Part 3 of our 3 Part blog series on building wealth on a small salary. If you’re ready to get some more excellent advice on how to build wealth, even if you’re not making a huge amount of income, get comfortable and let’s get going! Enjoy.

Staying out of debt, or paying down your debt as quickly as possible, should be one of the most important goals in your financial life. “Bad debt”, like credit card debt that charges very high interest rates, should be at the very top of your priority list to pay off because it will keep you from making progress on your other financial goals.

While paying down debt is important, it’s also important to have an emergency fund set up so that, if something happens, you don’t go further into debt to pay it. Car repairs are great example. No one really plans for a major car repair expense and, if you don’t have money set aside to pay for it, it can ruin any financial planning that you’ve made.

Experts believe that, when you’re paying down debt, it’s best to use 50% of the money that you have to pay down your debt on an emergency fund instead. So, for example, if you have $400 a month to pay down your debt, you should use $200 to pay that debt off and the other $200 should be put into your emergency fund until it’s equal to six months’ worth of pay. (12 months is actually better.)

Once your debt is paid off you should then keep your credit cards open but use them extremely sparingly and pay off any charges immediately when the bill comes due. This will help to keep your credit score high and keep those accounts from being closed for non-use by the card issuer,  something that can actually lower your credit score.

Next is, however possible, to increase your earnings. There are basically two ways to increase your net worth: spending less and saving more is the first, and the second is to earn more money.

One of the best ways to do this is to find part-time work. This second “income stream” can be used to help you pay off your debt, put more money into a retirement account or, if those goals are being met, can be used for fun things like vacation, new clothes and so forth. (But only if your other financial goals are being met.)

This can also include looking for investment opportunities that might come your way. Owning a second home that you rent out, if it’s financially feasible, is a great way to increase your financial streams and build equity at the same time. Selling things on eBay that you buy at garage sales, finding part-time work online in your particular industry and many other opportunities exist to increase your income, especially if you have some spare time during your day to do it.

Our final bit of advice for building wealth on a small income is to consider consulting a financial expert. While you’re already doing yourself a big favor by reading these blogs and doing research on your own, the fact is that sitting down with a financial expert can be extremely helpful in giving you some perspective and helping you to see the “big picture”.

Simply put, when it comes to finances there are a lot of emotions involved, and having a little bit of professional accountability, and an outside opinion, will help you to look at your finances much more objectively.

We hope you’ve enjoyed this 3 Part series and that the advice and information was helpful. We also hope that you now realize that it is possible to build wealth even if you aren’t earning income like a Rockefeller if you just put your mind to doing it, create good financial habits and stick to your plan consistently.

Of course if you have questions you can always contact us via email and we’ll get back to you ASAP with advice and answers.