The John Tesh Blog

10 tips for a fresh financial start

The past is past.  Hit rough financial times?  It's understandable- you may be feeling pretty crummy right now.  But keeping yourself locked inside blame and despair- either directed at yourself, or possibly, your partner- is not going to be your way back to financial order in your life.  And with Thanksgiving one week away, how about a fresh look at your situation- dare I say there may be something for which you can be grateful? It's time to move on, and take some action, with a plan outlined by "The Money Lady", Suze Orman, writing for Oprah.com. 

1. No Blame, No Shame

The foundation of a financial fresh start actually has nothing to do with money or specific financial dos and don'ts. The first, and most difficult, step is to absolve yourself and your spouse or partner of any guilt. Make a promise: agree that the past is past, and you are going to focus on the future. Whatever mistakes you feel you have made with money, whatever moves you wish you had or hadn't made, are irrelevant. You are free to move forward only when you remove the emotional shackles of regret. This cleansing step is especially important for couples. You are in this together, so no finger-pointing or arguing about any past decisions. Deal? Deep breath, everyone. Exhale. Now you are ready to put your financial house in order.

2. Take a Snapshot of Your Finances

It's impossible to map out a route to your destination if you don't know where you're starting from. So let's take a "before" picture of your finances. If you've read Suze's advice, or seen her on TV, you've heard her say this many times- open every single financial statement—bank, credit card, mortgage, 401(k), brokerage account—and take a look. Only when you have everything in front of you can you set priorities about what to do next. If you're vexed by your checking account (you swear you should have more money; you can never figure out why your checks bounce), start fresh by opening a new one. Leave enough in your existing account to cover any checks that haven't yet been processed, then transfer the rest to the new account and close the old one. Next, sign up for online banking. It should be free, and as long as you use your home computer, it's also safe. The advantage of online banking is that you can pay bills very fast, and your account is automatically credited or debited for each deposit and payment, making it easier to stay on track.

3. Adopt a Foolproof Credit Card Strategy

Make this the year you tackle that credit card debt once and for all. Doing so will make you and your family stronger and happier—forever. What happens to the stock market and the housing market is completely beyond your control. Credit card debt, however, is completely within your control. Every time you pay off a card with a 15 percent interest rate, you get a 15 percent return on your money.

See if you can qualify for a balance transfer card that offers a low or 0 percent introductory interest rate for the first six to 12 months. If you can get a good deal, move your high-rate debt to that new card. Do not use the card for any new charges, and push yourself hard to pay off the balance as soon as possible. If you don't qualify, no worries. Always pay the minimum due on each card, on time, every month. Whenever possible, send in some extra money on the card that charges the highest interest rate. Your goal is to get the costliest balance paid off first. When the first card is cleared, direct your payments to the card with the next highest interest rate. Keep doing this until you've zeroed out the balances on all your cards.

4. Try Harder to Save

When Suze suggests that people send in more money to pay off credit card balances or increase the amount they save each month for retirement, she says she often hears the same sad story: "Oh, Suze, I would if I could, but I can't because there's no extra money left at the end of the month." And here comes Suze with another challenge to your thinking: that there's no money left because you haven't evaluated your spending habits. And here's where Suze implores folks who have "nothing left" to dig deep and be willing to change some habits; to set goals and use those goals as the motivation for lifestyle changes that will allow you to save and invest. Take a clear-eyed look at your credit card statements for the past six months. Are you absolutely certain that there isn't at least $50 or $100 showing up that you could have done without? Suze calls this "hidden money," and here's how you can find it.

Try to reduce every one of your monthly utility bills by 10 percent. Change your calling plan or get rid of the landline account unless you absolutely need it. Dial back the platinum cable package to silver. Trim your utilities by spending one afternoon increasing your home's energy efficiency: attach a draft-blocking guard to the bottom of any external doors; add caulk or weatherproofing material around drafty windows; put low-flow aerators on your showerheads and faucets; and replace burned-out bulbs with compact fluorescent energy savers (they're pricier than conventional bulbs but last much longer, saving you money over the long term).

Cars are another great place to save. Plan on driving yours for at least seven to ten years (regular tune-ups will help keep it running longer). Consider buying a used or certified pre-owned car rather than a brand new one. If you get a three-year loan, you have plenty of life left in your car, and money that once went to car payments is freed up for other financial needs. And avoid leasing. Since you don't own the car, you never have a time when you are driving your car free and clear. Also, raising your deductible or designating one car to be used for low-mileage driving (under 15,000 miles a year) can reduce your insurance premiums by 15 percent or more.

5. Separate Savings from Investments

Now it's time to move on to how you put your money to work for you and your family. There is a vital difference between money you need to save and money you need to invest, Suze adamantly believes, yet sees that it's a distinction many people don't grasp. Money you know you need or want to spend in the next few years is savings. Money you keep handy for an emergency belongs in savings. Money you hope to use soon for a down payment on a house belongs in savings. And all savings belong in a low-risk bank savings account or money market account. The goal is to keep your money safe so that when you go to use it, it will be there.

Money you won't need to use for at least seven years is money for investing. The goal here is to have your account grow over time to help you finance a distant goal, such as building a retirement fund. Since your goal is in the future, money for investing belongs in stocks. Later in the article, she explains, the potential inflation-beating returns that only stocks can deliver make them the right choice for a successful long-term investment strategy.

6. Know Your Credit Score

The big takeaway from the meltdown of 2008 is that banks are going to be a lot less eager to lend money to you. You will need a sparkling financial personality: a FICO score above 700, solid verifiable income, a manageable amount of existing debt—to get good offers for credit cards, auto loans, mortgages, and refinancings. And you can expect lenders to continue to tighten the screws on your existing credit lines; all the credit they loved to give you before 2008 now makes them nervous. You can pay to get your credit score by going to MyFico.com. If your score is below 700, two of the best ways to improve it are to pay your bills on time and push yourself to reduce your credit card balances.

7. Evaluate Your Retirement Plan

If your 401(k) and Roth IRA lost value in 2008, that's a good sign. It means you were invested in stocks, and that's exactly where you should be invested—assuming your retirement is at least a decade away. Only stocks offer the chance of high returns that outpace the annual 3 to 4 percent inflation rate. In your 20s and 30s, aim to keep 80 percent in stocks and just 20 percent in bonds; you have time to ride out stock swings. As you age, slowly ramp up the percentage in bonds; in your 50s and 60s, consider keeping 40 percent or more in bonds to help boost your portfolio when stocks are slumping. Suze believes that a big mistake you can make is to stop investing in your retirement accounts or to shift money from stocks into "safe" money market accounts.

Instead of worrying that your account is down, remember that your money buys more shares of your retirement funds. The more shares you own now, the more you will make when the market recovers. Buy and hold is the way to go. 

Here's some perspective: The 2008 market slide is the tenth bear market (commonly accepted as a decline of at least 20 percent) since 1950. If you'd put your money in stocks in 1950 and stayed invested through the ups and downs, your average annual return through 2007 would have been more than 10 percent. That's not to say you can count on an average of 10 percent over the next 50 or so years (7 to 8 percent is probably more realistic), but it illustrates how keeping focused on the long term pays off.

8. Diversify Your Assests

Try to reduce any company stock you own in your 401(k) to less than 10 percent of your total retirement assets. Just ask employees of Enron, Bear Stearns, Merrill Lynch, and Washington Mutual how smart it was to make big bets on their own stock. Mutual funds and exchange-traded funds (ETFs) are ideal for retirement savings because they own dozens of stocks in their portfolios.

If you're flummoxed by all the investing options in your 401(k), look for a "target retirement" or "life cycle" fund. Then pick the specific portfolio that dovetails with your expected retirement age and you're all set; you will be invested in a mix of stock and bond funds appropriate for your age. You can also invest your Roth IRA in these types of funds; Fidelity, T. Rowe Price, and Vanguard all offer these one-and-done options.

9. Don't Obsess Over Your Home's Value

If you own a house and can afford the mortgage, consider yourself lucky. Try to love your home for what it is: a haven for you and your family, not a path to riches. Unless you bought at the height of the market in a super-popular region that has gone Ice Age–cold, you're going to be fine. And even if you did buy at the peak, if you plan on staying put for five to 10 years, the real estate market will recover with time. But understand: A home is not an investment that will fund your retirement or vacations. The 10 or 20 percent annual gains during the housing boom were temporary insanity. Buy a house you can really afford, and over time it will rise in value. But its main value is as a home. Period.

If you got caught buying into the housing bubble and are now in mortgage trouble, talk to the lender about your options. Don't raid your retirement accounts to keep up with the payments. What happens when the retirement accounts run dry? You still won't be able to cover the mortgage, and you will have lost all your future security.

10. Protect Your Family—and Your Nest Egg

If there is anyone dependent on your income—parents, children, relatives—you need life insurance. For the vast majority of us, term life insurance is all we need, because it protects you for the "term" of the policy (from five to 30 years) and is incredibly inexpensive. As always, it's important to buy a policy from a firm with a strong financial rating, but even if an insurance company runs into trouble, your state insurance department has funds set aside to help protect you. Set as another goal for yourself to get your estate papers in order. You should have a living revocable trust (this document spells out how your assets should be distributed) with an incapacity clause, as well as a will. Also, have an "advance medical directive" in place that tells your doctors the type of care you want if you become unable to speak for yourself.

Finally, every family should have an emergency savings account that can cover at least eight months of living expenses, and even if you aren't bringing in the majority of income, it's important to have your own personal savings account that could support you for at least three months, as a just in case. The best place for your savings is an FDIC-insured bank (or a credit union backed by the National Credit Union Share Insurance Fund). If you keep less than $100,000 at an FDIC bank, no matter what happens to the bank, the Federal Deposit Insurance Corporation (part of the U.S. government) will make sure you get every penny back. Online banks that are FDIC insured are just as safe as the bank downtown. (Please note: The emergency federal legislation passed last October increased the FDIC insurance limit to $250,000 through December 2009. But to be extra safe, keep no more than $100,000 in any single bank.)

Everyone one of us can be in control of his or her own financial destiny- no matter what the future holds. What a thing of value- and some of the best goals you could set for yourself to start before the end of this year, and conquer in the next!

Hope your weekend is grand!

John

Email John:  johnsblog@teshmedia.com

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10 retirement mistakes you don't want to make.

A few days ago, I touched on the challenges of interviewing for those over 50, and some newer perspectives to make that meeting a success. But being in the over 50 group, how about your retirement plans? These are tough times for retirees and for those planning for retirement. Nest eggs have been demolished by the economic meltdown. Job cuts have forced many people into early retirement with insufficient funds to sustain them in their golden years. While there’s not much that can be done about the past, anyone can avoid making mistakes that will make a bad situation worse.

WalletPop brings in retirement expert Dan Solin, author of the new book The Smartest Retirement Book You'll Ever Read, to take a look at the ten biggest money mistakes a retiree can make.

Overconfidence in Your Investing Skill

Investors generally, and men in particular, like to think that they can handle their investment decisions. But guess what? Studies show that the average equity investor who handles his own investments has a much smaller return than the S&P 500, even less than the rate of inflation. If you rely on your own investing skill to fund your retirement, it may be time to worry.

Using a Market-Beating Broker

We've all heard about the so-called financial experts who say they can pick stocks or mutual funds that beat the market. If so, what accounts for their dismal investor performance? The truth is, no one can be certain what tomorrow may bring. A diversified portfolio with appropriate asset allocation is the best bet -- and that goes double for retirees.

Fleeing to Safety

Fleeing to safety is a natural instinct when things look bad. And it’s true that keeping all your investments in Treasury bills, bonds, or even under the mattress may preserve your assets. But there is a hidden cost -- inflation. Retirees have to not only protect themselves from the risks of the market, but protect the value of their assets as well.

Believing All Bonds Are Safe

Stocks are the risky investment choice while bonds are safer, right? Well, no, as many investors have learned the hard way. As with any investment, the higher the offered return, the more risk you assume. Even the tried-and-true municipal bonds can be shaky as the recession pushes towns and communities toward the breaking point.

Being Tempted by ETFs

Both exchange-traded funds and low-cost index funds can make attractive investment options. But guess which option is often less expensive? Which one requires a brokerage account with commissions that reduce your return? Which one automatically reinvests dividends? And which one encourages you to pick certain sectors -- the opposite of diversifying your portfolio?

Ignoring Immediate Annuities

While retirees may want to avoid variable annuities and equity-indexed annuities as poor investments, the same can not be said of immediate annuities. Annuitizing a portfolio can greatly reduce the chances that an investor will run out of money in retirement. Some fixed annuities even include inflation protection.

Retiring Too Early

Remaining in the workforce can dramatically improve a retiree’s chances of eventually affording a comfortable retirement. It increases Social Security payments and the value of 401(k)s. It also delays depletion of retirement funds. So, working for another year or three can make a big difference, especially in these days of recession-depleted nest eggs.

Not Having a Current Will

We've talked about this before, my friend, and it's still as important as it was, even if no one wants to confront his own mortality and the many issues it can bring. But those who don't create a will can cost their heirs a bundle in avoidable estate taxes. And who wants government officials making critical decisions about who inherits their property and their portfolio? Better to designate a spouse, a trusted friend, or professional fiduciary for that.

Remarrying Without a Prenup

Second or even third marriages can bring with them a whole host of questions about who has rights and responsibilities for what. What better way to establish clear financial obligations than with a prenuptial agreement? But retirees shouldn't try to draft a prenup on their own; only experienced legal counsel can ensure that the prenup is enforceable.

Taking Social Security Too Soon

You are eligible to start receiving your Social Security benefits once you've turned 62. So why wait? The money is just waiting there. One reason: wives often outlive their husbands and become dependent on Social Security benefits to live. These benefits would have been higher had the husbands put off receiving benefits until later. Not married? Your best solution could be to take the benefit earlier. Talk to a financial planning professional you can trust to know what's best for you.

It's not easy, and you may have felt nothing near hopeful in this last year or so, and whatever nest egg you had doesn't look so great... Stay positive, make some of the tough changes you may know deep down inside you need to make, and find a trusted advisor to help you understand where you are today- because tomorrow can be much better, and wouldn't you like this nest egg better?

John

Email John:  johnsblog@teshmedia.com

Check out the new John Tesh Social Network. You can connect with new friends, post your own blog, visit various forums, upload your favorite John Tesh music and share your photos.  To learn more about how to join, click here.

Your children may be stressed. How to help them be stress-free.

It's not exactly new news to us in this last year, or more, that adults are reporting sky-high levels of stress- even those who'd not felt high levels of anxiety previously. Home foreclosures, job losses (now the leading cause of the highest unemployment numbers we've seen in decades), health care benefits losses...this list can seem insurmountable sometimes! Our economic turndown has taken a huge toll on us- but on our children, too! Kids already have plenty to get stressed about: homework, cliques, sibling rivalry. And as news about the economy, natural disasters, and terrorism fills the airwaves and dinner-table conversations, it's almost impossible for children not to pick up on their parents' stress as well.

"I have kids tell me that they’re worried about the environment and the economy," says clinical child psychologist Mark L. Goldstein, Ph.D., an adjunct professor at the Chicago School of Professional Psychology. Children have a different reaction to stress than adults. They may lose concentration and get stomachaches and more frequent colds. A study done at the University of Rochester Medical Center found that children whose families are under stress experience more fevers. But MSN Kids' Health & Fitness suggests starting with yourself, and working your way down to fine some concrete ways to help them—and you—get a grip.

1. Troubleshoot your own stress

Eight out of 10 Americans say the economy is a significant source of stress in their lives, according to an American Psychological Association survey. Those fears can spread to our kids. "Children turn to parents in order to get a sense of what's going to happen," says Deborah Belle, director of the human-development doctoral program at Boston University. Taking a time out, whether it's a walk or a long hot bath, will calm you down and offer an example of a healthy reaction to stress. Put off difficult conversations with your spouse until after your kids have gone to bed.

2. Be firm about activity-overload

Kids are way overbooked these days. "I met with the family of an 11-year-old who was in a dozen different activities," says Dr. Goldstein. "She wasn't sleeping, her nails were bitten, and she was wetting her bed." When he recommended that she drop some of the activities, her parents protested that she loved them all. But parents have to make the decision of what's best. His rule of thumb: "One sport, one other activity, plus any religious education your child may be taking."

3. Bump bedtime up by half an hour

A 2006 National Sleep Foundation poll found that children hit the sheets about 30 minutes past their official bedtime. Plus, they may need much more sleep than you think, says Jodi Mindell, Ph.D., associate director of the sleep center at the Children's Hospital of Philadelphia. Preschoolers need 11 to 13 hours a night, 5- to 12-year-olds require 9 to 11 hours, and kids 13 and up need about 8 1/2 to 9 1/2 hours. If there's a TV in your child's room, yank it, says Dr. Mindell. "The light suppresses production of relaxing melatonin and makes them less sleepy."

4. Encourage kids to move more

Children in America are exercising less than ever before. This inactivity decreases production of the hormones that help regulate stress. If your children don't play team sports or run around outside with friends, institute family activities such as an after-dinner walk or a weekend bike ride.

And just think what a little more sleep for yourself, and a little more activity with your kids could do for your own stress level? Can we say LOWER??

John

Email John:  johnsblog@teshmedia.com

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What's the difference between getting further into debt, and living a life of wealth? Not as much as you might think.

Jean Chatzky is one woman who believes, even in the toughest economic times (as all of us are experiencing; some more than others) that anyone can prosper…if they possess key traits and abilities that will set them apart. She calls these traits, and her new book, The Difference, and describes how you can go from the person who lives paycheck to paycheck to the person who lives in comfort.

Do you have The Difference? And, if not—how can you get it? Jean shares the eight things that matter most to help you become financially free.

Happiness and Optimism

Some people believe money leads to happiness. Not true. Once you're living comfortably, more money doesn't buy more happiness. The reverse, however, is true: Happiness leads to money. And success. Likewise, so does optimism. Both empower you to solve problems, create new ideas, take long-range consequences into consideration and come back to try again if you miss the first time.

Resilience

People who have moved from a bad financial situation into comfort or wealth have resilience. They can overcome—on the job, in their personal lives, with their finances. They don't deny the bad things that happen, but they're able to turn their focus to things over which they have control with the belief that they have the ability to effect change. The good news is you don't have to be born with resilience—you can learn it by controlling the things you can control and letting go of the others.

Connectedness 

Ever heard of social capital? It's the asset created when relationships between people change in ways that lead to action, generally for good. It's an important component of The Difference, and the wealthy and financially comfortable not only have more of it than people living paycheck to paycheck, they know how to use it. They cast a wider net, socializing with neighbors, co-workers, people who can help them advance financially or in their careers. To get your share of social capital, you have to make time for people and put yourself forward as a leader.

Passion

This is a key element that moves people from a life of financial struggle to one of financial success. The wealthy, simply put, want it more than the rest of that. Some want it in the form of money, but most are quite passionate about the careers they choose to pursue. And, at a time where doing what you love may not seem possible, it's important to know you can learn to love what you're doing- right here, and right now.

Intuition

Over the years, your brain has scored up scads of patterns, information that tells you that if one thing happens, something else is likely to follow. We feel these signals in our gut—and we call them hunches. They are really our intuition, a sixth sense that is more developed in the wealthy than in anyone else. You can learn to bring yours forward by adopting strategies like giving your intuition a little room to breathe: Jean herself says she has the best moments of "enlightenment" when she's not searching for them.

Make savings your new, "got to" habit

The wealthy people in Chatzky's study certainly have the funds to be crazy spenders, but most aren't. Both wealthy and financially comfortable individuals say that saving more money has been an "absolutely essential" financial goal as an adult.

Invest in stocks

Jean did the research for The Difference when housing prices were cratering and the markets were falling out of the sky. Yet, one lesson emerged again and again: The wealthy understand the need to take risks in the market—in good times and in bad—in order to make their money work as hard as they do.

Gratitude

The Karma Kickback. The people who get rich—and stay rich—are not just grateful. They practice gratitude by giving back to their communities, to organizations they believe in and the people they care about. (Your place of worship may call it 'tithing.') Even if you are thinking of something you view as mundane—like your job—when you think about it as a gift, you focus on what life might be if you didn't have it.

Can you see The Difference in your life today? Tomorrow? As long as you see it, you'll live it.

John

Email John:  johnsblog@teshmedia.com

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Worried? Many of us are. Tired of it? You bet. Here's how to cope.

Money worries...you're sick of it! We all are, to whatever degree: whether it's the stress of not enough of your own money, a family member's troubles, or simply feeling the heartache of sympathy for so many in our country today struggling to make ends meet- it's hard, and there is a name for it: money anxiety disorder- the latest American epidemic (the acronym, conveniently, would be MAD.)

According to a survey in October by the American Psychological Association, 80 percent of us find the recent financial crisis a significant cause of stress—up from 66 percent last April—and women are bearing the brunt of the worry, reporting greater concern over job stability and health problems affecting their families, for example, than men are. "Money is a safety net, as in, 'I may not be able to count on people, but I can count on my cash,'" says the APA's public education coordinator for Pennsylvania, David Palmiter, PhD. "Now the thinking's gone to: 'There's nothing between me and the abyss.'"

You can find plenty of advice from financial experts on how to cope. But what about the pervasive sense of panic, which can take a serious toll on health, putting you at higher risk for a host of ailments from high blood pressure to heart disease. Science has shown that exercise and meditation are two of the most effective ways to reduce stress—but you probably already know that, and likely feel too pressured to try either. Oprah.com asked a few experts for other strategies you might not have considered.

Try hypnosis:

For years people have turned to hypnosis for help quitting smoking and losing weight, but the technique is also becoming popular among business types desperate to overcome financial stress, according to a November report in The Wall Street Journal. Generally, in hypnosis, a therapist uses verbal cues to put clients into a deeply relaxed state, where they become absorbed in their inner thoughts, then offers suggestions to shift an attitude so they can better tackle a problem. In this case, the suggestions might be "Money is energy that comes and goes" or "Your net worth doesn't equal your personal worth," to deflect the paralysis and insecurity that financial panic can cause. Ideally, clients learn the process on their own.

"Hypnosis is very similar to meditation," explains Dwight Damon, president of the National Guild of Hypnotists, who recommends trying a professional session before using the method on yourself. "While it won't make you richer, it will help you handle, and feel better about, the money you do have."

Treat yourself- NOW??

Yes! To lower financial stress, set a budget for each day and reward yourself, suggests Alvin Hall, a financial commentator on BBC TV and radio and author of You and Your Money: Mastering the Emotions Behind the Numbers. "Ask yourself: 'What is the one thing I can do that will give me the longest-lasting uplift for the least amount of money?'" During the economic downturn of 1987, Hall's treat was blackberry pie. "I'd think about it all day, and if I came in under my budget," he says, "I'd go order a slice. When I couldn't afford that, I'd visit the museum and look at Van Gogh paintings."

Become a manicurist for a friend.

Or exchange massages with your partner. According to Robert Sapolsky, PhD, professor of neurology and neurological sciences at Stanford University, who has studied wild baboons for 30 years, primates groom each other to reduce stress—and the effect seems to be more powerful for the one who is doing the primping.

Take up knitting...and you might come up with a blanket!

According to research at the Harvard-affiliated Benson-Henry Institute for Mind Body Medicine, the repetitive motion and focus of needlework can elicit what's known as the relaxation response—a calming meditation-like state that slows heart rate and causes blood pressure to drop. In addition, a study published in the Journal of the American Geriatrics Society suggests that knitting is associated with a lower risk of dementia for those 65 and older.

See a bigger picture, or that forest through the trees.

During the Great Depression, "stress took the form of personal shame," according to historian David M. Kennedy, Pulitzer Prize–winning author of Freedom from Fear: The American People in Depression and War, 1929–1945. His own father, he says, had "what we would call a nervous breakdown." Kennedy observes that a much healthier and more resilient attitude for our times is: "Taking some responsibility but seeing this downturn more as a systemic failure and not a personal one."

John

Email John:  johnsblog@teshmedia.com

Check out the new John Tesh Social Network. You can connect with new friends, post your own blog, visit various forums, upload your favorite John Tesh music and share your photos.  To learn more about how to join, click here.

Re-finance? Save money.

Mortgage rates have gone down again, and there are many folks interested, again, in re-financing their current rate. Are you one of them? Maybe you should be. I've got some quick tips here from WalletPop.com- a personal finance site that's helping consumers keep pretty up to date on what you can do to start saving some mortgage money!

For the past year, the mortgage market has taken aspiring homeowners for quite a ride filled with lots of ups, and plenty of downs. Foreclosures have been epidemic, and interest rates have skyrocketed. In recent months, the market looked like it was staging a comeback, thanks to a drop in mortgage rates and new legislation that helped borrowers refinance even when their homes had lost value.

But these much-needed financial breaks appeared temporary -- in mid-October, rates inched back above 5%, and mortgage applications plunged almost 14% over the previous week. Low interest rates help both buyers and owners hoping to finance or refinance. The 30-year fixed-rate loan inched up to 5.07% from 5.02% this week, which is still historically low.

Interest rates had been declining steadily since August, down to 4.92% on 30-year loans and 4.37% on 15-year loans, with fees averaging 0.7 percent. Such low rates enticed new homeowners to get in on the game, but the federal Making Home Affordable plan also helped money-losing homeowners get a slice of the action, too, like one homeowner in Md. whose house value plummeted over $140,000! This homeowner didn't refinance, but qualified for the program, saving about $400 monthly off the mortgage payment.

For those who meet the eligibility requirements of being current on their mortgage payments and owing less than 125 percent of their primary home's value, the legislation can mean saving thousands per year.

But today's low rates are already inching north and probably won't stay low for long, says David Wind, president of Guaranteed Home Mortgage Company, based in White Plains, N.Y. "We anticipate that the rates will stay attractive for the next three to six months," he says.

A few tips can help homebuyers and homeowners get the best deals.

Boost your credit. Before heading to a lender, examine your credit report, and then ask for help if it needs improvement. "If someone is interested in getting a loan or refinancing, they'll have to have a FICO score of 660 or better to be a good candidate," says Wind. "If their score is too low, they might want to see a credit-counseling service."

Be persistent. Meeting loan qualifications is only half the battle. Conquering the paperwork is the other. "I called two and three times a day to get my lender to process the paperwork," says Schreiber, the Maryland homeowner. "The pleasant persistence paid off. I'm actually using the savings on the refinance to pay off a second loan."

Mind the requirements. Those relying on the Making Home Affordable plan for refinancing help should note that eligible candidates must be refinancing their primary home, have a loan owned or guaranteed by Freddie Mac or Fannie Mae, and show evidence that they can reasonably make new mortgage payments.

Ready to go? Here are a few last tips about refinancing:

• Spend Less -- Refinance Your Mortgage
  If you are stretching to meet your monthly payments on your mortgage, you may need to consider refinancing options. If you can get a lower interest rate than you currently have, you'll be able to save substantially on your monthly payment. The key is to look down the road. Don't get yourself into an incredibly low interest 3 year ARM program unless you plan to sell your home or refinance again within that timeframe.
• Refinance -- Fixed or ARM?
  Refinancing is very popular nowadays, especially since interest rates have been low. There are also several different refinancing options you may explore. For instance, you can opt for a fixed rate or an adjustable rate mortgage. A fixed rate mortgage will usually be for a term of 15 or 30 years and the interest rate will stay the same for the duration of the loan. An adjustable rate mortgage (ARM) means that after a term (usually of 3-5 years), your interest rate can change (usually upwards).
• Home Improvements? Cash Out Refinancing!
  If you have equity built up in your home and you have an expanding family, you may want to improve your existing home. After all, with the way many home prices are going, you might not be able to afford to move back into your own neighborhood! If you decide to improve your home, you can easily refinance and pull out money to add a bathroom, a bedroom or upgrade your septic system. Banks and mortgage companies often offer special incentives for home improvement equity loans. In some cases they even have special loan programs for higher amounts.

Enjoy your home sweet-maybe a little less expensive-home! And have a great weekend!

John

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Think Winter's just for snow sports? Saying "I do" could be just the sport for you.

The thing is, once a couple has made promises to one another for a life made together, in the end, it really doesn't matter where, does it? Well, of course, it does, to some degree. Couples have visions of how they want to share their special day with friends and family. And warm weather months certainly hold a great deal of promise for sunshine, and colorful new blossoms of flowers. Guest attendance comes into play, also, making summer the peak season for weddings. But MSN Money lays out some different perks for couples who marry in the winter- namely huge savings.

Peak wedding season falls between May and October in most of the U.S., says Richard Markel, the president of the Association for Wedding Professionals International. During that time, most wedding vendors -- including caterers, photographers and limousine companies -- charge the most because their services are in demand. But in the winter, business comes to a standstill, especially in the northern regions hit with particularly harsh weather, and engaged couples have more room to negotiate for lower prices.

During the winter, the number of weddings throughout the country declines by 40% to 50% below that of peak season, Markel says. And of the roughly 2.2 million weddings that take place in the U.S. each year, only 5% occur in January, he says. That winter dip in demand means that couples marrying during the cooler months compete with fewer weddings for vendors.

Couples who are considering a January, February or March wedding still have time to book vendors, Markel says. "Couples have a major opportunity because the number of weddings that occurred in 2009 has been down by about 5%, and bookings for early 2010 are down as well," he says.

(December weddings aren't as cheap because banquet facilities give priority to recurring customers: conventions and companies planning holiday parties.)

Here are the four types of wedding vendors with whom you'll see some of the biggest winter savings.

The Banquet Facility

The largest wedding-related expense is the banquet reception, which can cost more than $10,000, depending on the number of guests, location and menu, Markel says.

Typically, banquet facilities charge a fixed price per person. But between January and March, the total cost often drops between 20% and 50%, Markel says. (The savings will be lower in states that have warm weather throughout the year, like parts of Florida and California.)

Couples who get married in the Meeting House Grand Ballroom, a banquet facility in Plymouth, Mich., will see big price differences. For weddings between January and March, couples will pay Friday prices for a Saturday wedding, says Randy Lorenz, the owner and general manager. For a party of 200 adults, that's a discount of $2,000; the banquet facility also waives its $300 ceremony fee.

However, not all wedding venues are cheaper during the winter than during the spring, summer or fall. Weddings at ski resorts are priciest in the winter, the venues' peak season, says Elise Enloe, the director of education for the Association of Bridal Consultants, a trade group.

Also, facilities that are popular with corporate holiday parties or conventions tend to be busiest during the winter, says LeLani Mandac, a senior catering manager at the Hilton Anaheim in California.

To save with a winter wedding at the Hilton Anaheim, couples will have to reserve the space no more than six months in advance, she says. Couples who choose an available weekend between conventions could receive an upgraded package at no extra cost, like a $70-per-person plated dinner (the facility's priciest package) at a cost of $65 per person, or an additional hour for their wedding celebration, which usually costs $250, for free.

In New York, winter is typically slow for caterers and other wedding vendors, says Andrea Correale, the president of Elegant Affairs, an off-premise catering and event-design company. As a result, couples marrying there have more room to negotiate meal prices during the cooler months. A caterer's price difference between a winter and summer  wedding in New York is, on average, $50 per person, Correale says.

Another option, of course, is to skip dinner. Lunch or brunch can save you 50%.

Flowers

Couples set on a particular color or type of flower should keep an open mind or prepare to drop a lot of cash.

The average cost of wedding flowers ranges from $2,000 to $3,000 in the U.S., says Baxter Phillip, the executive vice president at Phillip's Flowers & Gifts in Chicago. To save with a winter wedding, choose flowers that are in season, like irises, orchids, lilies and most roses, he says. Hydrangeas and peonies are the most expensive in January, and red and white roses are the priciest in the two weeks leading up to Valentine's Day and during the holiday season.

Also, find out where the flowers are coming from. Their starting point and shipping costs factor into the price. Seventy-five percent of wedding flowers (primarily roses) come from South America, whose summer season is our winter, Phillip says. Those flowers often are more affordable for winter weddings in the U.S. than, say, flowers imported from Holland, which shares our winter. Distance is also a factor.

Photography and video

Fewer weddings mean fewer requests for photographers and videographers.

For weddings between December and March, many of these professionals discount their custom packages by as much as 10-25% of identical services for summer weddings.

Transportation

Limos are at their most expensive during prom season and peak wedding season -- periods that winter weddings avoid. So expect to pay 10% to 20% less during the winter than you would in May or June, Markel says.

Many companies lower the price on their fleet of limos and luxury cars for most weekend weddings between the first Saturday after Thanksgiving and the end of March. Couples could see savings in a typical stretch limo- as high as $475 in season, down to $400 in the off months.

The day of the week you choose for your Winter Wedding could save money also. From Sundays through Thursdays during the winter, Reston Limousine, based in Washington, D.C., offers a fourth hour free on any vehicle rental at least three hours.

If you and your "to be" have hearts set on those beautiful warm months, then as long as you have a plan for saving, stay with your original ideas. But if the idea of starting your married life off with a little more money (or, in many cases- a lot less debt!), then consider asking your family and friends to celebrate with you in clothes made of warmer fabrics (and wear a coat!)

John

Email John:  johnsblog@teshmedia.com

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It's not pleasant to think about, but what would happen if you became injured, or too ill to make your own decisions?  Would those now fall into the hands someone you trust implicitly, or a legally closer, yet obscure, family member chosen by the state?  Liz Pulliam Weston, a personal finance writer, advises to not wait.  Make your decisions known, and soon. 

Take this scenario: your mother, out of state, suffers a severe stroke. In the final months of her life, every decision, outside of perhaps picking a daily outfit to wear, is made by someone else. Decisions regarding her life- what she'll eat, how her bills are paid and how hard her caregivers should fight to keep her alive- are now being made by others.  Would you, let alone your mother, feel comfortable with this?

Most Americans don't have wills, but that's not the crisis that many in the estate-planning industry would have you believe. With a few exceptions, which we'll talk about below, most people's quality of life won't be much improved by a will.

Who would pay your bills or wrangle with insurance companies about your care? Who would decide whether to sue that driver who hit you -- or to shut off the respirator that's keeping you going?

The state will eventually find someone to fill these roles, after a potentially costly and time-consuming court hearing. But it might not be the person you would want. So at a time when you're most vulnerable, life-and-death decisions could be made for you by a stranger -- or an estranged, distant or greedy relative.

That's why you need the following documents:

• A durable power of attorney for health care, which lets you identify who will make medical decisions for you. (This is also known as an advance directive or health care proxy.)

• A durable power of attorney for finances, which designates who'll handle money decisions.

• A living will, which tells doctors exactly what kind of care you do and don't want to receive if you're terminally ill and incapacitated. (Some states, including Kentucky, Minnesota, Oklahoma, Oregon, South Carolina, Virginia and Wyoming, combine the living will and the durable power of attorney for health care in the same form.)

Fortunately, you can get these documents, plus a basic will, drawn up by an attorney for $300 to $500 in most areas. You can also buy software, such as Quicken WillMaker, for about $40 if you want to do the work yourself.

The point is, just do it. Strokes and accidents don't happen just to other people.

If you need more convincing, consider the case of Robert Wendland, who was severely injured in a 1993 car crash at age 42, sparking a gut-wrenching court battle between his wife and his mother that ended up before the California Supreme Court.

Wendland was in a coma for 16 months before recovering what doctors called "minimal consciousness." He could catch a ball and play with infant toys but couldn't speak, eat, walk, recognize his family or comprehend a Saturday morning cartoon. Doctors said his condition was not terminal but would never improve.

Wendland's wife, Rose, whom a court had appointed as his conservator, decided he wouldn't have wanted to live as he was and asked doctors to remove his feeding and hydration tubes. Wendland's mother, Florence, went to court to keep him alive. Eventually, California's top court sided with the mother -- a few weeks after Wendland died of pneumonia, after surviving on life support for eight years.

Although courts have allowed family members to disconnect life support from unconscious, terminally ill patients who didn't express their wishes clearly, the California justices were reluctant to set such a precedent for "minimally conscious" patients.

Had Wendland created durable powers of attorney or any other paperwork detailing how and whether he wanted life support to be used, the court battle may have been prevented, legal experts said. That's because the U.S. Supreme Court has ruled that every individual has a right to direct his or her own medical care, even if loved ones disagree with those directions.

And let me tell you: Not having clear instructions, or having to fight with other family members over what you think a loved one would want, is pure anguish.

Of course, thinking about these issues is not fun, which is probably why most people avoid it. You have to ponder some of the grimmest circumstances imaginable. Do I want to be on a respirator if I'm conscious? If I'm unconscious? Do I want food and water withheld? How about pain medication?

There are so many issues to ponder that Weston highly recommends ordering copies of Your Way, a guide created by nonprofit group HELP, to aid you in deciding what you want and don't want if you're incapacitated.

You also have to figure out whom to name as your "attorney in fact," or proxy, to help implement these decisions for you. Keep in mind:

• Two heads may be better than one. You don't have to name the same person for both powers of attorney. In fact, many people find that the people they trust to make health care decisions are different from the ones they want handling their finances.

• Spouses are good, but have a backup. If you're married or in a committed partnership, that person is a logical choice to fill both roles. But you'll still need backups in case he or she is injured or killed in an accident with you, or is unable or unwilling to serve.

• Keep them close. For the health care directive, you'll probably want people who are nearby or at least willing to travel to the hospital to be with you, perhaps for an extended time. The person handling your finances may be able to do so remotely, although you may still prefer to name someone who lives relatively close for convenience. In addition to paying your bills and handling insurance claims, the person handling your finances may also need to sell your home or make other complicated moves that require more proximity.

• Make sure they're tough. With your health care proxy, especially, you need someone who's forceful enough and committed enough to your stated wishes to advocate for you, regardless of what others (including family and medical professionals) might think.

You can change these documents at any time, as long as you're still competent. You probably should review them about once a year to make sure you're still comfortable with your decisions.

Once you make these arrangements for yourself, start bugging your parents to get their documents in order. If you're not sure how to start that conversation, you can tell them about your own efforts to deal with incapacity or relate a horror story from a friend's experience (ask around; you'll find some). If nothing else, print off a copy of this, and attach a "Let's talk about this" note.

Now, back to the issue of wills. Really, many people want more control over who gets their stuff than state law dictates. If you're wealthy, estate-planning documents also can help you reduce potential taxes, which can give you peace of mind while you're alive. That said, there is one group of people who should absolutely, no question, have wills, and that's parents of minor children. Even if you can't agree on who gets the crystal,

you need to agree on who would take care of your children in the event of your death. No matter how icky you feel about planning for your own demise, you owe it to your kids to spare them the potentially ugly and drawn-out custody battle that could ensue if you don't make these decisions now.

Weston, wisely, encourages anyone vulnerable in these areas to go make that appointment with an attorney or buy the software- right now. A small investment of your time could spare you and your loved ones a lot of grief, as well as to be able to give them one last piece of your compassion if they come to a time demanding difficult decisions regarding you.

John

Email John:  johnsblog@teshmedia.com

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Ready for October? Here's our challenge!

Summertime has passed- we're settling into our newfound Autumn, aren't we? September is nearly gone! October is just around the corner- Thursday!- and with the beginning of October, I've got an idea to throw out to you- ready?  How about a 30 day challenge- beginning Thursday- to not spend money.  Wait a minute- before you tune out- I mean it. It's what personal-finance experts call a no-spend month. Also called a buy-nothing month, it's a 30-day period of superfrugality in which you cut out all extras, buy only basic necessities and spend as little money as possible.

With families facing so much economic uncertainty, it's more crucial than ever to beef up your emergency fund and pay off debt.

A no-spend month can be an effective short-term strategy to pad your savings account, free up extra money to tackle your debt, realign your spending with your values and generally cut financial fat.

Take this example: a Texas family decided to limit all family spending for food, entertainment, fuel and clothing- anything not a regular monthly bill such as a mortgage or car payment- to $250, when they normally spend $350 a month on groceries alone.

This family did it by cooking all meals from scratch, using basic fresh ingredients and food from their pantry, running multiple errands on each car trip, and walking instead of driving whenever possible. Instead of lunch out from the office every day, they also took up brown bagging lunch every day.

This could be an eye-opening experiment for you! Instead of out heading out shopping or doing things that cost money, you may find more free time to take a closer look at your regular monthly bills.  Now's the time to find your inner creativity, friend, by relying heavily on your pantry for meals. Use washable rags instead of paper towels, make your own laundry detergent or floor cleaner (vinegar and water works wonders!) and try using inexpensive homemade alternatives to household cleaners- how much vinegar do you have, and make sure to have a good supply beforehand of baking soda!)

"Anyone can do anything for 30 days," says MSN Money personal-finance columnist Liz Pulliam Weston, the author of "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life."  Liz estimates that a 30-day spending diet could save families an average of $400 and put them in a better position should a job loss or other calamity occur. "If you do this, you have taught yourself what your (financial) weaknesses are, and you have already experienced the difference between a need and a want," Weston says.

If you want to try your hand at 30 days of superfrugality, there are several ways to structure your month of not spending.

• Set a dollar figure for spending for the month and stick to it.
• Cut out all luxuries without setting a dollar limit.
• Combine a 30-day short-term spending diet with an effort to boost your income.

Like our example family, you could give yourself a set budget for the month and then try to fit all household purchases into that budget. Recurring monthly bills, such as your mortgage, student loan, car payments, utility bills and credit card bills are excluded from this amount.

The limited-budget approach can require creativity.

How can you spend only $1 on entertainment for the entire month? How about recent issues of your favorite magazine- normally a big impulse by while you're waiting in line at the grocery store- at a fraction of the price at a local thrift store?  Looking for dinner that very night? Look for lower-cost alternatives to meat to stretch your grocery dollars- a markdown of a good quality meat, bulked up with lots of in-season produce.

The second approach to the 30-day spending fast is to forgo the set-dollar-amount budget and simply cut out all luxuries instead. In this case, money can only be spent on necessities.

Weston, herself, took the challenge in 2006, by buying only necessities, and seeing the things she and her husband were spending money on that they didn't need to.  For instance, previously, if she had 15 minutes between meetings, she would fill the time by buying a cup of coffee. And though she rarely bought new clothes for herself, Weston didn't think twice about outfitting her toddler daughter with new duds. "It surprised me how much of my spending was automatic."

The key to making the second option effective is to dig deep to determine what is a luxury and what is truly a necessity, says Harrine Freeman, the author of "How to Get Out of Debt: Get an 'A' Credit Rating for Free."

Of course, this will vary from family to family, but, in general, recurring bills, gas and groceries would be considered necessities while lattes, restaurant meals and new shoes would definitely be off-limits.

The third option is to combine a 30-day spending diet with an effort to boost your income. That can be as simple as cleaning out your attic or basement and selling everything on eBay or Craigslist, Freeman says. "You can use what you save and what you earn to pay down debt or create an emergency fund."

No matter which route you choose, a month of minimal spending can lead to a real, workable and long-term household budget and spur you to permanently cut the fat from your spending.

A 30-day spending diet can be a valuable precursor to a budget you might actually stick to because "at the end of the month, there is a very real, tangible financial benefit. You can actually see how much you saved," says Brad Stroh, a co-founder of Bills.com. "It gives you a sense of empowerment and control over your money that can lure you into the game."

Superslim budgets with no room for fun, though, are doomed to fail. The goal is not to cut out all sources of joy in your life, it's to spend only on the things and experiences that are truly important to you, might improve your life, things you use and enjoy a lot, and that will give you a great internal lift- not just a momentary lift.

You might just be amazed how little (money) you can live on once you have some experience in spending very little.

John

Email John:  johnsblog@teshmedia.com

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What makes these three money-saving tips so amazing? They're "no-brainer" ideas!

At any time in history, no matter what the current state of the economy, no matter what the current trends, no matter what the unemployment rate is or where interest rates hover, some money-saving ideas remain true, and these are gathered from LifeOrganizers.com.

Some of these ideas you may have heard many times before, in different variations, even; others may be entirely new to you.  But whether you are familiar with these super secrets or not, it could be so worth your while to put them into effect in your own life. The magic they will work on your financial life is guaranteed- where else are we getting guarantees these days?  Makes them worth a try, because big changes come from small steps.  One plus one does equal two.  Adding one from eleven different places, there's a good chance you'll see big results, from some pretty down-to-earth tips.

Amazing Money Tip #1:

The great scientist Albert Einstein once said, "It takes a genius to see the obvious."  What he meant by that is that sometimes the simplest things in life are the most powerful ... but because they are so simple, we tend to ignore them, and not let them work for us.

One of the simplest but most powerful money making ideas is this: keep a daily log of everything you spend.  Go to the dollar store and buy a little notebook and carry it with you wherever you go.  Write down every penny - every single penny - you spend.  It's as simple as that.

If you do this, you will find something magic happening in your financial life in just a few weeks: you'll see what you spend, where, and how much can really be looked at as "necessary."  It makes the flow of money through your life more real and exact.  It shows you simply and clearly just where you are spending your money, on what and why.  Once you know that, it becomes much easier to control your spending. Very powerful, indeed, and quite eye-opening.

For example, a person could realized through examining their notebook that they actually spent nearly $2,000 throughout the year on diet soft drinks, snacks and candy bars!  Since their job only brings in $25,000 per year, they realized that 8% of their entire income was being frittered away on something entirely frivolous.  The person gave up the snacks and drinks, and found they had enough money to take a vacation the following year!  If you had the choice between snacks or a much needed vacation, which would you choose?  Clarity that comes with this insight can help you gain much needed control of your finances.

Amazing Money Tip #2:

Stop credit card spending- otherwise known as deficit spending!  We all know how much trouble Uncle Sam has been creating spending more money than our country takes in.  It's called deficit spending.  Well, don't fool yourself.  The same rules apply to you. Using those evil little plastic cards may be the "American Way," but it's a darn poor way. 

Today, the average credit card holder is carrying $8,000 in plastic debt !

Spending yourself into debt with a credit card is unbelievably easy, as many of you already know.  The reason is psychological.  When you give that clerk a credit card, it's just not the same as handing over a stack of green dollar bills.  Would you as readily hand over a fistful of ten dollar bills as flip a credit card across a counter?

Probably not.

Credit cards put you in the hole and keep you there.  Even for people with good incomes, paying your credit card debt down to zero is amazingly difficult.  And make no bones
about it, credit card debt will sap your financial strength just as readily as an open vein will deplete your physical body of its very life force.  Using a credit card by choice can quickly turn to using it for need.  Once you get to that point, you are already in trouble.

There is no secret to freeing yourself from the credit card game.  You must take out a pair of scissors today, cut your cards in half, and begin paying them back, slowly but
surely.  Be careful: closing the account could affect your credit score negatively, so you may want to keep the card open- just stop using it!  Be sure to always pay more than the minimum amount due, even if it is just $10 more.  Once you stop adding to the debt , even small payments will eventually add up. You can get out of debt if you are patient and disciplined. Once your card debt is history, you must adopt a strict pay-as- you go policy. Instead of buying now and paying later, save now and buy when you have the full amount.

Once again, this is not rocket science, but stopping credit- oriented consuming is one of the most powerful financial tools available to anyone today.  Why not pick up this tool and use it?

Amazing Money Tip #3:

Sell your junk.  That's right, it's high past time for a major yard sale.  Search through your house or apartment for every single item you don't need, and could sell at a flea market or yard sale.

Take an inventory.  The truth is, most people are astounded by what they own - and how much money they have tied up in useless stuff.  Why let it collect dust in your attic while it could collect interest in a savings account? Good question, huh?

You could easily be $500, $1,000 ... even $3,000 richer by the end of the week.  As an added bonus, you'd have your place cleaned up, and you will have a fresh feeling of starting over.  A garage sale is an excellent way to not only clean out your house, but it often gives a psychological boost that helps people get control of their life and money.

See?  Pretty easy to understand...and here we thought it was complicated, right??  Have a fantastic day today.

John

Email John:  johnsblog@teshmedia.com

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