Category Archives: Finance 101
Finance 101: Different Types of Mortgages
When buying a home most of us do not take our time in researching and determining the best options for a mortgage. For the majority of us, our home is the most important and expensive purchase we will ever make! Right now my student loans far surpass that, but that’s beside the point. We invest quite a bit of time and effort in finding the perfect property in the best neighborhood, but when it comes to finding the best deal for a mortgage, we usually take whatever is offered rather than research and secure the best mortgage for our particular situation.
Consider this: the average homeowner will pay more in interest over the life of their mortgage than the house originally cost (you can use the Emortgage calculator to see that for yourself). You can see why you getting the best deal for a mortgage now could potentially save you tens of thousands of dollars in interest over the 20 to 30 years that it will typically take to pay off your mortgage.
Finance 101: How To Open A Checking Account When You Are In ChexSystems
In life, when you are hitting an unseen obstacle as you try to reach your goals, it can be a very frustrating feeling. After all, life’s challenges are much easier to take on when you fully understand what you are up against.
That is why people who have been rejected time and again for a new checking account can start to feel a bit helpless. Many falsely believe that their credit (FICO) score is to blame, and they do not understand that the most likely reason for their rejection is due to something called ChexSystems.
Finance 101: Basics of Cash Advance and Payday Loans
It’s no secret that the American banking industry has undergone major challenges and transformations over the past two years. Institutions have closed ranks and have reduced the amount of money available to borrowers. This includes everything from declining to offer certain types of consumer loans to reducing the credit limits of millions of borrowers. According to a recent Wall Street Journal article, the total lending funds available to consumers fell to $433 billion in 2010, “down 51% from $887 billion in 2007″. Borrowers that make up the low end of the credit community have virtually been left with no recourse for fulfilling their short term lending needs. In stepped cash advance and payday loan establishments.
Finance 101: How To Avoid Bad Tenants
Until the collapse of the mortgage industry under the weight of fraud, real estate had traditionally been viewed as a safe investment vehicle. Skyrocketing prices at the height of the real estate bubble brought many buyers into real estate that were enticed by the idea that they could make money from their investments. While property prices have fallen nationwide, some savvy investors are holding on to their property and renting to tenants.
Dealing with tenants if you are not a real estate professional can be very difficult as I have documented with my tenant from hell stories. The easiest way to lose your investment in real estate is to be a lax landlord and let bad tenants run roughshod over you. Hopefully, with this handy guide, you won’t have too much trouble when you run into a bad tenant.
Finance 101: Introduction to Bonds Lesson 1
All of my life I’ve heard about diversifying your assets by having stocks and bonds. I kind of know what a stock is but the other day I wondered, just what’s a bond, and why would I want one? If you have the same questions then stay tuned for the latest installment of my basic finance course: Finance 101.
I actually own some bonds as part of my investment strategy. My last employer offered employees the ability to purchase bonds automatically through a direct payroll deduction on a monthly basis. I figured, hey, why not and allocated $100 each month for about 6 months towards bonds. They were mailed directly to my mom, and I promptly forgot about them until I bumped into an old pay stub last week. I began to wonder, just what the heck did I purchase anyway? Let’s begin with definitions. According to About.com, a bond is “simply an ‘IOU’ in which an investor agrees to loan money to a company or government in exchange for a predetermined interest rate.” Great! So who’s the investor? Well, in this case that would be me or whoever purchased bonds. Sweet! I’m an investor. Now, how do I make money from this? This is where it gets interesting. It all depends on what types on bonds you’ve purchased.
Finance 101: Understanding Your Flexible Savings Account (FSA)
Hey there! If you’re following along this is part three in my Finance 101 series.
If you’re still employed and your employer hasn’t dropped your healthcare program then your open enrollment period is about to begin. There is where you get to change your healthcare options. If your company offers a flexible sending account or an FSA this is also the time for you to select how much money you would like to contribute to that account for the next year. Last year I realized that many people didn’t understand how the whole flexible spending account thing worked and how it can benefit you. You won’t be a part of that group after this post. If you want the short, short version then it’s simple: money for healthcare expenses is deducted on a pre-tax basis thereby reducing your taxable income. Now you may go. For those who want to understand how it works, read on.
Finance 101: What the Heck is Peer-to-Peer or P2P Lending?
This is part two in my Finance 101 series and it’s a long one. This time we’re learning about peer-to-peer, person-to-person, social, P2P or sometimes micro lending. The concept has many names but it’s basically the same thing – you are getting a loan from a private individual instead of a bank. That’s the short, short version for those without the time to stick around for the article. The rest of this post is directed to those who are completely clueless about the process. Read on.
Let’s begin with the most basic. According to Wikipedia, this is a type of lending or borrowing “which occurs directly between individuals (‘peers’) without the intermediation/participation of a traditional financial institution.” I like my definition better. You’re thinking, well how does this work? Let’s look at two scenarios.
Finance 101: Why Banks Want You to Open Accounts
I’m starting a new series here called Finance 101. When the mood stikes me I’ll cover one basic consumer finance topic that I think will help us as we both get out of debt. Let’s begin this series with the most basic thing…why banks need you to open accounts and deposit money in the banks.
Deposit accounts are your typical savings or checking accounts where you deposit money into an account at a bank. They’re sometimes called demand accounts meaning that they have to give you your money when you ask for it. When you deposit money at a bank, the bank now physically has your cash and gives you some note that says they’re holding that money for you. It might be your deposit receipt, your statement or a passbook. So, the bank now counts your money as their asset but also lists that same money as a liability that they owe to you. What’s just happened is that you have effectively given the bank a loan and now they owe you the money whenever you come back and say that you want it or when you spend it by using debit cards or checks.
Now you’re wondering, why the hell does the bank count this as their asset? Well, it gives then the ability to use the money that you have deposited in order to make money for the bank. So your money might be packaged together with other deposits and the bank will give out a loan. It can be a car note
or a mortgage or a personal loan – basically whatever will make them money. The way that the bank makes money is in charging fees and interests for the loans that they issue. If you’re lucky and you have a savings account the bank will pay you some form of interest in the hopes that you keep more money in the bank for a longer time. Whatever interest they pay you is a tiny fraction of what they are charging the person who took out the loan. Now you know why banks want you to open accounts and deposit money. Let’s get to how you can use this to your advantage.
So far this year I’ve made $175 in interest from just opening two free checking accounts at different banks. You’re thinking, wow! How did she manage to do that? Simple. Remember that whole banking crisis fiasco? The banks all want to pay back the money that they owe the government and return to profitability. In order to do that they need you to deposit money in the bank so that they can make loans again. They are so desperate that they are willing to pay you to open and fund accounts. Typically you need to open an account with $50-$100 and make 6 direct deposits or make a certain number of debit card purchases. After you have met whatever qualifications they have and had your account open for whatever period is in their offer, they will deposit the “interest” and you are free to do what you want with it.
I did that with Chase by funneling $25 each paycheck into a checking account. I closed the account as soon as had my “interest” payment. I earned $125 from that one. Now I’m on to Capital One and they are offering $200. That’s not too shabby for very little work.
Currently Chase is offering $100 to open the account. Please use this link for the offer. Comerica Bank also has some offers as well. They have too many hoops to jump through for me though. I will add the Capital One offer next week once I verify it. Come back to this post for an update. I’ll also list current offers on the left sidebar.
Do you know of any other offers? Let me know and I’ll share it. Class dismissed!
