6 money dilemmas

If you sometimes have the feeling, you’re just « running the numbers » and that you wonder why, this can be an interesting article. It shows six common financial quandaries and the math is already done. The right answer may depend on things that you can never know for sure and at times, emotional considerations may tip the balance.

Pay off a credit card OR fund your 401(k)

You really should do both, but if that isn’t possible, pay off the plastic first. Good saving habits are also important. The bottom line is that if you have a big credit-card balance, you should wipe it out before you open a 401(k).

Save in a Roth 401(k) OR a regular 401(k)

With the arrival of the Roth 401(k), you may have a second chance at a tax-free income. Our advice: grab it. Unless you’re on the verge of retiring and know your income will drop, the Roth wins.

Lease a car OR buy a car

Buying a car costs less if you own your car till it drops, buying is the cheapest on the long term. But with leasing, you can always drive a shiny new car and your monthly payments are lower.

Prepay your mortgage OR invest

The feel-good choice isn’t necessarily the smart choice. By preparing your mortgage, you are reducing your liquid assets and if you can always pay off your mortgage later with the money you invest now.

Buy a home OR rent a house

Buying is the best as long as you’re confident you’ll be staying put for several years.

Take Social Security early OR late

If your healthy and don’t need the money, it’s best that you wait.

I think it’s an interesting article, certainly for people who haven’t seen this at school. There are so many questions to which people don’t have an answer to. This could really help them out, even though you should consider the answers by considering your own lifestyle.

Laura

Source: http://money.cnn.com/2007/12/11/pf/right_call.moneymag/index.htm?postversion=2007121111

CREDIT CRISIS SHOWS AN IMPACT ON HABITS OF PAYMENT

An investigation of credit insurer ‘Atradius’ shows a first impact of the international credit crisis on the habits of payment of European and Belgian traders. 1200 companies are sounded out about the habits of payment of their business relations in Belgium, Germany, France, Italy, the Netherlands and the United Kingdom. Belgian companies pay their foreign outstanding accounts after an average of 35 days. That’s six days faster then the premising terms of payment. To their Belgian suppliers is the average 41 days, that’s ten days faster than last year. The investigation shows that traders search for alternative and cheaper manners of financing. One of them is the decrease of terms of payment for customers. Belgium and France are the only countries who undertake more steps this year to protect themselves against risks of payment.

Companies have to perform these manners if they want to see their money in the future. If you give customers a lot of time to pay off your bill, they will be inclined to pay first other debts and maybe afterwards there is nothing or less left for you. It’s a nowadays problem that people can start too many credits even if they have the financial possibilities to pay them back.

Jan

http://www.standaard.be/Artikel/Detail.aspx?artikelId=DMF06122007_016&kanaalid=3

Know your home's future

Whether you're thinking of moving to a new city or are you just curious about your own neighbourhood, the Web let you see your town like you've never seen it before.

scoop out the houses: if you choose a town, you can see with satellite view a streetmap of the place. But you also can ask for the "Heat map", there you can see which places are most wanted and popular are, based on prices and sales. You also can ask questions about the area or read discussoins of it. There is also a website where you find the value and prices of your neighbour's houses. And ofcourse there are also internetsites where you can search for available and nearby shops.

check out the schools:there are sites where you can find the public schools testresults and information about private schools. Both sites have a parents review, so you can always follow the discussions.

meet the neighbours:through surfing on the wordwildweb you get a lot to know about your neighbours, you can read their blogs or find forums and discussions. There is also a website to get to know each other, so new habitants can meet and learn each other

It scares me a lot that you can find so much about other people and their way of life, just by typing some words on the internet. It's true that a lot of people put information themselves on he internet, but schoolresults and value of houses, must be something private. Not everybody wants that such a things are known.

Els

source:http://money.cnn.com/2007/11/29/pf/bestweb_home.moneymag/index.htm?postversion=2007120806

Makeover tips that can sell your home

People are going through the home like detectives. If the home doesn't flow, even if it doesn't smell right, they'll pass.

Here's what you should look for to avoid a home makeover misstep:

Pre-'60s homes:
Vintage homes do not have the ability to power modern appliances, upgrade the power.
Plumbing is your second priority.
Homes built before the 1960s often have hardwood floors. They are a hot commodity today.

'60s homes:
Single-pane windows are dated, upgrade those.
Change your kitchen by replacing cabinet hardware with stainless steel.
If you have termites, treat this annually.

'70s homes:
You can lose the time warp easily with a fresh coat of paint.
Sometimes the siding and brick can be painted to give the home a modern look

'80s homes:
If you want to replace your kitchen counters, look around your neighbourhood. If everyone has granite, then you're going to have granite, too.
Wallpaper is another '80s trend that may date your home. Pull it all off.

'90s homes:
home appliances wear out when they are 12 years old. items that may need replacement include the water heater, the stove/oven, the washer/dryer, the refrigerator and the dishwasher.
Don't hurry into a new roof. Have it inspected.
A clean carpet always says "welcome home" to prospective buyers.

I think it is good to make your house look better, because this way you might sell it at a higher price. But most people don’t know what they should replace or repaint, so they could use some tips from the article.

Kathleen

Source: http://finance.yahoo.com/real-estate/article/103990/Makeover-Tips-That-Can-Sell-Your-Home

THE PURCHASING POWER OF THE BELGIANS DROPS AGAIN FURTHER OFF

Belgium drops further off on the European classification concerning purchasing power. That shows an annual study that reckons with the local costs of living and the level of the social cash benefits. The available net income per person for this year has an average of 17.143 euro.
Belgium knows a little bit of a slump concerning the purchasing power because with this average we finish on the twelfth place on a total of forty European countries. In comparison with two years ago we have lost four places. Switzerland and Liechtenstein, Luxembourg and Norway represent the European top three. Their average amount is about 10.000 euro higher than ours.
The inhabitants of the central -and east-European countries have less purchasing power than the Belgians. Especially these countries dangle at the bottom of this list. Although emphasized the study that some regions in central –and east-Europe do it better than in the west. There are big regional ranges within western countries as well.

According to the study is the Belgian inhabitant not able to buy as much goods and services with an amount of money in comparison with other European countries. It’s still good to life in Belgium if we can keep up with the top fifteen in Europe. I think the high cost for the social system that other countries perhaps not have, has a big part to do with it.

Jan

http://www.standaard.be/Artikel/Detail.aspx?artikelId=MS1K3T0A&kanaalid=3

Divorce is negative for woman’s income

Men become financial better than women after a divorce. It appears after an inquiry from the University of Antwerp. It says that women lose almost 142 euro per month from their income and that the revenue of the men increases with 100 euro per month. It takes at least 5 years for the women to reestablish her income again. The reason for all that, we can find in their work- and family situation. Married women, with children mostly work part time. They also get often the custody after the divorce and that makes it harder to find more flexible work. This inquiry stirs up again the discussion on the new law, there they think that women get financial better out a divorce than men. What apparently isn’t!

A divorce is always a painful thing, but the financial side can be even tougher. I think it’s very important that these ex-lovers can’t bankrupt each other and have a normal life after their relationship. But if this inquiry shows that women are discriminated on that part, then the law certainly must be revised.

Els

Source: http://www.standaard.be/Artikel/Detail.aspx?artikelId=B20615741071129&kanaalid=3#

Person-to-person lending online gathers steam

Services match up borrowers with lenders, avoiding traditional banks.

Social lending has been around since the days when needy families turned to the richest man in town, but the Web is breathing new life into the practice. Loans on Prosper and Facebook’s LendingClub is rising. By 2010, the report forecasts $1 billion in peer-to-peer loan originations.

The idea behind the sites is that borrowers can find better rates than traditional banks offer, while lenders can earn higher returns than investment. Borrowers on Prosper post how much money they need, the purpose of the loan and what interest rate they can afford. Lenders bid on the loans of their choice, typically funding only partial amounts and diversifying their risk among hundreds of loans.

The opportunities for social connection appeal to users and lenders enjoy the satisfaction of seeing their money help someone in need. Each Prosper borrower is assigned a grade based on their credit score to help lenders evaluate their risk and the site verifies borrowers’ identities. Prosper reports late payments to credit bureaus, you have to keep up with these payments just as you would with any other financial obligation.

It are the borrowers who are crucial to the future success of peer-to-peer lending. As soon as you put $10,000 out there to 10 people and six do not pay you back, would you want to do it again?

I think this is very good for both lenders and borrowers and you can diversify your risk by funding little amounts to several different people.

Kathleen

Source : http://www.msnbc.msn.com/id/21993720/

Single? You need a plan of your own

The system just isn’t set up for households that consist of just one person. That means planning is even more important of you. The amount of singles has importantly increased in the last few years. Reasons are divorce and people are marrying later or aren’t marrying at all. Just as married couples, the older a single gets, the more assets he or she accumulates. And because they can’t rely on another for financial help in crisis, it’s even more important for them to put a plan in place.

Stash more cash:
Step one is to put a six to twelfth-month emergency cushion in place.
Get the right insurance:
↳ disability policy? Absolutely. Long-term-care Insurance? Maybe. Life insurance? That depends.
Singles have to protect their earning ability. They can do that with disability insurance.
Put the right documents, and people, in place:
As soon as you’ve accumulated assets that you want to end up in a particular place, get a will and a living trust. And even more important, you have to give someone power of attorney to make medical or financial decisions on your behalf.
Don’t forget the tax man.

I think it’s important for such an article to exist, nowadays they are a lot of single people and that number will increase even more. If you’re single you have to protect yourself a lot better against dangers and risks. Because you can’t rely on someone else. So I think it’s an interesting article, because it tells you what you have to consider if you’re single and you don’t want to face surprises.

Laura

Source: http://money.cnn.com/magazines/moneymag/moneymag_archive/2007/12/01/101187977/index.htm?postversion=2007112710

PODCAST 2

http://rapidshare.com/files/71506290/podcast_2.wav.html

Els, Laura, Kathleen & Jan

EIGHT LEADING BANKS INVEST UNETHICAL

“Netwerk Vlaanderen” has brought information together in a sizeable file: “Bank secrets. Eight banks and their alarming investments”. It’s denouncing the investments by Axa, ING, Fortis, ABN Amro, Citigroup, Dexia, KBC and Deutsche Bank. With that would “Netwerk Vlaanderen” bring up the failure of transparency and social responsibility of banks.
There goes money from these banks to AviChina, that sells military material to Myanmar and Sudan, although has the European Union raised a weapon release against these countries.
According to the Christian union of employees (LBC) should the financial organizations reckon with important environmental- and human rights standards in their investment decisions and they aim at an ethical lower limit. That’s why the union invites all his militants to start a discussion within the social consultation in the sector. Belgium has given the example to prevent investments in controversial weapons. Nowadays we could become the pioneers in excluding intolerable practices on the field of environment and human rights.

Companies, banks, the government,… has to keep ethical investments always in mind because it became an important item that has been forced by the community. I think that banks can’t exclude unethical investments because they earn a lot of money with them.

Jan

http://www.standaard.be/Artikel/Detail.aspx?artikelId=DMF13112007_040&kanaalid=3

Belgian Children receive 190 euros for their toys.

Last year parents have spent about 190 euros on toys for their children. If we calculate also the videogames, than it would be 302 euros. The import didn’t grow, but because the prices are stable, can we say that there is more sold. With those marks, the Belgian market scores better than the average in the 15 countries of Europe. It represents 2,4% of the Belgian market. Videogames are very wanted; almost 37% of the budget went to those games. But who decides on what the money is given? The OIVO inquired many people and what can we say? Almost 70% of the children decides themselves which toys they want to have. Until the age of twelve, toys are the most important, but when they become fourteen, almost 90% will choose videogames.

I can’t say that this article shocked me, not at all in fact. If you see how children are getting spoiled and how expensive toys have become, I think it is a normal evolution. Not that I think that it is a good evolution. There is a lot of social pressure and parents often want that their children get the best, although they should need the money for other things. Producers are also very clever. They produce expensive toys or games, but they make also a lot of extra, expensive things for it. Like for example the play station it’s very expensive, but you have to buy all the games separately, and you pay for those also a large amount of money.

Els

source: http://www.demorgen.be/dm/nl/997/Ombudsman/article/detail/52769/2007/11/15/Belgische-kinderen-krijgen-voor-190-euro-speelgoed.dhtml

Young doctors in debt

Chris and Meg Reis are on their way to long medical careers. Now it’s time to deal with $500 000 in student loans.

The lives for medical residents aren’t easy: med school graduates getting years of on-the-job training, putting in brutal hours for salaries that, on an hourly basis, work out to a little more than they could earn stocking the shelves at Costco. But it will pay off, they say, once they become full-fledged doctors, they’ll have six-figure incomes, more reasonable hours, a respected occupation and work that they love.
But for this generation of doctors, financial security won’t come guaranteed with their medical licenses.

The couple’s work is rewarding, but not in the monetary sense. While they don’t have to make student-loan repayments yet, their low salaries qualify them for hardship deferrals the interest keeps accumulating, and the amount they owe keeps growing at the rate of about $17 000 a year!

The advice:
° ignore the usual advice
° get protected (insurance)
° deal with debt
° keep plugging away

In my opinion there is a serious problem in the US, student loans shouldn’t be as high as they’re at the moment. And it’s true that when people hear that you’re a doctor, they immediately associate it with high salaries and luxury lifestyle, but they seem to forget the accumulated debt and the hard work you put in it. The government should do something so that student don’t be discouraged to follow medicine in university.

Laura

Source: http://money.cnn.com/2007/11/16/pf/young_doctors.moneymag/index.htm?postversion=2007111611

Kicking the fund-trading habit

If you are not getting good results, and you are not even having fun, active investing is not for you.

There are people who spent five hours a week researching and tracking mutual funds, without any results.
You would certainly think that working hard and smart to pick the best mutual funds should result in better performance. But it rarely works out that way. That is because nearly all the research you can do is backward looking.

With thousands of mutual funds, the ones that have performed well over a short period, will show up at the top of your charts. But their good performance can usually be chalked up to luck. By the time you send the hot fund your money, you are set up for a few years of bad times.

A lot of people who research and track these funds, also buy and sell frequently. That triggers tax implications and opens you up to a whole lot of human error. Plus, actively managed funds charge far more in annual expenses. Those can really eat into the returns you get. So it really is much more effective to invest in the entire U.S. and international stock market using a handful of index funds. You can then forget about your portfolio, other than maybe rebalancing once a year. You save in expenses and taxes - not to mention what you save in stress.

I think lots of people can learn something of this article. It is not because you manage your portfolio actively, that you will earn more.

Kathleen

Source : http://money.cnn.com/2007/11/15/pf/funds/ask_the_mole.moneymag/index.htm?postversion=2007111513

A MOTORBIKE AS COMPANY VEHICLE

The company vehicles haven’t escaped to some unpleasant financial measures. The employer has to base his fiscal deduction on the CO2 discharge of the car. Earlier the costs of a company car could be reduced to 75 per cent, nowadays the per cent will be reduced progressive in proportion to the CO2 discharge. For environmentally friendly cars the deduction will be raised to 80 or 90 per cent. The measure becomes generalized to the complete fleet of cars in April 2008. Further on explains the article why we have to consider a company motorbike instead of a car.

If a motorbike is leased by an employer then count the next fiscal rules/advantages:
The employer receives monthly a leasing bill that’s fiscal deductible for 100 per cent. The paid V.A.T. is also 100 per cent deductible at his V.A.T. notification. Next to this he hasn’t to pay a CO2 tax.

An employee will be taxed on benefits in kind. Two factors are important for the calculation of the benefit:
Kilometers home to work travel: The advantage will be calculated on flat rate kilometers of 5000 a year when your home 25 or less kilometers from work is. Above 25 kilometers the flat rate kilometers will be 7500 a year.
Fiscal hp: The fiscal hp will be linked to a flat rate kilometer rate. If we keep that in mind is the taxable advantage of a motorbike smaller in comparison with a company car, because the fiscal hp of a motorbike is generally lower.

A motorbike as company vehicle is useful because of the fiscal advantages. It’s not recommended to use a motorbike as a private vehicle: the weather isn’t always good, not safe for children, high chance on injuries or death,…
A motorbike as company vehicle is debatable. The fiscal advantages can’t compensate to the disadvantages.

Jan

http://www.cash.be/articles/index.jsp?articleID=111401&sectionID=981&siteID=73

Text message charges soar

It is the communication method of choice these days, but texting can totally add up.

Although teenagers have been driving the trend, nearly everyone is texting.
But that convenience comes at a price. If you do not shell out for a texting package, which can cost $3 to $20 a month depending on the provider and the plan, most carriers will charge you for each message whether sent or received.
And the price per text is on the rise. Earlier this year, some providers raised their rates to 15 cents a text, while others upped the cost to 20 cents per text, and those prices get even higher across the board for international messaging.
That can really add up. Especially with incoming texts that you cannot control. Paying per text can exponentially impact your monthly bill.
To avoid getting hit with a huge bill, the best option is to explore cost-effective packages which can offer a few hundred texts per month for a few dollars extra.
Consumers can also track their messaging activity during the billing cycle by reviewing their account online. Once you near your limit, cutting down on texts will keep your bill under control.
But a sure-fire plan is to avoid texting completely, and stick with old fashioned calling.

There are people, especially teenagers, who cannot live without their sell phone anymore. I think the bill for these people will be very expensive, but if you only use your sell phone when it is really necessary I do not think there will be any problem.

Kathleen

Source: http://money.cnn.com/2007/11/08/pf/raw_deal_texting/index.htm?postversion=2007111213

Benefits from giving

It’s wonderful when you can go true life with the credo “it’s better to give than to receive”. But it’s probably better when you can give and receive at the same time. When you’re budgeting your charities you must reconsider everything twice. It’s also a nice thing when you can pass the methods to your family. Charity is a nice thing to do. On the website are already 2 allocations given: “charitable sweat equity” and “bigger charity spending by bigger earners”.

You also want to be sure you follow the rules so you'll be able to easily and rapidly justify your donations should the IRS ever question them. Underneath are some guidelines:

• Plan your charity budget
  


• Sweep away street solicitations
  


• Relies receipts
  


• Say no to propped-up value
  

You can still maximize the cumulative amount that goes around you'll be able to give for the rest of your life by careful planning in light of the following tax facts and rules

• Outer limits
  


• Maximum and minimum hassle
  


• Unlock stock and barrel
  


• Know a benefits self-benefit

Of course there are still several others ways to look and invest at your charity budget. But when I look in the article those 2 are the most important and have probably the most impact.

Els

Source: http://www.forbes.com/personalfinance/philanthropy/2007/06/18/donations-charity-taxes-pf-education-in_af_0618soapbox_inl.html

How $ 100 oil would cost you

You should brace yourself for record gas prices before the holidays and higher airfares.

Its recent rise will soon start to bite, at the pump, the airline ticket counter and possibly in your home.

Drivers had gotten off easy, gas prices hadn’t kept up with the increase in oil prices. The main reason: Demand has been fairly tame.

The relative price of gasoline is low, and that’s unsustainable, says Norrish.

Expensive flights

Higher oil prices also mean higher airfare for travelers. Jet fuel has been going up consistently for the last 3 to 4 years to the point where it’s affecting the airlines bottom line. Any cost gets returned to the customer, so they’ve been bumping up ticket prices to make up the difference.

Heating up a bit

There will be higher heating bills for those who use oil with a 22 percent increase in bills from last year.

The bigger picture

Higher gas prices will lift the costs to transport all goods, and manufacturers will respond by raising prices for consumers. But this is just a fear, it isn’t certain yet.

I think it’s normal that prices are rising, but this don’t mean I find it a good thing. They should think about other resources in stead of gas. I don’t think raising the price is the right solution, we should do more research to green business and green methods.

Laura

Source: http://money.cnn.com/2007/11/09/news/economy/oil_pay/index.htm?postversion=2007110916

FINANCIAL RULES OF THUMB

There are some rules of thumb that can help you gauge your financial progress. The article informs us about five rules:

How much debt should you have?
Most experts agree that your total monthly debt payments shouldn’t exceed 36% of your gross monthly income and over time you have to reduce that number.

How much home should you buy?
You should start by calculating your debt-to-income ratio using the 36% guideline for the sum of your monthly debts. After subtracting your other debt, you are left with a monthly payment that should be appropriate.
Another rule of thumb for housing is that you should buy a house that costs no more than two and a half to three times your annual income.

How much money should you save?
One of the most widely used rules for saving is that you should save at least 10% of your income. This is typically assuming you are saving additional money into a retirement plan as well. This 10% rule applies to creating a savings cushion for unexpected expenses, a college education, or other goals.

How big should your emergency fund be?
Most experts suggest a household have between three and six months worth of expenses available in the event of an emergency.
example: monthly obligations = 1 729.75 EUR
emergency fund = between 4 844 EUR and 10 381.38 EUR

How much money will you need in retirement?
Many experts use the assumption that you will need to replace your pre-retirement income by 75-80%. If you make 55 361.15 EUR the year before you retire, you should expect to have a little over 41 519.93 EUR in income during retirement.

Everyone has a unique situation so I think it’s not really easy to keep up to this financial rules,
unexpected problems are never far away.

Jan

http://financialplan.about.com/od/personalfinance/a/rulesofthumb.htm?p=1

Wanna retire rich? Don't spend like Britney

Whether you’re worth $ 100 million like Britney Spears, or $ 100, the same simple strategies can help ensure a comfortable retirement.
Britney f.i. isn’t saving for retirement while she got a large income. Her excess may shock most of the people, but her saving habits are actually pretty normal. The overwhelming majority of American 20-somethings aren’t saving anything for their retirement either. This way they don’t take advantage of their biggest asset namely time.
You have to be able to set aside just a little each month; this can help to maintain your lifestyle in perpetuity. Hiring a team of people to handle your investments isn’t really necessary. You can just put your 8% in a so-called target-date retirement fond.
As time passes, and you get closer to retirement, the fund will automatically adjust that mix of stocks and bonds to more conservative levels. The best part with these funds is that you do nothing. You’ll never have to say, “Oops I did it again” when it comes to your retirement.

I think it’s an interesting article, because many young adults don’t really see their retirement coming closer. Most of them use their first salary to buy a car, a house, … Finally they own and gain their own money, and they can do whatever they want with it. But if only they would put aside just a little amount for their old days, they wouldn’t have to face problems in the future with it.

Laura

Source:
http://money.cnn.com/2007/11/06/pf/retirement/revell.moneymag/index.htm?postversion=2007110617

Time to get out of debt

When money was easy and housing was booming, piling on debt seemed to pose little risk. Now it is time to dig yourself out.

Not so long ago, living a little beyond your means was not necessary. Just live well, knowing you could always tap your equity once those credit-card balances got a bit too high. But that gamble is no longer paying off.
If you are in over your head, you have got to think strategically about managing your debt portfolio so that it does not crush you. The plan that follows can help you bear the burden.

Reset your priorities
Sometimes the best thing you can do is defer savings and instead put every available cent into paying off debt until you get your finances under control.

Stretch it out
If you own a house and you are now tapped out, lowering your payments with a 40-year loan could be a good move. You will spend more in interest charges, but if the alternative is falling behind in your bills and having to sell your house in a falling market, a longer mortgage is the lesser evil.

Shop like crazy
It is a reminder that you will need to shop around more than ever for the best deal.

I think this is a good plan to get your finances back under control. But if I was you, I would not let it get this far.

Kathleen

Source:
http://money.cnn.com/2007/11/02/pf/chatzky_november.moneymag/index.htm?postversion=2007110210