Pets are among the beloved creations known to man for ages, though pet ownership comes with a price. In due course, it is likely that your pet may require medical care and you may have to pay a big bill. As a means of taking care of such possibilities, pet insurance can be a good idea for most pets. But it is not always easy and you will have limitations set on your pet insurance by the insurance company. There are many considerations to be made before you decide on whether to take a pet insurance policy or not.

• Check if your pet insurance company has a list of providers.

Some pet insurance companies have an approved list of providers and hence, if you already have a veterinarian, you will have to verify if your veterinarian is one among the approved list. If not, then you will have to choose a different one to have your pet covered. But the good news is that most health insurance plans for pets permit you to select any veterinarian of your choice. Before you finally take up a policy from any company, find out about it to avoid surprises later.

• Learn about the exclusions

No matter which pet health insurance policy you take up, it will have exclusions. These include pre-existing conditions of the pets such as injuries, medical concerns of any kind those have occurred before enrollment into their policy, neutering, vaccinations, dental care, flea control or other illnesses in cats which were not neutered before they turned one.

• Understand deductibles and co-pays

For each procedure performed on the pet, based on its age, certain insurance companies charge deductibles. Get to know about the deductible amount and also the co-pay percentage.

• Types of caps

There are three types of caps on the policies namely incident, annual and lifetime caps. Find out the types of caps your pet insurance policy has and determine if the needs of your pet can be confined to that amount. Incident cap refers to the amount up to which each procedure or illness is covered. Annual cap refers to the maximum limit on the coverage for a calendar year, beyond which no more coverage will be offered. Lifetime cap is the maximum amount up to which your pet is covered during their lifetime.

• Find out if your pet insurance company pays a flat percentage or applies a schedule after deductible.

Certain companies have a schedule listing with specific maximum coverage amount on various diseases, procedures, and conditions. Few other companies pay a certain percentage of the schedule amount after a flat rate deductible is made. Calculate to see if it is feasible to your pet’s needs.

• Pick a plan right for your pet

You can save high costs by choosing a plan that would work best for your pet. Few companies provide a selection of plans based on the needs of pets such as plans for senior cats, accident coverage, etc. Coverage is also available for preventive care, extended cancer, dental and many more.

• Does your company offer additional benefits?

Certain pet health insurance companies go the extra mile to provide added benefits such as coverage for damage liability on third party property, boarding fees, discounts for enrolling multiple pets, etc. Find out if there are any extra benefits obtained by taking up a policy from your pet health insurance company that can lead to additional savings.

Conclusion

At the end, it is your individual preference whether you choose to buy pet insurance or not. It may happen that even though you have a healthy pet, you may have to face circumstances when your pet may suddenly fall sick, become old, get hurt or may cause damage to third party property. Eventually you may have to pay a large amount of money from your pocket, in the absence of any kind of insurance coverage. Considering those factors, it is sensible to pay for a pet insurance policy instead.

It will especially be necessary for those who have certain breeds of pets which are more prone to chronic ailments or just that the probability of those pets facing illness in the future is high. On the other hand, if you discipline yourself and accumulate the premium payments you would otherwise pay toward policy into a savings plan, you can allocate that amount for your pet health needs. That could serve as an alternative to having a pet insurance policy but if you do not possess control over those savings, you will be unable to afford anything. Nevertheless, there are many pet owners who value the peace of mind and protection offered by any pet insurance policy. No matter what kind of policy you finally decide to take up, make sure that you fully understand the extent of coverage and your out-of-pocket expenses prior to signing up for any policy.

Are you planning to take a vacation sooner? Then it is most likely that you must be hunting through several booking sites and airline websites in search of a good deal to find a cheap flight ticket. It is not by mere luck that you can end up with a cheap airfare. You will have to look for the right price at the right place. The following tips can help you to book a cheap flight ticket without breaking the bank.

Search through Airline Websites Which Offer Deals

Most of the times, the airline deals posted online are mistaken to be an exaggeration and thus ignored. When an upcoming flight has empty seats, those seats are usually marked down by the airlines. You will be able to find such deals on the “last minute bargain” page of those airlines.

Follow Techniques to Cut Flying Costs

Look through the “Special Offer Pages” of the airlines. Most airlines offer last minute deals to fill up the seats which would otherwise be empty. Browse through the sales pages of the airlines to find promotions or any kind of special offers. You will have to locate them and book at the earliest. It is not necessary that all deals need to be the last minute ones. You will find a few which can be booked in advance and these kinds of deals are offered by airlines so as not to have empty seats on their pricey flights. You can benefit from such offers with just a little bit of extra efforts.

Another option is to bid your ticket. When a buyer purchases a ticket through internet services like Hotwire or Priceline, those tickets become non-refundable and the buyer does not have the privilege to select the airline or flight of his choice. The day you wish to depart can be chosen by you but you will be unable to choose your specific time within that day. In such cases, the airlines perform tradeoffs to obtain considerable savings on seats that would most probably not be sold via usual booking procedures. You can take advantage of such offers, but remember that you will have to maintain high flexibility with your itineraries.

You can also act as an air courier. Companies who are in need of shipping small packages abroad hire a courier through whose checked baggage, goods can be delivered. When you become an air courier, your will receive a significant reduction in your airfare but you will have to give away your whole baggage allotment to the shipping requirements of your hiring company. You will also not be able to plan your schedules according to your needs but will have to comply as per the needs of the shipper. On the other hand, if you are one who can ready to undertake a flexible schedule and to carry light luggage, this will be a very good opportunity.

Learn to Spot Hidden Airfare Fees

Most airfare prices keep increasing due to various factors such as increase in fuel costs. The fees and taxes levied can be difficult to be noticed but they are vital since when they add up to your base price, the final costs can be much higher.

Be Practical with the “Base Price”

It will be beneficial if you decide beforehand on the base price you are willing to offer. You will be able to make better bargains and grab good fares if you have an idea on the base price offered. You can look for information such as the amount paid by someone else on the same day for the route you are looking for or the best price received the earlier week. You can also make use of the internet tools meant for them.

Check to see if Budget Carriers are the right ones for you

At times, budget carriers may charge additionally for an in-flight snack or if you have a heavy baggage. You may also have to access smaller airports at a remote place. Check to see if budget carriers will work for you, for if they do, then you may be able to reap good savings.

Make Best Use of Frequent Flier Miles

Keep an eye on the miles accumulated and you should also learn as to when it is good to spend cash to buy a ticket instead of using your flier miles to bring in more benefits. Take into consideration the partners of your miles program. Find out which rental car companies and hotels are such partners and utilize them during your travel. Also, take steps to not let your miles expire.

Make Use of Internet Tools for Airfares Tracking

It is quite impossible to be seated in front of a computer to monitor and track the fares throughout the day. This is where the internet tools come to your rescue. Some of them are Airware Watchdog, Fare Watch, Kayak’s Explore and Yapta. Get to know the pros and cons of each of these tools. Search using multiple tools at a time to get the best deals.

Check to See if a Mileage Credit Card Will Work for You

Mileage credit cards levy high interest rates and therefore you need to be certain as to whether you would need them or not. If you can use credit card for your payments and can pay off your balances on time, it can be rewarding. Take into consideration your travel practices and your travel locations.

Compare Airfares at Various Airports

Airlines compete with each other for fares along similar routes and hence there are variable fares for different cities. Try to see if better fares are offered at airports within about 100 mile radius of your home.

Are you in the market to buy a home and planning to apply for a loan? Gone are those days when a buyer would have to choose from among a few kinds of home loans. You will find numerous financing options available today and it can often be overwhelming to choose a loan that is in conjunction with your present financial state and your plans in the future. By familiarizing yourself with the types of home loans obtainable, you can be all set to embark on your journey towards your goal of owning a home.

COMMON LOAN TYPES

Fixed-Rate Mortgage

The interest rate in a fixed-rate mortgage is the same throughout the life of the loan. It is one of the widely chosen types of home loan. It requires simple planning, budgeting and safeguards from inflation. They are available in 10-year, 15-year, 20-year, 30-year, 40-year or 50-year mortgage terms and you can select the one that fits your budget.

VA Loans

Veterans who have served in the U.S. Armed Services are eligible to receive VA Loans, which is a kind of government loan. Based on certain factors like the year of service, type of discharge – whether honorable or not, the requirements are applicable. As a borrower, you do not require a down payment with VA loans and that means added benefits. VA loans are funded by a conventional lender, though guaranteed by the Department of Veteran Affairs.

FHA Loans

If you are a first time home buyer, you might find FHA loans to be most appropriate due to the reason that FICO scores are not required to qualify for the loan and it has only minimal requirements for down payment. The government insures these kinds of loans through mortgage insurance.

HYBRID LOAN TYPES

These type of loans are a combination of both fixed-rate and adjustable-rate mortgages.

Adjustable-Rate Mortgages

There is fluctuation in the interest rates of Adjustable-Rate mortgages. Prior to the adjustment, these mortgages have the ability to remain in a fixed state or move up or down monthly, annually or semi-annually.

Combo Mortgage Loans

Combo mortgage loans have 2 loans namely a first mortgage and a second mortgage. These can be either fixed-rate or adjustable-rate mortgages or a blend of both. In order to avoid the payment of private mortgage insurance, as long as the down payment is less than 20%, borrowers can get two loans.

Option ARM (Adjustable Rate Mortgage) Loans

There is periodic fluctuation in the interest rates of these mortgages and hence they can be considered as adjustable-rate mortgages. Borrowers in these types of loans have the option to select from an assortment of payment options and index rates.

OTHER TYPES OF MORTGAGE LOANS

Equity Mortgage Loans

While a first mortgage is present, equity loans occupy the secondary position. Cash is received when equity loans are taken. These loans can be fixed, adjustable or a line of credit. Funds can be withdrawn by the borrower from these, as and when required.

Streamlined-K Loans

A streamlined-K loan offered by FHA rolls the funds into a single loan and offers it to a borrower for home fixings. In comparison to 203K, it can be acquired with ease and necessitates less paperwork, though the limits on the dollars toward repairs are lower in these loans.

Reverse Mortgages

Contrary to the borrower making payments to the lender every month, the lender makes monthly payments to the borrower, provided that the borrower continues to reside in the home. Reverse mortgage loans have their interest type as fixed or adjustable and these loans are offered to any one exceeding 62 years of age with sufficient equity.

Bridge Loan

Bridge loans can be obtained when the seller of a home is in need of equity to purchase another home, while his existing home has already been put up on the market and is yet to be sold. In these cases, the existing home of the seller is used as security for such loans.

Conclusion

The length of time planned to own a property is a crucial factor on the type of loan to be opted by the borrower. If the stay in a home is intended to be for a longer period of time such as 15 years or more, a fixed-rate mortgage might be more suitable. Else, if the stay is planned to be for a shorter period of time such as 4 years, then an adjustable-rate mortgage with a low introductory rate might be the best. You can obtain better financial benefits by choosing the right type of home loan. Under normal circumstances, the lowest interest rate is offered by Adjustable Rate Mortgages, followed by Hybrid loans, and then comes the Fixed Rate Mortgages. Those with a bad credit score or possessing more debts might find it difficult to obtain any kind of mortgage loans. No matter which kind of mortgage you finally decide to go, it is eventually narrowed down to two choices – fixed loan or adjustable-rate loan. You also need to decide whether you prefer a government-backed loan or a conventional loan. Once you make the necessary choices, it is pretty simple to choose the right loan in adherence to your financial status.

Most of the problems happening these days in the real estate market are mainly because of the homeowners outstretching their budgets to own the houses they really couldn’t afford but desired. As humans, each of us dream to own a home with lot of space and a nice view, big yard, remarkable location, etc. But the issue is that, just a few make efforts to estimate if their affordability matches with the home they wish to own and how buying an expensive home would ruin them financially. Owning a home is not similar to owning a new laptop or any technical device in the latest version. You need to know how much house you can afford, before you even set out to look for one.

The following steps can offer guidance to buy your right house within your budget:

• Conservative Start

Many first time homeowners begin by buying a big home beyond their affordability and then later struggle to pay off the mortgages. Instead, start off with a home reasonably sized according to your needs that can fit your budget. Later during the coming years, if there is a need for a larger home, you can find a bigger home after setting a maximum budget for it.

• List Down your Preferable Features

You will have to decide on what features you would like to have in your home before you begin your search. Take a drive around your neighborhood, browse through catalogs, etc. to find more information.

• Features Prioritization

Having listed your expected features in your new home, the next step would be to prioritize those features. At a later stage after you have finalized your budget, this kind of prioritization will even enable you to make tradeoffs. You can share your features prioritization with your real estate agent and it can in turn be beneficial to him to locate the right kind of house for your needs.

• Check your Down Payment Affordability

Determine how much cash you have available for a down payment. You also need to check your affordability on closing costs. With these data, you can decide on what kind of loans you wish to get.

• Do your Math Homework 

Determine your Debt-to-Income Ratio

A rule of thumb used by many lenders on the amount that you can borrow is the debt-to-income ratio, which considers your mortgage payments, and any other debts which you may have, for example, credit card debts, student loans, car loans, etc. The debt-to-income ratio is represented in a percentage of how much of your income is used to pay for your debts. Normally, the upper limit set by the majority of the lenders is a ratio of 36%. You can expect to have a higher interest rate or be denied for ratios above 36%. As such, greater than 28% toward housing expenses is not preferred.

Calculate your gross monthly income (income before taxes and other expenses are removed) and multiply it by 0.36. For instance, if your gross monthly income is $7,000, then $7,000 X 0.36 = $1,800. It implies that your total monthly debt payments (including mortgage payment) should not exceed $1,800.

Following that, find out your total payments toward non-mortgage debt (car payments, credit card payments, etc.). For instance, if it equals $800, then the maximum mortgage payments would be: $1,800 – $800 = $1,000. Thus, with the example provided here, it can be determined that you would be able to afford a home with a mortgage payment of $1,000, including insurance, property taxes, etc.

• Try Getting Prequalified for a Loan

When you get prequalified for a loan, a loan professional will be reviewing your finances, which in turn can be beneficial to you by knowing if your home buying plan is realistic. As a part of the process, the lender will be performing a thorough evaluation of your finances before prequalifying you for the loan. You will get to know how good your state is with regard to the current market and also it does not cost any money.

• Be Prepared to Make Tradeoffs

It is good if you find a home with all of your preferred features and the one within your budget. Else, you will have to revisit your list to decide on which features you definitely expect and which among them you can live without. You need to make up your mind on what features you are willing to compromise and those you cannot, in order to get hold of a home as per your needs.

• Look for a Good Realtor

This is a crucial step in finding the right home. A good realtor has sufficient knowledge on the current market and can offer his valuable suggestions to hook you up with the right home within your budget. In case if it is not feasible to find a home matching your preferred features and your budget limit, he will be able to propose alternative measures to benefit you in the long run.

While paying off student loans and college tuition continue to be financial burdens on most college students, saving money seems to be almost impossible in today’s world of temptations. To live within a budget at the same time while you try to balance school, work, and social life, it can be crushing to stay out of debts and save money. But with careful planning of your expenses and adopting the necessary measures, you will find it simple to have a normal student living that fulfils your needs.

Keep an Eye on your Expenses

In a piece of paper, list down all possible expenses each month and your income. Your income should include items like paychecks, payments you receive from student loans, any financial help from parents, etc. Your expenses should include items like tuition, room charges, food, transportation, school supplies, medical, insurance, etc. If your income is variable, take into consideration the lowest income expected. In your final outcome, your income should be greater than your expenses. Else, budgeting has to be modified by minimizing your expenses, so as not to exceed the income.

Use a Debit Card Instead of a Credit Card

Most college students are lured to use a credit card leading to unnecessary expenses, which in turn ruins their financial status right at the beginning. To avert this condition, you can use a cash back debit card and earn good rewards every time you use the card.

Buy Used Textbooks

It is convenient to purchase a new textbook from a bookstore but you will eventually be spending large amount of money each year to get those new books. As an alternative, you can either buy or borrow used textbooks from your seniors or through some other source. Of course it will cost effort on your part to find used books, but it will be worth considering the savings you will make over a period of time.

Avoid Impulse Shopping

You will end up buying too many things which you do not require, thus wasting lot of money instead of saving. Prior to making any purchase, ask yourself if you really need it and how badly you need it.

Quit Needless Habits

Like anyone, you too must be having needless bad habits like smoking, buying very expensive items, partying too much, etc. Quit those habits and you will find yourself saving lot of money, which can be used for other necessary expenses.

Stay at Home for Entertainment

Whenever possible, avoid leaving home for movies, restaurants, etc. Instead, you can invite your friends to your home for games, movies, etc.

Look Out for Side Jobs

Try to find a side job with flexible hours, such that you can balance school and work. It will help to make payments toward tuition, other fees, etc.

Ask for Student Discount

Student discount can be obtained at entertainment areas (such as theaters), insurance, computers, etc. At all such places, ask for student discounts as most places are happy to offer discounts to students to help them in their progress.

Reduce Your Travel

If you live close to your college campus, you can save big on transportation. Whenever there is a need to travel, use a bicycle if that is possible. By reducing the transportation, you save on fuel, vehicle maintenance charges, vehicle insurance, etc., all of which can swallow a large amount of money.

Dine at Home or at the Cafeteria

It can be very appealing to dine out with friends often, but that puts a large hole into your pocket, every time you dine out. Moreover, you may find it hard to prepare meals at home and would instead prefer to go the fast food way. By following a little more discipline and managing your time, you will be able to cook at home and save huge money. Or you can prepare meals during the weekend for the days ahead. In addition, you can also find out if your college offers discount cards to dine at the cafeteria.

Fight Boredom by Staying Busy

Due to boredom, it often so happens that we resolve to bad habits and unnecessary expenditures. As a result of involvement in such acts, a lot of money is passed down the drain. Keep yourself busy by participating in any activity like sports, clubs or anything related to your schoolwork that do not necessitate expenses.

Discuss your Financial Plan with your Roommates

When you have a roommate, discuss with him/her your financial plans, in order to make sure that you both are on track. It is highly essential that you should be able to stick to your budget without any hindrances from your roommates. 

Conclusion

College education is a major step that you have undertaken to improve the prospects of your job in the future. But you need to have a strong foundation with excellent financial health to reach your goals. By carefully analyzing your needs, wants, income and expenses, you can be worry-free of your financial burdens during your college life and can save money.

No matter how hard I try to convince myself – and Mother Nature – that it’s spring, the weather seems to disagree with me. And although the calendar may say it’s March, and although Punxsutawney Phil may have failed to see his shadow back on Groundhog’s Day, it’s still cold enough where we live most nights that I’m forced to turn on the heat.

In years passed, I’d force my husband to don multiple layers of socks and sweatpants while I turned the thermostat down to 62ºF in an all out effort to keep our home heating bill low. But with two little kids running around our house – kids who, I should add, absolutely refuse to wear socks and, in some cases, pants – I’ve learned that keeping the house as cold as a mortician’s freezer isn’t all that feasible; so, I’ve had to try different tactics to keep our home heating bill from rising as high as the temperature inside.

Back in January, I saw firsthand just how out of control our home heating bill had become. Over the past few years, our average heating bill during the winter has been about $90; but during the first month of 2013, we somehow managed to use $111 worth of natural gas to heat our house. Something had to be done.

We live in a 2-story home that is roughly 1800 square feet. We have a sunroom addition that boasts its own heating and cooling system, which runs on electric, not gas. All our bedrooms are on the second floor, while our family room, kitchen, dining room, and that sunroom are on the ground level. Each floor has its own furnace, air conditioner, and thermostat, which is pretty much the status quo where we live.

I decided to use all these things to my advantage in order to shave as much as possible off our home heating bill. Over the next month, I:

• Turned the heat on the ground floor down to 62º every night after I put the kids to bed; I simultaneously turned the upstairs thermostat up to 68º. When I woke up in the morning, I reversed the settings.
• Opened up our blinds, shades, and curtains when direct sunlight was filtering through them; that means I left them closed at night and on cloudy days.
• On days that didn’t require a lot of additional heat, I’d open up the French doors to our sunroom, turn off the downstairs thermostat, and use the addition’s electric heater to warm up the first floor.
• Limited the length of my hot showers and switched to a cold water laundry detergent, as our water is also heated by natural gas and is a part of our overall heating bill.

I was eager for the February heating bill to arrive in my mailbox to see how much we’d saved. When it did, I wasn’t disappointed:

For the 32-day billing period, our heating charges were $85.57, or $2.67/day. Comparatively, our January bill only covered 30 days, meaning we spent $3.70/day during that cycle. I’d managed to save us over $1/day with our changes!

I know what you’re thinking: maybe it was simply warmer in February and you didn’t need to turn the heat on as much. I thought about that too, so I called up an old friend, who just happens to be the chief meteorologist at the local TV station where I spent years working as a news producer. I asked her to compare the average temperature for January with the average temperature for February… turns out, it was actually about two degrees colder in February than it was in January. I’d saved $26 on my home heating bill – a decrease of 23%! – even though I had more need for the natural gas that heats my home.

What are your tips for keeping your heating bill low? Are you as eager to turn off your furnace – and ramp up your AC – as I am?

My husband and I are still weighing the pros and cons of our recent property appraisal, which left us with an underwater mortgage. We have until the end of the month to decide whether or not we’re going to appeal the county’s decision – and the property taxes that go along with it – and, although I thought it would be a clear-cut decision, it’s proving to be far from it.

The Pros

On one hand, having a low property value is a good thing. That’s because the lower property value comes with a lower property tax bill – at least theoretically. However, the county is in the midst of attempting to increase property taxes – rather, the property tax rate – by more than 9% in order to recoup some of the losses of its recent revaluations. That kind of negates the positive aspect of having what I consider to be an artificially low property value.

The Cons

Still, if we weren’t planning to put our house on the market in the next month or two – if we weren’t planning on moving at all – the new value of our home wouldn’t be all that damning. It’s largely because we’re about to try to sell the place that it hurts so bad. After all, it’s going to be tough to ask what we consider to be a fair price (probably in the mid-$140s) when the county thinks our house is worth $10,000 less.

But the thing is, having a low tax value is going to be bad not just for my husband and I, and our chances of selling our house without taking a loss, but for our entire neighborhood and, potentially, the people who ultimately purchase the house from us, too. Here’s how:

A Neighborhood in Decline

At this point, I’m pretty confident in saying that my neighborhood is in “decline.” We were on the verge before these recent reappraisals, but the county’s heavy-handed evaluations really pushed us over the edge. In the few short weeks since the property value notices appeared in our mailboxes, a slew of my neighbors have put their homes on the market for next to nothing. I’ve done enough reading on urban decline to know that this is often the first sign of a neighborhood in trouble. While it likely won’t affect the people who buy my house or any home in our neighborhood over the next year or so, over time, we’re likely to see more renters move into our neighborhood as investors scoop up homes at rock bottom prices. Another concern is that the lower property values – and corresponding sale prices – will bring in a different type of homeowner, perhaps one less inclined to keep their property up to standards.

Difficulty Securing a Loan

But there’s a more immediate issue with these new tax values, and it goes beyond my neighborhood alone. As I mentioned in my previous post, the county devalued property across the board in our jurisdiction; by published reports, they wiped away 8-11% of our county’s tax base with these appraisals. While my neighborhood was particularly hard hit, we were far from the only ones.

Let’s say we were able to get someone to bite at an asking price of $145,000, even though our tax value is now $134,500. A family looking to put down 3% on an FHA loan would be taking out a mortgage for $140,650. There’s a real possibility that an underwriter wouldn’t approve a loan that would be underwater – from a tax value point of view – right from the start. This could make it tougher for first-time or under-capitalized homeowners to get into the market.

Our Decision

Ultimately, we can’t focus on what a low property value will do to our neighborhood; we have to consider how it will affect our individual circumstances… which is why we’ve decided to go ahead and appeal the county’s assessed value. I’ve heard from friends and neighbors who have gone through the appeals process in years passed – usually in an effort to get a lower tax value and, hence, a lower tax bill – without much success, so I’m not holding out hope that we’ll get what we want. But I strongly feel that we at least have to make the effort.

Have you ever invested in Certificates of Deposit? If you’re younger than 25, you might not even know what a CD is, and there’s actually good reason for that. Back in the 80s, inflation was high, which allowed the rates of various investments to grow inflated as well. In that time period, you could invest in a five year CD for over 12% interest! Now that’s pretty impressive! Do you have any idea what kind of interest you would get today with that same investment term? Not even 2%. It would probably be something like 1.5%. For this reason, they just haven’t been as popular of an investment anymore. So what can you invest in that’s safe, but will most likely yield you a little more?

A Plain Old Checking Account

It sounds crazy, but did you know that there are some checking accounts that pay interest of 3 or 4%? Mostly, these rates are from credit unions, and there are some requirements that you must meet each month in order to get this rate, but it’s quite attainable! Last year alone I earned over $100 because I did two simple things: (1) I checked my account online at least 4 times a month, and (2) I made at least 10 transactions with my debit card (and I of course had some money in the account to make interest money off from). That’s it! If you have a credit union in your area, they may be offering the same deal. It’s definitely worth looking into.

Invest in the Bond Market

If you’re looking to keep your money safe, but you want still want to earn some interest, you may be interested in fixed rate bonds. There is absolutely no guess work when it comes to investing in these bonds. You can purchase the bond for a set amount of money and they’ll tell you the percent interest that the bond will pay. These types are very predictable and are often very safe. This is why you often hear of retirees switching their investments from the stock market into the bond market.

Invest in Real Estate

This is definitely more of a hands-on investment, but I just can’t help but mention it here. Real estate has increased in value over the past year or so, but it has still not reached the value that it once was in 2007. If you can find a deal in real estate, not only will you gain earnings on the value of the house, but you’ll be earning a cash flow that’s greater than your monthly expenses! While no real estate purchase is a guaranteed success, there are certainly many options available right now that make sense for a buy-and-rent strategy.

With each of these options available (among many others), why would you limit yourself to CDs? What are you going to gain by earning a pitiful 1.5% on your money over the course of 5 years. I could much rather take open up a checking account, invest in the bond market, or try my hand at real estate investing.

Ahh, the ubiquitous 401k…. Is there anything we don’t know about this omnipresent investment? It was conceived in 1978 and rang in the death knell for conventional pension plans by the early 80’s.  Employers leaped at the opportunity to phase out burdensome pension plans which were devastating their balance sheets. Employees found this painless savings mechanism attractive as well, because they were often sweetened by employer contributions. Since then, more than 60% of our retirement plans are some form of 401k. I think you would agree this bears closer examination.

What is a 401k?

In the simplest of terms, it is an investment retirement account, differing from a traditional “IRA” in several significant ways:

• Annual contribution limits are higher for a 401k than a traditional IRA.

• Plans are administered by your employer.

• Employers may contribute to your plan, matching your contribution dollar for dollar, perhaps less, perhaps not at all.

• Employers may require that you be “vested” that is to say, a member of the plan for a specified number of years before you are entitled to retain employer contributions.

• You may, for specific purposes or circumstances, borrow from your plan.

They are the same as a traditional IRA in that:

• The 401k is funded with pretax dollars, which means that you will pay income tax on withdrawals from the plan at retirement.

• These retirement withdrawals are permitted when you attain 59.5 years of age.

• Penalties attach for withdrawals prior to retirement age (59.5 years).

• Catch-up contributions are permitted for those who attain age 50 before the end of the year.

Are 401k’s safe?

• That depends on your definition of safe. If you mean, are your contributions at risk, the answer is YES!

• There is no guarantee that you will see gains in the value of your investment portfolio. At worst, some of the investments could “go south”. You are allowed investment choices. While you cannot choose the actual investment, you can choose the level of risk you are willing to accept.

• There is no insurance on a 401k per se, but if your investments are made through an SIPC (Security Investors Protection Corporation) insured brokerage firm, you at least have some protection against a failed brokerage house.

My employer offers a Roth 401k. Should I consider it?

In my opinion, there are two factors that affect this decision. If your answer is yes to either one of the questions below, I suggest you choose a Roth.

1        Will my income at retirement exceed my current income?

2        Am I struggling with the contribution limits of my 401k?

Now allow me to explain…

Contributions to a Roth are after tax dollars. When you begin taking disbursements from a Roth 401k plan at retirement, there are no income taxes to pay on the money you withdraw. An important advantage if you are in an unfavorable tax bracket. That’s why a yes answer to the first question should steer you to a Roth.

The contribution limits on the Roth are no different, however, since you are contributing “after tax” dollars, you have in reality tucked away more “tax-advantaged” money, making a “yes” answer to question 2 a persuasive reason to opt for the Roth plan.

Only a small percentage of employers are offering the Roth version, and if your employer isn’t one of them you can invest in a Roth IRA in conjunction with your traditional 401k. Your annual contribution maximum is about two-thirds less than the Roth 401k, but it’s still a great option.

Hopefully, I’ve given you some ‘food for thought’ with regard to your retirement investments. I’m sure many of you ‘boomers’ are giving increased thought to your investments as they relate to retirement. I know our readers could benefit from your experience. Please to a moment to comment! Thanks!

I have paid my mortgage every month for six and a half years; for most of that time, I’ve added a little bit more to my monthly payments to pay down the principal. We’ve refinanced to a lower interest rate, and we didn’t buy more home than we could afford. We bought our house at the height of the market, but made some capital improvements that we thought would raise the value of our home. We kept our house in excellent condition, both inside and out. And yet, despite all the effort, I’m feeling utterly defeated… because, as of last week, we officially are looking at an underwater mortgage.

Huh? What Does That Mean?

In case you’ve been living under a rock for the past five years, let me give you a quick refresher on exactly what constitutes an underwater mortgage. Basically, it’s when you owe more on the home loan than the property is work. The latest national numbers suggest 27.5% of American homeowners are underwater on their mortgages, which is also called negative equity. While that’s down from from 31% in late 2011, more than 13.8 homeowners – representing more than $1 trillion in negative equity – are still underwater as of the 4th quarter of 2012.

How Did We End Up Here?

When we bought our house in August 2006, we paid $146,900 and put down 5% with our down payment – a foolish decision at the time, but we were young and stupid. We ultimately took out a home loan for about $140,000. Three years later, we made another dumb decision; we refinanced – to a low rate (at the time) of 4.75% – but wrapped our closing costs into the new mortgage.

When we refinanced in 2009, two things happened in a very short period of time. First, the county conducted their routine appraisals; it’s something they do every four years to reevaluate property values and property taxes. Between the time we bought our home and this revaluation, we redid our kitchen (nothing high end, just new floors – which we installed ourselves – and mid-range solid countertops) and put on a sunroom addition to our house. The county valued our home at $161,800. Then, about two months later, we had an appraisal for our refinance; the home was valued by the bank at $161,000 – pretty comparable to what the county said it was worth. At the time, I remember being surprised that our house had appreciated so well. Yes, we’d put in some big improvements and additions, but in terms of what we put into the house, we were pleased with the appraisals, especially given the housing market at the time.

Fast forward four years, and the county has just redone their evaluation of property values. The results are disastrous.

Breaking Down the Numbers

I was expecting a little pain when I opened the county’s property reappraisals, but the number I saw on that page was shocking. They valued our house at just $134,500 – more than $12,000 than what we bought it for six years earlier (before all those upgrades) and almost $27,000 less than the two appraisals we had in 2009. That difference of $27,000 of lost equity represented nearly 17% of our home’s value. As it stands, we owe $134,671 on our house, so we’re technically $161 underwater – although that negative equity will be erased within the next month or two.

We’re not the only one who lost gargantuan amounts of money with our new property values. Many of our neighbors lost close to 20% of their homes’ values; overall, the county shaved off between 8 and 11% in property values across the area – now they’re talking about raising taxes.

However, the property values were very haphazard; in my neighborhood, there are several homes with significantly less square footage, smaller lots, and fewer upgrades that are valued at $20,000 more than my home. Why? According to the tax office, it’s because I (and many of my neighbors) own two-story homes. The sale price of the two-story homes purchased over the past two years in my area forced the county to take 15% off our property values; however, not a single ranch or one-and-a-half story home in our area sold in the past two years – not for lack of trying, as several owners tried and failed to sell for rock bottom prices, but literally couldn’t give their homes away – and without a lack of comps, those homes only lost 5% or less of their value, which seemed par for the course.

Moving Forward

I think it’s imperative we make an effort to get the property value increased, since we plan on moving out of state in the next six months and need to sell the house; the only way to do that is by appealing the county’s tax valuation.

Do you think it’s worth our time and effort? Do you think we stand a chance of getting the county to increase our property value?