June 2010 - Posts
Television is full of advertisements aimed at selling you a new car. The industry is counting on low interest rates, an upswing in the economy, and the guarantee that if you lose your job, you have an extended grace period on your loan.
But if you're in the market for a new car, before you start shopping around, be sure to call your insurance agent first. Insurance companies base rates primarily on your driving history, but an expensive new vehicle raises flags that can add $1,000 or more to your annual tab.
Because of the economic depression, the number of Americans driving without insurance has risen. In 2008, 13.8 percent of drivers were uninsured, compared to 16.3 percent today. And those who do have insurance are paying more for it. According to the Bureau of Labor Statistics, the cost of motor vehicle insurance rose just 7.6 percent between 2006 and 2009. But it jumped 4.5 percent between 2008 and 2009. According to industry experts, this is because the cost of repairs has risen sharply.
If you decide to purchase a new vehicle, call your insurance company for estimates once you've narrowed down your purchase choices. Then consider these tips as you review your options:
• Assess your driver profile. Insurer records give insurance companies a good idea of what kind of driver goes for a particular type of vehicle. That profile can help or hurt you. For example, minivan or small SUV owners tend to not use the cars to commute and avoid night driving, and are seen as safer drivers and are the cheapest to insure. Sports car drivers pay more for insurance.
• Consider the model year. The latest model year is more expensive. Wait to buy until there's a newer model on the lot.
• Ask about recalls. If you're considering buying a car that has had a recall, ask your insurer if that will impact your insurance rate.
• Pick your own color. Red cars, contrary to popular belief, don't cost more to insure.
• Check safety records. Insurers like models that have a record of few claims. You may be able to lower your rate through discounts for features like anti-lock brakes or anti-theft devices. They can knock 10 percent off your bill.
• Combine policies. Buying any new car may help cut your overall bill, and many insurance companies offer discounts of 10 percent to 20 percent for insuring more than one vehicle.
• Look at hybrids. They have inexpensive parts and mechanics must be specially trained, which pushes up costs. But owners tend to be more responsible and safe drivers, and a solid driving record can make the difference in how affordable insurance is for a hybrid.
The bottom line is this: do your homework and shop around. Communicate with your insurance agent. And in the end, you'll be driving a lot happier and safer...with a much fatter wallet.
More than half of all U.S. businesses are home-based, yet these types of businesses are often dismissed as hobbies or part-time ventures with limited economic impact.
But some research shows that about 6.6 million home-based businesses provide at least half of their owners' household income. The number of "homepreneurs" will continue to grow over the next decade, due in part to a sluggish economy, high unemployment and lack of jobs.
With that in mind, there are trends that we can look for in this part of the business world.
• Small business will continue to focus on cost containment and cash flow. The obvious cost advantage of a home-based business will lead to more small businesses being or becoming home-based.
• A new, do-it-yourself movement is gathering steam among homepreneurs. Crafters, digital tinkerers, green advocates and others are using their garages, basements and backyards as their factories. These artisans are combining digital technology and tools with traditional methods to create innovative products, processes and business models.
• Cloud-based IT services provide access to advanced computing capabilities on a variable cost basis, reduces the need for IT infrastructure and support and enables mobile computing. The Cloud is a key driver of the shift toward home businesses.
• Mobile computing growth has provided home businesses with the tools needed to operate and mange a distributed business using smart phones, netbooks and location-based Internet services.
• Social computing is not just a trend among non-business folk. Social media are online marketing tools that allow home businesses to develop sophisticated marketing programs like those once only available to large companies.
• New localism is a trend that has been around for a while, and is driven by changing demographics, technology, rising energy prices and concerns about the environment. Americans are becoming more concerned about where they live; their communities. Home businesses tap into this by allowing greater community focus for the owner and by benefitting from market opportunities created by locally-oriented customers.
• Aging baby boomers are flocking to home business, drawn by the flexibility, the opportunity for an improved work/life balance and the desire to pursue a new career.
• Interest in balancing life and work is rising among all demographic segments. Homepreneurs often cite work/life balance as one of the key benefits of home business ownership.
The Federal Reserve has released new rules that will limit most credit card penalties to $25, and fees for not using the cards will be eliminated. The new rules will take effect Aug. 22.
"The Federal Reserve's guidelines issued today are great news for consumers," said Rep. Carolyn Maloney (D-N.Y.), one of the authors of the credit card laws.
The Fed's ruling could mean lower interest rates for consumers, and will require banks to reconsider interest rate hikes that have been put in place during the past year. Banks would be forced to reduce rates if the reasons for the increases are non-existent. Regulators will review and enforce the cuts.
But with the new limit comes a little wiggle room for the credit card companies. The Fed leaves room for larger penalty fees to be charged if a consumer has shown a pattern of repeated violations or if a card issuer can show that a higher fee offsets its own costs in dealing with the penalty.
For consumers, the new rules mean no more being fearful that they'll be charged a fee for not using their cards. It also means that penalty fees can't exceed the dollar amount incurred by the customer's violation that caused the fee. In other words, if a customer exceeds a credit limit of $5, that customer cannot be charged more than $5 as an over-the-limit fee.
Consumers can also wave goodbye to multiple penalty fees, as long as the violation was based on a single late payment. The $25 limit will mean significant savings for consumers who face median penalty fees of $39. Credit card companies have also been prohibited form hiking interest rates on existing balances as long as customers pay their bills on time. They are also required now to notify their customers at least 45 days in advance of interest rate increases and most fee changes.
But if cardholders are repeatedly late or over their credit limit, and the issuer can justify the fee to regulators, the second penalty fee could be raised to $35.
Even with these changes, the Fed still has not addressed interest rate hikes imposed on consumers who violate the terms of their credit card agreements.
Experts in the industry say that although the new restrictions decrease the ability of the credit card industry to price for risk, the net effect will be a decrease in credit availability.
In the current uncertain economy – managing your debt may be one of the most important financial survival skills you have
many consumers find themselves in an uncertain financial position these days. In the not-so-recent past, using up home equity and leveraging expected (and usually successful) financial market returns is no longer a viable or sustainable method of debt management.
Far too many consumers are finding themselves in a debt hole – as evidenced by the still-mounting home-foreclosure numbers. For more and more consumers, reduced credit scores and the decreased availability of credit due to the tightening of credit by banks and other lenders has come as an unpleasant shock. Some consumers have had their credit limits cut, which may have a negative impact on their scores, while others undergoing serious financial stress due to unemployment or other factors have seen their credit scores drop rapidly.
It is a good time for all consumers to “wake up” and carefully examine every debt/liability account they have – deciding in each case whether the accounts are really serving the purposes for which they were obtained – and if they remain affordable. One example of an unnecessary account is a charge account from a retail store that you no longer shop at . It may be time to finally close that account.
One tried and true rule of thumb is that your total monthly debt should not exceed 20% of your net income.
Your credit score is determined by your payment history, total amounts owed, the length of your credit history, and the type of credit you use as well as new credit obtained recently. Paying bills on time and keeping credit card debt at reasonable levels are major factors in changes to your credit score. A credit score of 750 or better is likely to get you the best rates on loans; a score of 710-750 is also considered high. Credit scores in the 580-710 range will most likely get you approved for a loan, but at slightly higher rates of interest. Anything below that means you probably be denied credit or will be charged very high interest rates if you are even allowed to borrow.
You can obtain a free copy of your credit report every 12 months at AnnualCreditReport.com
. To obtain your actual credit score, you'll need to go through one of the three credit bureaus, which will charge a fee of up to $15 typically.
Contact your creditors if you have a problem paying bills on time. Dispute negative or incorrect information on your reports. Consult a nonprofit credit counselor if necessary, and avoid websites and offers that promise immediate credit repair or results.
Last night I spent $25 on a movie …
OK … that was the personal finance part of this post …
I took my wife to see an absolutely wonderful movie last night – Letters to Juliet is a movie about love at any age, played with sensitivity, beauty and expressiveness by Amanda Seyfried and the seemingly timeless Vanessa Redgrave. Redgrave plays Claire, a woman who, at the age of 15, was too scared to follow her heart and run away with the Italian boy she loved, instead returning to England with her parents and living a more conventional life. Heartbroken over her lack of courage, the young woman writes a tearful letter to Juliet (from Shakespeare's Romeo and Juliet) and leaves the letter behind a brick in the wall underneath “Juliet's” balcony in Verona, Italy.
Seyfried is a young woman visiting Italy 50 years later. Left to her own devices by her workaholic fiancée, she meets Juliet's “secretaries,” a group of women who reply to the letters left for Shakespeare's fictional heroine by distraught young women looking for advice. Finding Claire's letter, she writes a poignant and sensitive reply. Claire, traveling with her uptight, very “British” grandson, returns to Italy and the search for her long lost Lorenzo begins with sometimes hilarious results – but throughout it all, the theme of optimistic, life-affirming love permeates the performances of Redgrave, Seyfried and others.
If you want to see a movie that makes you feel like anything is possible – go see “Letters to Juliet.”
I'm a guy … and I loved this “chick-flick.”