November 19th, 2008 — Investing, Long Term, Money, Personal Finance, Real Estate
Right now, if there was a market that had bad news written all over it, it would be real estate. The housing crisis has made investors jumpy, the economy appears to be tanking and home values are plummeting across the country. Would you believe that this is actually a good time to get into real estate? With the proper choices and management, this is absolutely true.
Down markets are a speculator’s dream come true and they can easily change your entire fortune. While we certainly don’t recommend sinking your life’s savings into a bunch of dead end properties this instant, this is a good time to think about investing in real estate the smart way. Never overextend yourself and always take the time to make smart investments that will pay off in the long term.
Let’s look at that statement a little more closely, especially the last two words – long term. Yes, right now, an investment in real estate is not going to do very well. In fact, it may even lose some value over the next few months. But, what goes down will go back up. Property values cannot stay low forever, and although they may not reach the insane heights they recently attained, it’s easy to make a good chunk of money with the right house.
Instead of looking at an investment in real estate in the tangible form, let’s compare it to an investment in a stock. You purchase a stock at $4 today and while it’s been steadily going up over the past few years, it’s still a pretty cheap buy. However, in eight months, the company takes off and the value of your stock increases exponentially. This would be considered a good investment. How is investing in real estate right now any different?
In fact, in some ways, you can do quite well with an investment in real estate right now. Consider the fact that foreclosures are at an all time high. What does this mean? Thousands of families need a place to live and they’re not going to be able to get a new home loan right away. This means that thousands of new renters have flooded the market and they have to find a house to rent.
Investing in real estate is always risky, but sometimes, the best returns come from taking a chance in a down market. You can easily pick up a property for pennies on the dollar, earn money from renting it out right now until the market changes and then sell it for a profit in a few years.
Remember – if you are going to jump into the real estate market, never purchase a property without first getting an inspection. Some homes that have been foreclosed on will be wrecked by the old owner or may have fallen into disrepair. Never accept anything on face value and insist on seeing the property in person. Pick properties that are solid, located in good neighborhoods and likely to go up back in value once this crisis passes.
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November 17th, 2008 — Money, Personal Finance, holiday shopping
It is looking like the upcoming holiday season will be gloomy for many families, given the current state of the economy and continued bad news on many financial fronts. While this may not be a time to go all out with gifts, there are holiday shopping techniques that you can use to save money without scrimping too much. Thankfully, stores are lowering prices, which will make it easier to get your gifts and still have money left over.
If you are someone that maxes out a credit card and goes whole hog for the holidays, this is the perfect year to rethink that strategy. Interest rates on credit cards are quite high and this type of spending will only hurt you over the long term. While it is wonderful to see the looks of joy on the faces of your recipients, this should not be enough to warrant loads of debt.
Look for the Best Deals
The first technique you can employ is simply smart shopping. Take a look at the different ads and develop a strategy for finding the lowest prices. As mentioned previously, stores are running numerous sales at the moment and this is a good time to stock up on holiday gifts. While many people prefer to wait for those last minute sales, this year, it may be smarter to take advantage of the low prices right now.
Try Shopping Online
This is also a good time to think about doing more of your shopping online. As gas prices go up, traveling to numerous stores has become prohibitive for many people. Having the ability to shop tax-free in many cases, and saving gas money, has given online stores quite a boost. It is also quite easy to find money saving coupons from online retailers and many are also running special shipping deals to help their customers save money.
Think About Handmade Gifts
If you are in a bad financial spot this year, you may want to think about making gifts instead of buying them. Whether you have the ability to sew, make toys, or do anything handy, these gifts will show just how much you care without breaking your bank account. While you may not be able to make the latest toy or Wii system, you can make heartfelt gifts that will be appreciated.
Putting it all Together
No one wants to think about being frugal during the holidays, but this year, it may not be a bad idea, especially if you are struggling financially. Try to think of new ways that your family can celebrate the holidays on a budget and use this as an opportunity to teach children about the real meaning of the holidays, instead of the commercial interpretation. They may be a little resistant at first, but this is a good lesson to learn and may help teach them more about the value of a dollar.
With a little creative thinking and planning ahead, you can make sure that this holiday season is even better than the last.
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September 8th, 2008 — Budget, Financial Security, Leverage, Personal Finance, Real Estate
Right now, the only news about the economy seems to be bad news, and it may take a few months if not years to improve. The dollar is weak, oil prices are still up and the cost of living has skyrocketed this year. These are unstable times, but that doesn’t mean that you can’t enjoy financial stability. Here are some tips to help you find your financial equilibrium right now.
First and foremost, if you don’t have a monthly budget, now is a great time to start one. You’ll need to divide all of your expenses into two categories, Essential and Non Essential. In the essential category are things like your house payment, car payment, food and utility bills. Everything else can go in the other category. You may be surprised by just how much money you’re spending every month on those non-essentials.
Once you’ve got this figured out, it’s time to find ways to bring in more money every month. That’s probably the easiest solution right now to staying afloat, but you may need to get creative. If you have extra money put aside, consider investing it wisely into something that will provide a decent return and as such, a nice little extra income for you.
One area to focus on right now is rental property. There are hundreds of thousands of foreclosures going on right now, and all of these former owners need housing. For most, this means either bunking with family or getting a rental property. However, in many urban areas, rental properties are hard to come by. In today’s market, you can pick up a house cheap and easily turn it into an income producing property.
If you don’t have enough free money to do that, consider leveraging some debt. This is a good form of debt that will go to work for you, allowing you to create more than one stream of income. Using the above example, you would get a loan for a property, and then charge enough rent to cover the monthly payments for the loan and create an income for you.
Having touched briefly on good debt, now is the best time to get rid of any bad debt you have. With interest rates going up, you’re going to want to pay down any non-fixed rate loans you have, or credit cards. Do not close off the accounts, but get your bad debt to the point where it is easily managed. This will free up more money for you each month and help you get more financially stable.
While this is not an easy time in America, things have been worse. Now is the time to think hard about how you view money and where your financial position is. If you are not happy with it, you need to take steps right now to change that and become more secure. This will help protect you should the economy continue its current downward trend.
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August 21st, 2008 — Budget, Financial Security, Inflation, Investing, Money, Personal Finance, Standard of Living
Turn on the television, read a paper or go online and chances are you’ll be bombarded with bad news about the state of the economy. Inflation is being whispered about, and in some cases, shouted about from the rooftops. Are we really facing inflation and how bad will it get? How can you find ways to save money when everything seems like it costs more?
First and foremost, inflation rates are up, but they are not as bad as they have been. For example, inflation in the 1980’s was actually much worse and we were in lousy economic shape back then. Now, due to the higher cost of living, it may seem as though we are in the throes of a world ending inflation, but it’s not quite that bad, at least not yet.
The main economic issue right now is how our daily necessities are quickly rising in cost. For example, flour now costs 37% more, and milk prices have jumped 23%. You don’t need to be told that gas prices are killing a lot of drivers, it’s already pretty obvious. Add in rising energy costs, crop failures and the housing crash and you have a recipe for disaster.
However, you don’t have to fall prey to inflation, if you take the right steps to avoid here. Here are some great ideas that will help you survive inflation, no matter how bad it gets.
First, if you don’t have a savings account, now is the time to start putting money aside. It may be a little tough, but you need to have some security and a cushion to fall back on. Even a small savings account can be useful. Inflation effects everything, but with the right budgeting, you can find at least some money to put aside each month.
Next, you can consider your employment options. If your company will allow you to telecommute, you can make that switch. You’ll save a lot of money on gas, particularly if you have a long commute. You may also want to consider either getting a second job that is close by, or working an online second job that you can handle from home. Getting more income coming in will definitely make inflation easier to ride out.
If you are investing, it may be time to retool your portfolio a little bit. Historically, bonds perform worse than regular stocks during inflationary periods. However, before jumping into the markets, make sure that you know what you are doing and that you have the help of a broker or financial planner to help you manage your portfolio.
Lastly, when it comes to beating high food prices, the old standards still apply. Clip coupons and find cheaper stores. Consider switching to a less expensive brand. No one likes having to scrimp, but if your budget is already tight, this can make a big difference. Stop eating out for one extra night a week or find ways to save money elsewhere to give you a little more freedom with your budget.
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