Best Finance Network
Get the best connectivity about finance.

Are you reaching that point in your life when you have to plan for your retirement? You must not rely on your social security money alone for covering all the expenses after your retirement. Not having a proper retirement plan will lead to a bad situation after your retirement and that is something that you must avoid. Here are 4 retirement plans that you can consider and choose from.

1. The 401(K) Plan

This is one of the most popular plans that employers use to secure their employee’s retirement. According to this plan, you must match your employer’s contribution to the plan (which oscillates between 1% and 6% of the payment) to take full advantage of the plan. Plan your investment properly so that you can take full advantage of it after retirement. Failing to match your employer’s contribution will make the investment in this retirement plan redundant. There are many other flexible investment plans for helping you with your contribution to the retirement plan. Choose one that you can afford.

2. Savings Incentive Match Plan for Employees (SIMPLE) IRA

Many small time employers secure their employee’s retirement using this plan instead of the 401(K) plan. The only difference between these two plans is the fact that this plan has no maintenance fee as such from the employer’s side and thus is a popular choice with most small time employers. The contribution that the employee is supposed to make to this plan is deducted automatically from the pay check.

3. Traditional IRA (Individual Plan)

It is always advised that you should maintain an individual retirement plan along with the employer’s retirement plan that is already in place. The contribution that you can make to this plan is limitless and depends on your personal financial abilities completely. The contribution eligibility is set at $5,000, plus $1,000 catch up for those over 50 years old, but not per account.

4. Roth IRA (Individual Plan)

This plan is similar to the Traditional IRA plan with the same limit and eligibility criterions. The only difference is the fact that the contributions you will make to this plan is not income tax deductible.

In case you find out that you are ineligible for the IRA individual plans, you can always set up an annuity fund. The tax benefits are lower than the tax benefits one gets with the IRA funds and also the contribution fees are higher than usual. These shouldn’t deter you from having a solid retirement plan in the first place.

Buying a car is a big financial investment. Most people are not able to pay cash for their new vehicle and must rely instead on car loans to make their purchase. In order to be able to make lower monthly payments, many people are now taking out loans that can take up to five years to pay off. The interest charges on these loans are quite high. By the time the car is finally paid off it will have cost many thousands more than if cash had been used to make the purchase.

In order to avoid the large outlay of money involved in buying a new vehicle, many individuals instead choose to buy a used car. This is certainly an option for some, but people who wish to own a new car can save money by following a few rules that make car financing less costly.

1. The first thing to remember is that cars are depreciating assets. As soon as a car leaves the lot it has lost several thousand dollars in value. Every year the car is worth less and those financing their car for five years are left with an asset that does not have much value. The best policy is to save as much cash as possible to pay for the car. Not only will this save a lot of money in interest over the years, it also puts the buyer in a position of power when negotiating car prices.

2. Decide on your budget before going to look at cars. Avoiding emotional buying is easier when you know how much you can realistically afford. Determine how much of a cash down payment you can afford without having to make sacrifices. There are websites that have loans calculators that allow you to check how much loan payments will be for various car prices.

3. Do comparison shopping of loans online. There are many websites that offer car loans at affordable rates. Getting a car loan at the dealership is not always the best option since every warranty or add-on that is purchased with the car will be added onto the loan and result in extra interest charges. Obtaining a loan before going to the dealership allows you to negotiate for a better deal. Do not immediately offer to pay the full price of the car. Car dealers expect to negotiate and the given price is never set in stone.

4. Car dealers love to up-sell their customers. Typical up-sells include extended warranties, rustproofing and fabric protection. Warranties can be purchased directly from the warranty provider. Car dealerships are only the ‘middlemen’ and stand to make a profit by selling them. Rustproofing is only necessary if you live in a place where a lot of salt is used on icy roads in the winter. Fabric protection is a personal choice but not generally necessary given the depreciating nature of vehicles.

5. Avoid negotiating ‘packed payments’. If the dealer tries to sell you a car based on the monthly payment you have to make, rather than the whole purchase price, be aware that this can add up to much more than the amount needed to cover the cost of the car.

Many people think that consolidating debts is a quick and easy way to solve their debt problems. It is easy and quick to get the loan and set it up, but there are still many dangers involved if they haven’t fully thought it through.

It happens all too often: John borrows $10,000 to consolidate his multiple credit card debts only to use his credit cards again when he feels the pinch. Before he knows it, John now has the $10k loan and a balance of $5k on his credit cards. He’s in more debt now than when he started.

To avoid this nasty debt cycle, you need to consider some important points before you make a decision. Here are the top 4 things you need assess:

• Do you spend more than you earn? A common reason for using a consolidation loan is to help with cash flow. But just like a vitamin supplement that will only help if you have a good diet to begin with, a consolidation loan will only help if your budget is cash flow positive. The worst thing you can do is take out a loan and they use your credit cards again when you feel the pinch.

• Can you afford the repayments? This comes after you consider your budget and based on that analysis, can you afford to repay the loan comfortably? The whole point of debt consolidation is to make the payment slighter lower and more affordable. If this isn’t the case, or you may struggle to meet the payments each month then you might need to look for another solution – like a debt management plan, for example.

• How long will the loan last? Sometimes, consolidating your debts to a lower monthly amount means you will pay for longer. This might be a positive if it means you aren’t struggling every month, but you need to be aware that you will be in debt for longer whereas most people are trying to get out of debt as soon as possible.

• How much will you repay in total? Another effect of paying the loan for longer is that the total repayment might be more than it would have been if you continued paying the previous amount. This might not be the case if you had high interest credit cards, and it gives you the more affordable repayment you might need, but you need to be aware that you might pay back more with a consolidation loan because it is taken over a longer period.

Hopefully these points will give you more information about whether a consolidation loan is right for your situation and you will know exactly what you’re signing up for.

They can be an excellent debt relief tool when used appropriately but many people think they are a magic bullet and get a nasty shock when they don’t change their spending habits or thinking and end up further in debt.

If you’ve taken out a consolidation loan in the past, share your experience with us in the comments below.

Mortgage lenders are definitely making it harder for you to obtain a mortgage.
Especially when compared to the boom years when criteria was probably too
relaxed. It is a hard market to research at the moment because lenders are
constantly moving their goal posts as to what is required to obtain a mortgage.

One of the big changes in the market is that lenders are requiring large deposits
to allow you to go onto an interest only mortgage. Historically interest only
mortgages were available to everyone disregarding deposit levels however over the years this has changed. Over the last couple of years it has been pretty
standard for a 25% deposit to be required to go onto interest only however
these levels have increased by some lenders to 50%.

A repayment mortgage will guarantee that the mortgage is paid off by the end
of the term however an interest only mortgage is only paying the interest so at
the end of the term the mortgage amount owed will still be the same. This is a
big concern for mortgage lenders as at the end of the loan they will want the
mortgage to be repaid and is one of the reasons why there has been a reduction
in interest only mortgages.

To take out an interest only mortgage you have to prove that you have a
method to repay the mortgage through an alternative investment vehicle
such as an ISA. These checks are also becoming stricter to ensure that your
investment vehicle is realistically going to be able to pay off the mortgage.

This is just one way in which finding the right mortgage has become more
complicated due to the changes in criteria. There are also many other factors
such as employment status, proof of income, affordability and credit status.

It is wise to get advise if you have any doubt about whether or not you are
applying for the right mortgage because a mortgage broker can ensure that you
are not wasting your time and credit checks applying for a mortgage that you
may not be able to obtain. They can also ensure that you are getting the best
deal on the mortgage market.

“The ability to pay your debt is important for your financial security. However, what happens if you are not able to make your payments? Succumbing to a disability could put you out of work for a long period of time. Your property could be destroyed in a bad storm before you finish paying for it. Credit card insurance could be something worth looking into.

Credit Card Life Insurance

If you die, your credit balance will be paid off. This can help relieve your family of at least one of your debts upon your passing. Without insurance, your family will be asked to pay your debt for you. You should be aware that you may already be covered if you already have life insurance through another provider. Therefore, it may not be worth carrying.

Credit Card Disability Insurance

Those who become disabled will have their current balance paid off. Keep in mind that future purchases will not be covered under this policy. Also, you will need to carry a policy for any of the credit cards that you currently have. However, this may be a good policy to have if you are really concerned about your credit score.

Credit Card Property Damage Insurance

Items that are damaged or stolen will generally be covered under the terms of this type of policy. The downside to this coverage is that many different policies offer this coverage as well. Your homeowners policy will cover the cost of anything damaged or stolen from your property. Renters insurance will generally cover this type of damage if you rent an apartment. Avoid this extra coverage if at all possible.

Other Pitfalls Of Credit Card Insurance

There are a a few other pitfalls of credit card insurance policies. The biggest pitfall is that there are many exclusions. You really have to read the fine print before agreeing to a credit card insurance policy. Another pitfall is that you are almost conned into buying a policy. One common tactic is to offer you a free 30-day trial. However, it is very difficult to cancel the policy after the trial is over.

Do yourself a favour by avoiding credit card insurance if at all possible. There are plenty of other policies that will offer you the same coverage for less. Purchasing a life insurance policy should cover your credit card debt as well as other debts you leave behind. Private medical insurance should help you cover your bills if you are ever out of work due to a medical issue. In other words, there is already coverage available to you if you are ever sick or injured. Go with that instead.