Short Sales

So I had two clients tell me this week that they were thinking about doing a short sale and one tell me he was considering foreclosure.

All of these clients make over $150,000 a year and have the money to pay on their mortgages, even though they are paying two mortgage payments.
They have just figured that their house value has gone down so much that it would take YEARS for it to come back in value and they are better off letting it go.
Seriously?? Is that the mentality now people? You want to just ruin your credit by having it go down 200-400 points ( which by the way a short sale is just as bad for your credit as a foreclosure is ) so that you can pay out the butt through higher interest rates bc no one will want to loan you anymore money.
Also, not to mention, how wrong it is to walk away from an obligation. If perfectly capable people start walking out on their mortgages this economy is going to have some MAJOR problems in our banking system.
What do you think?

Some Tax Tips

For my Tampa people...

Did you know that if you rent your homestead out for less than 14 days throughout the year that the income you receive is 100% tax free? Awesome, that means you can rent out your pad for the Superbowl weekend and all of that money you make is exempt from taxes...yay!

Capital Losses

Unfortunately this year there are not alot of folks with capital gains- most of us have capital losses.

It would be valuable to sit down with your advisor or CPA to see what losses you could take this year to help offset income. You can take a max. loss of $3,000 per year and deduct from your income on the front page of your 1040. If you have losses more than $3,000, you can carry them forward to future tax years.

** Keep in mind this applies to non-qualified accounts, not Retirement ( qualified accouts like your 401(k)'s, Roth's or IRA's)
Another thing to remember is that even though your mutual fund may have lost 30% YTD, your mutual fund may still be passing on capital gains from stocks they were forced to sell this year in the fund that still had a gain. Yes, that can really suck if you are getting passed a capital gain when you might not have owned the fund when they bought the stock that they are now selling at the capital gain. So you could accomplish 2 things, sell a fund at a loss to write off on your taxes and if you time it correctly, you can not own the fund when the capital gain is distributed in December.
Another thing to keep in mind is that if you still want to keep the investment, which is usually the case, you have to wait 30 days( wash rule) before you can buy the asset back again.

The election and taxes

So, we have elected our first African-American President, I truly did not think we'd see this day at least for another 20 years. That shows the American people can change, or maybe we were just so thirsty for something different than the oh so popular Bush administration that we ran for the complete opposite.

I'l be the first to admist I don't know heck of alot about politics. I'd probably consider myself a left Republican, if that term even exists. Being in the finance industry is what ultimately drives me to the Republican side.
Obama has promised change, job growth, to fix the healthcare system etc. But we live in a country that makes its money how? Through taxes. To fund all of these programs, I don't know how he can do it without raising taxes, and I definitely don't believe in wealth redistribution.

I work hard for my money and want to make my money work hard for me, not give it to people who don't want to work hard and sit around with a sense of entitlement. Do you know what the highest expense you pay on your investment dollars is? It's not the 1-3% you pay on your stock transactions, mutual fund 12b1 fees, or investment fees to your advisors- it's the 10-35% you give to the government, and a Democrat president could eventually mean higher taxes ( ie higher income) to pay for all of these promised changes.

Of course, on the other hand I don't know what the other solutions are? How do we raise money without increasing taxes, spur job growth without raising debt to finance these big infrastructure improvements, and balance the budget all at the same time? and oh yeah fix this credit/housing crisis too? Obama, if you can figure this all out, hats off to you.

2009 IRA/401(k) contribution limits...

The #'s are out, the IRS just posted the IRA contribution limits for 2009 and they are as follows:

2008 Roth and Traditional IRA contribution limits- $5,000
2009 Roth and Traditional IRA contribution limits- $5,000 ( moving forward they are supposed to be adjusted for inflation, but the IRS did not see a need for an adjustment for inflation this year probably bc of the economy )

401(k) contribution limits: 2008- $15,500 2009- $16,500 -yay!

Over 50 year old catch ups-
401(k)'s- $5,500 for 2009 -( 2008 was 5,000)

For business owners, the Simple IRA has increased to $11,500 for 2009 from 10,500 for 2008. The over 50 catch up remains unchanged at $2,500)

PLAN ON INCREASING YOUR SAVINGS TO REFLECT THIS FOR 2009!

I'm back

Hello fellow blog readers, I've been out for the past few weeks, I just have had not the energy to talk finance after talking it all day at work, and we've just been surrounded by bad news too...
BUT I'm back and I will try to focus on the positives.

The market ended the week with a 11.31% gain in the Dow and a 10.53% gain on the SP500, great news! Some economists and analysts are thinking we might be reaching the bottom of this rollercoaster ride, what do you think?

Are you wanting to open your own business?

Bill Gates didn't create the idea ofMicrosoft on his own- he bought it from a group of software programers.
So if you don't want to spend the time building and branding your own business, copy one from someone else- through a franchise.
I like http://www.franchiseopportunities.com/, check it out to see all the businesses out there...do your research and try something that you have a passion for!

Something Positive....

So thanks to legislature passed last year, we will be able to save alot of money on our 2008 tax returns... Why? Well many exemptions and deductions are being adjusted for inflation- which has been rising this year. Check out this IRS article showing how much MORE tax money you might be able to save.....
so yes inflation is going up, but maybe you can squeeze some more tax savings out of it...

The Latte Factor

Americans spend way too much money on stuff that we don't need. I'll sit across from my clients sometimes who make $130k a year, but I have to hold them at gunpoint to get an extra $200 saved a month.
Think about this....what do YOU spend money on that is a luxury that could be cut. Not to pick on coffee, but it is a great example...a cup of coffee at home, costs you what...25 cents. A starbucks coffee costs $5....think about it.
$5* 5 days a week= $25, * 52 weeks a year= $1,300 you are spending on coffee, but you haven't been able to save for retirement, cash reserves, a downpayment on a house etc? Plus you could have a tax savings on that $1,300 if you were putting it to an IRA.
Try to write down your latte factor and CUT IT out and save it instead. Some other examples are cigarrettes- a nasty habit you should cut for your health and your wealth! Esp my NYC friends who spend $10 every few days on a pack, now that makes me sick!
Other examples...
Your weekly pedi/mani
Your shoe addiction...I'm thinking of that great SATC episode, Carrie frets that she will really be the old lady that dies in her shoe
The $3 bagel in the morning
Wine.....try sticking to $10 a bottle, I can find lots of $10 wine that is pretty damn good
Going out for lunch everyday...try bringing your lunch
The pets....no they don't need all of those toys, they're pets!


Do it now...WHAT IS YOUR LATTE FACTOR?

What do YOU think?

Bernanke, Bush and others are urging Congress to take action to approve the $700 billion bailout...which would provide capital to financial institutions who are trying to write off all the bad debt on their balance sheets....so the question is...
Should the Govt. bail out these companies to help provide some stability to the economy by increasing liquidity and assumptively helping economic growth through increased confidence, lower mortgage rates and increased lending to buy all these houses...

OR...
Should we let capitalism work its way through the markets...the survival of the fittest, companies that were prudent with their balance sheets will aquire and survive, those that didnt will fail or be bought...

What DO YOU THINK?

Did you know...

After the terrorist attacks of 9/11 the Dow fell 14.3% from Sept 10th to Sept 21st, but 63 days later had returned 24.8%....don't time the markets, you will miss the bounce back..

After the crash of 29 from 10/11/29 to 11/13/29 the market lost 43.6%, but then 126 days later it was up 46%.....for those that could keep their money in the market, you would have recovered your losses...stay invested...
For the week of Sept Sept 15/08 to Sept 19/08...

Monday- market down over 500 points
Tuesday- market closes up 140 points
Wednesday-market drops 450 points
Thursday- market closes up 400 points
Friday- market closes up 368 points
for the week...a loss of .27%....i bet the people that sold after Monday weren't too happy, bc they actually realized the loss....

It is going to continue to be a rocky ride, so keep your seatbelts fastened...
STAY INVESTED!

5 Tips to remember in a volatile market...

1. Don't let emotions affect your financial future- ie don't make poor sell decisions bc of short term market fluctuations.
2.Diversify, diversify, diversify- ex. if you had 50% of your portfolio in Lehman, you wouldnt be doing very well right now...keep an appropriate mix of stocks, bonds and cash based on your retirement goals and time frame. Use diversified mutual funds that own hundreds of stocks in hundreds of companies, or use Exchange Traded Funds
3. Be disciplined- continue to systematically invest in the markets through dollar cost averaging ( ie every paycheck continue to contribute to your 401ks, add to Roth IRA's etc.etc.)
4.Avoid market timing- trying to get out of the market at a high and get back in when things have settled down is impossible to do.....you'll end up getting in after the bull market has already started...STAY INVESTED!!!
5. Review your financial plan- Every year you should sit down with a financial planner to review changes, update rebalancing and your investments- see what opportunities can be taken or things to avoid.

Breaking the Buck

This week on my way to work, I was driving and checking my Blackberry, probably not the safest thing to do....and there it was- an email from corporate that the Reserve fund had dropped its NAV price from $1.00 to .97cents. My heart stopped...for a sec...until I realized it was the Reserve Primary fund, not the Reserve US Govt. fund that I have my clients in....luckily I did not have one of my client's accounts in this fund. However, we've heard all these headlines over the past months...first, Bear Sterns, Fannie and Freddie, Lehman and then AIG, one of the nation's largest insurers....it is one thing to hear about these companies, but then to see the Reserve fund, the oldest, most prestigous money market manager out there, declaring that they have broken the buck....which means that the NAV( share price) which is always held at $1.00 was dropped to 97...a 3% loss in an account that is considered very safe. Why? Well money markets invest in a number of types of investments to give you the 3-5% yield they average...things like bankers acceptances notes and commercial paper...well they had about 780+ million in Lehman brothers paper. Ouch.
But don't fret too much, remember I'm talking about money market mutual funds....your money markets, checking, savings and CD's are FDIC insured...check out my blog a while back on FDIC insurance.
If you do have money in a money market mutual fund, don't panic...breaking the buck has only happened once before and no other companies besides the Reserve fund has announced any bad news. If it totally freaks you out, move it to a money market at your bank instead of your brokerage firm, but I think this might cause panic and start even more problems if everyone starts doing this...

Lehman..

Unless you live under a rock, you probably heard that Lehman Brothers, a company that has been around for 158 years, has filed Chapter 11 bankruptcy. And Oh yeah, Merrill Lynch also annouced its sale to Bank Of America.
Why did Lehman file bankruptcy.....just like an individual, it comes down to their balance sheets.
If I'm an individual that has overleveraged myself with a mortgage( prob an interest only) that is worth more than my house, have thousands of credit card debts and other loans, and nothing in savings, would you invest in me? Probably not.
Would you invest in an individual that had no debt except a modest mortgage payment, assets diversified between IRA's, stocks, and 1 years worth of living expenses? Probably.
Same things with companies- Lehman Brothers unfortunately overextended themselves- but don't look at all the bad;there are still companies out there with good balance sheets, yeah their sales may be down, but whose aren't- they can still survive- their stocks are cheap bc they've gone down with current market conditions- could be a great time to buy these companies, IF you are a long term investor and can stand a bit of risk.

Asset Allocation

Did you know that asset allocation is the most important thing when managing a portfolio?

It is however, not what makes headlines. Often you can pour through the financial press and read about what companies are good buys, what the hottest mutual funds are, or what stocks are good for a bad economy.

What does not make the headlines very often on CNBC or Bloomberg is asset allocation- which is a professional management system that was developed by a few University of Chicago professors. They studied years and years of market data and found out the following:

Your mix between all the asset classes is what drives 92% of your portfolios performance...yes, 92%!

What drives 4% is picking Stock A over Stock B, and then just like any other study there was a 4% variance.

The mix of asset classes ( meaning what percent you should have in Large Cap vs. Mid or Small Cap) is dependent on three things:

1) Your risk tolerance- are you aggressive, moderate,etc.

2) Your tax status

3) Your time frame

So, your asset allocation is going to be different then your neighbors, friends, co- workers etc. bc these 3 factors differ for everyone.

What is your asset allocation, are you using this in your portfolios?

Are you looking for a higher yeilding savings account?

For a couple of years now, I've known about the ING Orange Savings account. This is an online account that has an attractive yield at 3%. Here is the breakdown:
Advantages:
- There are no minimums- you really get 3% even if you only have $5 in the account
- It is FDIC insured
- Everything is done online, there is no check book...to get money into the account, you have to link up a checking account and do a transfer ( ** Note, it has to be checking, you can't transfer from your brokerage, money market or savings account at other institutions...Example, I'm going to transfer my the cash in my current Money Market ( which is only earning me 1.6%) to my checking account and then transferring it to the Orange Account)
- There are NO account fees

Disadvantage:
- It is easy to move the money back and forth between checking and savings; so if that will tempt you to use the money for that new pair of shoes vs. a real neccessity, look into things that have more handcuffs, like a money market fund at your local broker or a CD.
- There is no Brick and Mortar building to go to and talk with someone..again all done online

So if you are looking for a higher yeilding, online account, check it out.
Or check out this website for a breakdown of other higher yeilding online accounts - This will give you a breakdown of the highest yeilding accounts in your area.

P.S.- While you're at it, the account allows you to set up an automatic savings plan into your checking account- this is a good way to do some forced savings!

Hurricanes and Gas Prices

We all felt the pinch at the gas station over the summer when gas peaked on July 11th at about $4.11 per gallon. Since July, gas prices have fallen with oil prices and the national average today is about $3.67. ( that's about a 10.7% drop over a month and a half). Oil and gas have dropped with the fear that higher oil prices will slow demand in the US and globally.

Hurricane Gustav heading towards the gulf also effects supply and demand.

Nearly 30% of our nation’s offshore oil production comes from Gulf Coast waters, while onshore refineries in the region produce nearly half the nation’s gasoline.When hurricanes Katrina and Rita slammed into the Gulf less than one month apart, our nation temporarily lost one-third of its total refining capacity and nearly one million barrels of oil production a day.

Hopefully Gustav will miss the oil fields and we will continue to see a drop in gas prices, otherwise we could see a temporary increase. This week the Hurricane has already halted the drop in oil prices.

Read more here.

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Student Loan Debt

I'm often asked by my clients and friends if they should pay off their student loans. And that all depends...on what, you ask? On the following:
1)Student loans are considered "good debt" ( as is a mortgage) Why? Well bc it was ( hopefully assuming you didn't major in Alchohol for Dummies ) a good investment in yourself...helped you land that job, qualify for higher pay etc. etc.
2)One advantage of having the loan, is that the interest is deductible on your income tax return .

In 2008, to take the full deduction ( which is a max. deduction of $2,500 of interest paid), your modified adjusted gross income (MAGI) must be under $55,000 for single filers (same as in 2007) or under $115,000 for joint filers ($110,000 in 2007). A partial deduction is allowed for single filers with a MAGI between $55,000 and $70,000 (in both 2007 and 2008) and joint filers with a MAGI between $115,000 and $145,000 ($110,000 and $140,000 in 2007).

For calculations if you fall within the phase outs, email me at askmisspenny@gmail.com

2) Most of the time student loan interest rates are low ( under 6% ). You could be better off investing that money into the stock or real estate market which over time has the potential to give you more than that. ( on average the market has returned around 12% over the past 30 years)

If you don't get the deduction, your interest rate is not that low, then you're betting off just paying it off as soon as possible. If not, keep paying the required payments, if you can manage to make that $20o student loan payment, force yourself to put $200 into savings too!!

What effects my credit score?

We all know that your credit score is probably the most important thing in your financial life- it's what decides if you get approved for that apt ,whether you'll be able to qualify for the mortgage on that dream house,or how much interest the auto loan will cost you on your new car. Having a low credit score can really fu** up your finances. So here are the biggest things that drive the calculation that the agencies( Equifax, Experian and TransUnion) use:

1.Your payment history – about 35% of a FICO scoreHave you paid your credit accounts on time? Late payments, bankruptcies, and other negative items can hurt your credit score. But a solid record of on-time payments helps your score.
2.How much you owe – about 30% of a FICO scoreFICO scores look at the amounts you owe on all your accounts, the number of accounts with balances, and how much of your available credit you are using. The more you owe compared to your credit limit, the lower your score will be.
3.Length of your credit history – about 15% of a FICO scoreA longer credit history will increase your score. However, you can get a high score with a short credit history if the rest of your credit report shows responsible credit management.4.
New credit – about 10% of a FICO scoreIf you have recently applied for or opened new credit accounts, your credit score will weigh this fact against the rest of your credit history. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. If you need a loan, do your rate shopping within a focused period of time, such as 30 days, to avoid lowering your FICO score.
5.Other factors – about 10% of a FICO scoreSeveral minor factors also can influence your score. For example, having a mix of credit types on your credit report – credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit – is normal for people with longer credit histories and can add slightly to their scores.

Side note on # 2- Often times, you will receive offers from credit card companies to do a balance transfer at very low interest rates - usually 4-0%; this is a good way to pay off debt quicker bc more of your payment will go towards principal instead of interest. However, it is important to leave your old card opened that you transferred from. Bc for the following example:
You've got two credit cards- both max. out to their limits of $5k .Meaning your available credit= 0% which will NEGATIVELY effect your credit. You get an offer to transfer both cards to a $10k card at a cheaper rate, so by doing the transfer and leaving the 1st two cards open, you now have available credit of $20k, and you are only using 50% of the available credit ( $10k) instead of 0%= GOOD for your credit. The key is to make sure you stop using the cards as well.

Wedding Budget

Now that I'm engaged, before my mind starts dreaming of all the amazing wedding planning and details ahead of me, my finance side kicks in. How much does a wedding cost? The first thing you do when you get engaged is to establish a wedding budget....how much can you spend? Where will your resources be coming from..family? Or will you and your fiance be fronting most of the expenses?

The last thing you want to do is start off a marriage with debt, that is a no no no...one night is just not worth the years of stress it could take to pay off the debt. Set a savings goal and a budget and stick with it.

Even if your parents are fronting the bill, try to think of it as spending your own money. Would you spend that much on a dress if it was your own money? Be sensible, maybe you'll end up with some extra for that downpayment on a new home or car!

I already found a great wedding budget calculator at www.theknot.com... click on Wedding Budget.

What if my bank floods?

As I sit here, hoping that Tropical Storm Fay stays a TS and doesn't hit Tampa too hard so I don't have to get out of bed and move the furniture off my balcony, I wonder....what would happen if a storm hits and my banks get flooded? I bank with BAC so I'm not personally too worried if a couple of branches had to close for a few days, but what about the small banks...are the safes water proof? Will I still have my money in my checking account if the cash blows away? Well, here's what I found ...

Bank Operations/Deposit Insurance
Q. If my local bank was destroyed, is my money still insured?
A. Yes, your money is still insured by the Federal Deposit Insurance Corporation. Deposits with a FDIC insured bank or savings institution will continue to be protected up to $100,000. However, you should keep any financial records that you have in order to help reconstruct your accounts.
Q. Will there be enough cash?
A. Be assured the Federal Reserve System has and will continue to meet the currency needs of the financial institution industry. The banking industry nationwide has more than sufficient resources to fill any shortfall.
Q. Is my bank safe? Do you believe the affected banks will survive?
A. We are not aware of any bank that has closed due to the impact of a natural disaster. Consumers can also rely upon the guarantees provided by the FDIC, which oversees the insurance funds that back deposits in banks and thrifts, and the National Credit Union Share Insurance Fund, which protects credit union depositors. These depositors can rest assured that deposit insurance is in full force.
Q. Who can I contact for more information?
A. The FDIC has a consumer hotline set up for this crisis. Please call 1-877-ASK-FDIC (275-3342). The hotline is operating 24 hours a day, 7 days a week.

*** Another point of interest is that the contents in your safety deposit box are NOT insured against natural disasters.

Capital Gains...

Did you know that if you are in the 15% or less tax bracket, that your long term capital gains rate is 0% until 2010?

Yes o%....that is a savings of 5%. ( normally if you are in the tax bracket below 15% your capital gains rate on long term ( more than 1 year) is 5%, if you are higher than the 15% tax bracket then your long term capital gains is 15%.

Example: I own 1000 shares of Walmart stock that I bought at $45 in 2006, and want to sell it now at$60...if my ordinary income falls below the 15% tax bracket, the capital gains I would have paid would have been

$6000-$4500= $1500 gain * 5%=$75 to the tax man I don't have to pay anymore, bc the rate is 0% until 2010!

May be time to sell some gains in your stocks and diversify elsewhere?

1st of many to come...

Often when you turn on the news, listen to the radio or read various financial articles from the financial press, you get so many different headlines and stories(sp?) that it is hard to bring it all together and understand the big picture of what it all means. Many mutual fund families publish weekly market commentaries from their economists and portfolio managers that sum up the week of headlines very well...so here is a market commentary from Riversource Funds from David Joy, a portfolio manager ( the main dude who is buying, selling and managing a portfolio of stocks within a mutual fund)

Let me know what you think....

401(k) loan, good or bad idea?

Your 401(k) allows you to take loans up to a certain percent of your account value. Typically the loan has to be repaid over a 5 year period through payroll deductions at an interest rate set by the 401(k) plan ( usually around 6%).

Often I have clients tell me that they don't view these loans as "bad" bc they are paying themselves back the 6% into their accounts. This is true, however, things to consider when you are repaying back your own money:

1) Since the loan is being paid back with AFTER TAX money through your payroll deductions, you end up paying tax twice to Uncle Same; once on the loan repayments, then again when you take out the money out as income during retirment
Ex: Your 401(k) is $100,000 and you take a loan of $20,000 @6% ( your 401k is now worth $80,000). You pay it back with after tax payroll deductions each paycheck. So you eventually have the $100k plus some interest back in your 401(k), but in later years that $20,000 that you already paid taxes on you will pay taxes on again when you take withdrawals after 59 1/2 as 100% of the account is taxable

I don't like to pay taxes twice on my money, do you?
2) Opportunity cost- if you take $20,000 out you miss the opportunity for it to grow
3) Most people don't notice this in the fine print, but....If you leave your company while your 401(k) loan is still outstanding, you are forced to pay off the loan, and if you are under 59 1/2 you will be forced to pay a 10% penalty and ordinary income taxes ( average 15% lets say )= 25% penalty..ouch!

So if you can avoid it, 401(k) loan not the best idea...

Life Insurance

What is life insurance? Life insurance should be call death insurance, because it is an insurance policy that pays a lump sum death benefit at the time of the insurers death. You can get life insurance from several life insurance companies and through work. Life insurance you buy individually is different from insurance at work, which is typically referred to as group life insurance. Typically group life insurance is cheaper, but when you leave your company, you don't have it anymore, however more and more companies are making their life insurance portable.
If you buy life insurance individually from a life insurance company, you control the policy. There are several types of life insurance, but the main categories are TERM ( ie temporary) or PERMANENT, which typically has cash value.
Term= renting an apt, as long as you pay your premiums you are covered for a certain amount of time
Permanent= Owning a home and building equity by having cash value in your policy

What type of insurance you should purchase depends on how much you can afford, as permanent insurance is more expensive, but it does pay out more often than your term insurance. I'll get into the differences in later posts....
Should YOU have life insurance? The answer is yes, if the following applies:
1) Someone else depends on you for income, i.e. your spouse or kids and they would not be able to continue their lifestyle if your income disappeared
2) You have liabilities that you don't want to leave behind for loved ones
3) You have an estate that is subject to estate taxes that you would like to minimize

Sit down with your loved ones and discuss if you should look into it, and then get with an insurance agent to see what type is best for you, or email me askmisspenny@gmail.com

PS Did you know life insurance proceeds are TAX FREE?

Do a check in

Often times, I sit down with my clients who have been investing for a while...they are in their forties and fifties and have money in various IRA's, mutual funds, stocks and 401(k)'s, but they often neglect their accounts ( which is good for me I guess because they coming looking for my help) often never rebalancing or changing their risk tolerance as they get closer to withdrawal time.

Would you buy a rental house, rent it out and then never do any maintenance on the house like changing the air filters, new paint, mow the lawn etc?? Of course not, so you can't do that with your investments either. You should at least twice a year sit down and do an evaluation- of everything...your savings rate, how your investments are doing compared to their benchmarks and other investments in their peer groups etc.

If you don't have the time, knowledge, energy, desire etc. to have the discipline to do this, then hey guess what..there are people out thereyou can hire to do it for you...people like me, financial advisors....ask your friends for some referrals, check out a seminar, or look to your employer for guidance...it can be well worth it in the long run.

Are you smart enough to time the market?

When the market is down, I often have my clients asking me- "should we get out of the market? should I put everything in cash and bonds and less in stocks?" As simple and as frustrating as an answer that it is, the simple solution is "No, stay the course".

I can't time the market- I have no idea when it is going to peak, and no idea when it is going to bottom. Sooo...if you have time on your side, you need to stay invested! The market goes up and down and to get the ups of the market, you have to stay in it to get the ups...if you wait until the economy is stable, the elections are over blah blah blah then guess what, you're going to miss the rebound.

You always here that the market will return between 8-10% over time, well the Dalbar Study showed that from 1985 to 2004 the average mutual fund investor gained 3.7% while the s&P500 returned 11.9%...why?? Because, investors were only investing in "hot performaning funds" when the market was up, and when it was down they sold- hence why market timing doesn't work. If you have good asset allocation in place, are dollar cost averaging and rebalancing your portfolio, you will be okay- trust me.

Obama vs. McCain...Where they stand on your money

That's what it all boils down to isn't it?????

Check out this article for a brief overview of where they stand.....http://money.cnn.com/galleries/2008/news/0806/gallery.election_issues/index.html

Want to get your finances organized?

Wouldn't it be great if you had one place that you could track all of your bills, analyze cash flow and have a one stop place to track your investments? Well there are programs out there that you can do this...Quicken and Microsoft Money, my personal fav. is the ladder. Often times my clients have accounts at various financial instituions and Microsoft Money allows you to link all of your accounts and view them all in one place- very convenient!
If you share your finances with someone else, this is a great thing to sit down and do together!
PS You can try a free 60 day trial of Microsoft Money right now.

Fun Cheap Things to do this Weekend around Tampa Bay

1) Go to the beach, skip the beachside restaurants and bring your own cooler for a beachside picnic! Take along your fishing pole and try catching dinner!

2) Check out your local state park and go for a hike ( ps hiking is walking!)

3) Like to golf? Search for your local Public golf courses- the later in the day you go, it's cooler and it's about half the cost of a morning game!

4)Check out local artists at the free Ybor City First Saturday Art Walk- held the first Saturday of the month.Among the August participants are Gina Rathbun, Jedd Lancaster, Kat Wilson, Linda Chaney, Rory O'Neil, Ryan Prado, Ricklene Wren and Yvonne Watters. Guests also enjoy a full bar and complimentary appetizers. Noon-6 p.m., 1503 E. Seventh Ave., Ybor City, free admission..

5) Wazoo- not as cheap, but HEY all the proceeds benefit the animals at the ZOO..

FDIC Insured

Did you know...

Your accounts at your banks that carry FDIC insurance, are insured up to $100,000 and up to $250,000 for an Individual Retirement Account.

$100,000 is each account under different ownership. Example, you've got $100,000 in an individiual account in your name, and another $200,000 in a joint account with your spouse. The individual account is covered and the joint account is ALSO covered up to $100k. To cover more, you can spread your accounts across several banks ( not branches- different banks ) soo if you have $1m in checking you should ideally have 10 seperate accounts at 10 different institutions.

What accounts are included- checking, savings, money markets, and CD's- PS a money market MUTUAL fund is not FDIC insured.

Fannie and Freddie, is this the right time to buy you?

FRE and FNA are down roughly 85% over the past year.

The housing bill just passed the Senate, could this be a good time to buy and make some quick money?

Hmm.

Money Saving Tips for the Weekend

1) Eat at home- enjoy making a meal at home together, add in a cheap bottle of wine ( try to find the best bottle you can for under $10)

2) Walk - try walking to do your errands, visit friends, do your shopping- great excercise and you'll save money on gas!- or try taking your local transportation

3) Before you do your weekend grocery shopping, try visiting this website first http://www.coupons.com/

4) Having the Saturday morning shopping itch? Skip the boring mall, check your local paper for yard sales! Try for ones that are in your neighborhood and walk to them!You can find great stuff for cheap by buying other people's cast offs - Craigs list often posts yard sales as well with desciriptions and pics of what is being sold.

5) Going to see a movie this weekend? Try going to the matinee- often a couple bucks cheaper than the prime times

6) Find the two for ones - my fav. smoothie place, Xtreme Juice, does 2 for 1 smoothies on Sunday, does your fav. place do something like that?

7) Find a fresh market- for my Tampa peeps, Ybor has a great fresh market- the veggies and fruits are about 20% cheaper than store bought, and it supports your local farmers

8) Find a free wine tasting

9) Bill paying time on Sunday? Try the automatic online bill paying- saves you money in stamps, everything gets paid on time ( good to build your credit ), and saves you time. While you are at it, sign up to have all of your mail done Paperless via online delivery- helps the enviroment!

10) Have fun!

Bulls Vs. Bears

No, we aren't talking sports.



On Wall Street, you will often hear the terms bullish or bearish or we are in a bear market vs. a bull market. So what is a bull and bear market?

There are several definitions of a bull and bear market, but rule of thumb a bull market is marked by an increase of 20% and a bear market is marked by a Decrease of 20% or more.

Bull markets are often marked by low unemployment, economic growth, and high consumer confidence; typically a bear market is the opposite- hello today's economy.

Where are we now? Unemployment is rising ( up to 5.5% from under 4.5% in 2007 ), the S&P500 is down YTD 16.32 and is floating around close to the 20% down mark since October, consumer confidence is hitting all time lows, gas and food prices are up, an election year, war in the Middle East and inflation is on a rise- just had its biggest jump since 1991!

But don't run for the hills yet-What does this mean for you Mr. Investor? If you have a long term outlook, then take a breath and relax, don't freak out when you get your June statements. The old addage, buy low, sell high...well, this is the WORST time to be selling, bc then you are actually taking a loss, bc once the market swings back, it will do so quickly and you don't want to be on the sidelines when it does- bc then you will be buying high. If you have any extra money, I would try to put it in the market. There is a lot of value out there right now, and don't worry even if you lose, it will be in the short term.

Love and Money

Most of the time when you read a love poem, hear a love song or watch a romantic movie, money is rarely mentioned. But, I believe money is a driving factor in a relationship. It's not necessarily the amount of money one person does or does not have, it's really how money is managed. Money is not taught in school. Your teacher never sat you down and explained to you how to balance a checkbook, what a mortgage is, why you should save in a 401(k) or even what a mutual fund really is. Mostly everything we learn is from our enviroment- family, friends etc. So, sometimes a person has a great money background and is a "saver" and when a "saver" falls in love with a "spender" ie a person who typically does not have great money background, it can sometimes lead to well, chaos. And it's not necessarily money as a medium, but it can be the catalyst for other deep rooted problems.

My parents got divorced over money. They were married 23 years and then boom, it was done. My perspective from hearing both parents talk about it is this: My mother grew up poor, never really had any financial independence on her own, got married at 18, divorced at 25. met my father, married him and had kids. She worked part time when I was little in the same job she had since she was 18. When my Dad's business was stable enough, she quit to stay home with us kids. Yes, in the beginning she would help with the real estate business. But, it was really my father's business, so she really never has had her own money. So eventually this led to excessive spending out of sheer boredom, in my opinon. My father took this as rejection, he worked hard, wanted to reinvest a lot of his earnings back into the business and became to see my Mom's spending as a rejection of his hard work.

In my own relationship, I strive to not make the same mistakes. My Mother has always taught me to make my own money, don't be dependent on someone else, this is one reason I strive to work so hard at my own career.

My boyfriend knows this is a fear of mine. In the beginning, at times I felt like things were unequal. I am a woman and make more money than my boyfriend. However, he is in a surgery residency so he will eventually make good money, so there is no resentment from him about making less. But, I still felt like things were not equal.. So, we talked about it-we sat down and figured out an agreement on our bills and other expenses and came up with a plan that made us both feel like we were having equal contributions based on the percentage of our incomes. Now, that we've done this, we have zero money issues, which is wonderful. So, to make love and money work- talking about it is most important. Everyone has different views about money, so getting it out in the beginning of your relationship hopefully won't lead to money issues later down the road in our happily ever after :)

Money Matters

I can still remember my first day of finance class at UF. I can't tell you my professors name, but I can tell you that he taught me something that has shaped the direction of my life and my career. He taught me the power of....COMPOUNDING INTEREST. Huh? This amazing math can work for you and it can work against you. He showed me how compounding interest can work AGAINST you when you ( at this time he was addressing us students who just discovered the freedom and dangers of having our own credit cards ) pay only the minimums on credit cards...WOW, I thought. I will NEVER EVER carry balances on a credit card. And to this day I don't. Well, I lie. I carry a balance on a 0% card at Lowe's that I will pay off as soon as it is not 0%. That is okay, and I'll explain why in later blogs. Anyways. Compounding Interest, let me illustrate how dangerous Mr. Compounding Interest can be....
For example, we've got Mr. and Mrs. Like To Have a Good Time. They are new in their marriage and careers. Throughout their college years and early twenties, they have racked up about $10,000 in credit cards on a Visa Card that has an APR of 10% and are paying just above the minimum payment at $100 per month. When does this get paid off?....August of 2028!!! How much interest do they end up putting in the Visa's pocket...$11,590. So their $10,000 of purchases ended up costing more than twice what they paid for it. Change their payment to $250 per month, when does it get paid off...July 2012 and they pay $2,212 of interest...just by increasing to $250 of a monthly payment from $100, they saved $9,378 of interest. When I learned this I thought to myself, "I want to pay $0 in interest", which is why I don't use credit cards. But, if you absolutely have to..increase your payment, stop paying minimums. Think of what you can do with an extra $9,378. ( Invest it, downpayment on a house, go back to school etc. ) Soo...this is why the light bulb went off for me, if you can learn HOW money works, YOU can get money to work for you.