New Year, New Financial Fitness Good Habits

It's a new year, and a new opportunity to resolve to build your wealth and make better decisions that will effect your long-term goals.  No matter where you find yourself at the present moment - whether in the comfort of a secure job or if you are presently unemployed - taking control of your situation will benefit you greatly. Here are some great tips that can help you no mateer where you find yourself on the financial spectrum. When the time comes that you need to make a large purchase, like the purchase of a home, the efforts you make now will make all the difference then. Home buying Financial Fitness is of course our special concern.

Use New Year to Build New Financial Foundation 

By Pamela Yip

RISMEDIA—This is your chance to start fresh with your finances, another opportunity to achieve the goals you didn't hit in 2010.

"The new year gives us all an opportunity to make decisions and take action," said Thomas Murphy, partner and certified financial planner at TEMAA Financial in Dallas. "I suggest 2011 be the year you take control of your finances."

MAKE YOUR GOALS CONCRETE: What are your financial goals? How will you achieve them? Without this blueprint, you'll be chasing your tail, worrying about which stock or mutual fund to invest in. Having no real plan could result in higher risk than you need, scattered and duplicate investments, and high fees.

Be specific about your goals. Don't just say, "I need to pay down my credit card." Instead, say you want to put a specific amount toward your credit card bill next year and you will achieve that by paying a specific amount each month.

Clearly defining a goal enables you to develop a concrete plan for achieving it.

"Come up with a plan on how to become debt-free, either on your own or with debt counseling," said Todd Mark, vice president of education at Consumer Credit Counseling Service of Greater Dallas. "What matters is taking those steps."

Becoming debt-free also means changing your mindset toward debt.

"Like most people who are used to carrying the extra weight around the middle, people get used to carrying debt and saying, 'That's where I am right now,' " Mark said. "We want to change that. We don't want them to accept it, and we don't want them to be comfortable with it."

SPEND STRATEGICALLY: "Make the decision that you will not spend one dime unless it is to help you achieve your goals," Murphy said. "No more spending money on things you no longer care about or to impress the neighbors or for any other reason, except it is part of your path to achieve financial success, however you define it."

TRACK YOUR SPENDING: "Record every penny you earn and every penny you spend for at least 90 days," Murphy said. "If you have no real idea how much money you make or where it all goes, you are not in control."

SAVE MORE MONEY: Always pay yourself first each month. It doesn't have to be a large amount of money. It just has to be consistent and left alone as much as possible. The compounding effect over time will take care of the rest.

"Set up a program to save the difference between what you earn and what you spend," Murphy said. "Save first, spend after. Stretch to save at least 10 percent of your income. Put the savings in an emergency fund and commit that you will only touch it for real emergencies — unforeseen and unforeseeable events. Set a goal of accumulating six months of living expenses in this emergency fund."

Take advantage of all opportunities offered by your employer to save money, such as through a 401(k).

"Those savings which come automatically out of your pay are best,"
Murphy said.

PAY OFF OR PAY DOWN DEBT: Debt is one of the biggest obstacles to achieving your financial goals. It will divert your money and cause your financial journey to come to a screeching halt.

"The more you owe, the less control you have over your life," said Calvin Helin, a demographic economic trend analyst and author of the upcoming book, "The Economic Dependency Trap: Breaking Free to Self-Reliance."

"Debt puts you in a position of seeking to pay off your debt rather than pursuing other areas of life that might be more rewarding. It is one of the biggest sources of family stress."

If you racked up credit card debt for the holidays, aim to pay it off in three months.

"If you haven't paid off your holiday debt by the time you've gotten your tax refund, there's a good chance you're going to continue to be paying on that during the holidays in 2011," Mark said.

Commit to paying credit cards off every month, Murphy said.

"If you find you cannot resist the temptation to buy, cut up all but one card and leave that card at home," he said. "Use it only for important purchases after careful thought and a plan for how and when you will pay it off."

Getting rid of the anxiety of high-interest rate debt is a far better gift than almost anything you could buy.

"Those who understand interest earn it; they do not pay it," Murphy said.

MAKE YOUR GOALS REALISTIC: "Don't say, 'I'm going to be debt-free and a millionaire by the end of 2011,'" Mark said. "Maybe you can say, 'I have a goal of paying down $10,000 in debt in 2011, and I want to be debt-free in four years.' "

PROTECT YOUR INCOME AND ASSETS: "Find out if your employer offers disability insurance and life insurance," Murphy said. "If so, buy it.
To determine how much you need, conduct a financial fire drill and imagine you are permanently disabled. How much money would need to come in the door to allow you and your family to maintain your standard of living?"

FOR THE LONG-TERM UNEMPLOYED: Your aim is to stabilize your finances as much as possible.

Besides the obvious priority of landing a job, you should analyze what financial resources you still have to sustain you.

"If you've been unemployed for awhile, try to get a part-time job at night and on weekends to help reduce the cash-flow drain and provide you with a sense of belonging," said Lynn Lawrance, certified financial planner at Financial Network Investment Corp. in Dallas.

If you've been unemployed for more than six months, watching your spending is all the more critical.

"Tracking every penny is a necessity, not a luxury," Murphy said. "Making conscious decisions about every spending decision is vital. Forcing yourself to reduce your standard of living temporarily may be the only way to allow you the peace of mind necessary to interview well."

When you do spend, make the money count.

"Squeeze every penny you spend to minimize the damage to your net worth," Lawrance said. "Spend only on absolute essentials and items that will boost your networking and interviewing success."

(c) 2010, The Dallas Morning News.
Distributed by McClatchy-Tribune Information Services.

Are You A Home Buyer In Need Of Help With Credit Fitness?

Nowdays, since the mortgage crisis, lenders are so very careful to make sure the loans they give out are good and solid. The extra scrutiny they put on you, as you shop for a good lender, means that any blip you may have on your record can determine whether or not you can get one dime out of any institution. Equip yourself with credit fitness. Here is a great article that tackles this important homebuyer concern:

By Chris Kaucnik
Many home buyers now and into the foreseeable future will face tight lending standards and will need to improve their credit score to get prequalified or preapproved for mortgages. Be aware of the following steps your prospects can take for some speedy credit repair to gain lender approval and the best possible rates, especially if they are months away from a purchase:

Credit Card Wisdom

• Paying revolving credit cards down is generally more beneficial than, for example, paying down student loans, mortgage or auto loans.
• Always leave a 30% or higher gap between what you owe on the card and the card’s limit. Lenders look for this minimum gap.
• Use cards with care even if you pay off balances each month because depending upon statement dates, the lender may see big balances.
• Pay down the cards closest to their limits first for speedier credit repair. The lending bank will then see the “gap” it wants to see.
• Do not ask a creditor to lower credit limits. Generally, carrying smaller balances on several cards is better than one large balance on one card.
• Check your credit card limits to make sure the report is correct. Limits may not be reported on all cards.
• Never make a late payment on credit cards or any loan.

Protesting Items

• Protest any unjust negatives, such as late payments, collections that are not yours, and any items not reported as “paid as agreed,” if you paid on time and in full.
• Protest items listed as unpaid that were included in a bankruptcy, and items older than seven years (10 for bankruptcy).
• Focus first on the larger, newer negatives listed on the report.

It is important not to worry about smaller items like incorrect address information or an old employer listed as current. This is, of course, unless there is the possibility of identity theft or the file is mixed with someone else’s.

This is certainly not an all-inclusive list of the steps that can be taken to improve a credit score, but it is a great start for clients needing to focus on their scores before attempting to get preapproved and purchase a home through you.

Chris Kaucnik is marketing director for Home Warranty of America, Inc.

Also see more financial fitness wisdom on Lauri Kent's Financial Page.

Learn about scams targeted at homeowners facing foreclosure

Public broadcasting stations across Texas will air a 30-minute special this month on scams surrounding foreclosure prevention and loan modification. Scam artists are preying on homeowners who are facing foreclosure, promising to modify loans and guaranteeing to save a home from foreclosure. They charge fees up front and then disappear. Many victims lose money and their homes.

Find out how you can help homeowners recognize a scam and what to do if they are approached. See when the special is airing in your market. You can also find foreclosure-prevention resources for homeowners at KeepMyTexasHome.org.

The special was produced in cooperation with Neighborworks America and the Texas Foreclosure Prevention Task Force, of which the Texas Association of REALTORS® is a member. A link to the pdf with schedule for the special, as it airs across Texas, is found at www.LakeConroeRealtyNow.com under Special Notice.

Christmas Financial Fitness

This may not have much to do with the value of your home, but it does speak to surviving the Holidays with all your pennies spent wisely. This is a fantastic piece covering the main traps to avoid in gift-giving.

5 Holiday Shopping Traps to Avoid RISMEDIA, December 13, 2010—Finding the right gift at the right price can be challenging, especially during the holiday season when deep discounts and door-buster sales abound. A recent issue of Consumer Reports highlights five traps holiday shoppers can avoid. "Knowing how to navigate sales, comparison shop, and cut through salespeople jargon is half the battle to stress-free holiday shopping," said Tod Marks, senior editor at Consumer Reports. "Shoppers need to take precautionary measures before purchasing gifts to make sure they are getting the right product, for the right price, with no strings attached." 1. Deep discount come-ons. "Door-buster" sales promise big savings. Consumer Reports found an electric percolator "on-sale" at Kohl's stores and Kohls.com for $61.99, a discount from the regular $69.99. But those prices are higher than the $59.99 manufacturer's suggested retail price. Retailers, especially discount stores, commonly sell below MSRP. Using a Web search, Consumer Reports found better deals. The best price was $30.03 plus $8.21 shipping at Salestores.com. What to do? Comparison shop before buying and don't worry about missing a sale, it's likely that another one will come around before the season ends. 2. Gift-card gotchas. New federal rules for gift cards limit issuers' ability to charge certain fees and impose expiration dates. Inactivity and service fees can be charged only if a card hasn't been used for at least one year. But issuers can still charge fees to buy cards, as they do for bank-issued variety, those that bear a credit-card logo. For example, expect to pay $3 to $7 for an American Express gift card. Also, gift cards are not protected if an issuer goes bankrupt. If that's the case, the card could be worthless. Beyond that, many people never get around to spending their gift cards. A quarter of people surveyed by Consumer Reports in October 2009 who received gift cards the previous year said they hadn't redeemed their almost one year-old cards. What to do? Give cash or a check. Cash never expires or loses its value, and is good anywhere. If the check is never cashed, the money stays in your bank account. 3. Extended-warranty pitches. Salespeople push service plans because retailers keep 50 percent or more of what they charge for them, but they are notoriously bad deals. Some repairs are already covered by the standard warranty that comes automatically with the product. Consumer Reports' data shows that products seldom break within the extended-warranty window of coverage, when items do break, the repairs, on average, cost about the same as the warranty. What to do? Some credit cards automatically extend the manufacturer's warranty on anything purchased with them, so check the card's website. Even if the warranty expired, check with the retailer or manufacturer, which might choose or be legally obligated to repair and make good on a product that prematurely fails or otherwise shows signs of a defect. 4. Return-policy limitations. Some retailers relax their return policies during the holiday season, but don't count on it and always learn the rules before buying. Some companies have different return policies for in-store, online, or mail-order purchases. What to do? Keep the receipt and let the recipient know the return policy. If the store provides a special gift receipt, include that with your gift. 5. Restocking fees. Many items, especially electronics and special orders, are subject to restocking fees that range from 10–25 percent if they are not returned in a factory-sealed box. What to do? Don't open the package unless you're sure you want the item inside. Items such as computer software, music CDs, and movie DVDs generally aren't returnable if the seal is broken. If a fee is charged, try to negotiate a partial refund, but never pay a fee if the item is defective.

Click here for the current local housing trends:
http://lauri.housingtrendsenewsletter.com/

The Long-Distance Move

Not much has changed in the last five millennia where long distance moves are concerned. Sure, these days we don't have to circle our wagons to shield ourselves from Indian attacks. Instead, we circle bubblewrap around our valuables out of fear that the burly mover might enjoy his midday snack casually sitting on top of the box containing grandmother's ancient soup tureen, passed down for nine generations. But relocating to a new place that is economically different, culturally different, climatically different -- or any other kind of different -- is a shock to the system. It is good to know what can be done to ease into a new location as quickly as possible. Moreover, equipping yourself with a little knowledge and a helpful network may save you a whole heap of money and time, by knowing where to go for this, who to trust for that, and so on.

And so I thought it good to share the following article. Being an international real estate executive and a former temporary resident of the Middle East, India and South Africa, I am very sensitive to the needs of my international clients. It is important to note, however, that domestic moves can be just as difficult as international moves, and of the same reasons. Here is a good article  I found that addresses some of the things you can do to ease into your new environment, whether you are moving her to Texas from Oslo, Ontario, or Oregon.

Advice for Relocating Clients: How to Land on Your Feet After an International Move

By Sharon Harvey Rosenberg and Myscha Theriault

RISMEDIA, November 30, 2010—(MCT)—We arrived on Guam (from a relocation move) with emergency cash, documents and an advanced shipment of necessary belongings. Unfortunately, an 8.2 earthquake destroyed our hotel and damaged the unloading docks, leaving us—at least temporarily—with just a rental car and the clothes on our back. Clearly, it was time to re-evaluate our settling-in strategy.

Even under normal circumstances, unfurling in a new location requires more than just a simple unpacking strategy. Here are our top tips.

Networking: Check out international organizations that offer networking opportunities to global travelers. For example, Hash House Harriers, an international running club formed in the late 1930s, has chapters all over the world, including Guam, Saudi Arabia and Thailand. Meetup.com allows individuals of any interest category to connect throughout the United States. In Kuwait, there are both Canadian and American citizens groups, as well as a French language association.

Nora Dunn (www.theprofessionalhobo.com) is a member of Rotary International, a global service organization that not only provides her with immediate opportunities for service, but an instant network of local contacts that are happy to help a newbie. And don't forget university alumni associations, trade groups and other professional organizations, with chapters in the U.S. and abroad.

Infrastructure: During international moves, an ironing board, French press and chairs rank high on our must-have list. Other seasoned travelers, with special needs or diets, ease the pain of relocation by traveling with back-up supplies of medicine, medical equipment and cooking supplies.

During an extended stay in Scotland, Greenland and Iceland, one traveler filled individual Ziploc bags with coffee, spices and other nonperishable food items. The storage bags were stuffed into paper towel tubes and then stashed in her luggage. This strategy created a portable supply of kitchen ingredients.

With that stock, she prepared meals while staying in rented homes in Europe. Donna Frose, an international teacher whose career has taken her to the U.A.E., Singapore, Kuwait and Ecuador, has a different set of priorities. Arriving with one set of bed linens and a pillow, she immediately searches out a couch, membership in the local Canadian Women's League chapter and the nearest diet cola supply.

Routine: New digs mean new routines for everything from banking, grocery shopping and medical care. While living in Paris, we used an informal alumni association to help us find the best deals in entertainment, groceries and clothing. For example, an old college friend provided information about great parties and events, including a poetry reading at an elegant bookstore in the Latin Quarter on the Left Bank of Paris.

After moving from New York City to South Beach in Miami, a network of friends and family helped us find affordable housing, supermarkets, health care and restaurants.

Click here for the current local housing trends:
http://lauri.housingtrendsenewsletter.com/

And of course, visit Lake Conroe Realty Now's website for more information about Lauri Kent and her team. Contact Lauri Kent with your Houston Texas area real estate questions.

Renters: Grab A Stack Of 1099 Forms. Come January 1st You'll Be Needing Them

"Honestly, it's an outrageous burden for rental owners."

That's from Tom Schatz, president of the watchdog group Citizens Against Government Waste. This is the second thing he said after hearing about this burdensome requirement that really sticks it to home renters in The Small Business Lending Fund Act, which passed last September 18th. It stipulates that rental property owners must issue 1099 forms to any work done on their homes over $600. What was the first thing Tom Schatz said? "You've got to be kidding me!" No, we aren't kidding. It takes effect on January 1, 2011.


So, if you are a renter and need a plumber to fix a sink at your rental property,  Get ready to deal with more than plumber prices - get ready to deal with the Internal Revenue Service.


To read about this in-depth, go to Lake Conroe Realty Now with Lauri Kent Financial News where we have the whole article regarding this issue.

Capital Gains Double-Whammy On the Horizon

As if we weren't already exercising ultra-caution in the manner and timing of our property purchases and sales, Uncle Sam has put out another taxation land mine to avoid. Even though it's nothing but bad news, as usual, being forewarned is being forearmed, so here is a brief primer on the new Patient Protection Affordable Care Care Act, and how it may be funded in part by the sale of your home.

From Sandy Botkin, CPA:

There is a BIG nasty surprise awaiting a number of people starting in 2013 that has NOT been mentioned by the media. Under the new Patient Protection Affordable Care Act (PPACA), single taxpayers who earn over $200,000 of Adjusted Gross Income (AGI) or married taxpayers filing joint returns who earn over $250,000 get hit with a major surprise. They will have to pay a new 3.8% Medicare surcharge on all interest, dividends, royalties etc. This seems to be covered by the media. What has NOT been mentioned is that this Medicare tax also applies to capital gains. Thus, it applies to stock and bond sales, mutual fund gains and sales etc. In addition, it could even apply to the sale of your principal residence on all appreciation beyond the first $500,000 of gain.

Example: John and his wife earn $275,000 a year. John sells his home for a $1,000,000 profit. He can avoid tax on the first $500,000 of gain. John not only pays capital gains tax on the remaining $500,000 but also pays an additional 3.8% surcharge.  If John were selling his second home, there is no exclusion. Thus, he pays this tax on all gain.
 
This is a major bomb for those of you with substantially appreciated real estate. You might want to consider selling your home or second home before 2013.

See this and more on Lake Conroe Realty Now with Lauri Kent Financial News.