I've had my auto insurance with State Farm for the past 2 years, and every year their car insurance premiums have been going up. It was only a few dollars difference and I just ended up paying the higher rate. But when I recently received a new renewal notice, their premium had gone up by $150 or over 20%! This bought my 6 month (semi-annual) car insurance bill to $836 per month, and this is after having a multi-policy discount. Upon receiving the mail I immediately picked up the phone and called the State Farm agent, who gave me the glib line that all companies are finding it difficult in the current economy and financial companies – especially insurance companies – had to raise fees to stay in business. A load of baloney if you ask me. Working in the financial services industry and as a regular personal finance blogger, I know a thing or to about market trends and insurances are in fact falling as companies try and retain/attract customers.

So I exercised my consumer rights and shopped around online. I checked out two or three company websites and a couple of multi-provider insurance portals (Insure me and Esurance). Based on wanting cost-effective comprehensive insurance coverage that provides multi-policy discounts along with a good customer service, my choices came down to GEICO and All State. Both these companies have been advertising heavily, claiming that they could save lots of money on car insurance. So I went to their web sites and submitted my personal and auto information to get insurance quotes, Here’s what I found for my two cars:

GEICO

By far, GEICO have the easiest to use website, with guidance on key terms and coverage options along the way. After giving some personal information about where I live (all insurance is determined on this basis), I really liked their online feature that automatically obtained my vehicle and driver information from motor vehicle departments and other groups. This allowed me to get a faster and more accurate quote, without having to type in all my car information. It took me around 5 minutes to get a premium estimate (broken down by each insurance item) that I could easily customize it to see what impacts changing one or more factors would have on the premium.

I tried about four variations and even after choosing a number of the higher-end options (like a low deductible and rental car insurance), that were better than my current policy, I ended up getting a quote for under $600. I then used this quote to call up my State Farm agent, and he said the best he could do was $710 (he "suddenly" found that he could drop $126 from the renewal notice amount!). I told him thanks, but no thanks, and that I will be taking my business elsewhere. It was also the inspiration for this article, so at least I owe him for that.

Before I get to my All State insurance and other insurance portals experience, it is worth noting a few of the key auto insurance coverage terms (based on definitions from the GEICO quotes I got). Most of these are pretty standard across providers and worth understanding when shopping around.

Bodily Injury Liability pays damages for people injured or killed in an accident for which you are legally responsible. It also covers your legal defense if you are sued as a result of an accident. Each selection shows two coverage limits (e.g. $100,000/$300,000 as I chose) - the first dollar amount represents the coverage limit for any one person; the second dollar amount represents the total coverage limit for one incident or accident. Individual states have different minimum requirements for liability insurance and for lease cars.

Property Damage Liability pays for damage to other people's property resulting from an accident caused by your auto for which you are legally responsible. It also covers your legal defense if you are sued as a result of an accident. If the property damages are high, your assets — including your home, savings and future wages — may be at risk if you are under or not insured. If you lease a car, your lease contract will typically require you to maintain minimum Property Damage Liability Coverage of $50,000.

Medical Payments coverage pays the reasonable and necessary medical, dental, hospital and funeral expenses for the insured, covered passengers and family members, who are injured in a covered auto accident, regardless of who was at fault. Coverage is also provided to the insured and resident relatives, while they are riding in someone else's car at the time of the accident or if they are struck as a pedestrian. If you have personal health insurance (which most professional workers have) that covers most of your medical expenses, you may want to choose a lower level of coverage.

Uninsured Motorist Bodily Injury typically pays for you and your passengers' bodily injury damages caused by an uninsured driver. The amount of coverage that you may purchase will vary depending upon the state where the policy is issued. There are a number of common exclusions to this coverage that will be detailed in your policy. Given the number of uninsured drivers, this is an important coverage, even in states with no-fault insurance.

Comprehensive coverage pays for losses to your auto not caused by collision, such as theft (like a stolen car stereo), flood, vandalism, earthquakes, explosion, fire, or other covered causes. If you have an older car, where the cash value is low, you may decide not to purchase this coverage. With comprehensive coverage, you choose a deductible - the amount that you will pay out of your own pocket - before your insurance pays your claim. For example: your car's stereo is stolen and replacement costs are $500. If you have a $100 deductible, your insurance will cover $400 — the replacement cost minus your $100 deductible. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket.

** 15 minutes could save you 15% or more on your car insurance. Get a FREE quote from GEICO today.

The other side to comprehensive coverage is Collision Damage coverage, which pays for damage to an insured vehicle when it hits or is hit by another car or object, or if the car overturns. You can also choose a deductible for this coverage.

Emergency Road Service (ERS) is offered by the bigger insurance companies and is a cost effective alternative to other road services such as AAA. It covers problems not typically covered by car insurance, such as towing, lockout service, and mechanical labor if you have a dead battery or get a flat tire. ERS helps to take the hassle out of unpredictable events such as a flat tire or a dead battery, and the piece of mind is worth the $10 dollars a month I would pay for this coverage

Other Insurance Companies/Websites I got quotes from:

- ”People who switched to Allstate saved an average of $396 per year,” is the claim the company makes. So I went and tried it for myself. Unfortunately, I got well below the average savings and my quote was around $700 for comparable coverage options. I also found their website a bit cumbersome (no automatic vehicle import feature), but I do think if you have multiple policies and are in certain associations/groups you could do quite well with them. Definitely worth getting a quote from, given that they are one of the largest insurance companies out there.

- Insure Me and Net Quote Auto Insurance! are both insurance portals which provide a way to get free auto, home or life insurance quotes from various small and large providers. The best feature about portal sites is that they give you quotes from a number of providers, though this also means your private information is now available to those companies. I found insurance quotes ranging from $500 to $1000, but overall I thought that GEICO provided a better deal. If it's been a while since you shopped around for car insurance it may be worth starting with one of these auto insurance portals, and then taking quotes received to get a better deal from your current or preferred provider.

- Esurance is an up and coming auto insurance company that provides discounted car insurance. They act like a broker between you and the other insurance companies and given their discount guarantee they are definitely worth visiting in this ultra competitive market. Their insurance premium quote was comparable with GEICO, and if I could have got a multi-policy discount with them, I may have gone with them.

Overall I spent four to five hours getting insurance quotes and it will end up saving me over $200 ($400 annually), so I think it was time well spent. Hopefully it saves you some time and money as well. Some last minute advice from all my research that I think can really save you money or get better coverage at a lower price, no matter which insurer you go with :

1. Shop Around: I cannot stress this more. Use the links in this post as a starting point and get quotes from the various websites. Then call the agent to ask about multi-policy discounts and if you belong to certain groups (e.g armed services) you may be eligible for even more discounts. Further, every other month companies update their premiums so a company you could have tried a while back that was too expensive, may now be able to provide a much better offering. No harm in getting a free quote to find out.

2. Check and Change options: Every insurance quote is unique and companies use different models to price coverage premiums based on various location and personal factors. So while you should always err on over-insurance, try changing coverage options (up and down) to see what impact it is has on the overall premium. You may well get a higher level of coverage for a few extra bucks.

3. Negotiate and use price matching: There is no such thing as a fixed premium. The benefit of shopping around online is that you can quickly get a number of quotes, using similar criteria, thereby getting a very good idea of what range your insurance premium should fall in. With the quotes in hand you can negotiate for a better price your preferred providers. Most will match and/or provide extra options to keep you on as a customer.

I will add that if you are happy with your current insurer, perhaps because of their great customer service when you had a claim, then it may be worth paying a bit extra for that. Otherwise, the key is to make sure you get the most coverage for the least amount of money.

Related:

~ Why you Should Buy Disability Insurance Policy
~ Life Insurance - Whole versus Term and choosing the right option
~ Health Care Plans: 10 Tips on Choosing the Right Option
~ FDIC Going Broke and Why Bank Fees will Keep Rising

Read More...

Following on his somewhat controversial article on the negative relationship between Religion and Money, guest author Tony Parker takes a cynical look at the recently enacted credit card reforms and why they make him angry.
__________

What a surprise, the government has imposed even more regulations on what’s left of our financial industry. Really, why don’t they just take over all the banks, insurance and hedge funds and just get this semi-control sham over with. Now the credit card industry is feeling the wrath of Congress who have suddenly discovered, after years of happily taking corporate contributions, that perhaps the consumers – i.e. disgruntled voters – may actually be worth listening to. Alas, congress and the current administration have yet again gone too far and many prudent, hard working and financially careful Americans (like me) will end up paying the price for the misspending of others. Here are my key issues with the recently passed credit card reform bill:

Bye-Bye No Annual Fee Cards: With credit companies forced to cut many fees on low volume transactions (like paying by mail), they will raise fees in areas that were previously funded from other sources. For example, the days of no annual fee credit cards may be numbered. Start expecting a minimum $100 charge every year for the right to use a credit card. That’s if you can qualify for one, given that card companies, like home loans from banks will only approve credit cards for those with FICO scores greater than 750. After all if they cannot charge outrageous fees to delinquent payers then why give them a credit card at all!

Bye-Bye Lavish Reward Programs : In addition to paying annual fees, I’ll probably also end up losing some of the credit reward program perks that make credit cards attractive to many people. I charge about 80% of my personal and all work expenses to my credit card. This gives me about 50,000 points a year on average, which has allowed me to get free trips, merchandise and even cash back rewards. I imagine these types off reward programs will be severely curtailed as card companies cut costs. In fact, my free debit card from the bank is starting to look more attractive at the moment.

I’ll now be Guaranteeing my Kids Debt in College: Okay, at first I thought that banning credit cards for kids under 21 was a great idea. Then I read the fine print – they can still get a credit card if a parent co-signs! So not only will kids be unable to build a credit history, but they may destroy mine if I co-sign for a credit card they will be (mis)using. I would rather the government focus on educating college kids - and their parents - on the dangers of credit card usage, rather than making parents co-sign for approval. Kids have a great way of emotionally black-mailing their parents to get stuff and they’ll soon figure out a way for getting them to co-sign (like, I need it for emergencies). In the meantime, many millions of parents will join their kids in the world of credit card debt at graduation.

Higher Interest Rates for all: The new legislation will prevent companies from increasing interest rates on missed payments for at least 60 days (or first year of a new contract), but after the mandated time frame expires, they can charge whatever "reasonable" rate they want. So if you thought the current 15% APY were high on overdue balances, you will be doubly shocked when credit card companies start charging a reasonable (according to them) 30% plus rate for over due balances. At this crazy rate your debt could double every 3 to 5 years, even if you make the minimum payments.

I’ll admit some of the provisions in the bill are good (like longer statement cycles and no double cycle billing), but credit companies are much smarter than the government and I can assure they will find loop holes in the new laws to continue making even more money. They’ll just add a “government regulation service charge”, to deal with the additional bureaucracy imposed on them. Despite being an on-time, in-full bill payer and responsible credit card user, I am going to get slugged along with those who were irresponsible with their money, access to credit and had bad spending habits. So much for doing the right thing.

My simple two step solution to deal with credit card debt – Don’t get a credit card and cut out habits that make you spend more!

Photo Credit : Andres Rueda

Related:

~ I Want My Bailout Too and Here's Why
~ 5 Clear Signs your Job is in Danger (and 5 things to do)
~ Funding the Bailouts by Printing Money and Issuing Debt
~ Credit Card Reform via the 2009 Cardholders' Bill of Rights
~ I bought into the market hype for Visa and got burnt!

Read More...

All the tax credits/deductions and payments provided in the massive 2009 economic stimulus package will no doubt be hard to top in the years ahead. However the good news is that there will be more credits and deductions available to most Americans in 2010, 2011 and beyond. These will continue to be funded from the $700 billion stimulus package, with additional funds coming from President Obama’s ten year annual budget. From previous posts on the stimulus tax credits and the over 400 comments, folks are clearly divided on the payment of these credits with many complaining that these payments and tax breaks are just more wasteful government spending with little real impact. However, for many Americans, young and old, these payments are a big and much needed boon in tough economic times.

Whatever your stance as it relates to the stimulus payments, many of these tax credits and deductions have been passed by Congress and signed into law by the president. So if you qualify, saying no to what amounts to free money is just bad personal finance. Therefore plan ahead and make sure you take advantage of these credits.

Extended till 2013 : The Making work pay tax credit provides $400 for individuals and $800 for couples, phasing out completely at $190,000 for couples filing jointly and $95,000 for single filers. Because the credit is refundable (people can get it even if they owe no tax), most low-income workers will also qualify for the full credit. If you're eligible, your payroll administrator will make the withholding adjustment automatically and thereby increase your take-home pay. The average worker will see this tax credit in the form of a $10 and $20 pay rise per year based on your tax rate. You may prefer not to adjust your withholding amount and can get your stimulus in a lump sum payment as a tax refund when you file your 2009 and 2010 taxes. Under the 10 year Obama budget, this credit is set to be extended to 2013.

Home Owner Credit payout in 2010 for homes purchased in 2009: While you could have claimed the $8,000 stimulus funded new home buyer credit this year, many Americans will be claiming it in their 2009 tax returns filed in 2010. With the housing market showings signs of a bottom, this credit along with lower home prices is enticing buyers back into the housing market. The key is ensuring you are eligible to claim the credit in 2010, which includes:

- Only homes purchased from Jan 1 2009 to Dec 1 2009 are eligible for the fully refundable $8000 credit. If you constructed your main home, you are treated as having purchased it on the date you first occupied it. The credit may not be claimed before the closing date. So ensure that you complete your purchase/closing by December 1 to claim this rather large credit. It is unlikely this credit will be extended, given the bottoming of the housing market

- Your modified adjusted gross income (MAGI) must be less than $95,000 or $170,000 (if married filing jointly). Work with your accountant and/or financial planner this year to ensure your income falls in these thresholds

- You should buy the house on your own because you cannot claim the credit if you acquired it by gift or inheritance OR if you acquired your home from a related person

- If you and your spouse claim the credit on a joint return, each spouse is treated as having been allowed half of the credit for purposes of repaying the credit. So the total amount claimable is still only $8000. Also, if you are married joint filers, both partners must meet the first-time home buyer criteria. So if you are planning to get married this year to someone who has owned a home - you may want to buy a home first and get married in 2010.

Mass Transit Fringe Benefit in 2010: Employees may exclude from income $230 per month in commuter transit benefits in 2009 and 2010 (adjusted for inflation). These qualified transportation fringe benefits are excluded from an employee's gross income for income tax purposes and from an employee's wages for payroll tax purposes.

New Vehicle Tax Deduction in 2010: In addition to the working tax rebates and home owner tax credit, the stimulus bill provides tax breaks for new vehicle buyers by giving them a federal-income-tax deduction on local and state sales and excise taxes. It enables taxpayers to buy now and get cash back later on in their 2009 tax returns (filed in 2010). It is applicable to the sales and excise tax on any new vehicle up to $49,500 of the purchase price. The car, SUV's, light trucks or motorcycles must be purchased after Feb 16, 2009 and before Jan. 1, 2010 to qualify of this tax deduction. This is also another provision that is unlikely to be extended into next year.

Energy Credits in 2010 and 2011: Given the President’s strong focus on the environment and clean energy, it was not surprising to see additional tax credits for home energy efficiency improvements. The Stimulus package provided for a uniform credit of 30 percent on the cost of qualifying improvements up to $1,500, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. The credit can be claimed via your tax returns in 2010 and 2011 for improvements placed in service during 2009 and 2010.

Education Credits claimable in 2010 and 2011 - The new American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making it available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses. Many of those eligible will qualify for the maximum annual credit of $2,500 per student. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. The full credit is available to individuals, whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. Many of those eligible will qualify for the maximum annual credit of $2,500 per student, so make sure you look into it, to help with rising college costs. There are also provisions in the 2010 budget to increase the maximum Pell Grant for college students, from low income households, in the next school year to $5,550.

2009 Social Security Payment. President Obama has proposed another $250 one time stimulus payment to social security recipients in 2010 as detailed in this article "An Extra $250 Social Security Stimulus Payment in 2010 for Retirees, Veterans and the Disabled". If you have not received your 2009 payment, make sure you visit the SSA website and follow up via the provided phone numbers.

The bulk of tax provisions in the stimulus package affect tax year 2009 - individual tax returns due April 15, 2010 - and tax year 2010 - individual tax returns due April 15, 2011. So it is important to plan your 2009 spend to ensure you qualify for the credits and deductions. I will continue to update this article and I encourage you to subscribe (free) via Email or RSS to get the latest news.

Related:

~ The Beginning of the End for the Mighty US Dollar
~ 10 ways to Quickly Improve Cash Flow by Saving Money and Creating Passive Investment Income
~ Credit Card Reform via the 2009 Cardholders' Bill of Rights

Read More...

If you are like most people, disability insurance is not very high on your list when it comes to coverage you should have. Most workers take the standard (free or subsidized) disability insurance offered by their employer and if none is available, they simply forgo it. This is strange because the risk of disability is far higher than the risk of death. In fact, the Society of Actuaries found that one worker in ten becomes permanently and totally disabled before retirement and that one worker in three becomes disabled for at least 90 days.

Disability insurance subsidizes your loss of income in the case of serious injury or illness. Or said another way, it will replace a portion of your lost income when injury, chronic illness, or other disabil­ity forces you to leave the workforce. Disability policies provide either short-term or long-term coverage. Short-term policies may provide up to two years of coverage, although these policies typically cover a much shorter period, perhaps 13 to 26 weeks. Short term disability (STD) is the one normally offered for by many employers. However for more complete coverage you should get some level of long-term insurance, which may extend throughout the policyholder's working life, often until he or she reaches age 65. At that age (or before, in some cases), the policyholder can usually qualify for medicare and social security.

** Compare & Save on Health Insurance! **

Here are some useful tips when it comes to purchasing disability insurance. Hopefully they’ll help you ensure you're adequately covered and perhaps even save some money along the way.

Best place to purchase: Your employer, thanks to group policies, is probably the best place to purchase disability insurance. Even if you think you get free or subsidized disability insurance, read the fine print because you are probably only getting the cheapest short-time type of insurance as part of your benefits package. Also, if your spouse works, compare who gets the cheaper insurance and go with the more cost effective policy. If you buy a policy through your employer, the downside is that if you leave your job, you could be without disability insurance until you acquire coverage from another employer. To ensure contin­uous coverage, you may wish to purchase a policy outside of work. Sites like insure me provide a simple way to get a comparison of quotes from multiple providers in one place.

Buy a policy with after-tax dollars where possible: The reason is simple - benefits paid by a policy purchased with after-tax dollars are not taxable. My employer allowed to me to buy life and disability insurance on a pre-tax basis, which I had thought was a great deal until I read that if you pay for a policy premium with pre-tax dollars, you would owe federal income taxes on those benefits. This makes them worth far less - especially if you are in a higher tax bracket. Because your insurance policy premium is likely to be much less than your potential tax liability of the pay out, getting your life insurance on an after tax basis makes more sense. So if your employers allow you to purchase dis­ability insurance with after-tax dollars – take it. This means you could use 100% of your benefit payment for your living expenses

What to look for in a disability policy : From a recent Vanguard article, here are the main factors to consider when shopping for a policy. The right policy cost and coverage will vary by individual and circumstance, so the perfect policy for one person may be far from suitable for another.
** Protect your future with free Long Term Care quotes **

1. Waiting or elimination period: If you become disabled, you won't begin to receive benefits until the end of the waiting period, which can range from 30 days to two years. More common is a waiting period of 90 to 180 days. The shorter the waiting period, the better, though you'll probably pay more for a shorter elimination period. Because just about all disability policies carry some elimination period, it's important to set aside emergency savings to cover your living expenses during the elimination period.

2. Waiver of premium: This means that if you become disabled, the insurance company will waive the policy's premium payments during your disability. Most policies allow for a waiver of premium. If not, ask for it.

3. Inflation rider: Sometimes an inflation rider is a policy option. The payments under most disability policies rarely keep pace with the rising cost of living. An inflation rider can provide this benefit. It will most likely cost extra, but if you suffer a long-term disability, this provision could prove very valuable.

4. Non-cancelable clause: As long as you pay the premiums, the insurance company may not cancel the policy under any circumstances. Once established, the terms of the contract may not be altered, and the premiums may not be raised. Non-cancelable policies are generally the most expensive option.

5. Renewable: If you buy a policy today, can you renew it? That depends on the policy's renewal rules. Generally you want guaranteed renewable policies because the insur­ance company must continually renew coverage over an extended period, which is specified in the
con­tract. No contract modifications can be made, and rates may be raised only for an entire class of policyholders. On the other side of the spectrum are cancelable policies, where the insurance company may terminate coverage for any reason by giving due notice to the policyholder.

Qualifying for Disability Benefits

To receive benefits under a disability insurance policy, you must meet the policy's definition of disabled. Disability is commonly determined according to two standard definitions: "own occupation" and "any occupation" Under Own occupation, you are considered disabled if you are unable to perform the primary duties of your occupation. Any occupation means that you must be unable to pursue any form of gainful employment. Obviously, an own-occupation policy is more attractive to a policy holder and so is more expensive than any-occupation policies. For higher-income or specialized workers, the extra expense may be worthwhile. Some insurance companies also market a hybrid policy: two years of own-occupation coverage, followed by any-occupation for the remainder of the policy.

One thing to remember is that most insurance companies will insure no more than 60% to 70% of a person's income. For high-income workers, the limit may be closer to 50%. So while it is better to have some income than nothing at all, disability insurance is never going to provide 100% income insurance. That’s why emergency funds and living below your means must be part of your longer term planning.

Picture Credit : YoungDoo

Related:

~ Health Care Plans: 10 Tips on Choosing the Right Option
~ I Want My Bailout Too and Here's Why
~ COBRA Health Care Premium Reductions (Subsidy) in Obama Economic Stimulus Package
~ Structured Settlements and Benefits From a Tax and Payment Perspective
~ Life Insurance - Whole versus Term and choosing the right option
~ 10 ways to Quickly Improve Cash Flow by Saving Money and Creating Passive Investment Income

Read More...

Part of setting up my new small business home office, meant getting a new PC that I could use to write for this blog no matter where I was at home or on the road. Initially I started my search looking at standard laptops/notebooks from the usual makers Dell, HP and Apple but I soon discovered a new type of computing device that is gaining immense popularity and is much more suitable for mobile-wireless computing. It is called a Netbook, or mini-laptop, and you'll be seeing more and more students, travellers and professionals using these really cool computers.

A Netbook is basically a small portable laptop/notebook computer designed for wireless communication and access to the Internet. They typically use a slimmed down Windows XP or Linux operating systems and are ultra light weight, typically weighing between 2 and 4 pounds (~ 1 Kg). Their LCD display’s range in size from 7 inches to over 12 inches. But what makes them stand out and the reason for their growing popularity, is that they are significantly cheaper (up to 50%) than regular laptops and notebooks, with prices ranging from $200 to $500.

They are definetly designed for users that work on/with the internet and pack a lot of power into their little shells. Nearly all models offer several USB ports (no CD/DVD drive), a webcam, LED backlit screens, integrated speakers, Wi-Fi and more, so have everything most users need. Battery life is good, though this is dependent on usage. Overall, though the trend towards netbook is growing rapidly and after coming to the market a year ago they are projected to grow to more than 20 million units by the end of 2009.

So which one is best?

As the netbook market grows, more and more players are coming into the market. This means that there are a number of choices out there and really most of them come with similar features. The key selection criteria for me were price (less than $400), battery life (6 hrs+), screen size (~ 10 inches), weight (less than 3 pounds) and memory (at least 1GB RAM and 150 GB disk) . Here are my preferred models so far: (all prices from Amazon as of post date; for more details on the each of the models below click the title link)

ASUS Eee PC 1000HE 10-Inch Netbook (~ $385)
Key features : 1.66 GHz Intel Atom Processor, 1 GB RAM, 160 GB Hard Drive, 9.5 Hour Battery Life and weighs less than 3 pounds

Asus was one of the first players in the netbook market and its new modesl are gaining rave reviews, with a recent NY Times/Cnet review saying that the netbook was “a small, light, and sexy device aimed at the fashion-conscious netbook fan who puts portability slightly above performance…The glossy black finish, the gently tapering lid, and the wedge-shaped profile all contribute to an overall design that’s more aesthetically pleasing than that of rivals.” For the price and features, this laptop looks like a deal.

Acer Aspire One AOD150-1165 10.1-Inch Sapphire Blue Netbook (~ $330)
Key features : 1.6 GHz Intel Atom Processor, 1 GB RAM, 160 GB Hard Drive, 6.5 Hour Battery Life and weighs around 3 pounds

Acer is fast becoming the new Dell of computing and this new netbook offering combines a solid model with a great price (cheapest one for the features I was looking for). From the pictures and what I say at my local Best Buy, this laptop looks very sleek in addition to having great graphics (webcam looked great). Unlike the Asus model though, this one does not have any built-in bluetooth capability and keyboard seems of lower quality.

Samsung NC10-14GB 10.2-Inch Netbook (~ $400)
Key features: 1.6 GHz Intel Atom Processor, 1 GB RAM, 160 GB Hard Drive, 6.5 Hour battery life and weighs 2.8 pounds

This model has the biggest and best screen of the lot. The unit is ultra-compact and like most Netbooks its projected area is smaller then an 8.5"x11" sheet of paper and the closed clamshell is 1" thick (about the size of an A4 book). The only draw back relative to the other models was the price, which is higher for the 0.2 inches of extra screen space.

I also liked the HP Pavilion and MSI Wind netbooks, but they didn't meet my price and weight criteria. Most netbooks offer a one year warranty, so there is no need to buy an extended warranty, because of the lower price trends and rapid evolution of these devices it will be more cost effective to buy a new one in a year. If you do want more computing power (for programming or gaming) and still need portable computing, it is almost cheaper to buy a powerful Dell or Acer desktop for your home and a netbook for travel, rather than buying a powerful and more expensive laptop or notebook.

I’ll be making my purchase early next month and am strongly leaning towards the popular Asus model, though also like the Samsung model based on my current work laptop. To me netbooks provide the all usefulness and functionality of a regular notebook/laptop, but at a much lower price.

Related:

~ China Taking over the Internet as Usage Surpasses America
~ Setting a Good Online Password
~ Apple 3G iPhone update and Analyst opinions
~ Why I hate shopping at Walmart

Read More...

One of the biggest hurdles in buying a home is getting the right financing at the price. This is especially the case in the current market where banks are placing strict criteria, and requiring large down payments to get a conventional home loan. Due to the deep recession, stock market plunge and other constraints many homeowners cannot take advantage of historically low rates and the $8000 new home owner tax credit, because of the inability to get funds required for a 15% to 20% down payment. This is where FHA (Federal Housing Administration) loans can help borrowers with low cash reserves, spotty credit history or other extenuating circumstances. A FHA Loan is one that is insured by the federal government against default, which makes it more appealing to lenders. The lower risk profile of the loan means that FHA loans generally have lower interest rates than conventional loans.

Conventional or traditional home loans on the other hand have no guarantees other than the borrowers credit and financial record to repay the loan. The higher risk, means banks want more assurances and greater down payment for these types of loans.

Conventional and FHA loans may be "conforming" and "non-conforming". Conforming loans (normally less than $417,000 in most states) follow the terms and conditions set by Government sponsored entities Fannie Mae and Freddie Mac that securitize these loans. Nonconforming loans are those that don't meet Fannie Mae or Freddie Mac qualifications, and are also called jumbo loans. Both FHA and Conventional loans can be fixed rate mortgage or adjustable rate. To know which type of loan is right for you, it is worth looking at some of main differences between FHA and Conventional home loans.

- The main advantages of a FHA versus conventional loan is that the qualifying criteria for a borrower are not as strict as those on a conventional loan and the down payment or upfront equity requirements are significantly less. In today’s market, to get the best rate on conventional loans you need 15% to 20% equity (assuming good credit and employment history). FHA loans typically require around 5%, but can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. You will to need to buy mortgage insurance though.

- FHA loans will allow the borrower who has had a few "credit problems" or those without a credit history to buy a home. An FHA underwriter will require a reasonable explanation of these derogatories, but will approach a person's credit history with a more lenient approach. Most notably, borrowers with extenuating circumstances surrounding a bankruptcy that was discharged 2 years ago can be approved for maximum financing. Conventional financing, on the other hand, would require multiple years to have passed to be eligible for consideration and relies heavily upon credit scoring. If your score is below the minimum standard, you will not qualify or you will be place in a higher rate Subprime, Alt A or A minus loan product. See this post on ways to improve your FICO Credit score

- FHA loans are generally best suited to first-time homebuyer’s who don't have a lot of money to put down on a house, average credit and worried about qualifying for a conventional loan. If a borrower does have past credit issues an FHA loan may be significantly cheaper than an alternative loan such as subprime, ALT A, or A minus. These other programs generally have higher interest rates or require a larger down payment or equity position. Many of these alternative loan products have pre payment penalties where as FHA loan do not have such penalties. However, it is important to compare the ongoing costs of a FHA loan and conventional loan to get an idea of the total cost to you.

- Another advantage of a FHA vs conventional loan is that FHA is one of the few home mortgage programs that allow a borrower to have their down payment gifted from a family member, a governmental agency, or non-profit organization. This allows home buyers without the necessary money to buy a home today.

FHA Loan Disadvantages

- Conventional financing generally does not require an upfront mortgage insurance premium when a borrower closes on the loan. With FHA financing, that fee for a 30 year loan is 1.75% of the loan amount that the borrower can wrap into the mortgage. On a $100,000 for 30 years at 8%, that's an additional $11.51 that the borrower must pay each month. That's almost an additional $132 the borrower must pay each year (fortunately the interest a borrower pays on his or her mortgage on a primary residence is tax deductible).

- Another drawback to FHA loans is that the loan limits set for FHA loans are typically less than the loan limits for conventional financing in most parts of the country. If a borrower is looking for a mortgage that exceeds the FHA loan limits for the area, the borrower would have to put additional money down on the property or finance under a conventional mortgage, Subprime, Alt A or A Minus product. Under the stimulus package FHA loan limits have been raised in many areas and FHA offer FHA Jumbo Loans (check for this option with your lender)

- You will have to buy mortgage insurance on an FHA-insured loan. The upfront premium is an amount equal to the following percentages of the mortgage that ranges from 1.75% to 3%. Most conventional loans also require mortgage insurance when your down payment is less than 15 to 20% of the sales price. On conventional and subprime loans, mortgage - insurance is provided by private companies. Whether private mortgage insurance is less than, equal to, or more than an FHA-insured loan’s insurance will depend upon the loan program and your qualifications. Compare the cost of FHA to subprime and conventional types of loans over the life of your loan. Then compare how much each one costs monthly. The FHA deal will probably be better. However, if you can afford a 15 to 20% down payment on a conventional loan, you won’t have to pay any mortgage insurance. A potentially big saving for larger loans.

- The time to process and to approve FHA loans is much longer than that for conventional loans due to the extra checks required for FHA approved loans. A conventional loan can take 2-3 weeks to process from application to approval. An FHA loan can take anywhere from 4 to 8 weeks, based on the credit and background checks required by various parties involved.

In Conclusion

Conventional loans usually require a larger down payment than FHA and if you have less than perfect credit you may not qualify for an affordable mortgage with a low interest rate . The best thing to do is compare the cost of the conventional loan to an FHA-insured loan line-by-line. What are the fees for each? What is the interest rate? How much is the mortgage insurance? How much down payment is required? For some borrowers, a conventional loan may be less expensive. For many others, getting an FHA-insured loan is the way to go.

If you can afford to put down more than 15% or 20% - without jeopardizing your current and financial position, then go with conventional loan because you pay no PMI and will get a very competitive interest rate. Otherwise, consider going with a FHA loan.

Read More...

Despite median home prices across the nation falling by 14 percent to $169,000, there are emerging signs that the housing market may be stabilizing and reaching a bottom. For new or would-be homeowners, mortgage rates below 5% and all the stimulus tax incentives have made buying a house much more affordable and attractive. And many of them have acted, with inventory of previously owned homes on the market dropping to 3.7 million in March from 3.8 million a month earlier, according to National Association of Retailers (NAR) data. The number of new homes for sale fell to 311,000, the lowest since January 2002, according to the Commerce Department.

As more people enter the housing market and inventories fall, home prices will eventually start rising providing much needed relief for current homeowners who bought in the last few years, with many owing more on their property than it is worth. In fact sales in the most distressed markets are now shooting up as prices fall, Nevada was up 117 percent; followed by California which rose 81 percent; Arizona up 50 percent; and Florida with a 25 percent increase. There are also signs that home price declines are slowing, with the latest home price falls lower than the first few months of the year.

*** Calculate Your Potential Mortgage Payments ****

"I do think we have some early signs that the market overall is stabilizing," Housing and Urban Development Secretary Shaun Donovan said today in a speech at an NAR conference in Washington. "Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate." Donovan said the government will allow first-time homebuyers to use the $8,000 tax credit approved by Congress in February (see all the details) as a down payment on mortgages guaranteed by the Federal Housing Administration.

With the overall economy and stock markets showing signs of revival, people are getting more confident about future prospects that in turn should drive housing markets to the upside. News reports highlighting sharp home price drops are skewed because they focus on foreclosure and short sales, whereas the fall in prices for traditional homes has been far less widespread. In fact if you bought your home more than 10 years ago, chances are you still have a lot of equity in your home.

No doubt it will take a few years for all the excess inventory to clear and it's unlikely 20% plus annual home price rises experienced earlier this decade will return, but eventually a house will once again become an asset rather than a liability.

** Don't Refi, Modify your Loan. Facing Foreclosure? Talk to a loan modification expert, save your home. **

Related:

~ Should I Refinance my Mortgage and Do I Qualify
~ Frugality,Thrift and Saving - The New Norm
~ High Interest Saving Accounts with Good Yields
~ The Beginning of the End for the Mighty US Dollar
~ Frugal ways to keep your home safe

Read More...

What are the hottest investments currently on Wall Street? You'd be surprised, but the answer is leveraged exchange traded funds (ETF's). In March alone, over 3.5 billion of new funds poured into these type of investments according to the WSJ. Leveraged ETFs offer double or even triple the daily return of a market index. Some of them, called "inverse" ETFs, move opposite to the market - for example, going up twice as much as an index goes down. Each day, they all adjust their exposure by rebalancing, or "releveraging," their positions.

How they work: Leveraged ETFs usually generate a multiple of the market's daily return by using something called a "total-return swap." Imagine a fund with $100 million in net assets and 200% leverage, meaning that it seeks to deliver twice the market's daily return. That requires the fund to maintain $100 million in swap exposure. In a long swap, a counter party like a bank or brokerage firm agrees to pay the fund $2 for every $1 rise in the closing value of a market index that day. On the other hand, if the market falls, the fund must pay the counter party 2-for-1.

From an investor perspective though, you can treat leveraged ETF's like any other ETF/stock that you buy through your online broker. The key is understand how you can make money via the ETF from movements in the underlying index. Here's an example from my own personal trading experience using Proshares Ultra Financials (UYG) and UltraShort Financials (SKF). These two leveraged ETF's seek to provide twice the daily performance of the Dow Jones U.S. Financials index. If you think the index is going to rise (i.e. financial stocks doing well) then you would buy UYG, alternatively if you think things are going to get worse you would buy SKF (where you make money if the index falls). The thing I like about these ETF's are that they are heavily traded so have a lot of volume and selling/buying is never an issue. Also, unlike options they do not expire and given the massive volatility in the financial markets, I have found you will eventually make money with them. My rule has been to sell whenever they go up by around 40 to 50%. For the last 3 months this has worked very well for me and I have made about $9,000 buying and selling these stocks. Thanks to $0 trades from Zecco, I paid no transactions costs either.

Other leveraged ETF's that I am going to start looking into are related to technology and resources sector, which I think are going to boom in the next 6 months. For these two sectors, I am focusing primarily on the upside ETF's - ProShares Ultra Technology ETF (ROM) and Ultra Oil & Gas (DIG). For a full list see the table here from Proshares, the biggest provider of these types of ETFs.

In Conclusion

Like any investment leverage ETF's have an element of risk and do not trade them unless you have the time and know what you are doing. To understand them better, do some research via the Morningstar fund research website and then follow them for a few days to understand how they work. My final piece of advise is not to get greedy when a market rallies in a way that favors your leveraged ETF position. Your gains are multiplied, but so are your losses if the index/market turns the other way. So sell when you make profits, because you will surely get another chance to buy in again.

Related:

~ Banking on a Rally for a Quick Trading Profit
~ Investment ideas from Barron's/Value Line fund manager survey
~ Before Buying Stocks: Your Pre-Investing Checklist
~ Is India the right investment right for you? 2 new ETFs

Read More...

The value added column in the Washington Post brings us the small business success story of Steve Fleishman, founder and president of Bethesda Bagel. He built the business from scratch to a franchise and manufacturing enterprise that delivers 15,000 bagels daily to 200 wholesale clients, that enables him and his partners to draw six figure salaries today. Clearly he has achieved success and is well on his way to financial freedom. What I found particularly insightful about the article were the key traits and characteristics that made Steve successful in his business venture. Whether, you are a business owner, thinking of starting one or just interested in stories of entrepreneurship these are great habits to keep in mind:

Ambition and Drive: By this own admission Steve Fleishman is driven and ambitious - "I grew up hungry," – and this enables him to work hard and be passionate about this business over many years. I believe this is vital for any business, job or venture. If you do not have some level of passion or belief then your chances of success are that much lower.

Varying Paths: Like most people, you will probably do many different things before you find something you are good at, and from which you can make a decent living. In fact you will most likely do a number of jobs "just to pay the bills”, before you fund the one career or business that you are passionate about. Steve, studied electrical engineering and liberal arts, then became a roving property manager for a family venture before realizing that this was not what he wanted in life. There is no single and defined path for being successful in life, and you must seek out or take opportunities wherever they may arise.

Contacts, Networks and Family: These are important in all aspects of life and even more so when starting a new venture. Steve started his business in Washington DC and got the idea for it through his wife’s contact who lived there. He also leaned on this family to get initial financing for his business, a very useful source with most banks unwilling to lend to new business owners (particularly in today’s economy). It seems that Steve’s success was driven in large part by the support and advice of friends and family. A trend that is evident in most small businesses.

Find a niche and replicate a successful business or idea: Many people are reluctant to start a business or pursue an idea in a small or new market because they cannot see the profit potential. However it is precisely in these types of markets that existing successful ideas or products can be replicated succesfully. Steve, replicated the bagel business in New York to a relatively under served(large) market in Washington DC. By providing a better product and leveraging his learning’s from an established market, he came to dominate the local market which had little or no competition. It is much easier (and profitable) to legally replicate a proven product or service, than to try and invent one from scratch.

Become an expert and know the details: To succeed in a job or business you need to know all aspects of the business. Right from how the product is made or service delivered, to the accounting and capital aspects of running the enterprise. Just because you may be highly educated and/or experienced, does not mean you don’t have to roll your sleeves up and get into the details. Steve, an electrical engineer by training, went back to learn the bagel business from scratch, while still keeping his day job – “He got a job making handmade bagels at Boulevard Bagels in Queens, where he reported every morning before his real estate job and then came back at night. "I apprenticed," said Fleishman. "I learned how to make a good bagel, nothing else."

Research : Before jumping into any venture, do you homework first. This is particularly important if you have an existing job. Obviously this means working before/after work and on the weekends. But doing the right research, talking to people you trust, can make the difference between success and failure. Over 75% of small business’ fold in their first 3 years – which is probably due in large part to poor preparation and not knowing the market.

Cash is King : Whether it is your own home or a business, we all know the value of cash and credit. Bills need to be paid and new things need to bought, for which you need funding. If you don’t have the money you have to borrow, on which the cost (interest) could be very high. Steve said that the hardest part was of starting out was coming up with enough money to grow the business because they were undercapitalized. This is a common problem that most business owners face and the sooner you learn to manage your cash flow the more stable your business will be. A good rule of thumb I have read is that when you are planning your business, double your estimates of the cash flow you think you will need.

For more great information on starting a small business I recommend these two inexpensive books, which provide a ton of useful information on the small business process: The Big Book of Small Business and How to Succeed as a Small Business Owner ... and Still Have a Life.

Related:

~ Top ten myths about buying a franchise - Part 2
~ Preparing for a Layoff
~ Working and Living in Dubai - Is all that glitters gold
~ 5 Clear Signs your Job is in Danger (and 5 things to do)
~ Virtual Administrative Assistants - Flexible Money Jobs
~ Tax Breaks in Obama's $15 billion Small Business Plan

Read More...

As a soon to be home owner, I was surprised at the amount of "green" tax credits available in President Obama's $787 billion economic stimulus package (aka 2009 American Recovery and Reinvestment Act). The $1500 energy efficiency credit has been well publicized, but there are a lot more goodies in there that you could save you a lot of money when it comes to tax returns next year, and reduce your carbon footprint to boot. From the IRS, here are some of the main new and expanded energy efficiency tax credits that all homeowners and car buyers could take advantage off:

Tax Credits for Home Energy Efficiency Improvements Increase: Bigger tax credits for making energy efficiency improvements or installing alternative energy equipment.The Stimulus package provides for a uniform credit of 30 percent of the cost of qualifying improvements up to $1,500, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. The new law replaces the old law combination available in 2007 of a 10-percent credit for certain property and a credit equal to cost up to a specified amount for other property. The new law also raised the limit on the amount that can be claimed for improvements placed in service during 2009 and 2010 to $1,500, instead of the $500 lifetime limit under the old law.

Residential Energy Efficient Property Credit: This nonrefundable energy tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines. The new law removes some of the previously imposed maximum amounts and allows for a credit equal to 30 percent of the cost of qualified property.

Plug-in Electric Drive Vehicle Credit: The stimulus bill provides a modified credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer's vehicles after the manufacturer has sold at least 200,000 vehicles.

Plug-In Electric Vehicle Credit: The new law also creates a special tax credit for certain low-speed electric vehicles (including those with two and three wheels). The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012. To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours. A taxpayer may not claim this credit if the plug-in electric drive vehicle credit is allowable.

Tax credit for plug-in electric drive conversion kits: The credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle and placed in service after Feb. 17, 2009. The maximum amount of the credit is $4,000. The credit does not apply to conversions made after Dec. 31, 2011. A taxpayer may claim this credit even if the taxpayer claimed a hybrid vehicle credit for the same vehicle in an earlier year.

Unless noted above, the criteria for claiming the tax credits are

* Must be "placed in service" from January 1, 2009 through December 31, 2010
* Must be for taxpayer's principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes and rentals qualify)
* $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
* Improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) - use IRS Tax Form 5695 (2009 version) - it will be available late 2009 or early 2010
* If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaic's, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.

For more information on the above check out the IRS.gov and Energy Star websites which provide more detailed information.

Picture credit : lcrf

Other posts on the various stimulus tax credits and deductions available to you:
- $800/$400 Working Tax Credit
- $8,000 New Home Buyer Tax Credit
- Key Dates to Receive the Economic Stimulus Payments
- Tax Deduction for New Cars up to $49,500

Read More...