Personal Finance Blog Rotating Header Image

January, 2009:

Personal money management: The key to a good future

We can’t foresee our life ahead of time. We are not certain on what is going to happen to us the next day. For us to enjoy a comfortable life (even when must to refinance our home), you should now start to protect all your financial assets. In today’s very challenging investment market offering a lot of investment opportunities for everyone, it is a must that you know a little of Personal money management. But if you really want to be successful in your managing your personal money, then you should first know the difference between wants and needs.

Personal finance management

Many people don’t do managing of their money because they thought it is not that or important or that it is very difficult to do. Personal finance management is just very simple and you could do it on your own. Managing your finances effectively could involve the following:
1) Planning out and reaching for your retirement goals.
2) Securing a personal financial future.
3) Exploring new sources for income.
4) Providing a secure financial future for you and your family.

Thinking about a second mortgage

Did you close on your house ten years ago and did you built up some equity already? Do you pay your house payment every month but do you also have a bunch of credit card companies that you are trying to keep happy? Do you pay an interest rate of seven percent on your mortgage but do you have a twenty three percent interest rate on each of your credit cards? What a waste! This is definitely the time to consider a second mortgage and the equity in your house will help you get a good deal.

Finance your home

If the equity in your home is more than the total amount that you owe the credit card companies and what you owe to banks as unsecured loans, than you are in the perfect position to negotiate and win. After all, most banks prefer the security of a mortgage loan where the equity is the collateral over the unsecured loans that leave the financial institutions in the cold when you decide to claim bankruptcy somewhere in the future. If you are in a situation like this you will be able to go negotiate with your bank for a second mortgage. The total of your monthly payments will end up being considerably lower and you will be able to enjoy life a lot more.

Refinancing your home mortgage could be a good idea

Did you close on your house let us say five years ago when your credit score was low and you were just lucky to get into this deal? Did that cause you to have to pay an extremely high interest rate? Was your only option at that time to find a home loan with an adjustable interest rate and did you just get a notice in the mail that your monthly payment is going to be considerably higher from now on. If this is you, it is probably a good idea to reevaluate your financial situation and find out if maybe you qualify for a better deal now, like refinancing your home mortgage.

Home refinancing

Start with pulling up your credit report and compare the score to what it was a few years ago. Did your score go up considerably? If so, this is definitely the right time to get you into a better deal. Do not forget that because you paid your mortgage payment every month of the last five years you have built up some equity in your home. Use that fact to your advantage when you approach financial institutions in your area to find a new home mortgage deal. If your credit score is up considerably you will probably qualify for a loan with a lower interest rate than the adjusted rate on your current mortgage. Try to find a deal where you get a fixed rate instead of an adjustable rate that would give you the same headache five years from now.

Is life insurance really needed?

While many people preach that life insurance is a necessity of adult life, there are also plenty believers of the opposite. Either way, this is definitely an issue worth considering at the different stages of life. We all should evaluate all pros and cons and relating them to the situation we are in at that particular time and circumstances of our life. If life insurance is absolutely appalling to you than it is probably a good idea to check out what your alternatives are that ensure that your passing will not be an extreme burden to the loved ones you leave behind.

The alternative that is probably the oldest solution to the problem is making sure that upon your passing your wife and children will be added to your brothers’ family. In other words, when you die your wife becomes wife number two (or three, or four…) of your brother and she is taken care of in this arranged marriage. This is not a joke. It has been done in several cultures, but is that how you see life after you for your family?

Joke related to life insurance

You can also decide to start saving diligently early on in your adult life and take the risk that you won’t have much money saved up if you happen to pass at a young age. While this definitely works for those among us that do not run into a lot of bad luck and live to be very old, you do not know what your lifespan is going to be or what all is going to happen to you in your lifetime. If you want security for your loved ones right from the day that this idea pops into your mind than saving alone is not going to be the assuring solution you were looking for.

Again another strategy can be very motivating. If you buy a house early on in your adult life and have the stipulation in the mortgage paperwork that the house is completely paid for if you or your wife happen to pass away before the end of the mortgage is in sight, than you can consider that in some way an alternative in how to take care of your loved ones if anything happens to you. Even though this will not help pay your final expenses, left behind family members will not have to worry about a house payment or rent anymore and that is an important part of a paycheck for many among us.