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Personal Finance

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Personal Finance Summary

Your trip to wealth begins with personal finance. Without properly arranging your daily financial life you won’t ever be able to save enough money to fund your climb to prosperity. Setting financial limits often feels like a series of dull restrictions and limitations but it sets the path that you use to financially ascend. Acting without comprehending these baselines will result in large amounts of financial waste. Ultimately waste kill your ability to properly pay down debts, save, and invest.

Personal Finance

Major Economic Analysis

Economic Summaries
Statistical Currency Projections
Large Speculator Sentiment
Technical Signals Lists

American Equity Markets

Economic Performance Index
US Dollar Projections
Market Sentiment Tracking
Sector Strength Tracking
Consensus Estimate Rankings
Fundamental Firm Analysis

 

Personal Budget

Budgets will alert you what you can spend and when to spend. If your budget exceeds your means, your financial life will be nervous and difficult. Your budget begins with how much money you’re earning, both monthly and annually. Certain expenses occur monthly, but many of your expenses occur every quarterly, biannually, or once a year. The same may occur with your salary, wages, residuals, and earnings. Add all of your sources of income.

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Banking

Your bank is quite easily the most important provider of your financial services. They are the source of your most common financial expenses. Your selection can have a crucial impact on your savings results as well as additional drains on expenditures, due to fees and “maintenance” costs associated with checking and savings accounts.

Choosing Your Bank

Choosing Your Bank

You have several options when it comes to banks and the type of bank you choose to deal with. This selection depends on your priorities and preferences. Banks come in 3 main flavors. You have your local retail chain bank, typically with several brick and mortar locations in your local area. Another option is your local credit unions, which are controlled by the members and provide low-cost banking. Your last option is banks which operate purely online, reducing costs and eliminating fees by handling all transactions digitally.

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Understanding Cash

Understanding Cash

The vast majority of people are mostly or only familiar with money on a cash basis. Your goal is avoiding being one of those people. You still have to understand quite a few things about the most basic monetary vehicle. You obviously need to carry a small amount of cash on you each day. You should not carry too much since cash cannot be replaced when reported lost or stolen. The rest should be kept in a bank account or cash equivalent instruments until you have built an emergency fund. Then your extra money is constantly saved or placed in your investment accounts.

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Savings Accounts & Emergency Fund

Savings Accounts & Emergency Fund

Between 10% and 20% of your annual income should be automatically routed towards your savings account and cash based savings vehicles. Your saving account primarily holds your emergency fund. The emergency fund is six months of your annual compulsory expenses reserved for financial disasters. Financial disasters mean losing your job, watching your home burn down, extended hospital stays, wrecking your car, and other potential major problems. It is not for spending.

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Money Markets & Funds

Money Markets & Funds

Money market accounts are a savings vehicle which pays higher rates than savings accounts. In exchange for these higher interest rates, you’ll have restricted withdrawals. These accounts are fairly horrible for handling situations where you need frequent withdrawals. You’ll also have higher minimum balances. A minimum balance of one thousand to three thousand dollars is fairly common. As long as your Money Market Account is not heavily withdrawal restricted, you can easily substitute it for a savings account when creating your emergency fund. A decent amount of withdrawals is 4 a month, some accounts only allow for 3. The best accounts allow for six or more, which is more than enough for an emergency fund.

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Checking Accounts

Checking Accounts

A checking operates primarily as a financial transfer account. This account exists almost purely to hold the money until it is ready to be withdrawn or spent. You withdraw, charge, or write checks against the balance of the account. Virtually all checking accounts come with a debit card and written checks. The debit card functions as a direct charge for in-store transactions or a card which can withdraw money from any Automated Teller Machine. ATM machines have their own fees. Some go to the bank itself as a servicing fee; the rest goes to the ATM’s owner or operator. The amount withdrawn is also subtracted from your checking account, encouraging you to find a bank with free ATM fees.

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Certificates of Deposit

Certificates of Deposit

Certificates of deposit (abbreviated to “CDs”) are an extremely popular savings instrument. CD’s are short term, ranging anywhere from one month up to five years. Higher interest rates are accompanied by longer terms or higher minimum balances. Certain certificates of deposit, known as jumbo CDs, have significantly higher interest rates than typical savings vehicles. Unfortunately, they also require a balance that begins around $100,000 US.

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Debt, Credit, & Loans

Debt is to be handled extremely carefully. A little wisely used debt can expand your life substantially. A lot can utterly destroy it. Decisions about debt aren’t solely made on the amount of debt either. The purpose, conditions, duration, and situation surrounding the debt are all factors in the decision to use debt.

Handling Debt

Handling Debt

Debt is to be handled extremely carefully. A little wisely used debt can expand your life substantially. A lot can utterly destroy it. Beware that decisions about debt aren’t solely made on the amount of debt. The purpose, conditions, duration, and situation surrounding the debt are all factors in the decision to use debt.

Begin by considering how debt functions. The mechanics of debt are the exact opposite of long-term investments. While investment returns compound your original principal, debt compounds the amount you will pay others. Interest slowly drains your wealth before you ever begin to return the original principal. If you don’t repay loans in a reasonable frequency, the total amount owed grows larger. Decreasing each payment only allows your interest to build, increasing the total amount of debt, and the amount of time you pay the debt. Remember before you borrow money: you could be investing the original principal and total interest on debts you owe.

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Truth in Lending Act

Truth in Lending Act

Note: This section is only for the United States of America. For rules in areas outside of the United States, please research your local regulations. The Truth in Lending Act is a 1968 federal law created to protect consumers by forcing lenders to deliver correct information to potential borrowers about their loans. The debtor must be given the following information accurately within loan documentation or offerings.

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Margin & Leverage

Margin & Leverage

If an item bought with debt increases in value after purchase, increases income long term, or delivers a return greater than the interest cost, the loan is referred to as “good debt”. Many investments purchased with loans can fall under the category of good debt. This is typically called leveraging, and the loan itself is a margin loan.

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Credit Score

Credit Score

The accessibility of consumption or investment loans depends strongly on your credit score. Your credit score determines your interest rate and co-signer requirements. Over the course of years, credit score has a significant impact on your cash outflows. This number comes from your history of handling debt obligations. Each time you engage in a credit related transaction a record is sent to multiple tracking organizations known as credit bureaus. They combine data from credit transactions into a document called a credit report. Each credit bureau has a slightly different version of the credit report, and lenders often access different companies or a combination of reports. Since they can look at any bureau’s report it’s crucial to know all your possible scores.

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Credit Cards

Credit Cards

Credit cards are revolving loans which build debt on a transactional basis and incur interest on a monthly basis. They make access to credit extremely easy, especially if you’re in a situation where you immediately need additional financing. This is not their only benefit. Unlike cash, if you lose a credit card you can report it lost and stolen. You can quickly cut off the loss of funds and contest charges, just like a debit card. Cash simply disappears.

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Payday & Title Loans

Payday & Title Loans

Payday, title and advance loans all have similarities to regular banking loans. Payday and Advance loans are repaid by the reception of your next paycheck(s). A title loan is secured by a piece of collateral, usually an automobile or motorcycle, much like many bank loans. The item posted for collateral must be clear of all liens. Title loans will also be repaid over time with your paycheck.
However, their cost is substantially higher than regular loans. Fees will start at 15% and go all the way up to 50% of borrowed fees. If you are late these fees will rise substantially. If you default the collateral attached to the loan will be seized by the company.

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Identity Theft

Anyone can steal your identity, from strangers to your closest friends and relatives. You must constantly protect yourself against thieves who will happily impersonate you for financial gain. This requires a solid preventative strategy combined with fast reaction times when tragedy strikes.

Preventing Identity Theft

Preventing Identity Theft

Preventing identity theft is highly correlated to your personal behavior. Your actions in three general areas can increase or reduce your exposure to identity theft and resulting financial problems. The first area is preventing identity theft while handling sensitive information. The second area is activity during sales and transactions. The third area is handling and destroying sensitive documents, which can be the most important area to prevent identity theft. Carefully managing each will substantially lower your identity theft risk.

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Fix Identity Theft

Fix Identity Theft

Fixing identity theft which has already occurred is annoying but necessary. If an impersonating transaction has occurred in your name, you will need to disable the account until you determine how transactions have occurred. You may have lost transaction cards or checks. They will immediately need to be deactivated, and replaced with functional substitutes. Update any automatic billing cycles tied to the credit or debit cards accessing the target account. You will need to provide a written request to contest the transaction. Be sure to deliver specific information associated with the fraudulent activity. Include your name, address, all fraudulent transactions, any respective account statements, and respective dates and times. If an account has been opened in your name, call the company or corporation where an account has been created. Directly explain that the account is fraudulent, and you would like the account closed.

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Work, Taxes, & Benefits

For the vast majority of people, work is the most fundamental source of all income. It provides you the money which allows you to save and invest. How you handle your paycheck helps to define your financial habits and what you do with your money. Handling the rewards of your work carefully, as well as your benefits can make your financial situation easier. Mishandling benefits can make your finances worse. Benefits such as stock options or share purchase plans can boost your net worth, but under the wrong conditions, they can also waste your bonus.

Payment Deductions

Payment Deductions

Your paycheck depends, rather obviously, on your payment structure. It generally meets one of the following: hourly wages worked multiplied by your hourly wage, annual salary plus bonuses for performance, or commission multiplied by the total value of products sold. Anyone who works a typical salary or hourly position will notice that their received paychecks are lower than their employer’s actual numbers. So what happens to the rest of your paycheck?

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Taxation Forms

Taxation Forms

The US government collects taxes from the general population every year on April 15th. Millions of Americans are forced to pay substantially more in taxes on this date, while others receive a refund. A set of forms and laws determine whether you’ll be receiving a refund or a request for more money. The forms associated with your taxes are the following: W4, 1040EZ, 1040A, W2, 1099.

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Stock Options

Stock Options

Your paycheck may not come completely in cash. Many firms offer the ability to use shares from the company to increase your net worth. One of these potential choices is stock options, which allow you to purchase shares at a later date at a fixed price. The fixed price is known as the strike price.

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Stock Purchase Plans

Stock Purchase Plans

Your paycheck may not come completely in cash. Many firms offer the ability to use shares from the company to increase your net worth. Stock purchase plans are one of these options. The plan’s goal is similar to stock options, which allows participants to purchase shares at a discount, but the function is different. While stock options allow users to purchase shares at a static share price called the strike price, stock purchase plans allow buyers to purchase shares at a discounted percentage of the market price itself.

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Retirement

The vast majority of workers fall far short of the amount of money they need to retire. Your retirement depends on multiple factors surrounding your current lifestyle. It also depends if you are willing to downgrade your lifestyle after retirement. Your retirement will require that you can maintain up to 30 years at your current lifestyle before your death.

Planning for Retirement

Planning for Retirement

The vast majority of workers fall far short of the amount of money they would need to retire. Your retirement depends on multiple factors surrounding your current lifestyle, and if you are willing to downgrade your lifestyle once you’ve retired. Your retirement will require that you can maintain up to 30 years at your current lifestyle before your death.

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401k

401k

A 401k program is an employer-sponsored retirement program. This program is self-directed, which means you pick the investments in the account. It is also self-defined. You choose to enroll in the program and the amount of money contributed from your paycheck. You also choose when you begin withdrawing money from the program, but within a specific age range.

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Roth 401k

Roth 401k

A Roth 401k program is an employer sponsored retirement program. This program is self-directed, which means you make the choices as to which investments are made. It is also self-defined, which means you choose to enroll in the Roth and the contributions that are made automatically from your monthly paycheck. You also choose when you begin withdrawing money from the plan, but within a specific financial range. Roth 401k plans are funded with after-tax dollars. All money will grow tax deferred until you begin withdrawing the money in retirement, and you won’t pay taxes on withdrawal

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457

457

The 457 retirement program is a tax advantaged account highly similar to 401k and IRA programs. These plans are oriented towards state, municipal, non-profit and government agency employees. The program is fairly simple. You set pretax dollars aside for your retirement, you receive reduced taxable income, and your deposit into your retirement fund grows tax deferred until withdrawal. Your contributions are set aside in a trust held until you’re ready to make withdrawals at retirement. Withdrawals of your distribution are required after 70½.

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403B

403B

There are alternative retirement programs aimed at those who cannot access a normal 401k vehicle. The 403b program is one of these alternatives offering a tax shelter for the plan’s users. This plan is offered by certain non-profit employers, ministries, and educational organizations. Employers chose the provider of their 403b programs, which changes the options that employees have as investments and their costs.

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IRA

IRA

The US government sponsors retirement programs. The program is known as an individual retirement account or IRA. IRA accounts are self-directed, self-defined, and tax-deferred. You can establish these accounts without help or assistance from an employer. Your potential selection of financial vehicles is also not limited to your employer’s account provider or preferences, giving you a wider selection than employer-sponsored accounts. To open an IRA simply approach any major financial services provider.

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Roth IRA

Roth IRA

The US government sponsors its own retirement programs, known as individual retirement account (IRA). These accounts are self-directed and self-defined. IRA accounts which are not tax-deferred are known as Roth IRAs. You can establish these accounts without help or assistance from an employer. Your potential selection of financial vehicles is also not limited to your employer’s account provider or preferences, giving you a wider selection than employer-sponsored accounts. In order to open an IRA account, approach any major financial services provider.

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SEP & Simple IRA

SEP & Simple IRA

The US government sponsors its own retirement programs, known as an individual retirement account or IRA. These accounts are self-directed and self-defined. Most are enrolled in on a personal basis, but some can be used specifically by business owners. The self-employed can use SEP IRAs and business owners with employees can use SIMPLE IRA to provide for their employees

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Home, Rent, & Mortgage

Everyone needs a place to live, but how you approach housing changes your financial future. After purchase, your living situation is hard to adjust. You have to find a new place to live, pack your belongings, and schedule a moving date. If you own the home you have to sell, if you rent you have to cancel the contract. It’s easy to downsize your budget by eliminating cable or downsizing your internet plans. It’s hard to downsize your house. This means each time you move, it’s extremely important your new housing fits your budget.
Staying within your means when approaching housing costs will save you pain in the future. Falling in love with a house or apartment is nice, but worthless when you’re paying the limit of what you can afford. Having no financial wiggle room is a horrible place to be when unexpected expenditures occur.

A Warning About Housing Budgets

A Warning About Housing Budgets

Your home address is usually the biggest percentage of your budget. It also is the hardest of your financial costs to trim down. The only way to adjust the amount you pay is to ask your landlord or mortgage company for a reduction in monthly payment or move. When financial problems occur, an unaffordable housing arrangement which can’t be changed becomes difficult to stay with and difficult to leave. Many families discovered this in the 2008 financial crisis when adjustable rate mortgages resulted in skyrocketing monthly payments. These adjustments marched alongside job layoffs, pay reductions, and reductions in working hours. They couldn’t sell their houses either. The mortgage market dried up due to fear, and buyers dried up along with it. Rather than pay between 45% and 70% of their budget into housing thousands of people discovered it was easier to let their home go into foreclosure and destroy their credit rating. It takes seven years for a foreclosure to disappear from credit reports, and scores will rise only if defaulters live perfect debt lifestyles. So how do you avoid this situation?

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Buy or Rent

Buy or Rent

Your actual approach to housing depends on many factors including your financial situation, timeline, method of purchase, and investment preferences. Buying a home is not appropriate for everyone. You should approach your decision to purchase a home from multiple angles, not simply your immediate finances and desire to own a home. Split your purchase decision into several factors. Consider all of the following: the financial market, your timeline, the home’s affordability, the upkeep costs, the housing market, and personal investment planning.

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Renting

Renting

Renting, for most people, is the much less attractive way of finding a place to live. The downside to renting is consistently paying someone else for a place to stay. The upside is lower cost, which gives you more personal funds to invest and wiggle room within your budget.

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Home Buying

Home Buying

Many people prefer to purchase their living space, for investment or living. The process of purchasing a home, condominium, or apartment is substantially different than renting.

You should see your potential home as a living space and as an investment. Viewing the home as an investment becomes more important as your planned time frame in the home shortens. If you will be selling the home a wiser financial approach will help increase your return on investment. Don’t simply buy the most expensive home you can afford.

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Mortgages

Mortgages

If you cannot buy your home with cash, you will need to know how the mortgage system works. A mortgage simply loans you money to pay for your home, and charges you monthly payments with interest until the debt is paid. The loan is a long term loan, ranging between 15 and 30 years in length.

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Renter’s Insurance

Renter’s Insurance

In either case of living space selection, you will be in need of insurance. Renting and ownership have separate policies. If you are renting, property is covered via renter’s insurance. It covers stolen, damaged, or vandalized property. It may also cover other problems that occur within your apartment. If someone is hurt in your apartment, your renter’s insurance may cover partial costs of settling a liabilities lawsuit.

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Home Insurance

Home Insurance

In either case of living space selection, you will be in need of insurance. Renting and ownership have separate policies. If you are renting, property is covered via renter’s insurance. It covers stolen, damaged, or vandalized property. It may also cover other problems that occur within your apartment. If someone is hurt in your apartment, your renter’s insurance may cover partial costs of settling a liabilities lawsuit.

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Utility Bills

Utility Bills

A home without water, electricity or heating is limited in function. Your utilities maximize the function of your home life, but also come with monthly bills. These utilities are easy to overlook when you’re budgeting, but you need to include their percentages in your upkeep. They are separate from your housing cost but are still directly connected. Larger living spaces often have higher utility expenses, but this also changes with habit.

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Automotive

The decision to buy a car is not simply materialistic. The decision to purchase a car has many separate aspects which a purchaser should consider. If you don’t pay attention, you could easily wind up paying far more than you thought or expected. You also don’t want to wind up with an undesirable car or a lemon that will wreck your finances long term. Your automotive expenses should cost less than 15% of your income. All automotive considerations begin there.

Research

Research

It is important you research multiple aspects of your purchase. Let’s assume you want a specific type of vehicle already, such as a coupe or SUV and are beginning from there. Your first objective as a buyer is finding your desired vehicle type within your 15% transportation budget. The first step is identifying the MSRP and invoice price of the car you want. You will use the MSRP to estimate the loan value of the car.

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Negotiating Car Deals

Negotiating Car Deals

The price you pay for identical cars varies widely based on the timing of your purchase, dealership’s sales, and negotiation skill. All of these can be used to get a lower price. Negotiation is the best way to pay a lower price, but it must be done carefully and correctly.

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Buying & Leasing New Cars

Buying & Leasing New Cars

If your desire is a brand new car, there are two ways to acquire a vehicle. You can either purchase or lease your vehicle of choice. Both systems have their own advantages and disadvantages.

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Buying Used Cars

Buying Used Cars

From a financial standpoint buying used cars can be a far better purchase than new cars. A used car has already absorbed the instant value loss after being driven from the lot, even if it was only driven for a few months. You won’t suffer an immediate value loss buying used cars.

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Automotive Financing

Automotive Financing

A highly disciplined group of people are able to pay for their vehicles in pure cash. Everyone else must borrow money in order to repay their bill. The dealership receives money from the lending institution and you will repay them monthly, exactly as you would with a short term mortgage. You’ll be billed interest by the lender and sales taxes by the state.

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Auto Insurance

Auto Insurance

Every state requires a specific amount of automotive insurance, which pays money to parties the case of an accident. Automotive insurance does not only cover the car, it also may cover personal and passenger injuries. Automotive insurance has the same properties as all insurance: coverage, premium, and deductibles.

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Insurance

Protecting what you own is a necessity covered by insurance. In some cases, it’s legally required. Insurance is a balancing act. You need enough coverage to cover potential damages, including death, but without exceeding your budget. Your coverage amount is almost always directly in line with your premium, or monthly payment. For several types of insurance, you will also pay a deductible. Deductibles are a small percentage of overall costs paid when damages are awarded before insurance pays the rest of the balance.

Automotive Insurance

Automotive Insurance

Every state requires a specific amount of automotive insurance, which pays money to parties the case of an accident. Automotive insurance does not only cover the car, it also may cover personal and passenger injuries. Automotive insurance has the same properties as all insurance: coverage, premium, and deductibles.

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Health Insurance

Health Insurance

Health insurance is essential. Health insurance is basically emergency insurance. You will rarely need it until an event which threatens your quality of life or life itself. You will need health insurance to pay your way. If you don’t have insurance, you will pay for the emergency’s costs out of pocket. If you have insurance, you pay an amount known as the deductible, and then your expenses will be paid by the insurance company. Since medical costs can run from tens of thousands to millions of dollars, a health insurance policy is absolutely essential.

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Home Insurance

Home Insurance

In either case of living space selection, you will be in need of insurance. Renting and ownership have separate policies. Homeowner’s insurance provides funds if a home you own encounters disaster damages, liabilities, and theft. They can cover stolen, vandalized, or damaged property. It may also cover other problems that occur in your home, like injury liability settlements.

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Life Insurance

Life Insurance

In the event of death life insurance sustains family members by providing payments to replace their lost income. The insurance provider pays a lump sum to the family itself. Under certain circumstances such as fraud or suicide, they will not pay the lump sum. They usually will have an investigation after deaths of insured parties.

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Renter’s Insurance

Renter’s Insurance

In either case of living space selection, you will be in need of insurance. Renting and ownership have separate policies. If you are renting, the property is covered via renter’s insurance. It covers stolen, damaged, or vandalized property. It may also cover other problems that occur within your apartment. If someone is hurt in your apartment, your renter’s insurance may cover partial costs of settling a liabilities lawsuit.

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Education & University

When your children are born they have a ticking clock. When that clock hits zero they graduate from high school and go to university. If you don’t have enough money to send them to university, they may not be able to attend a school of preference. Even worse, the price spent on college continually rises annually. The inflation-adjusted prices for American universities have increased over 500% since 1980. Many private universities cost $40,000 or more per year.

529 Savings Plans Guide

529 Savings Plans Guide

A 529 plan is one of several variations used for saving money for a higher education. 529 plans are similar to many Roth retirement funds. You deposit after tax contributions which are placed in investments. They are withdrawn tax free, as long as the funds are being sent to an accredited college or university for specific expenses. These expenses include tuition, books, school supplies, and required enrollment equipment. You are responsible for proving expenses are being used for tuition.

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529 Prepaid Tuition Plans

529 Prepaid Tuition Plans

A normal 529 plan is a program that invests money for university or college. A prepaid 529 tuition program preserves financial costs by purchasing education credits. Students can use these educational credits in the future for college or university. As a result, you are essentially paying now for education later. Since college costs increase between three and six percent annually, paying your child’s college credits ten years in advance saves money. From the early 1980’s to 2010, college costs rose over 500% in real terms.

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Coverdell Savings Plans

Coverdell Savings Plans

Coverdell Savings Plans are highly similar to basic 529 savings plans. Coverdell plans are savings accounts with tax-sheltered returns and withdrawals. You fund Coverdell plans with after-tax dollars, which are grown tax-free. They are also withdrawn tax-free, but only when the withdrawal is applied to an educational expense. These can only be used at eligible education institutions, but they include a far wider variety of schools, colleges, and universities. You can use these programs at public or private elementary schools, secondary schools, colleges, and universities. There is one limitation; the school must be an accredited school in the state.

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Student Loans

Student Loans

The least desirable way to pay for your child’s graduate or undergraduate college education is borrowing the money. Unfortunately, most people will eventually need to borrow money to attend college. But they should always keep those loans under control. Excessive borrowing costs you substantially long term.

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Personal Finance

International Economic Analysis:

  • Major Currency Economic Summaries
  • Performance of Major Imports and Exports
  • Mandates of Central Banks versus Expectations
  • Performance Indexes of Major Economies
  • Economically Correlated Currency Projections
  • Large Funds Currency Sentiment Readings
  • List of Technical Indicators to Look For
  • Occasional: Foregin Exchange Technicals Markups

Personal Finance

American Markets Analysis:

  • Summaries of American Economic Structure
  • Performance of Major
  • Imports/Exports
  • Federal Reserve Mandate versus Expectations
  • Performance Indexes of U.S Economy
  • Economically Correlated U.S Dollar Projections
  • Large Trading Fund Index Sentiment Readings
  • Market Wide Earnings Versus Valuations
  • Fundamental Ranking of U.S Business Sectors
  • Best and Worst Future Consensus Estimates
  • Occasional: Firm Fundamental Strength Report
  • List of Technicals to Look for While Trading

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