Personal Finance Resources

I am proud to introduce my user friendly, simple, free home budget spreadsheet.  I took the home budget spreadsheet that I have been using for the last few years, and modified it so that it is dirt simple to use, and helps you to predict your future savings!  Just a few instructions to follow, to make sure there is absolutely no confusion:

1. Line 5 of the spreadsheet is where you enter your after tax or net income.  It is entered by month, so that if you have a job that is not salary and your earnings vary month to month, this home budget spreadsheet will still work for you.
2. Column B of the spreadsheet is where you enter all the line item expenses that you are budgeting for.  Try to come up with an average for the year, as you don’t want to change these items as the year progresses, if possible.  All the automatic calculations assume that the budget items will not change.
3. Cell B22 of the spreadsheet is where you enter your bank account’s balance at the beginning of the year.
4. Columns C through Y are where you will be entering your actual monthly expenses, as they happen.
5. Check the automatic calculations for your predictions!

With regard to the automatic calculation area, here are the definitions of what is being calculated:

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Ever thought that 60 miles per gallon would cut your monthly gas bill in half? Me too. The idea of the hybrid is almost too good to be true. And from a financial standpoint, it is too good to be true. The following information is a cost comparison between the Honda Civic Sedan and the Honda Civic Hybrid Sedan. Essentially the same car, except the hybrid uses half electric, and half gas power, thus improving gas mileage. According to Honda, the Civic gets 40 mpg on the highway, while the Hybrid Civic gets an amazing 51 mpg. This is where the salesman gets you. “It will help protect the environment while saving you tons of money on your gas bill every month”, a salesman might say. This is very convincing, as it appeals to both our emotional side in protecting the environment, as well as our wallet. But let’s take a closer look at the two:

• Civic Sedan: Starting MSRP - $15,010
• Civic Sedan: Highway MPG - 40
• Civic Hybrid Sedan: Starting MSRP -$22,600
• Civic Hybrid Sedan: Highway MPG - 51

Now, I have compiled a spreadsheet that will aid you in your financial evaluation of the hybrid vs regular car purchase. As always, I have run an initial estimation only, you will need to download the spreadsheet at the bottom of the post, and update the numbers per your circumstances. Let’s look at the findings:

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The following mortgage calculator will allow you to easily find the number of months and/or the number of years it would take to breakeven on your refinance investment (number of months and/or years at the new discounted payment to recoup the closing costs), as well as what your new mortgage payment would be.  This calculator will also provide you with the total savings you should expect over the life of the loan.  This spreadsheet tool is a must for everyone looking to refinance their home.  Let’s take a look at the following example:

The values above are purely an example and for demonstrative purposes only.  Be sure to get a good faith estimate from your lender to ensure that the closing costs you think you will be paying are the actual closing costs you will be paying. A refinance tends to be much easier to acquire than a new mortgage.  Take advantage of this fact, even you have less than perfect credit, and shop around. Find a lender that doesn’t charge any points to procure the loan, and whose appraisal, survey and document fees are cheap, comparatively speaking.

The mortgage calculator refinance breakeven is in spreadsheet format and is free to download here:

 Mortgage Calculator Refinance Breakeven.xls provided by Personal Finance Resources

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A mutual fund, simply defined, is an investment vehicle which allows a group of many different investors to pool their money together with a clear financial objective - to make money. It consists of an extensive collection of stocks and/or bonds, which is managed by a professional or group of professionals called an investment advisor. The mutual fund was created for those investors who feel investing their money by themselves to be too risky or just not savvy enough, but who still want to take benefit of the shared market. And benefit they do.

Mutual Fund Shares

Shares in the plan are purchased for you according to the rules of the plan and many restrictions on investment and redemptions apply. The shares are issued or redeemed by the investment advisor(s) typically in large blocks. These professionals issue and redeem shares throughout the day to keep the mutual fund making money. Mutual fund share prices are determined at the end of each business day by adding up the current value of the securities in the portfolio (after any expenses) and then by dividing the sum by the total number of shares outstanding.

Mutual Fund Diversification

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A Reverse Mortgage HECM, sometimes referred to as a Home Equity Conversion Mortgage (HECM), is a special type of home mortgage that lets a homeowner convert a portion of the equity in his or her home into money in their pocket. Simply put, a reverse mortgage is the exact opposite of a regular mortgage. The lender pays the borrower, and the borrower’s debt will increase as the equity in their home decreases. It allows individuals aged 62 and older to convert their home’s equity into tax free cash to help act as a second income during retirement. A reverse mortgage is a great way to tap into the equity of your home if you are not looking to sell your home and are also looking for tax free income. You may be asking yourself, just how does this work, and when will the loan need to be paid back?

Reverse Mortgage Loan Details

Reverse mortgage loans can be withdrawn in one (or more) of three options:

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In this post, I would like to present personal budget guidelines, and hopefully, point out some potential holes or problems in your budget.  The goal here is of course, to help you find ways to increase your disposable income, or the amount of money left over after all bills are paid.  After reviewing this post, I hope to ignite some ideas in your mind about ways to cut expenses, and the things that are really eating holes in your budget.  The following chart is a mixture of what other personal budget experts think, and my personal opinion of how to allocate your money:

In the above table, I have listed the expenses in order of importance (to me, anyway).  There are a couple of key things I want you to notice in reference to the above table:

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Why contribute to an IRA?  Because the government has allowed us to contribute on a tax deferred or tax free basis to our retirement.  Anyone who is risk averse (wants to maximize return without giving up too much risk) should be involved in some type of IRA.  There are two types of IRA s, the Traditional IRA, and the Roth IRA.  In this post, I am going to show you my approach to IRA s, as well as showing you how I shop for funds within my IRA.  The contribution limits for both the Traditional IRA and the Roth IRA are as follows:

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FHA loans were originally created for the first time home buyer as an assistance program. FHA (Federal Housing Administration) began “backing up” or insuring certain loans for mortgage companies, savings and loans institutions, banks and other lenders to convince them to lend to first time buyers. The program worked so well, that it is now widely known and available.

It is important to understand that FHA does not issue the loan itself, a typical lender actually provides the loan, FHA merely insures the loan (in part at least) against default from the borrower. Thus, if a borrower stops paying their loan, the lender has the opportunity to file a claim with FHA to recover some or all of the money. As you might guess, this made lending to first time buyers and buyers with less than perfect credit more attractive to lenders. Lenders are exposed to less risk in lending to this type of buyer, and thus approved more loans.

Although FHA provides a greater opportunity for borrowers to obtain financing, it also requires more information / documentation prior to loan approval, such as:

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If you have been struggling to get rid of harassing creditors, then online credit counseling may be the way to go.  Online credit counseling can be purchased, but there are also free and non-profit organizations available.  You can go to a credit counselor if you like, but going in to see a counselor face to face can be embarrassing, and you may lose some confidentiality over time as people tend to get to know you and talk. Online credit counseling is a convenient and flexible way for you to to get personalized, and more importantly, completely confidential assistance.  It is important to realize the difference between credit counseling and credit repair services, as credit counseling only gives you information and helps you develop a plan on how to repair your credit, whereas credit repair services actually help you do some or all of the work.

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An interest only mortgage can be a valuable investment tool.  However, you must be very cautious using this method.  There are many dangers surrounding the use of an interest only mortgage.  In a nutshell, an interest only mortgage is a mortgage that the borrower makes very small monthly payments (to cover interest only) and then is required to pay a fully amortizing payment at the end of the interest only option period.  Get the details on an interest only mortgage.

Typical fixed loans amortize, or pay down in increments, the principle balance of the mortgage over time.  However, paying down part of the principle balance over time increases the monthly payment.  This is the advantage of the interest only mortgage, as you only have to make small monthly payments, providing a great tool for short term real estate investments.

In my opinion, buying a house in a fast paced, quickly appreciating market is the best place for the use of an interest only mortgage.  Let’s take a look at the following *example (there will be a link at the end of the post to download the spreadsheet):

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