Successful Investment Planning (7 Critical Steps That Must Always Be Followed) from Woody Alpern on Vimeo.

Fashions change from year to year, but the one thing that doesn’t change is the cost. Clothes are becoming more expensive than ever. But at a time when it is critical that we save money, this is one area in which we can effectively do so – without giving up fashion sense.

Consignment shops offer individuals the opportunity to buy brand-name clothing for less. You can be assured the clothes are good quality because these shops only take new or used (worn one time) clothing. The label on the clothing is also required.

In fact, you can sell your own clothing with these shops and earn a commission. This is another way of saving on clothing costs.

But one of the most intelligent ways of saving money on clothing is an idea that has been around for ages: Buy one or two outfits and add an assortment of accessories to change the look of the outfit. Stick to colors that can be worn year round.

Remember to always have that one basic black outfit! You can accessorize it in a variety of ways and no one would know it’s the same outfit.

For those who have a closet full of clothes, it may not be necessary to buy any new clothes at all if you have maintained the ones you have well. This, in and of itself, can save you quite a bit of money.

Take care of your clothes by changing into sweats when you come home from work, hanging them up as soon as you take them off, taking care of any stains that may occur, and storing winter and summer clothes appropriately. If at all possible, purchase clothing that doesn’t require dry cleaning. That’s a huge chunk of change in savings right there.

You may also wish to swap clothing with your friends. This is becoming quite popular online as well. There is a website where you can swap children’s clothing as they grow out of them. Imagine the savings there!

When you initially buy clothes, look for quality; that is, clothes that will last a long time. Resist impulse buying. Just supplement your clothing with those things you need, not desire.

Looking good doesn’t require that you spend a fortune on clothes. If you are creative and have that confident air about you, people will not be looking at your clothes, but at you.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

Staying disciplined with your savings is just as important as staying disciplined with your family budget.

When you open a savings account, you are given a passbook. Every time you make a deposit or withdrawal, the amount is recorded in the passbook.

Let’s say, for example, that you have an online business where payments are made to you through PayPal and then transferred to your savings account.

While you may know how much you have deposited into your account utilizing a PayPal printout, it is still important to update the passbook whenever possible. This way, you can be sure that the funds you have deposited are noted in the passbook. You also want to receive the quarterly interest from your bank.

Unlike a family budget where you have to record expenditures and income, the passbook does the work for you. Each time you make a deposit or withdrawal, it is duly recorded.

The discipline needed is in cases when you cash a paycheck and set aside money to deposit into your savings account. Both can be accomplished in one visit to the bank. If you keep deposit slips in the glove compartment of your car or in your purse, you can easily make the two transactions at the same time.

On the other hand, if you merely cash your paycheck at the bank and take the money home, there is no inducement to fill out the deposit slip until another day. Perhaps you decide that you do not want to deposit the amount you initially set aside. Or perhaps you have a deposit slip already made out but decide to rip it up because you need a few extra dollars for something else.

Let’s face it; we have all been guilty of changing those deposit slips – even with the best intentions. But doing so sets a pattern for future deposits. This is where the discipline part of saving can make all the difference.

In these difficult economic times, we cannot afford to change the numbers that can adversely affect our savings. If the household budget calls for depositing a certain amount of money into the savings account, then that is the amount that needs to be deposited. No ifs, ands, or buts.

It’s quite easy to say we will make up the difference the following month, but the odds are that will never happen.

If you have a budget that requires a specific amount of money to be deposited in the bank weekly, bi-monthly, or monthly – try to stick to the budget. That is the true test of discipline and your willingness to abide by your own financial policy.

Brought To You By
Woody Alpern
CPA/PFS
www.yourwealth.com
Woody@yourwealth.com

Undoubtedly, your children have seen you use a credit or debit card when you shop and wanted to know about them. Explaining the difference between credit and debit cards and their function will take some time, as well as a few tools to illustrate their use.

Probably the best way to explain what each card is for is to demonstrate by using visual tools. For example, take out a debit card and a credit card. Use a label or scotch tape a piece of paper to each one identifying what they are.

Now you can effectively show your children what they are used for. Make a game of it. Place a few grocery items on the kitchen table. Pretend that you are buying them and paying for them with a debit card. Explain the process to the children in ways they can understand. Repeat the same process with a credit card.

Show the children a credit card bill. If the grocery amount is on the bill, they can easily connect your grocery demonstration and the charge on the bill.

Most likely the children will have many questions for you. Answer as best you can in words they understand.

More importantly, however, is to illustrate to the children what can happen if you use the credit card too often. Use the family budget as a way to teach them that you have set aside so much money to pay for the credit card bill each month. Then show them what would happen if you overcharged; that you wouldn’t have the money in the budget to pay the monthly bill.

You may have to repeat the demonstration a few times before the children truly grasp the significance of what you are trying to relay to them. Eventually, they will come to understand and will probably ask, “Why don’t you just buy things with money?”

That’s a good question and one that will take time and a considerable amount of self-examination to fully explain to their satisfaction.

While experts suggest that you really do not have to explain what credit cards are used for and why, they do recommend that at some point you have to have a discussion about financial responsibility.

This is particularly true when the child becomes a teen and asks for their own credit card. There has been a great deal of discussion as to whether or not teens should be given a credit card at all. Whether you are a proponent of such an idea, early education on the disadvantages of owning a credit card will likely be a topic your family will discuss in the near future.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
Woody@yourwealth.com

In order to determine the pros and cons of a second mortgage, let’s first explain what it is. A second mortgage on a home is basically the process of taking out a “second” loan. It does not take precedent over the original mortgage, which would have to be paid first.

Under what conditions would a homeowner take out a second mortgage? There are a variety of reasons, including healthcare costs, college, home improvements, consolidating debt, or perhaps to create an equity line of credit.

In today’s market, however, it is going to be quite difficult to obtain a second mortgage. The reason for this is that the value of homes is in decline. On the other hand, in cases where a home has a great deal of equity, there may be the possibility that a second mortgage can be obtained.

Generally, however, a second mortgage may be the only way to pay outstanding debts and/or increase the value of the home by making significant improvements.

Unfortunately, there are disadvantages in taking out a second mortgage. What if you cannot pay back the loan? The consequence is foreclosure, considering that you have the first mortgage pending as well.

Secondly, there are higher rates incurred with second mortgages. In fact, banks view a second mortgage as a higher risk because the homeowner is still paying off the first mortgage. In today’s economy, the chances of defaulting on a second mortgage are much greater.

In addition, there are many fees associated with a second mortgage. This, combined with the initial mortgage, can put a family into dire financial straits if neither mortgage payment can be met.

Given the difficult times we are living in, it is not a good idea to take out a second mortgage on your home unless you can afford to do so. But, even then, the market value of your home can decrease even further; a health crisis may occur, you may be laid off or have other debts that you can no longer pay.

There is no way of knowing how long this current economic crisis is going to last. Are you willing to take the risk of losing your home by taking out a second mortgage? If you are thinking of a second mortgage to consolidate debt, another prudent course of action would be to speak to a financial counselor who can guide you into finding an alternative way to pay down your existing debt.

Think twice about a second mortgage on your home. There are many disadvantages in pursuing this course at this time.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
Woody@yourwealth.com

If one of your New Year’s resolutions was to rein in the cost of spending, now is the time to tighten your budget even further. Here are some tips on how to save money.

• Buy groceries in bulk. Utilize Sunday coupon circulars and in-store circulars to find the lowest prices on items. Buy store brands whenever possible.
• Cancel newspaper subscriptions and/or the purchasing of newspapers and read online newspapers instead.
• Utilize consignment shops as often as necessary. If you have new or used clothing, you can make a commission on the sales through consignment shops. Moreover, you can purchase clothes here as well.
• Shop online to save on tax. If you shop with Amazon, become a Premium member. For $79.00 a year, you will not have to pay shipping costs on purchases of $25.00 or more.
• Take inventory of any new or used items you neither want nor need, and sell them on eBay.
• By making your home energy efficient, you can save quite a bit of money on utility bills. In fact, contact the utility company to see if they can budget the monthly bills so that you pay a smaller amount each month.
• Purchase energy-efficient light bulbs. They last longer and will keep the cost of electricity low.
• If you have cable service, call your local cable or phone company and ask about their bundle package.
• Call the credit card companies and ask to have your interest rate lowered.
• Contact your phone company and eliminate any unnecessary add-ons. If you own a cell phone, you may wish to disconnect your home phone entirely.
• Use the library more often to obtain books, CDs, and DVDs. If you need to buy any of these items, buy them used on Amazon.
• There are several coupon sites that offer discounts on items as well as grocery coupons. Check out ebates.com as well. They offer discounts on most major items in department and electronic stores.
• Save money by paying bills online. You can save quite a bit of money in lieu of buying stamps.
• Eliminate buying coffee in the morning on the way to work. Take lunch instead of eating out.
• Limit dining out in restaurants to once a month.
• Cancel magazine subscriptions. Your local library will most likely carry the issues for free.

These are just some ideas on how to save money. These are uncertain times and, with unemployment at 7%, it is a good idea to put away enough money to cover immediate expenses in case you are laid off or lose your job.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
Woody@yourwealth.com

This current economic crisis has caused a tidal wave of debt and the inability to pay down such debt. Regardless of whether it’s mortgages, credit cards, or other loans – living on credit has become the norm rather than the exception.

We all know the hidden dangers of incurring too much debt. Some may not be able to afford to pay more than the minimum monthly balance due on credit cards. This just adds more stress to an already problematic situation.

Moreover, due to the rise in unemployment many people have lost their healthcare insurance. This means that they may have to use their credit cards to pay for prescription drugs, doctor visits, or emergency care. Currently, according to one United States Senator, 11,000 individuals a day are losing healthcare insurance due to business closings, mergers, and the inability of major corporations to maintain their bottom line.

In December alone, there were over half a million jobs lost and this year, the projections indicate that more of the same will occur. Even as we speak, the credit crunch is causing massive layoffs. Estimates are that unemployment will reach double digits by the end of the year.

Yet, individuals may have no other choice than to use credit cards to buy even the most basic necessities such as food, clothing, and prescription drugs.

As an example, one woman was given four prescriptions by her doctor. Although she has very good healthcare insurance, her co-pay was $177.00. This is mainly due to the fact that each year a deductible has to be met. In her case, it was $200.00. Afterward, the costs will fall back to the usual $5.00 to $9.00 per prescription. Needless to say, she charged the amount on her credit card.

Given the fact that her current interest rate on the credit card is 20.99%, the cost of those prescriptions drugs is now considerably higher.

This is the hidden danger of using credit cards, especially in this current economic crisis. One could argue that she should have gone to the bank and taken out the cash to pay for the drugs. But research has shown that individuals are more likely to use a credit card than to part with their well-earned cash. Most would say her reasoning does not excuse the fact that this action will increase her debt.

There are so many instances where individuals use a credit card for items that can easily be paid for with cash. And statistics show that more and more people today are using their credit cards to pay for healthcare costs regardless of whether or not they have the cash on hand.

Credit cards are akin to Monopoly money. There is no emotional attachment to credit cards. It is a means to an end, even if that end means that a person will be paying down debt for a very long time.

If you use credit cards and find that you whip out the card for just about any purchase you make, why not stop and think about the possible consequences of those actions.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
Woody@yourwealth.com

What is a rate lock? According to the Consumer’s Guide to Mortgage Lock-ins, a rate lock is a lender’s promise to hold a certain interest rate and a certain number of points for you, usually for a specified period of time, while your loan application is being processed.

Establishing a rate lock will depend upon the lender. It may take weeks before all of the paperwork is prepared, so locking in a rate during this time benefits you, the consumer.

There is a disadvantage, however to a rate lock. Let’s assume that your lender has given you a rate lock and is now processing the paperwork. Let’s also assume that the interest rate has gone down. The question then becomes whether or not the lender will offer you that lower rate.

It is important that the rate lock is given to you in writing. The Consumer Guide asserts that some lenders have pre-printed forms that set out the exact terms of the lock-in agreement, while others may only offer an oral agreement. It is prudent course of action to seek out only those lenders who offer the former, rather than the latter.

Will you be charged for a rate lock? Some lenders do assess a fee at the outset for a rate lock. Also be aware that some may also keep that fee if, for whatever reason, your application is withdrawn.

How much is the fee? That depends entirely on the lender. They may charge you a flat fee, a percentage of the mortgage amount, or a fraction of a percentage point added to the rate you lock in. It varies among lenders.

How long will the rate lock be available? Although the normal lock-in time is from 30-60 days, there are some lenders who may only offer the rate lock for 7 days, while others may offer you a 120-day rate lock. Keep in mind that the longer the time given, the more money you will pay for this service.

Here are some questions you can ask each lender you visit regarding rate locks, as posed by the Consumer Guide:

• Does the lender offer a lock-in of the interest rate and points?
• When will the lender let you lock in the interest rate and points? When you apply? When the loan is approved?
• Will the lock-in be in writing? If the lock-in is not in writing, you will have no record of the lender’s agreement with you in case of a dispute.
• Does the lender charge a fee to lock in your interest rate? Does the fee increase for longer lock-in periods? If so, how much?
• If you have locked in a rate, and the lender’s rate drops, can you lock in at the lower rate? Does the lender charge you an additional fee to lock in the lower rate?
• Can you float your interest rate and points for now, and lock them in later?

Brought To You By
Woody Alpern
CPA/PFS
www.yourwealth.com
Woody@yourwealth.com

In these difficult economic times, now is a good time to begin teaching small children about money in a manner they can appreciate and absorb.

Here are some tips:

• Sit down with your children and talk about money and its value. Use coins to show examples of how money is earned and spent.
• Talk to your children about the importance of saving. Use tools such as a piggy bank or the family jug to illustrate the point.
• Explain to your children the difference between the items you need and the items you want.
• As they grow, show them how to use a checkbook. Explain what the checking account is for and then take them to the bank and explain its function. Let them see how you deposit money into a savings account.
• When they are old enough, take them to the bank to open a savings account of their own.
• When you take them grocery shopping with you, explain why you choose one item over another.
• Have weekly discussions about the family budget.
• Explain why it is important to save money, especially now. Give them a clear picture about the current crisis so they can understand why family spending has to be cut down.
• Take out the Monopoly money and use it to illustrate how the family budget works.

Experts from Family Education advise that it is never too early to teach children about money. From ages six through ten is a good time to begin discussing what money is, how it is used, and the importance of being responsible as well as understanding that everything costs money.

From ages eleven through thirteen, you can begin the process of opening up a savings account, how to shop in an appropriate manner, and the importance of giving to those less fortunate.

Teenagers from fourteen through eighteen will be learning about getting a job, saving for college, budgeting, the pitfalls of credit cards, and the meaning of taxes.

Allow young children to ask questions and answer them honestly. Utilize repetitive learning and give them small tasks they can perform to ascertain if they fully understand its meaning.

Finally, lead by example. Children learn from their parents and if they notice that the family is utilizing money in a responsible manner, they will begin to make the connection and become financially responsible as adults.

Brought To You By
Woody Alpern
CPA/PFS
www.yourwealth.com
Woody@yourwealth.com