FINANCIAL FREEDOM

Your complete guide to achieve financial freedom. Proven tips, tools and tactics for you to achieve financial freedom. Make money, save money and effectively manage your money.

The underlying belief system

Written by Dian Herdiana on 10:11 AM

Many of us do not consider the underlying belief system about money to be of any importance. You think it does not matter because what matters is what you do now—right at one level but not complete.

All ideas that we have learned about money in the past are coloring our actions today. These are ideas that you are unconsciously following because you are not aware of them.

It may be: “money is bad,” “there is never enough money,” “money does not grow on trees,” etc. The list is long and painful to read when you realize that this is actually a part of you.

I was thinking: How come these beliefs are so strong? Why am I blocking myself from financial freedom? I have been working on myself for six years now, and the beliefs are still there!

So, I went looking for answers in self-help books, personal development books, New Age books, and financial freedom articles, etc. I have also done psychokineseology and past life sessions, and I have been talking to a lot of people. The answer that I come up with so far is that the underlying beliefs are coming in as all other conditioning: from our early years.

Some people also suggest that past life experiences can have an influence. Our childhood conditioning mainly comes from our parents as well as from the rest of our family and the environment around us.

If the idea in the place you grew up is that money is scarce, you can be sure that this idea sneaked into your mind somewhere along the line, and it is probably stuck there without you knowing it.

You are just wondering why there never seems to be enough money around. So, if you can now grasp the idea of negative thinking patterns about money, I will tell you to move on.

If it is difficult for you to accept this idea and you are now thinking that this does not count for you because you have learned positive thinking, that is great!

But look at the reality and do a little checkup: Is my positive thinking really working?

I am asking you to do this because my experience is that positive thinking and a YES! mentality is not always enough.

The negative thought patterns I am talking about are deep; you can call them “root thought” or “sponsoring thought”; they are thoughts that are lying underneath and behind your conscious thoughts that you are thinking on an everyday basis. They are very strong—and strong enough to sabotage your new way of thinking that may be very positive and good.

I point this out very strongly because it is important that you are willing to look at your own thoughts and to work on them to change them into healthy sponsoring thoughts that are healthy for you and will bring you abundance and wealth instead of struggle and suffering.

To change these thoughts, you have to be persistent; you will need a burning desire to train your mind into thinking differently.

You will have to do a little brainwash and afterwards a lot of relearning with your new and healthy thoughts. To train your mind, I will explain to you the concept “Act as if.”

“Act as if” works the other way around of the normal creation process, which goes like this: thought, word, deed (action). An idea comes into your mind as a thought and takes shape and becomes clear. That is the first step in creating.

Then comes the next step, which is the word. In the gospel of Saint John in the Bible: “In the beginning was only the word,” there is a great truth—only that in the very, very beginning, there was also a thought; an idea.

The word is spoken or written and makes the idea more strong; more solid. This is already a big accomplishment in the creation process, but the idea is still not physical reality.

This comes in the third step, “deed”—or the action that you do—to give your idea physical form. Take a look at this practical example: I had an idea a long time ago that it would be great to have a practical how-to guide on how to create financial freedom; initially, I had the idea because many of my friends and people I met were complaining about the lack of money to do what they want.

As I talked with them, it seemed that the reasons for these problems often were similar, and I had a feeling that there had to be a solution for this. I wanted to find the solutions (step one: ideas and thoughts); write them down and make them clear as well as easy to understand when spoken in a seminar or written down (step two: word); and then in the end to create this article and make it available for everyone who would be interested (step three: deed and action). As you are now reading this article, you can see the practical result of the thought-word-deed process unfolding straight in front of you! Going back to where we started, with the concept of “Act as if,” we have to look at why and how to do it.

Why? It is because the process of creation does not only work with the conscious thoughts you have but also with your subconscious beliefs. So, if your underlying belief system always tells you that there is not enough money, then that is the reality you create.

To train your subconscious to think differently, you first have to become aware of when these beliefs kick in. For me, it works like this: There is a Salvation Army officer standing in the street, giving out a magazine, and collecting money.

When I see him, I immediately shrink and think: I hope he does not see me. Now, of course, he sees me and gives me a smile, and I think, okay, I'll give him some money.

After all I know that this makes me feel good. Then, for the same reason that I tried to avoid him, I also start having second thoughts about giving him the small donation. The thought goes like this: I don’t want to give away the money because if I do, then I will have less, and I do not have much at all. How can I just give away the little that I have (the root thought is that it is never enough money)?

In the short term, I will have less money if I give some of it away. In the longer term, this is not as true. What I do when I walk pass the Salvation Army officer without giving any money is to reaffirm to myself the idea that I cannot afford to give him money because there is never enough.

So, what I can do to change this root thought is to first give him the money I thought of, I know it is going to make me feel good and then think to myself: WOW!

I can afford to give him money, I know that there is more where it is coming from, and I trust that this will end up in my pocket and on my bank account, so I can happily share it with more people.

This action will then affirm your new thought: There is always enough money! Now you may think, this is a lie, but then take the new thought you have learned by “acting as if” and look again on the thought-word-deed process.

You may think this is extremely difficult and everything inside of you says NO! But still, try it out. You do not have to give away all your money; that is not the point.

The point is that you give yourself the feeling of abundance and that you can share. If you have very little money, you can give according to that. It is important that you get the feeling so you can start believing in your new thought. When you say to yourself that you always have enough money for everything you want and need, you will protest and say: “This is not true; fact is this and that and blah blah blah.” You are right! Fact may be this or that, but if you want to change, you better start here—right at the root cause of your money problems. This is a little bit of “Fake it until you make it.” You can make it easier for yourself by thinking thoughts that you can accept, such as: “I know there is more money out there, and right now, I am figuring out how to get it to flow into my bank account.” Then, you give yourself a feeling of security and that it is actually true: There is enough money! When you get your head around this one, you are a giant leap ahead on the road to financial freedom.

How To Get Rich On The Internet In 7 Easy Steps

Written by Dian Herdiana on 9:25 AM

Step #1.

Forget about getting Rich. Instead concentrate on establishing a cyber business that you can be extremely proud of. A business that you will be happy to tell your neighbors about. A business that truly helps people in some way.

Look around you, in your hometown. How many millionaires do you know? Look closely at how they made their money. Many people who are wealthy today got that way through small businesses they started years ago.What do you suppose they were they thinking when they started out? Was their goal to get rich? I doubt it.

It is my guess that they had an idea for a business they could start. Maybe it was something they were good at, and just thought it would be fun to make money doing something they enjoyed. Maybe they always wanted to own a business of their very own, and once they got that opportunity they poured their heart and soul into that business.

How did they treat their customers when they first started? Did they treat them like some kind of a machine that's only purpose was to bring them cash? Or did they bend over backwards delivering world class customer service to make sure those customers kept coming back year after year?

I think you know the answer. The millionaires in your hometown did not get wealthy because they set out to get rich from the onset. They got wealthy because they did a lot of good, and provided their customers with the best service they could. They treated those customers with respect, and went the extra mile every single time they got the chance.

Forget about getting rich, and concentrate on establishing a business that helps as many people as possible, and you will eventually become rich. You may never have a million dollars, but you will be rich in ways you never thought possible.

Step #2.

Discover your passion. What is it that you are passionate about? There is one thing that you enjoy doing more than anything else. What is it? Baking bread, fixing cars, decorating mailboxes? There is something that you are passionate about. Take that passion and give it a unique twist and turn it into an on-line business.

My passion is landscape plants and landscape gardening. I'm really good with plants and landscaping. I own the worlds smallest, most famous nursery. It's only 1/20 acre, but because I am so passionate about this little tiny nursery, people all over the world not only know about my little nursery, but they are trying to duplicate what we do in our backyard nursery.

How did our little nursery get so famous? I made it that way. It's my passion! I created a website about it, I write articles about it, I get magazines and newspapers to write about it, and I even managed to get it featured on a television show. I love my little nursery, and I tell everybody about it!

Through my website and all this publicity I find other people that share my passion. They gladly pay me good money to learn what I do, and how I do it. I wrote a little book and a few reports. I made some homemade videos about it. And I do mean "homemade".

My customers love the videos, even when the screen goes blank for a few seconds because I really don't know how to make videos. They don't care. They love the videos. Why? Because my home brewed videos teach them how to develop their passion into a small business. My customers are extremely grateful for what I do.

Forget about trying to get rich. Instead find your passion, and turn it into an on-line business. No matter how much or how little money you make, you will be rich in a way that most people never get to realize.

Step #3.

Start writing about your passion. Take a stack of 3 by 5 index cards, and start writing ideas on them. One idea on each card. Write as fast as you can. Just keep putting one idea on each card, until you have at least 200 cards, 500 cards, or whatever number you can come up with. What kind of ideas should you write? Write an idea for everything you know about your passion. Every little detail that you've learned over the years.

For instance.

Did you know that the best wheelbarrow in the world is a "Jackson"? A Jackson wheelbarrow is designed in such a way that you can load it so that the bulk of the weight rests on the wheel and not the spine of the "wheelbarrow pusher". I'll bet you didn't know that did ya? I know it. And if I include that one little tidbit along with a hundred others, I've got a saleable product that others are willing to pay me money for.

Your brain is packed full of little tidbits about your passion. Write them index cards. Once you have completely exhausted every possible topic for your index cards, begin sorting and organizing your cards. When you are done you will have the outline for a product that others will pay you money for.

Step #4.

Create a website about your passion. Make it the best website on the net about your subject. Make it a fun and friendly place for people to visit. Make it so good that people who share your interest will stop by at least once a day.

Step #5.

Offer a few products for sale from your website.

Many people just browse, learn what they can, and leave without spending any money. Others want to learn every detail they can about how I sell tens of thousands of dollars worth of my homemade products on the internet so they buy my e-book, "How to Make Thousands of Dollars with Homemade Booklets". I offer plenty of free advice from the message boards at both of my sites. That's what keeps people coming back day after day.

Step #6.

Make your product digital. Create a simple information product, a 25 page report is great for starters. My best selling product was a 25 page report that sold for $19.95. Then I added some content to the report and raised the price to $24.95 and it sold even better. Now I've added even more content, converted it to an E-book, and raised the price to $39.99 and it really sells great now.

Creating an E-book that can be delivered electronically sounds really complicated, but it's not. I was really intimidated by the idea of creating a digital product. When I finally looked into it, I couldn't believe how easy it was using Adobe Acrobat.

Step #7.

Set up an affiliate program so that other internet marketers can earn money for helping you sell your digital products. This is much easier than you think. As a matter of fact, it is as simple as can be.

I use ClickBank. They handle the complete sales process for me, including processing the credit cards. They even pay my affiliates for me. All I have to do is let other internet marketers know that I have an affiliate program, and that they can earn money simply by putting a link on their website. You can learn more about ClickBank at my website.

This is the most incredible business in the world. 24 hours a day, 7 days a week, 365 days a year, people can visit your website, order your digital product, take delivery immediately, and the entire process is fully automatic. You never lift a finger, except to answer a few e-mails when people have questions.

You can have hundreds of other internet marketers sending you customers. They get paid for their efforts automatically, and you just keep selling more and more products. Business has never been this easy!

What Does Financial Freedom Mean To You?

Written by Dian Herdiana on 9:20 AM

So, what does financial freedom mean to you?
Most working people dream of this thing called financial freedom. It certainly sounds like something we'd all want. But have you ever stopped to really think about what it means? It can mean different things to different people, so before you spend time looking for it, maybe it's worthwhile to examine what the concept really means to you. After all, it's hard to find something if you don't know exactly what it is!

Time and money are inversely related. This means that in most cases, one can be traded for the other. And if you think of how that applies both to your everyday life and to the way business is conducted, it's true. For example, you can spend your own time cleaning your house or mowing your lawn, or pay someone to do it for you, and free up the time for yourself. You can spend time researching on your own, or you can pay some money for someone else's specialized knowledge in that same field.

With that idea in mind, financial freedom may be defined broadly as reaching the point where you no longer have to trade your time for money in order to provide for what you want in life. There are two key phrases in that idea - "no longer have to trade" and "what you want". These are what you have to define for yourself, in order to determine what financial freedom means to you.

To many, financial freedom means just not having to work for a living. They dream of stepping off the treadmill of going to work everyday to pay the bills. Some may want to escape the stresses of the job itself, unpleasant working conditions, commuting, boredom, and so on. Others may just value more time to be with their families and pursue their own interests. For most people, it's some combination of those.

But some people will want to continue to work, even after they've reached a state of financial freedom. They may already have a job they find personally rewarding, or they may be able to switch to another job which they love. If they're financially free, the income they receive from a job doesn't matter as much. Still others may want to run their own business. Financial freedom, for these people, means they don't "have to trade" their time for money, but they may choose to do so.

The other important factor in finding financial freedom for yourself is that of your current and future lifestyle. Some people prefer a very modest home, car, vacations, and possessions, and will always want to live that way. Starting from the same point, these people will be able to reach a level of financial freedom sooner than those who aspire to more elegant surroundings.

To reach financial freedom, you will have to decide on your own means of getting there. You may find you can reach that point on an income, most likely from your own business, from investment income, or from a combination. If you take the business income route, be sure to build something that will continue to provide income, even if you don't trade your time for it. Otherwise, you won't have reached that level as we've defined it here.

Ultimately, financial freedom is about control. Control over your own time and life, that will let you make the choices you want to make, rather than being forced to accept those offered by circumstance.

Responsible Refinancing: Tips To Avoid Predatory Lending

Written by Dian Herdiana on 7:30 AM

Homeowners interested in refinancing are probably aware of the dangers of predatory lending. But how do you recognize a predatory lender when you see one? How do you avoid the very real consequences of making a bad refinancing decision?

Predatory lending really means that a lender influences you to refinance your home in such a way that is not in your best financial interest. Homeowners often become blinded by perceived short-term benefits, losing sight of important long-term goals.

The number one mistake to avoid when refinancing your home is canceling too much equity. You’ve worked hard to build equity in your home, and cash-out refinancing options can sometimes cancel every bit of it, making your home virtually worthless to you until you can build up equity again.

However, equity is what allows you to borrow against your home, so canceling some of your equity by refinancing is not always a bad decision. If you are refinancing to consolidate other debt, for instance, this could be a decision that will strengthen your financial situation for the future.

Cash-out refinancing allows you to take cash out of the loan at closing, and while this can be seen as an investment if the cash to be used for home improvement, it is absolutely detrimental if the homeowner spends the cash on something like a new car or boat. The homeowner has then wiped out equity in a home that will only increase in value, and traded it for something that begins depreciating immediately.

Predatory lenders take advantage of homeowners who have difficulty focusing on their long-term financial goals. If you are considering a cash-out refinancing option, ask yourself if your plans for that cash are going to help you reach your long term goals or not.

Refinancing a fixed rate mortgage (FRM) to an adjustable rate mortgage (ARM) to take advantage of current low interest rates is another decision homeowners are likely to later regret. That low rate may look attractive now, but an adjustable rate mortgage is just that: adjustable. Interest rates could rise higher in the future than the rate on your current FRM. Lower monthly payments may seem like a great way to save money, but in the long-term you could end up paying thousands more on your new loan than you would have paid if you’d stayed in the old one.

However, refinancing from an ARM to an FRM is usually a wise decision, even if the fixed rate is slightly higher than the current rate on the ARM. The idea behind refinancing to an FRM is that you lock yourself into an interest rate that you are comfortable with paying.

Refinancing to the same type of loan as the current mortgage for a lower interest rate is also a decision homeowners probably won’t regret. Just be sure you intend to stay in your home long enough for the savings in interest to cover the cost of refinancing.

One other important safeguard against predatory lending is the Federal Truth in Lending Act, which guarantees borrowers who refinance on their primary residence a three day grace period to back out after closing, so long as they are refinancing with a different lender than the one who holds the current mortgage. This is called the “right of rescission,” and very few borrowers take advantage of it, but knowing you have the right to back out of a bad deal makes refinancing your home a little less stressful.

Follow the Path to Financial Freedom

Written by Dian Herdiana on 7:27 AM

Retirement may still be a few years, or even decades away, but there’s no time like the present to start planning for your future. However, not enough people are doing it.

According to a recent GoodLife survey by Stowers Innovations, Inc., less than 20 percent of adults over the age of 18 have a definite plan for retirement at a specific age. Now is the time to take control of your financial future and declare your personal financial independence.

“The only person you can count on for your financial security is you,” says James E. Stowers, founder of American Century Investments and author of “Yes, You Can… Achieve Financial Independence.” “When you count on yourself, you are in control of your own circumstances and with this control comes peace of mind. With unwavering determination, anyone can achieve financial independence.”

Follow this six-month plan to begin your path toward financial freedom.

Month One — Make a commitment and determine your priorities. The first step toward financial independence is making a commitment. Sign your own Declaration of Personal Financial Independence as a reminder of your personal pact. You can find a Declaration of Personal Financial Independence at www.afiweek.com/si.asp.

Once you’ve committed, establish your priorities. Determine what is truly important to you and how to live your life in a way that allows you to attain these things. Financial priorities can encompass many things including education, family unity or fulfilling basic needs like transportation. Once you set your priorities, form a plan to meet them. For example, you may start saving for college, a family vacation or a car.

Month Two — Eliminate debt and establish a budget. Debt is an American epidemic. More than 70 percent of surveyed adults reported living with debt. Thirty-five percent had over $8,000 in debt. Analyze your current payments and find ways to pay down your debt as quickly as possible. Options range from borrowing money at a low interest rate to pay off high interest credit card debt, to stopping all other investments and using that money to bring your unpaid balance to zero.

After you establish a plan for eliminating debt, create a budget and be determined to live within your means. This can help you achieve your goals and stay debt free in the future.

Month Three — Audit your finances. Take stock of your progress to-date. Each week, perform an audit on a different area of your finances. Review your spending pattern and make certain your spending matches your priorities. Re-calculate your debt to determine the impact of your debt elimination plan. Analyze your budget to see if it is working for you. Lastly, look at your complete financial picture to view your financial puzzle as a whole instead of individual pieces.

Month Four — Increase your financial IQ. From children to newlyweds to retirees, continued financial education is important for people of all ages. Increase your financial knowledge through a variety of outlets including newspapers, financial books and seminars. Learning about mutual funds, investment opportunities and savings plans can diversify your finances and put you in a better financial position for the future.

Month Five — Start thinking long term. Now is the time to plan for your financial future by paying yourself first and setting up an emergency reserve.

The concept of paying yourself first is one of the most effective ways to save and begin building a foundation for your future financial security. Each month, before you do anything else, put a set amount of money into a high yield savings or investment account.

Since life is full of risks and financial pitfalls, build an emergency reserve to sustain you during hard times. It is advisable to save between three and six months of living expenses in an easily accessible saving account. The amount of your reserve will depend on the flexibility of your budget and your comfort zone. Remember your emergency reserve is not intended to cover all possible risks. For complete protection, take advantage of the many insurance options available to you.

Month Six — Resolve to stay focused. Congratulations on making it to the sixth month. Take time to reassess your finances and your complete financial picture. Determine what has worked well during the previous five months and what you can do better. Then reconfigure your financial plans to take these things into account.

SIDEBAR

The first step toward financial independence is making a commitment. Stowers Innovations, Inc. offers the following Declaration of Personal Financial Independence as a reminder of your personal pact.

Declaration of Personal Financial Independence

In order to enjoy peace of mind and live a more meaningful life, I, _______________________, hereby declare my intent to achieve personal financial independence.

Only I can secure my financial freedom. Therefore, I will:

* Establish my priorities – I will decide what is truly important to me and create a financial plan that will help me achieve my goal.
* Practice responsible credit card use – I will reduce and eliminate outstanding balances on my credit cards. I will only use my cards if I have the money to pay for it each month.
* Create a budget – I will set up a budget and keep track of my expenses to stay within my budget. I will make sure I am getting my money’s worth.
* Pay myself first – I will save for my future. I will deposit a percentage of my monthly earnings into long-term investments.
* Get help – I will promptly seek professional assistance if I don’t fully understand what I am doing.
* Think long-term – I will invest for my future and take advantage of my employer’s saving and retirement plans.
* Increase my financial IQ – I will stay current on the latest financial and economic news. I will continuously research and look for better ways to accomplish my financial goals.
* Expect the unexpected – I will create an emergency fund to cover unexpected expenses.
* To thy own self be true – I will be honest with myself and continue to be determined to be financially independent by living within my means.

Signed ____________________________________ on this date _______________

Can You Become a Millionire?

Written by Dian Herdiana on 7:30 AM

Yes, you can become a millionaire without winning a lottery. It is possible to become a millionaire by cutting your small expenses and getting into the habit of saving regularly. It is not only what you make but also what you spend that determines if you would be a millionaire or not when you retire. We all want to make big bucks as quickly as possible and retire early, but that is not always possible unless you win a lottery. However, with a long term saving strategy most people can become a millionaire by the time they retire.

Can you believe that 70% Americans are living from paycheck to paycheck? You may think that those small items, like coffee or candy, that you spend money on everyday are not worth your considerations when it comes to realizing big money in your bank accounts. You will be surprised to know that by cutting $100 every month from your expenses and investing that money for 30 years, you will net close to a quarter million dollars at an average 10% rate of return. If you are an one-pack-a-day smoker, you are just throwing away a quarter million dollars by smoking for 30 years.

Have you ever heard of the "Latte Factor"? It is the money you spend on small items everyday that add up to a considerable chunk at the end of the year. Invested wisely, that money will grow to your wildest imagination. You do not have to give up your favorite coffee and spend your days miserably. Just cut down on your everyday small item purchases by at least 50%.

Start an expense book and, for one month, write down every penny you spend everyday. At the end of the month, add up the money you spent on small items like coffee, candy snacks, muffins, power drinks, power bars, etc. Now, here is what you need to do. Budget your coming month's small item expenses at half the level you spent in the previous month. At the start of the month, take 50% of the money you plan to spend on small items and stash it in a newly created savings account. Do it for one year and at the end of the year, take the money out from the savings account and buy some index fund using a discount online broker like ameritrade.com.

Besides savings on small items, you should also have a monthly retirement account, for example a 401K account if your employer is offering one. It will save you big on taxes till you retire and start withdrawing money from it. If your employer is matching your 401K contributions up to a certain percentages, it will be like throwing away money if you are not taking advantage of that match. Put two to three thousands dollars in a Roth IRA because returns from a Roth IRA is tax free.

If you are short on cash, get a newspaper delivery route. It will provide you a nice chunk of money at the end of each month. Start a website on your favorite topic, for example a discussion forum for paper delivery persons. You can generate a small income from advertisements on your website. Research selling opportunities in e-bay to generate small incomes every month.

If you pay your credit card purchases over several months, you are making the credit card company rich. Settle the entire amount of your credit card balance when the payment is due to avoid exorbitant interest rates charged by credit card companies. If you are not able to pay the entire balance at the end of the month, do not purchase on credit. Wait for your purchases till you save enough money. Except your house and cars, avoid all debts.

There are plenty of opportunities to amass wealth and become a millionaire when you retire. Use the Internet to educate yourself in saving, investing, and earning extra money.

6 Ways to Create Multiple Streams of Income

Written by Dian Herdiana on 7:23 AM

To achieve financial freedom, one cannot only depend on the earned income from his/her day job. One needs to create multiple streams of income, by tapping into the different channels of opportunities.

Let me share with you 6 main types of income streams:
1. Write your own books; create your own audio cds, e-books, video etc. Then earn royalties and fees from licensing or selling your intellectual products.

2. Conduct seminars and workshops so as to magnify your value by reaching to more people at one time. In this way, the money that you will earn from each workshop or seminar will not be fixed; it will all depend on how many people you are willing to reach.

3. Start your own business. Earn dividends as an investor or directors of a business, earn salary as a CEO, and earn through royalties from the brand of a business.

4. Earn commissions from sales, or referrals. For e.g. through online affiliate programs, through downlines, Google Adsense, etc.

5. Earn through investment in real estates by collecting passive income from rental fees.

6. Earn through investment in paper assets such as stocks, mutual funds, bonds, etc.

Before you engage in any one of the way to generate your additional incomes, please do read up and understand the field of investment first.

Disclaimers: Neither we nor any third parties provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or suitability of the information and materials found or offered on this article for any particular purpose. You acknowledge that such information and materials may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law.

Four Dangerous Words - "You Can Refinance Later"

Written by Dian Herdiana on 6:10 AM

Buying a house is an expensive proposition. It's the only thing most people will ever buy that will take decades to pay off. As such, it is not something most buyers enter into lightly. The financial demands are significant and the payment has to be made each and every month for the next thirty years or so. Adding to the complexities of the process are the current sky-high prices of housing and the fact that interest rates are steadily rising. This adds up to a situation where many buyers may find themselves looking at loans they can barely afford to pay.

Lenders are aware of these market situations that have made buying a home a difficult endeavor. The industry has responded by creating a wide variety of loan options in order to meet the needs of just about anyone. Some of these loans, however, offer terms that can make buying a home somewhat of a risky proposition. Option ARM and interest-only loans can both shock buyers several years down the road when they adjust, creating huge increases in the monthly payments. Yet sometimes, when the buyer asks about these things, the lender will reply with "You can refinance later."

In theory, that is true. Assuming that the loan has no overly expensive early payment penalty, the buyer should be able to refinance at any time. But being able to refinance is one thing; having market conditions that make refinancing a smart move is something else. Most people can remember the late 1970's, when interest rates for houses topped 15%. While rates have been near historic lows recently, there is no guarantee that they will not rise to that level again. If they do, refinancing, while possible, would certainly be a bad idea.

Interest rates are no the only unforeseen circumstance that might arise. The economy might take a downturn and you might have to take a pay cut. Or the market could soften, causing property values to decline. Either of these could make refinancing a house that you can only barely afford difficult or even impossible several years from now.

When a lender points out that you can always refinance later, he or she is generally telling the truth. But taking out a home loan with terms that are stretching your finances now while assuming that you can make it better later by refinancing is poor financial planning. If the loan you are considering is expensive to the point where refinancing later is a necessity, you are probably buying a house that you cannot afford.


©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.homeequityhelp.net, a site devoted to information regarding home equity lending.

Why you should use Forex to attain financial freedom

Written by Dian Herdiana on 1:54 AM

What Does FOREX Stand For ?
FOREX stands for Foreign Currency Exchange Market. It is gaining more and more interest in the investing world, and for good reason. The FOREX Market is the largest market in the world and can be accessed anywhere in the world. The FOREX Market's volume is over 1.5 Trillion, providing almost infinate liquidity and flexability.

How do you trade?
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Rate tarts no longer welcomed by mortgage and credit card providers

Written by Dian Herdiana on 6:19 AM

Following on from recent moves in the credit card industry to reduce the number of people switching from one financial provider to another, mortgage lenders are now looking to follow suit.

Abbey is the latest High Street mortgage lender to notify its customers that they are increasing the costs associated with switching from their mortgage to £225, this fee is over and above any other penalties levied for leaving early, and represents an increase of 25%. Abbey is however only the most recent in a list of 53 mortgage providers announcing similar steps within the last year.

Michael Coogan, Director General of the Council of Mortgage Lenders, said, "All lenders are having to look at their fees much more closely now". The recent financial reviews were attributed to the slowing of the housing market whilst administration costs have continued to rise, however David Hollingworth of mortgage brokers L&C agreed with the BBC that lenders were imposing the charge to discourage people from moving.

The Financial Services Authority advises caution when looking at the possibility of changing lenders. “Switching can cut your monthly payments. But you’ll need to weigh up these monthly savings or other benefits against the up-front costs of making the switch.”

The growth in the number of consumers switching their financial providers has occurred due to the recent growth in the number of finance assessment tables in newspapers, and financial comparison websites such as Moneynet which have been launched to help consumers to get the best rates available.

The ease with which consumers can compare the various rates and offers that are available has meant that financial product providers have fought to attract new financially mobile members from other providers, through special offers and limited term deals. By making use of these deals the financially mobile ‘Rate Tarts’ have been able to wipe thousands of pounds off their mortgage repayments, and some have even turned profits by regularly switching credit cards.

The main strategy that has been adopted by the credit card companies such as Egg, Barclaycard, MBNA, Alliance & Leicester, Tesco and Mint, to prevent rate tarts, is the introduction of about a 2% transfer fee on all balances between cards. Card holders will then usually benefit from an introductory period of up to 9 months at a rate of 0% interest being charged over the deal period.

Although the moves are designed to stop the actions of rate tarts eating into lenders profits, many experts still say that while there are more obstacles, and the benefits of switching have been reduced compared to past levels, borrowers can still save money by judiciously changing between lenders.

Savings Director for Chase de Vere, Sue Hannums, believes that, "Even with these new charges, those with outstanding debts on their credit card should still look to move to a cheaper deal. If they can switch from one introductory offer to the next they should make substantial savings over the long term."

Financial Director Stuart Glendenning states that consumers are saving about £1 billion a year by taking advantage of interest-free periods; however he suspects that, “Most banks are now working on a way to discourage rate tarts. This will probably come in the form of more widespread and more expensive transfer fees, particularly for longer interest free offers."

Martin Lewis, of moneysavingexpert.com, advises: "You must be vigilant and be prepared to transfer again and again if you want to make the savings. After a six-month interest free period, you only have to pay interest charges at the standard rate for two months to lose all of the benefits. And even if you forget to move from that card just one day after the free period expires, you will pay an entire month's worth of interest for that simple mistake." For mortgage borrowers, the introduction of penalty fees does seem particularly harsh, as David Hollingworth of mortgage brokers L&C points out, "Most people's gripe here is not that there is a fee, but more about the increasing of that fee over the term of the mortgage, so when you are taking a deal out it can be one figure, when you come to actually switch, then you are looking at a very different figure."

But the lenders view it as more of an effort to recover fees directly from the customers who are causing them additional costs, rather than including these costs into their overall interest rates thereby making everyone pay.

It seems that the financial industries love affair with attracting customers from competitors has finally ended. Whilst there are still many lenders willing to provide offers to attract customers, there are also many lenders now looking to make rate tarts an endangered species.

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