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Facing Your Financial Fears

The Money Nerve
Facing Your Financial Fears

Facing Your Financial Fears

We all have money habits ingrained in our lives, yet many of us are afraid of facing financial fears. Financial fear is often caused by emotional response that we unconsciously carry with us, and facing your financial fear is the first step to eliminating stress and worry.

There are dozens of emotions that surface when it comes to money. When I was thinking back on the emotions I have dealt with in client meetings over the years, I came up with an extensive list. But one emotion seems to crop up more often than others. It’s exhaustion. Looking at the root cause of our financial actions can be exhausting. Being broke can be exhausting. Budgeting can be exhausting.

Exhaustion

Many people have a message in their mind stuck on replay, and it says, “I don’t want to look at my financial reality. I just don’t want to look at how messed up I actually am.” It seems less exhausting to live in a make-believe world! The problem with that assumption is that it’s a fantasy. As soon as you get an overdraft fee – BAM! Welcome to the real world. Dealing with reality out of fear makes you may feel even more de- energized and defeated.

Turn your exhaustion around:

• Analyze your true situation. Don’t spend money before you receive it.
• Have a contingency plan
• Create a strategy to move in a new direction.
• Investigate smarter personal finance tips and tools

Determine where your “MONEY NERVE” is by facing Your Financial Fears

1. Write down a recent, uncomfortable Money Nerve moment and analyze how you might have mitigated the emotions behind it and improved the situation.
2. Start a journal to track your money habits and emotions
3. Make a list of people in your inner circle of family and friends with whom you could discuss finances.
4. Make a list of professionals who could provide financial advice, maybe a CPA or a financial advisor.
5. Pick the three strongest emotions that trigger your Money Nerve. Mentally trace them back to what you believe to be the root cause. For example, “My father got angry whenever we wanted to eat out.”
A.
B.
C.
6. Write down a recent, uncomfortable Money Nerve moment and analyze how you might have mitigated the emotions behind it and improved the situation.
7. Review your journal entries to identify other emotions that trigger your Money Nerve.

Becoming more aware of the emotions that trigger your Money Nerve will create new options for making positive change in your life!

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Low and No Payment Mortgages

mortgages

Low and No Down Payment Mortgages

Low and No Down Payment Mortgages

~ written by Clever Dude

Hi Money Nerve readers! Thought this “Clever Dude” article about mortgages was very informative. Check out the details.

Many years ago, mortgages required a good credit score and a large down payment of at least 20%. That’s no longer the case since the Federal Government created several home loan programs making it easier for borrowers to attain a mortgage loan.

Here are some loan programs that allow for a low, or no down payment.

FHA Loans
The Federal Housing Administration was introduced to help encourage home ownership in the U.S.You may qualify for an FHA loan with just a 580 credit score and a low down payment of just 3.5%. That’s a much lower down payment than conventional loans which require between 10% – 20% down.

One of the great things about FHA loans is that the down payment can be a gift from a friend or family member. Up to 100% of the down payment amount can be gifted to the borrower allowing for 100% financing to those who are receiving a gifted down payment.

The FHA also allows for higher debt-to-income ratios than other types of home loans. In some cases, lenders can allow for DTI ratios up to 50%. With this calculator, you can figure out how much house you can afford factoring in PMI and property taxes.

Pros and Cons of FHA Loans

Pros

Low down payment
Low 580 credit requirement
Lower interest rates
Higher debt-to-income ratios allowed
Up to 6% of closing cost can be paid by the seller
Non-occupying co-borrowers allowed
Many FHA approved lenders nationwide
Higher allowed debt-to-income ratios

Cons

Low loan limits
Fixer-upper homes can’t be financed
Mortgage insurance premium required
High MIP costs, up to 1% of loan amount
Up-front MIP required

VA Loans
If you’re a Veteran you may qualify for a VA mortgage. VA loans are the cheapest type of mortgage loan available. They require no down payment and no mortgage insurance is required. In order to qualify, you must be an active, or retired Veteran or a Veteran spouse.

Like FHA loans, VA loans come with lower mortgage rates than most conventional loans do. They do require a higher credit score than FHA, most lenders require a minimum 620 credit score to receive 100% financing.

USDA Loans
The U.S. Department of Agriculture created the USDA rural housing program to help loan to median-income borrowers become homeowners in rural parts of the country. USDA loans do not require a down payment.

Because they are 100 % financing lenders have higher credit score requirements. Typically you will need a minimum 640 FICO score to qualify for a USDA mortgage. When you think of the term “rural” you generally think of farms and ranches. However, about 97% of the country is in an eligible USDA location. Most areas that are 30 miles outside of major cities are USDA eligible.

Conventional 97 Loans
Fannie Mae is one of the largest buyers of mortgage in the U.S. Fannie Mae has started the 97% LTV conventional mortgage loan which requires just a 3% down payment. That’s even lower than FHA. To qualify for this loan program you must have at least a 620 credit score.

Some of the benefits of conventional loans are the higher loan limits than Government backed mortgages. In low-cost areas of the country, the loan limit is $424,100 which is over $150,000 higher than the FHA limits. Like FHA loans, conventional 97 loans also allow 100% of the down payment to come from gift funds.

The Bottom Line…
There are many mortgage programs besides just FHA that offer low or no down payment loans. USDA and VA are the only two mortgages that offer 100% financing. If you’re not eligible for either you may qualify for FHA or a conventional 97 loan with low down payment requires, much lower than traditional financing.

Knowing your options is an important part of the process especially before speaking to a loan officer. Not all lenders offer all types of loans, knowing the different types of loan programs can help you save a bundle on your home.

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Teaching Yourself to Say NO to Debt

Today’s Guest Blogger is Matthew Woodley, creditexpertrepair.com.

Be sure to implement some of his insightful tips for dropping debt!

Teaching Yourself to Say No to Debt

If you are struggling with debt then you have to make a commitment to change the way you spend your money. There are many places you can turn for help, such as financial advisors, and there are many ways to help turn your finances around with programs involving debt management, refinancing, or even debt consolidation. Tapping into professional assistance and teaching yourself to say no to debt can pave a new path to financial freedom.

With that said, no matter what options you choose you need to commit to saying no to any more debt. No matter how tempting it may be to spend, if you want to get out debt you have to stop adding to it.

It is true that it can be hard not to take on new debt, especially if you are used to using your credit cards and are living pay-check to pay-check. To get started here are a few suggestions for teaching yourself to say NO to debt and changing your habits.

Avoid New Loans

When you are having trouble paying bills, it can be very tempting to seek out a new loan in order to cushion yourself and have a sense of security. However, you are much better off reducing your expenses in other ways and creating a monthly budget. This can show you how easy it can be to save money and allow you to learn how to live within your means.

Begin teaching yourself to say no to debt by using cash for all of your expenses. You will begin to realize just how much of a crutch your credit card and loans have been. If you have a lot of debt and cannot afford to buy something in full using cash, then you should not be allowing yourself to buy it.

Breaking Bad Habits

It is very important to allow yourself to put paying off debt before anything else. By avoiding loans and only spending the money that you have in your account you will be able to break away from your spending habits and stand up to your finances.

Another great way to learn new habits is to start paying yourself before you turn to other expenses. You can do this by setting up a deposit into your savings account on the first of the month. When you start to see this money disappearing each month you will begin to treat it like any other payment, and even forget that you are actually saving money. This is one of the best habits to get into and is a great way to save for an emergency or start to build up a nest egg.

Even if you set up a withdrawal that puts $50 a month into your savings – you will have at least $600 in an emergency fund at the end of the year. While that may not seem worth it right now, it can be the difference between bankruptcy and making it through any difficult times. Something as simple as avoiding buying a cup of coffee each day can allow you to pay yourself first, and is more than worth it in the long run.

Reducing Toxic Debt

Aside from putting away a bit of money, you should always do your best to target toxic debt with any extra money you have from your budget. Toxic debt refers to the high interest payments that you have in terms of credit card balances or pay advance loans. You should always being focusing on paying off this kind of debt first before upping your payments on things such as student loans or car payments. Tackle the worst debts first and then you will be in better shape to slowly pay off other debt such as your mortgage.

The fact is that most of us have more money than we think we do, we are just guilty of impulse buys and not having our priorities straight. By teaching yourself to spend in cash, avoid loans, pay yourself first, and attacking toxic debt, you can form all new habits and in many instances find out just how much extra cash you will eventually have lying around at the end of each month.

Be smart, stick to your guns, and that dream retirement or debt-free future could be closer than you think.

Matthew Woodley is the founder of CreditRepairExpert.org which provides users with free and unbiased information on how to repair and improve their credit score. Make sure to follow him on Twitter for the latest on credit repair and debt management.

For more info, please visit CreditRepairExpert.org

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Radical Abundance Workshops

Radical Abundance Workshops are happening this September in Montreal and Toronto!

Radical Abundance Workshops in Montreal and Toronto
Find Radical Abundance with The Money Nerve

Join us in Montreal September 15-17, and in Toronto September 22-24!

Do you have limiting money beliefs? Are you ready for a path to create financial freedom? Want to heal your relationship with money in a creative, collaborative and supportive way?

FINANCIALLY TAPPED, EMOTIONALLY TRAPPED?
You CAN create a new path for financial freedom. If you feel the heat rising when you pay those monthly bills, that could be your money nerve alerting you that it’s time to make a change. The Money Nerve concept will inspire you to make a real change in your perspective about money. I love working with groups and leading workshops – to help each of you navigate your emotional response to money, create a healthy budget and chart a new course!

Our Radical Abundance Workshops have been engineered to create a transformation of your limiting financial mindset and help you to uncover new pathways for creative solution and a richer life experience.

Join us…

Join me  and colleague CORE Energetics professional Josee Martel, for an incredible mind-opening experience that will change your life! You will be given tools and techniques for personal and professional success, while learning to live a life of proactive abundance!

Be a part of this weekend workshop in either Montreal or Toronto

Take advantage of this opportunity to evolve your capacity to play big in life and relationships. We’d LOVE to have you at our Radical Abundance Workshops!

Select Your Location

Montreal911 Rue Jean-Talon E, Montréal, QC H2R 1V5, Canada

Montreal Facebook Event Info HERE

Toronto: Colt Paper Building, 151 Sterling Rd, Toronto, ON M6R 2B2, Canada

Toronto Facebook Info HERE

Schedule both weekends:

Friday: 7-9:30 pm
Saturday & Sunday: 9:30 am – 5 pm

Radical Abundance Workshops
Bob Wheeler & Josee Martel

 

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Investing In a Volatile Market

Guest Blogger George Diaz

Investing In a Volatile Market

Ever since the election of Donald Trump, markets have been very volatile, hitting record highs one minute, and then experiencing massive selloffs the next. For this reason, it is imperative to know “how and where” when investing in a volatile market.

We are living in turbulent times.

Market volatility should be a reminder to regularly review your investments and make sure you have a diversified investment strategy that matches the overall risk in your portfolio to your personality and goals. Here are some guidelines for you to invest in an unpredictable market.

1. Stand firm: Crises happen on a regular basis and are usually of short duration.

Market crashes can be annoying, but history shows that the stock market has been able to recover from declines and can still offer investors a positive return in the long run.

In fact, in the last 35 years, the market has experienced an average decrease of 14% from highest to lowest during each year, but still had a positive annual return more than 80% of the time.

2. Be at ease with your investments

If you are nervous when the market goes down, you may not have the right investments. Your time horizon, goals and risk tolerance are key factors in ensuring that you have an investment strategy that works for you. Even if your time horizon is long enough to justify an aggressive portfolio, you have to be comfortable with the bumps you will encounter.

However, you should be mindful of not being too conservative, especially if you have a long-term horizon because strategies that are more conservative can not provide the growth potential you need to achieve your goals.

 

Attempting to enter and exit the market can be costly.

3. Do not try to time the market

4. Invest regularly despite volatility

If you invest regularly for months, years and decades, short-term crises will not have a big impact on your bottom line. Instead of trying to judge when to buy and sell based on market conditions, if you take a disciplined approach to investing, you avoid the dangers of market timing. Seize opportunities!

Bear Market Strategies

During a general downturn in financial markets as a result of economic uncertainty, investors rush and seek security in their investments.

There may be some actions to take while the markets are down, to help you have a better position for the long term. These strategies are complex, and you may want to consult a professional before making any investment or tax decisions.

1. Avoid positioning yourself in volatile funds or ETFs of complex nature, even more so during a full correction.

2. Say goodbye to the losers. Now is the right time to do a portfolio cleaning. If these stocks did not perform well in boom times, why would it be any different now?

3. Reduce your stock positions. If the market continues to decline, you will be able to go hunting for undervalued securities, because you will have sufficient liquidity.

4. Buy bonds. Debt securities can be great allies in the midst of bearish gaps in the market.

5. If the stock market continues to move down, try to avoid constant monitoring, as fear will make you anxious and often results in people making hasty decisions about their assets.

6. Taking short positions is one way to make money in a bear market, such as selling futures, betting on declines or helping to reduce your portfolio exposure to the market.

Guest blooger George Diaz writes for finance sites: sobredinero.com and Myfinancialwisdom.com. He can be reached at george@sobredinero.com or via Twitter @sobredinero1

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Time Value of Money

Understanding The Time Value of Money

Today’s guest post is by Gary Forman, founder of the Dollar Stretcher newsletter and website. One of his clients asked Gary:

“Does anyone think that $20,000 will buy a new car forty years from today? Maybe it’s time for an article on the time value of money, accounting for inflation in long term investment plans, and related issues.” ~  Lester

Lester was referring to an article that I had written saying that when you buy something today, you’re agreeing not to buy something more expensive later. And, he’s right. You can’t simply take today’s prices and expect them to be valid for future purchases, especially if you’re looking more than a few years into the future.

The concept of rising prices is only one component of an economic theory called “the time value of money.”

Having money over a period of time is valuable. Money can earn more money. Suppose that you had $100 today and could earn 10% on it. A year from now you’d have $110. In two years $121. So having that $100 is valuable.

Also, I’d rather have $100 today than wait and get it tomorrow. I won’t earn much interest in one day, but it should be worth a little more tomorrow. It’s also safer getting it today. There’s always that possibility, however small, that you won’t get the money tomorrow. By getting it today, you’ve eliminated that risk.

Another area where the time value of money applies is in the area of retirement planning. Suppose that you expect to retire in 20 years. You know that prices will rise before then. But can you estimate by how much?

Rule of 72

A quick and easy way to answer that question is to use the rule of 72. The formula is easy. The number of years in the future times the interest rate you expect equals 72. That’s how long it will take for prices to double.

Let’s do an example. You want to know how long it will take prices to double if inflation is 6%. A little algebra tells us that you divide 72 by 6. Thus, prices will double in 12 years. So if you expect to retire in 20 years and inflation is 6%, prices will be nearly 4 times higher when you retire. ($1 x 2 = $2 in 12 years. That $2 x 2 = $4 the next 12 years. Or 4 times in 24 years)

Suppose that you had $100 today and could earn 10% on it. A year from now you’d have $110. In two years $121. So having that $100 now is valuable. Also, I’d rather have $100 today than wait and get it tomorrow. I won’t earn much interest in one day, but it should be worth a little more tomorrow. It’s also safer getting it today. There’s always that possibility, however small, that you won’t get the money tomorrow. By getting it today, you’ve eliminated that risk.

If you play with the formula, you’ll find that the rate of interest you choose makes a big difference in the results. For instance, 3% inflation would mean that prices would double every 24 years. Quite a difference compared to our first example – going up 4 times in the same amount of time.

You can also use the same formula to calculate how long it will take your money to double in an investment account. For instance, if you’re earning 9% on your investments, it will take 8 years to double. (9 x 8 = 72).

You may want to get more precise than our little formula will allow. For that, you’ll need something called a financial function calculator. It will do a lot more than the time value of money formula, but it’s easy enough to learn how to use it for time value questions. And, they’re not expensive.

Some people will subtract the inflation rate from their investment return to get a “real” rate of return on their retirement savings. For instance, if you earned 8% on the money and inflation was 3%, you’ve really gained 5% in buying power.

Another application for time value of money is when you’re trying to decide which payment plan you’d prefer. What happens if you were told that you could buy a car for $20,000 cash today. Or you could make $400 payments for 60 months. Or you could put $4,000 down and make $375 payments for 48 months.

You could add up all the payments you would make, and that would be a good rough estimate. But you’d get a more precise answer by using a calculator to bring everything back to today’s dollars so that you’d have a fairer comparison.

$1 today is more valuable

Don’t be intimidated by the concept. Just remember that having $1 today is more valuable that having one a year from now. And the same holds true if you’re paying. A dollar that you pay today is more valuable than one that you’ll pay next year.
With an understanding of the time value of money and the ability to use the rule of 72, you can help yourself in a variety of common money situations.

~~~~~~~

Thanks Gary! This article by Gary Foreman originally appeared in The Dollar Stretcher.com.

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He’s been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.

Time Value of Money Image via weakonomics.com

 

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Tax Tips to Lower Your 2016 Tax Bill

Tax Tips to Lower Your 2016 Tax Bill

You still have time to cut your taxes — and make smart moves to lower next year’s as well. As a certified CPA myself, I am swimming through a pile of tax returns for my clients! I wanted you to have some good info on how to lower your 2016 tax bill, if you haven’t filed yet.  Here are some effective tips from SANDRA BLOCK, Senior Associate Editor, Kiplinger’s Personal Finance.

Most taxpayers approach the tax-filing deadline with a mixture of fear and loathing. But this year, there are reasons to be more sanguine. For one thing, because 2016 was an election year, Congress didn’t tinker much with the tax code. If your personal circumstances didn’t change last year, your tax bill probably won’t change much, either. And if you’re a do-it-yourself filer, you don’t have to get up to speed on a slew of new rules.

Because April 15 falls on a Saturday this year and April 17 is a holiday in Washington, D.C., you have until Tuesday, April 18, to file your federal tax return.

VIDEO: How to Prepare for Tax Season

Here are some ways you can still trim your 2016 tax bill, plus potential speed bumps.

Contribute to an IRA.

If you’re not enrolled in a 401(k) or other workplace retirement plan, you can deduct an IRA contribution of up to $5,500 ($6,500 if you’re 50 or older), no matter how high your income. You have until April 18 to make a 2016 contribution to your IRA.

Fund a health savings account.

You also have until April 18 to set up and fund a health savings account for 2016. To qualify, you must have had an HSA-eligible insurance policy at least since December 1.

Get credit for tuition payments.

The American Opportunity tax credit, worth up to $2,500 per eligible student for the first four years of college, is a valuable tax break for parents of college students.

Health care housekeeping.

President Trump has vowed to repeal the Affordable Care Act, but it was still in effect in 2016, so you’ll have to deal with it on your tax return. To avoid a “shared responsibility payment”—longhand for a penalty—you must prove that you had qualifying health insurance in 2016 or were eligible for an exemption.

Want to investigate these ideas  a little deeper? Additional details HERE

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Spring Cleaning Your Finances to Make Life Easier

The Money Nerve

There is something refreshing about the advent of spring; it’s officially time for reviewing and renewing! This week, we take a look at spring cleaning your finances.

Ask, “WHY,” before spring cleaning your finances

Why do you budget, save, spend, insure, invest and plan the way that you do? Are you happy with how your finances are working for you? Write down some clear and definitive ideas to sweep away old habits and create a more satisfying result.

Review your budget

Balance all your bank accounts and take a second look your past six months of credit card charges to see if all adds up correctly and that there are no billing errors.

What??? You don’t have a budget. Today is a good day to write down your income and your expenses. With that knowledge, you can now plan and direct your dollars into more focused streams!

Set a few primary, short-term goals

For example, you could set a goal for paying off the credit card with the lowest balance. Set yourself up to hit your new objectives. As you achieve success with your smaller financial projects, you gain confidence to complete larger intentions! And that is a win-win for you and your wallet!

Clear Out the Clutter

Take a serious look at everything you own. Give deep thought to want you want to be most important in your life. Set up actions steps to turn that visual intention into reality. Too much stuff? Distill it down. It’s easier to take care of less. And you keep what is most valuable to you. Too many accounts to manage? Pare down to three accounts, now you have more money at each institution and have created more “klout” for yourself. Utilize direct deposit and automate a small percentage to savings each week.

Streamlining your efforts help to clear your mind, and allow you to focus on creating a proactive life. You will find that spring cleaning your finances, and stating goals result in intentional living.

Find more #moneynerve tips – Enjoy this new vodcast: Funny Money Talks!

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Gratitude

3x3-gratitude-thank-you

Where is your “Gratitude Meter” set? Do you find something to be thankful for each day or do you rush through life unaware and unhappy? The action of being thankful, appreciative or expressing gratitude can be a powerful tool for living a meaningful life. Studies show that we can deliberately pursue an appreciation for the goodness in our lives, the result is an increase in our well-being and happiness.

Focus on the goodness in your life, and you retrain your brain to look for abundance. Try this instead of dwelling on the lack of “things.” Scientific studies demonstrate that fear and negativity increase cortisol.  This “fight or flight” hormone narrows your perspective because you perceive danger in your life. Developing a positive mindset increases the mood neurotransmitters (serotonin and norepinephrine), in your body. A positive mindset also encourages people to “broaden and build” life skills. Begin to actively seek new opportunities and utilize your small successes to achieve a more abundant and meaningful life.

Take a moment each day to express gratitude for the goodness in your life. This intentional action sets the tone for the rest of the day. Some people like to begin their day with a meditation or mantra of gratitude. Your thoughts direct your efforts, creating the best results, at work or home, as the day unfolds.

Others prefer towrite down their activities and review the goodness of the day each night. Being thankful for all the moments and people in our daily life can change our intentions. Learn to flip frustrations or challenges to create new opportunities for choosing what is important over time.

As the holiday season approaches, many people focus on gift-giving, thankfulness, and an abundant life. Remember to keep that sense of choosing happiness and caring when the fine china is put up. Keeping an attitude of gratitude throughout the year can relieve stress and generate a more optimistic view. A mindset of cultivating kindness can often have positive effects that we can’t even imagine. Like a small pebble thrown into a pond, the ripples of good will and thoughtful interactions can have a huge impact on many people, some of whom you may never meet!

In gratitude ~ Bob

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Destination: Celebrating a Successful Life!

prosperity-wealth

Being rich is not a destination. Fine-tune your success with targeted goals and conscious choices. Here is how to create and celebrate your life – the way you imagined it could be! 

SUCCESS consists of three things:
• Know what is available to you
• Know what you want
• Know what the next step is once you are successful

Being rich is not a destination. Each of us has our unique perspective and vision of what success means to us. What is your image of wealth and success? Can you visualize yourself in a prosperous place in life? Define what is most important to you for the next year. If you can “see” it, you stand a much better chance of creating it.

Some people value a good steady job as a sign of success; others may value more time with family, a big annual vacation, a new car for their spouse or saving to purchase a home. As you state what is important, you will be more aware of your daily activities and begin to focus your attention on actions that will make your goals materialize.

Pursuing a new path toward financial success can create unexpected reactions and results: you may get some pushback from friends, coworkers or family members. That is okay. You are not staying in the same comfortable path. You are evolving toward a new direction, and that can make others uneasy. Continue on your journey! Reap the benefits.

As you gain traction and reach your goals, be sure to stop and celebrate your life. Pause. Enjoy the moment. Don’t let negative emotions become roadblocks. Know that you can continue to move forward with intention and clarity. Cheers!

Here’s a quick video for you to reflect on. If you are looking for some new financial tools, be sure to check out these new online financial platforms and apps I have collected — as a resource for you.