July 9th, 2007 8:37 PM by Salim (Sam) Kader MLO# 130505
Stock market goes up and down. The best advise is to stay long haul and not to act harshly in time of uncertainty. Ideally, you should have at least three years of living expenses out of the the stock market and in certificates of deposits, bonds and money market accounts. This allows you to wait for falling mutual funds o stocks to recoup their losses without having to sell them at a loss. On average, bear markets come every six years. Diversify your portfolio to have a mix of stocks, bonds, cash and different investments in small and large companies in different sectors both in the U.S. and internationally. A mixture of (your age - 100% = % invested in stocks).
Usually it takes about 15 percent less in living expenses but certainly not 40% less to live in retirement.
1. Stop using credit cards to pay for everyday expenses. Pay in cash or don't make the purchase.
2. Consider consolidation. Instead of having multiple cards with debt, move the balances to a single card.
3. Pay off small balances. There's a psychology to pay off the one with the lowest balance. It gives momentum to keep reducing debt.
4. Set a budget and live by it. Tract daily expenses with a computer spreadsheet or simply write them down.
5. Setup eight-months of living expenses stashed in a savings account.
6. Setup Roth IRA - Contribution can be withdrawn at any time or age with no penalty or tax bill. You just can't touch the earnings before the age of 59 without incurring the 10% penalty and income tax.
7. A 60-day loan from traditional IRA in a jam. The catch is the account must be replenished; else, 10% penalty (unless you're 59 or better).
8. A home equity line can be established but vow not to touch it unless absolutely necessary. The idea is to have the account in place as a last resort.
Homeowners - Consult lenders at first sign of financial trouble.
1. Lenders are not in the business to foreclose. Lenders would only resort to foreclose to limit losses on defaulted loans.
2. If you are behind on payments, lenders will likely work with homeowners to bring them current. Homeowners must be in communication with the lender and be honest about finances.
3. If the owners has consistently made timely payments and had no serious defaults, the lender will be more receptive than if the person has a record of chronic late payments.
4. Lenders can help by creating a plan with specific deadlines that must be met to avoid foreclosure and based on what the borrower can do to get the loan current.
5. Meet with the lender at the first sign of trouble and be honest about impending difficulties.