As you know, last week the Powerball lottery was $590 million. I had considered buying a ticket (roughly my 3rd or 4th ever) but never made it to the store to actually pull the trigger. I haven’t been tossing and turning all week wondering if I would have won. The reality is that the odds were VERY against me.
There is at least one person down in Florida that has undoubtedly lost a LOT of sleep over the last week. It was announced that there was one winning ticket sold at a Publix grocery store in Zephyrhills Florida last Saturday. No one has come forward yet so all we can do is wait to see who it is. There was a rumor that a 26 year old girl won but that hasn’t been confirmed.
Whenever the lottery gets really big, I always find myself doing some quick math in my head. Mostly I just fantasize about the huge amount of interest I could generate on such a large amount of money. Without a lot of work, I think someone could generate at least $6-7 million after taxes and never cut in to the principal with a jackpot that big. That’s a ton of money. The first thing I always think about is who’s houses I’d pay off first. In the first year, all of my immediate family would get their houses paid off and I’d give them at least $250,000 each. In the second year, I’d focus on very good friends. In the third year I’d pay off houses for my cousins and other family. In my mind, I’d save about $1M of interest income for myself each year and then use the rest to impact other people’s lives. Why keep it all for myself? With that much income, you could really ease the pressure on a lot of people around you and you wouldn’t have to worry about ever running out of money. I’d really only have one rule which would be, “never, EVER use any of the principal”.
If you’ve been reading this blog for very long, you know I’ve always kept an eye on lottery winners that end up spending all their money. There have been a huge amount of people that started out poor, won the lottery, and then a few years later, ended up poor again. Just because you have a large chunk of money in the bank, doesn’t mean you automatically learn how to be smart with it. It’s almost too bad that they don’t mandate that winners have to take a financial literacy course before they receive the majority of their winnings. Maybe they could just force winners to spend a minimum of 40 hours reading personal finance blogs. That just might be enough to keep them from ending up right back where they started.
(Guest Post by Platinum Direct Finance)
Recalibrating car loans is often done by consumers who wish to take advantage of a drop in interest rates, or they may simply want to upgrade their current vehicle. In this article we discuss some of the risks you should keep in mind when you want to refinance your car loan.
Car loan refinancing is often transacted for some or all of the following reasons:
Decrease of the loan repayments (dollars) – Refinancing is about reducing your dollar amount payments per month. Lower interest rates results in fewer dollars needed to be shed per month.
Decrease of the loan repayments (frequency) – Some loan amounts can be paid fortnightly, which in the long run decreases the total dollar amount of the loan being repaid and in turn reduces the frequency needed to service the loan.
Extra repayments – This simply relates to the ability of being able to make extra payments, without penalties being applied.
Extra facilities – Often loans with added features allow for the option of redrawing on any extra payments you have made. However, the interest rates are often higher.
Upgrading to a new vehicle – This is often a dream that turns into fruition after much sole searching and calculator key tapping. This will necessitate in clearing the detritus of the old loan, in order to create a fresh plinth for the new one.
Keep in mind that there are hidden fees that must be taken into consideration before these recalculations take place, that come under the terms of:
Switching fees – Note that these are often termed ‘exit fees’ (from the current loan).
Entry fees – Or commonly known as ‘establishment fees’ (for the new loan).
Bear in mind that other hidden mathematical calculations could take place in the background while you sleep, which can relate to such factors such as compound interest. This simply means interest calculated on top of interest already generated.
Knowing the terminology stands all consumers in good stead of being able to converse with the lender and show that valuable homework has been undertaken. Make sure that the interest rate cut is significant in the refinancing process. If you only save the cost of a cup of coffee per month, then there is virtually no point in refinancing.
Also note that if a product mainly gloats about the interest rate, make sure to read and digested the fine print. Glossing over this important document has seen many consumers curse when they discover the exclusion of the most important comfort factor omitted of the Redraw facility: This simply allows the consumer to redraw on any extra payments that have been made on the loan. One never knows when there will be an unexpected expense arise, such as the need to pay for children’s orthodontia, or the need to take a well-deserved holiday, just to name a few.
This article is a guest post by Platinum Direct Finance. Platinum Direct Finance provide loans for people in Australia who wish to purchase assets including boats, planes, trucks, forklifts, office equipment and vehicles. Visit Platinum Direct Finance for refinancing your car loan.
(Guest Post by Renee S.)
Purchasing a car can be very expensive, especially if you are purchasing a new car from a dealership. Because the price that is paid for a car is so high, you will want to make sure that you are getting the best rate possible for your car loan. Having a lower interest rate assigned to your car loan could result in savings of hundreds of dollars over the life of the loan. There are a number of ways to increase your chances of getting the best rate on your car loan, but here are the ones that seem to be the most effective.
Increase Your Credit Score
The best car loan interest rates are typically reserved for those borrowers with the highest credit scores. If you want to get the best rate possible on your loan, increase your credit score as much as you can before you begin applying for a car loan. There are many different ways that this can be accomplished, but the simplest ways are to pay down your outstanding balances as much as possible and examine your credit report for errors that can be removed. These actions can result in a quick, dramatic increase in your credit score, which will qualify you for a lower interest rate on your loan.
Another way to effectively reduce the interest rate for your car loan is to get pre-approved for the loan before you begin shopping for the car. In many cases, outside lenders have better rates available than what the dealership’s financial department will offer you. Obtaining pre-approval for the loan will ensure that you will be able to fund your car purchase and you will know exactly how much you will be able to spend. Lenders like Clydesdale Bank have created online application processes that allow you to get pre-approved for the loan that you want from the comfort of your own home.
If you truly want to get the best rate on your car loan, you should take the time to shop around for the best rate. Different lenders have different loan products available with differing interest rates and fees. The first loan that you find may not be the best loan for your situation. By taking your time and reviewing the loan options available to you, you will be able to distinguish which ones would be beneficial to you and which ones are not a good idea. Once you have reviewed the loans, you should choose the one that has the lowest interest rate, the best terms, and is managed by a reputable loan company.
I’ve recently found myself surpassing some financial milestones that I never thought I’d see. Our retirement accounts are at levels that I used to just dream about when I was first starting out. Never underestimate the power of consistent contributions and compound interest, that’s for sure.
As I was sitting here looking over the numbers I started to wonder why I’d always thought these milestones were somewhat impossible to reach. I think a lot of it is because I grew up in an environment where these numbers were unattainable, both due to income levels of my parents and also due to priorities. Had I grown up in a household that was pretty wealthy, the numbers I’m surpassing today would seem relatively insignificant.
As I was staring at the numbers on the screen, I thought to myself, “Hmm, this is more money than my parents had when they were in their 60’s and I’m only 41”. Then I started thinking about how these numbers stack up to what my grandparents had when they were retired. My grandfather was a retired banker and I believe they were pretty diligent savers. While I don’t know their exact numbers, based on what my parents inherited and what we got after they died, I think I have a pretty good idea of what they had saved. Obviously inflation makes those numbers seem like less than they really were 20 years ago, but even when I mentally try to account for that, I’m still trending towards having a lot more wealth in retirement than they did.
Does any of this matter? Nope. It’s completely irrelevant. It makes absolutely no difference how my wealth stacks up to my parents or grandparents but I mentally still find myself playing these games about the numbers. What really matters is whether OUR finances are on target to support OUR future. At our current rate of savings, we are very much on track for a solid retirement. Of course, things could change in an instant. One of us could lose our job tomorrow and be unable to find comparable work for a long time. We could experience a natural disaster that wipes out a lot of our assets. The possibilities are endless. So, we won’t get too excited about our current financial condition and we’ll just keep saving like crazy, while enjoying every day along the way.
I never met a trip I didn’t want to take, a meal out I didn’t want to eat, and a dress I didn’t want to own. In other words, if I followed every spending impulse I’d be dead broke. Unfortunately, early in my adult life this is exactly what I did. Having access to seemingly endless credit and what at the time seemed like an endless paycheck meant I bought every little thing that caught my eye. My family got lavish birthday gifts, I treated friends to meals, and I treated myself to spa treatments and mini-retreats to go shopping in Dallas.
When my income didn’t cover my monthly expenditures, I shrugged and carried my credit balances over making only the minimum payments and exploding my debt. I reigned in my spending a bit after a few bad months, but still kept coming up short at the end of the month. After sitting down one teary night of number-crunching, I realized that I had willingly dug a financial hole for myself. I had to do something or risk getting buried in it. I considered drastic measures: black market organ dealing, writing hit screenplays, applying for grants. Ultimately, after a sensible phone call to my father I opted for a simple solution. I set a budget for myself.
My first step was establishing my need to haves (shelter, food, transport to work) versus my want to haves (trips to London, adorable kitten heels, rodeo tickets, and basically everything else). Evaluating what I needed to spend in a month just to live was a big reality check. It cut down on my superfluous and exorbitant spending quickly. I looked at ways to maximize my budget and run my life more efficiently. I researched energy savings at www.TexasElectricityProviders.com and cut down utility costs. I started eating in more, preparing myself simple meals. I stopped going shopping to remove temptations. I even hunted down a less expensive apartment to save on rent.
I still buy things I want, but instead of buying them on first impulse I save up for them. This has actually created a greater satisfaction when purchasing items and also gives me more time to make informed consumer decisions.
I recently purchased a great new laptop for example, but I did the legwork and made sure I selected the computer that best suited my needs and will last for several years. Spending less means that I have to be careful about which social invitations I accept, but ultimately I enjoy when I do go out much more now. I appreciate the time and I don’t worry about the expense or if I’ll go over my credit limit because I know exactly where my finances stand. I have big financial goals now too, I am working toward buying my first house. I have a nice nugget set aside for the down payment and then some.
I also created a pillar in my financial plans that I never even considered previously: investing. By budgeting my spending I have created room to start using my money to make more money. I have invested in a Roth IRA and made a few other longterm investments as well. Having my money in a place where it is growing versus evaporating gives me confidence about my future that I never had when I just tossed my paycheck at the nearest mall.
While initially constricting, setting a budget has set me free. My personal finances are no longer a burden and I look forward to making educated and fiscally sound decisions with my life.