My Personal Finance Blog

Investors who work with a real estate broker have found that a good relationship is probably the most critical link to rewarding investments.

Before buying that first or next home, there are 3 things you should really do before calling your real estate agent or mortgage broker. It is important to understand where you are financially before your heart becomes set on that perfect house. By figuring out your net worth, your monthly budget, how much debt you pay every month and what your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios are you will have a better understanding on how much you can afford on that new house.

1) Net Worth

Simply stated your net worth is the difference between your Assets what you own and your Liabilities, what you owe. It is important to analyze your net worth prior to jumping into the house buying market. One it gives you an accurate look at your current financial situation, and two when it is time to talk to your mortgage broker or lender you will already know the answers to their questions. It is better to be aware of your financial information prior to this meeting so the feedback you receive will not come as a complete surprise. Knowing your net worth will give you a good indication of how much of a down payment you will be able to afford.

2) Budget and Debt Payments

If you haven’t done so prior to buying your house, you should at least create a list or budget of your monthly finances and debt payments. It is good to know how much of a mortgage payment you can realistically afford. A monthly statement of your expenditures and debt payments will give you a breakdown of where your money is being spent. Once you know how much you spend on heat, electricity, cable, groceries, and all those monthly expenses that seem to creep up on us, you can see what kind of mortgage payment will fit comfortably into your budget.

3) GDS & TDS

Almost always lenders will use two methods to determine what you can afford as a monthly mortgage payment. The GDS determines the monthly housing costs as a percentage of your total gross monthly income. Your total housing cost payments can not exceed 32% of your gross monthly income. These costs usually include principal and interest of a mortgage, taxes, and heating expenses. For example if you paid $1000 monthly mortgage payment (Principal & Interest), with $100 for taxes, and $100 for heat, you pay $1200 total monthly housing cost. If you make $5000 a month in gross income your GDS would be $1200/$5000 = 24%. The TDS is an expansion of the GDS, along with monthly housing cost payments all other debts such as loans and credit cards are also considered. In this case your TDS can not exceed 40% of your monthly gross income. Taking our last example if we add $500 a month in other debt our TDS would be $1700/$5000 = 34% As you can see there is a lot of pre-work before you decide to hit the pavement. It is always a good idea to sit back take an hour or two and figure out where you are financially before talking to that mortgage broker or real estate agent. It may save a lot of people, a lot of time or you maybe very happy to learn you can afford more than you expected.

Accountants tend to work in one or more of four main sectors within their industry – Audit, Financial Accounting, Management Accounting and Tax.

Within an audit environment, accountants, (or auditors as they are more commonly known in this role,) will investigate and evaluate a business’ procedures and financial statements to help compile and produce a report. During these investigations an auditor will help to ensure that the business’ accounts, statements and methods comply with national and global accountancy legislation. An external auditor will compile their report independently of the company they are auditing, with this report being delivered back to the auditor’s organisation as well as the company itself. Internal auditors investigate and evaluate the internal controls and procedures that their own business has in place, and will report these findings back to the business’ Board of Directors.

A Financial Accountant based within a business creates reports based on criteria laid out by the Government. In the UK this means that they record, classify and interpret all financial information within their business compiling reports both for the Board of Directors and Government organisations. They often also advise senior managers on the current financial situation within the business by monitoring the cash flow in and out of the company, preparing quarterly and annual financial statements and overseeing the company payroll.

Management Accountants analyse financial information both within a company and in the business world in general in order to forecast what may happen in future and how best to plan for it. They review the general performance of their business and compare this to the rest of the business world, and present this information as a report to senior management. This information is usually kept confidential within a company, as it may help them get the edge over their competition.

A Tax Accountant has the responsibility for preparing tax statements both for individuals and businesses. The position requires a very good understanding of tax laws and of economics on the whole, as there can be a lot of complicated juggling of facts and figures involved. Tax accountants have a huge responsibility, as they need to make sure that the individuals and companies that they work for are obeying tax laws and regulations.

Many words have been said about the importance of the car in our life. It has become like an accessory that you just can’t imagine yourself without especially in our modern world. We drive here and there and we can’t think of anything that would turn our life into a complete nightmare more than the absence of the car. But having enough money and being able to pay for car services together with an urge to drive is not enough to become a good driver. There are many details that should be taken into consideration by those who want to become professional skillful drivers. You have probably heard about quotes on car insurance sites. And you probably wonder what those things are, how they work and what good are they to us. Let us explain the deal with auto insurance quotes to you. Let’s imagine you logged on to some insurance site. There should be a variety of deals available to anyone on car insurance. There are different plans, different policies. How do you know which one to get and will the chosen one be suitable for you? This is the major question. Costs and rates may vary from one company to another. Some companies are willing to compete and offer better prices. But price is a secondary thing. The important part is getting the right insurance. You have to be a precise as you possibly can be while giving information about your car to the company. If you are not a newcomer to automobiles, you surely know that good driving record, credit history; location of vehicle, safety features on a vehicle as well other details lead to discounts. There are also some things that can increase the payment – those things are tickets, accidents, low credit score, high mileage on the road, gaps in coverage and so on. The insurer has a full right to set high rates on premiums if you have all of those in your history check.

If you are well experienced driver and your financial situation is more or less stable, you surely will be able to find a good quote. So what is necessary for the driver to do while being on the road? A good driver will always keep his eyes on the road while driving. It is also not permitted to use mobile phones or any other equipment while driving. If you are a considerate driver, you won’t eat or drink on the road as well. Posted speed limits are there to indicate the allowed driving speed – please always remember this. The road is not the right place to show what you are about. Don’t try to show any dangerous stunts – don’t be irresponsible. Stop at red signs that are placed to indicate danger and prevent you from any accidents that may happen. Your bills and all checks need to be paid on time. There should be no gaps in your coverage. You may think they are not a problem now, but later on they may be a big deal. Driving less that people normally do will benefit the rate payments and having more than one car will give you a possibility to enjoy some discount available to multi-car owners. The rest can be found on any insurance company’s sites. Don’t forget to get your auto insurance quotes now!

One of the results of the recession has been to reinforce the tendency to opt for term insurance as the first life policy. With the disappearance of credit and the pressure on employment, people have decide to switch to prudence. That means paying down the debts and cutting back on discretionary spending. Is this financial puritanism sensible? There are a number of factors to consider. First, a definition. A term policy is life coverage for a fixed number of years. Think of it as like a bet. If you are still alive at the end of the term, the insurance keeps all the premiums, and you and your dependents get nothing. Now, let’s focus on the psychology of the young. Most never bother thinking about insurance or, if they do, it’s a very low priority. Why bother worrying about something that’s unlikely to happen for decades? Statistically, this is a reasonable view. Just as many young people back their health and refuse to buy an individual health plan, the majority see no advantage in life insurance. Life expectancy has been rising steadily over the last 50 years. This calm confidence lasts until they enter a stable relationship. Until children appear. But, by then, the cost of living has gone up and, potentially, what was two incomes has become one. Then, buying term insurance is the cheap option.

The real question is whether buying a whole life policy early is always the right answer. The argument goes that you take on the higher premiums when, as a young single, you have the most disposable income. Inflation and pay increases slowly make the higher premiums more affordable. If you do become a two-income family, this really takes the pressure off. Hopefully, by the time children come along, you have already produced a financial situation in which the premiums are now affordable. Hmmm. Back to definitions: this policy insures your life, but also has an investment element that builds up a cash value over time. If you keep up the premiums, this provides security during retirement and for your dependents. Except, people do not make rational financial decisions. The young prefer to enjoy their youth rather than stay home and save for their retirement. Worse, the reality of most of the investment elements is that they represent poor performance. If you bought term insurance and invested the balance of the premium saved in regular investments, you would almost certainly do better. The hard reality is the insurance companies charge commissions for setting up your account and then impose management fees for investing your money. This slices the top off the investment returns.

So the conclusion is slightly bad news. The decision on what to buy is not directly related to the life insurance quotes you receive through a site like this. The best value is buying term insurance and having the self-discipline to invest a growing proportion of your income. If you do not have that self-discipline, the whole life, universal and variable policies represent compulsory savings. In effect, you are paying the life company to do the work of investing for you. The perfect choice starts with the life insurance quotes and diverts through the office of an independent actuary who will give you an educated guess on the quality of the investment returns from the whole life policy as against managing your own investments over the next thirty years or so. Now you can decide whether you want to trust yourself or accept a low but guaranteed yield from the insurance company.