In this interview with Vanguard Eric Tyson, one of my favorite investment companies, Tyson states that most time people are there own worst enemies because they overspend and run themselves into debt.

The number one problem is overspending. Some Americans, frankly, are not savvy consumers. They lack the discipline to live within-or below-their means. They live in the moment, pursuing instant gratification instead of doing what’s in their long-term interest. They abuse credit cards, buy stocks without doing research, and generally have little or no idea how much they should be saving toward future goals.This isn’t especially surprising. We’re all bombarded by advertising 24-7, and it’s difficult to insulate yourself from the pressure to drive the “right” car, live in the “right” neighborhood, own the “right” stock, and so forth. Americans need to learn that giving in to that kind of pressure can have serious consequences to their financial well-being.

It is as simple as that. Easier said then done as well because it takes amazing will power to hold back on spending and to treat yourself or those that you love. So in the retrospect, try to maximize as much as you can the amount of money that you do not spend and constantly try to beat that amount. Then simply invest until your early retirement comes around.

Popularity: 100% [?]

A reverse mortgage is a loan only available to seniors aged 62 and over. What this type of mortgage does is release the home equity from the property into a lump some or into multiple payments . The home owner then lives their life in bliss without worries of repayment because the obligation to pay only factors in when the home owner dies, the property is sold or the the home owner leaves to go to a senior citizens home.

Requirements

The borrower must be at least 62 years old. There are no minimum income or credit requirements for this type of loan as like with other types. There must be no existing loan ore mortgage against the property at the time but if there is you can simply apply the new reverse mortgage money to payoff the existing mortgage loan amount. Lower valued property types such as mobile homes do not qualify and if there is a pending bankruptcy, the process may take a longer time. One final necessity is that the home owner must attend free financial counseling by the Department of Housing and Urban Development (HUD).

Reverse Mortgage Money Factors

There are five primary factors that must factored in to determine the amount that will be paid to the home owner.

1. The appraised value minus any repairs that must be paid and whether there are any existing liens on the real estate property.
2. The interest rate that is listed by the U.S. Treasury 10 year T-Bill or the LIBOR index.
3. The age of the home owner also determines the amount of return.
4. Line of credit does play a role because it will maximize the amount collected.
5. Location is another factor and whether the maximum loan amount is subject to the maximum loan limits.

Once the home owner cashes out then the funds can be sent to a type of escrow account. However if you do not take the option of a escrow account, then you must pay all taxes and/or insurance. If there is lapse of some sort, then you can be subject to default on the reverse mortgage.

Costs and Interest Rates

Cost vary but are typically like an insurance premium of 2% of the loan and a 2% origination fee in addition to the normal closing costs. These are usually several thousand dollars and other costs such as third-party costs like appraisal fees, title searches and so on do apply. So typically out of a $100,000 loan there would be $4,000 in costs besides the normal closing costs amount.

You can include all of these fees within the loan itself so that no costs are made immediately out of pocket in cash. This means that the initial loan principal will be more and the fees will accrue interest.

The interest rates on a reverse mortgage are similar to those of Adjustable Mortgage Rates (ARMs). They can be set on a annual, semi-annually or monthly basis.There are fixed interest rates now but they still are rare. While no payments are made during the home owners lifetime, the interest accrued is added to the principal of the loan.

Tax Related Info

According to the American Bar Association

• The Internal Revenue Service (IRS) does not consider the payments from a reverse mortgage as income.
• Annuity advances may be taxed partially.
• You cannot deduct interest until the end of the loan.

End of the Reverse Mortgage

So this means that the home owner has died, sold the property or moved out of the property for 12 months. The loan will be paid off from the sale of the house or after the heirs refinance. After the loan is paid of, the heirs may receive any excess funds or if there is no hier then the bank will take the difference.

This type of mortgage does have some major benefits but be warned, never miss the tax or insurance payments.

Popularity: 84% [?]

Being frugal should always be top on your list in order to be retire early.

Steps for early retirement

• Be very Frugal. Live below your means and don’t pay for anything that you don’t have to.
  • Use coupons for everything.
  • Ride a bike to your destination or car pool.
  • Send your child/children to public school instead of private school. Major money saver here.
  • Use credit cards with cash back rewards like Citibank, Chase and CapitalOne.
• Save at least 20% of every paycheck. After five paychecks you already have saved a whole paycheck without thinking about it. If 20% sounds like too much, then by all means start by 10% or even 5%.
• Learn how to get multiple streams of income. Get another job, start blogging, fix computers or cars in your spare time. Start somewhere and then that whole paycheck can become 100% saved.
• Invest for the long term in the stock market and always buy low. Try hassle free methods like investing in Mutual Funds and Exchange Traded Funds (ETF). These help you because you don’t need to buy individual stocks and they are well diversified.

Popularity: 29% [?]

This is actually the not to do list. This is the way to the dark side of becoming financially independent. If you find yourself doing any the things listed here, immediately stop yourself.

1. Apply for all those cool credit cards like free miles, points and cash rewards. These are good in limited numbers like a maximum of two of these combined.
2. Apply for any credit card that does not give you anything back.
3. Take your credit card and max it out to buy unnecessary things for crazy luxury or to impress your friends.
4. Pay your bills late and then pay late fees.
5. If you have big bills, at least try to pay the minimum payment.
6. Wait till a unpaid bill goes to a collection agency.
7. Don’t pay your landlord or mortgage because you want to buy that sweet new current year vehicle. My friends dad told him “You can’t live in a car and if you could, how long do you think that will last?”
8. Try to runaway from your taxes.
9. Payday loans are for emergency funds in which you pay back high interest rates. Instead create your own emergency fund of about 6 months worth of emergency money.
10. Pride, think you don’t need to budget and put away some side money. Listed as pride but it can be listed as poor thinking.

If you are guilty of any of these things, please call a financial adviser!

LoL, I had fun posting this little folly list because I am happy to report that I am no longer doing these things any more.

Popularity: 26% [?]

Credit cards are great but require self restraint. It just makes it too easy at times to spend money and you don’t notice the total until the end of the year. So this is the greatest debt builder but we have a great way to combat this.

1. List you credit cards in interest order.
2. Determine which credit cards you will terminate because as a rule of thumb, you don’t need more then 3 credit cards ever.
3. Call each credit card company in order and ask for a lower interest rate and “no fee 0% APR” transfer.
4. Start transferring balances from the new adjusted higher rates to the new lower rate.
5. Pay off the remaining balances on the highest credit card balances first.
6. Snowball your new debt free life.
7. As you pay off the debt, cancel the card on balance completion until you have 3 credit cards or less left.
8. Pat yourself on the back because you just terminated you debt.

It’s that simple to do. It may take some time but this method is the best and cheapest method to remove these hurdles from your path to getting rich.

Popularity: 29% [?]

To become financially independent you will first need a road map that will help you attain that level of independence. I have been playing around with some methods and I found that these were some good methods to help me out. A good road map should help you get out of debt, invest, budget and plan for retirement.

Making Money Methods

• Set Goals – What do you want to do? Make money, attack debt or plan for retirement. Hopefully you will like to do all of these things at once. I planned to set my goal to increase wealth and in that respect to increase wealth.
• Read Personal Finance – Read every web article, book and subscribe to personal finance magazines.
• Track Spending – Track all of your expenses so you can see where your money is going. I realized that I spent about $60 per week at Duane Reade. You know that was cut later on.
• Cut Expenses – This goes hand in hand with tracking expenses. You then analyze where you spend too much and then trim them out of your budget.
• Decrease Debt – Start cutting down credit card debt. Start with the smallest debt then work your way up to the big ones. Shop around better interest rates then call up your current credit card and tell them to rate you can get and see if they will negotiate. If they do fine but if not then transfer the debt to the new one and close the old credit card immediately. Cut your total credit cards down to 2 maximum cards.
• Extra Income – Look into alternate streams of income. I use dividend stocks, Google Adsense, web advertisement, regular 9 to 5 job, high yield money market account for liquid money, rent house/apartment.
• Purchase Stock – I would say to purchase dividend stock because they increase per share and they still function as stock.
• Purchase Property -By purchasing a property, you increase your wealth automatically and fast. You force yourself to save and properties increase with inflation.

This simple but highly effective methods are so simple when you think about it, but highly effective. These cover making money, removing credit card debt, gaining extra income, cutting expenses with a tighter budget and planning for retirement by learning steps to increase wealth.

Popularity: 53% [?]

The buzz is that there is a contender to Quicken and it is web based and free. You can check your finances anywhere and at anytime you wish. It has a nice look and feel with speed from the Ajax backend that it was built on. I am no super finance guru but I will give the review that I feel best with for average to intermediate users.

Advantages

• Fast.
• Free.
• A rival to Quicken even in its beta stage.
• Easy setup.
• Accessible anywhere.
• Beautiful Ajax design.
• Tons of graphs and charts.
• Easy way to see trends.
• Nice feature named “Ways to Save.”

Truly one of the best rivals to Quicken and it is free to use with no installs to worry about. It is built on a web technology that allows it to load various parts of the web page in an auto update way. I just added my user name and password for my various accounts and waited a short minute or less for account history to be updated; then I was ready to rock. They added a plethora of charts and graphs to show spending habits in a glance. You can even check spending habits as easy as just viewing your personalized trend reports page. Mint.com truly tries to make personal finance as easy as checking your email. A good feature that I really like is the “Ways to Save” money section. I love it because what it proposes to do is automatically check different banks and get you the best rates that it can find all automatically. I feature still has some bugs but it shows a lot of promise.

Disadvantages

• Didn’t know my credit card info like interest rate and total rewards.
• Misclassified a Countrywide Mortgage Payment as an Electronic Boutique Purchase.
• Still in Beta.
• Suggestions to save money section named “Ways to Save” needs work.

With all good things there are the disadvantages or the minor short comings. I plugged in my information for one of my credit cards and up to now it doesn’t know the exact interest rate or APR. Mint.com also tries to categorize all info automatically but still false short in this aspect as well. One of my mortgage payments was classified as a Electronic Boutique purchase but was then replaced by transfer. The suggestions to save money is still a major point but however still needs some work as well. I don’t want to be too mean because the web application is still in beta.

Conclusions

All I can say is try it out and see what you can get from it. It’s free and over round pretty good. Just remember that it is in beta still so don’t go by everything that it has to say without first thinking it thoroughly through. That goes especially for the ways to save money section.

Popularity: 75% [?]