BUY LIKE BUFFETT

Avoiding Overspending

Mark — Mon, 12 Dec 2011 08:15:12 +0000

You arrive home, exhausted and drop armfuls of bags on the floor. You’re back from a trip to the shopping malls and only now are you starting to feel that flush of regret and embarrassment come over you. As you take out your shiny new purchases from their bright carrier bags, you might well be asking yourself ‘should I have bought that? Take heart, because you’re not alone.

Regrets over things we probably shouldn’t have bought are widespread these days and it’s tempting to shrug off your overspending habit and forget about it. Some people find that using a prepaid credit cards helps guard against their impulsive shopping tendencies as this limits the amount they can spend. Others won’t leave home unless they’re in the company of a friend, whose good sense and wise advice, they hope, will save them from themselves.

Many find that the sales are the biggest danger zone of all. They leave for the shops, full of good intentions. Their mission might be to pick up a new coat and, they reason with themselves, they’re also bound to get a bargain with all the offers that are in the stores at the moment. Three hours later, they’re home. You could search through the carrier bags all you like, but you won’t find anything resembling a coat. Unless, that is, you have a very good imagination. Well, they could always keep warm this winter by wrapping up in that shocking pink king size duvet cover, on offer at 50% off and practically perfect, except it doesn’t have any pillow cases to go with it…

Or, at a pinch, they could always curl up in the strikingly patterned, luxury fleece lined dog basket that was so cheap it was practically being given away?

These examples of impulse purchases are somewhat extreme, but most of us buy things that we don’t need, won’t use and are likely to end up in the charity bag after spending a few years at the back of a cupboard.

A lot of research has been carried out into what makes people buy on impulse and it seems that what it boils down to is that our emotions and feelings play a huge part in our purchasing decisions. Retailers have wised up to this and do everything in their power to make sure that they exploit our receptiveness to suggestion. A great example of this is the way in which sweets and all manner of tempting products are placed just before you get to the supermarket till.

You didn’t even know you wanted chocolate, but there it is, just in front of your eyes. Next second, it’s in your shopping cart. There’s another way in which your impulse to buy can be triggered. If you see a picture of your favorite celebrity, holding up an electrical gadget of some description, you’ll be far more disposed to buy it than if there was a simple display of hundreds of boxes of said gadget. Your interest and passion have been stirred by the celebrity association and emotion has triumphed over reason.

For those who seem fated to repeat their impulse buying mistakes again and again, it’s time to take some drastic measures.

1. It’s good to make a list and stick to it. That piece of paper should be in your hand the whole time you’re out shopping and if it’s not on the list, it doesn’t get bought.

2. Avoid sales. If you weren’t going to buy it at full price, the fact that it’s reduced is no excuse either. Prepaid credit cards can also help as they keep your spending spree to a pre-arranged limit. By using prepaid credit cards, you can still shop for the things you need but will be less likely to be tempted by those other ‘bargains’.

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Finding The Best Loan For Your Needs

Mark — Tue, 02 Aug 2011 10:32:07 +0000

During most people’s lifetime there will come a time when they have to take out a loan as they are often necessary to buy a car, to buy a home, or to pay for a college education. It is important to do your research on the type of loan that is best for your particular situation. After you determine which type of loan is best, you should also do your homework on the lenders that offer the loan you are looking to secure.

It is imperative that you know exactly how much money you will need to borrow.This will keep you from paying too much money for your home or automobile. For a home loan or a car loan, you can lower the amount of money you will have to borrow if you have some money put away to use as a down payment. It may also be worth working out the length of time that you can afford to pay back a loan and consider that, if you do have a down payment, the less of the total price that you have to finance, the further your money will go.

Picking The Best Loans

The best loans are often secured from a reliable and stable lender with a good reputation so it is also a good idea to shop around for the most suitable deal from the best lender. When shopping around, compare the interest rates and terms of the loan you want between a variety of lenders. Is it more important that you have a low interest rate and a long repayment term? Or is it preferable to pay a higher interest rate with a shorter repayment period?

The interest rate for the loan is usually based on your credit history, which is reflected in your credit report. The higher your credit score is, the higher the likelihood that you can secure a low interest rate. If your credit history is not so good and your credit score is on the low side, your interest rate will likely be higher. Lenders consider low credit scores a greater risk, so they justify this by charging a higher interest rate.

You can obtain a free copy of your credit report from any of the three major credit reporting agencies: Equifax, Transunion, or Experian. Know your credit score before you approach any lenders. There are a number of loan repayment calculators available online that can help you figure out how long it would take you to pay back a loan. This is helpful in figuring out what you will actually be paying, bottom line, once interest is calculated.

Once you decide on which lender to use, how much you will borrow and how much you will put down, educate yourself on the details of the loan. Ask plenty of questions and make sure you are satisfied with the answers. If you are not, do not sign any paperwork.

If loan shopping starts to become overwhelming, you may want to ask friends, colleagues, or family members for a referral to a lender or a loan broker. A loan broker can do the shopping around for you, looking at the possible best loans and weeding out the lenders that are on your “no way” list. The broker can also, on some occasions, negotiate the terms of your loan as well.

Photo by: Steve Snodgrass

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Stock Investing 101: 4 Moves To Make In A Declining Market

Mark — Wed, 11 May 2011 17:25:21 +0000

The volatility is back in the stock market as investors are buying and selling stocks with reckless abandon again. The Dow Jones had a few steep drops last week as fear is returning to the marketplace. There are growing fears of a double dip recession taking place and investors are afraid of holding stocks that may be plummeting. In order to restore calm back to the investing marketplace, here are a few things that you can do to protect yourself and your portfolio.

1. Start buying value stocks

One strategy that has always served me well during times of financial crisis is to buy the names that I know. You can buy stocks whose prices may have risen too rapidly during the periods of the most volatility. This could either be large cap blue chip stocks with massive cash flows or growth stocks whose valuations were far too excessive. Major market drops may be the only time that you will get to start buying shares of these companies.

2. Sell the safe havens

The best time to sell safe haven assets is during a fear rally. Gold, oil, and commodities tend to reach their highest levels when investors are abandoning the stock market. You could make some money for your self by selling these commodities once the market has gone through a pullback. A smart trader could have sold out of oil around the $108 to $110 level and buy back in later at a lower price.

3. Remember to diversify

Everyone knows to diversify their portfolio but lots of people forget when the stock market is booming. Money pours into equities at a phenomenal pace when the Dow Jones and S&P500 are rising. Some investors may even find themselves holding 85 to 90% of their portfolio’s assets in cash alone. This is a risky proposition for almost any investor. The returns of intermediate term bonds may not be as high as you like but they do offer positive returns. That is not anything to be looked down at when the market is tanking.

4. Become a put buyer

If you are an investor in high beta stocks like Netflix and Amazon then you better buy yourself some puts protection. These stocks have a tendency to get hurt the most during market crashes because of their high P/E ratios. Buying a couple of put options can help to insulate your portfolio and will give you an out if your company’s stock price happens to come tumbling down.

Remember that stock investing does contain risk so you need to prepare yourself to handle the emotional ups and downs of the marketplace.

What moves do you make when the stock market is dropping? Do you add to your positions, sell your shares, or do nothing?

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You Should Keep Paying A Car Note Forever

Mark — Mon, 09 May 2011 14:38:29 +0000

A monthly car note is one of those bills that most people try to get rid of as soon as possible. They are so happy when their automobile monthly payments are over because they no longer have to send in payments anymore. They can then relax knowing that the car is paid off and go back to business as usual. Let me explain to you why this is a mistake. Your financial goal should be to keep writing a check for the same amount of your car note for the rest of your life.

Keep Paying A Car Note

You are probably thinking that I am crazy for suggesting that you should keep sending in car payments forever. Actually, it makes good financial sense.

I am suggesting that as soon as your car is paid off that you keep writing the same check but you change the payee to yourself.

One of the biggest mistakes that people make is that they get in the habit of making a car payment for 3, 4, or 5 years and then stop as soon as the car is paid off. They take the money that used to go towards the car payment and find some new bill to spend it. The money is quickly wasted which keeps them from ever realizing the savings of not having a car note.

Use The Car Note Money For Investing

My strategy is to keep you paying the same amount of money forever. Once your car is paid off, you simply keep writing the same check. You can either use the money for stock investing or put it in a savings account. You should keep doing this month after month as if your car payment never stopped. You could easily save $5,000 or more inside of one year. This will keep you from having to borrow since the money saved will draw substantial interest for future earnings and make the need for an online check advance a thing of the past. You would be surprised at the amount of money that you can rack up in a short period of time.

Let’s say that you bought a Toyota Camry and have a car note of $400 a month for 4 years. Every month you mail a check for $400 to Toyota Financial Services. You will have paid your automobile finance company $4,800 per year and a total of $19.200 by the time that your loan is paid off. Once you make the 48th payment, you should write the $400 check but make the check out to a different payee. I

f you are investing the money, you can make the $400 check out to your broker. If you choose to save the money, make the check out to yourself and deposit it in a money market account or high interest savings account.

The beauty of this method is that you will never miss the money because you have gotten used to paying it. Savings and investing has become a regular bill that you will never miss.

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The New Reality: Retirement Planning For Your Children

Mark — Wed, 04 May 2011 09:10:30 +0000

It is always a smart idea to teach your kids about saving and investing as early as possible. You give your child the greatest chance at financial success by starting them off while they are still young. It is pretty easy if your use the following tips to execute a financial plan for your child. The following is a guest post by Lisa Cintron.

At a time when economic worries have everyone scrambling for financial security, the thought of investing in your child’s retirement may seem absurd. Or does it?

In the past, even a single generation ago, people could rely on Social Security and pensions to get them through retirement. The people who made investments coasted through their retirement, but that was then. Now, facing a job market that no longer offers pensions and a Social Security system on the verge of bankruptcy, people know they must initiate their retirement planning much sooner than every before. Helping your children begin a life of saving and investing in their future is something every parent must do. Simple steps can be followed to make this change in saving habits much easier.

* Start a mutual fund for your child(ren). After the initial investment most mutual funds will allow you to contribute as little as $50 dollars each time you make a deposit. Encourage friends and relatives to make contributions in lieu of large gifts. Require your children to invest a portion of any gift money they receive.

* Reduce amount of money that is used to purchase gifts during the holidays. By investing half the amount you would spend on toys that are soon forgotten. you will be able to amass a substantial retirement account for your children.

* Make deposits automatically. When you have deposits automatically withdrawn from your bank accounts it is easier to manage your money.

* Live beneath your means. This is crucial for saving for your own, and your child’ s futures. You cannot save anything if you spend it all.

* Use tax credit wisely. Every child age 17 and under receives a $1000 tax credit from the federal government. Dedicate this credit to the mutual fund each year, regardless of any other plans you may have for your refund.

* Take advantage of tax deferred state plans. Many states offer tax exempt or tax deferred programs for minors.

* Consult with a certified financial advisor to help you with the execution your plan.

Investing one hundred dollars a month over the course of forty years will generate over a million dollars in savings. If the savings begin when the child is quite small, the investment value is sure to exceed the million dollar mark before retirement age.

By making it a habit to invest into your child’s future, they will also learn to invest. It is imperative to instill into today’s child that they are responsible for their future, and every action must reflect that responsibility.

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How To Get Out Of Debt Part II

Mark — Fri, 22 Apr 2011 08:50:54 +0000

Most people struggle with debt repayments in one form or another. Debt can come in the form of credit card bills, mortgage payments, student loans, and car loans. If you are really strapped for cash, it could even come in the form of payday loans. Debt woes affect different people in different ways. Some people spend day and night agonizing over their debts while others are resigned to the fact that debt will be a problem for the rest of their life. It doesn’t have to be this way. Let’s take a look at a few ways that debt can be eliminated. The following is a guest post.

Increase your income

You will feel a lot better about your debt problems once you develop a plan of action. A good debt plan should involve simultaneously increasing your income while decreasing your debts at the same time. You can increase your income by earning some side income from freelancing, consulting, blogging, or ecommerce. Any part time income earned can be used to attack your current bills.

Reduce your debts

Debt reduction can be achieved by either increasing the amount that you pay on each debt or getting the debts reduced. If your interest rates are sky high or you have trouble repaying your debts, you could consider debt counseling and debt consolidation. High interest rate loans like credit card debt make them virtually impossible to pay off if you have a large balance.

For example, if you have $25,000 in credit card debt and your interest rate is 29%, more than $7,250 is being paid in interest alone each month. That is $604.16 a year just in interest payments!

Consolidate your loans

Consolidating loans makes sense in situations like these. Debt consolidation is taking out a big loan in order to pay off a bunch of different loans. The advantage of this is that you are left with one single loan and one monthly loan repayment. The end result of debt consolidation is a lower monthly payment and a lower interest rate to repay. These plans can often keep you from having your possessions repossessed and your home foreclosed on.

Bankruptcy

All of the solutions above are designed to keep you from bankruptcy which is known as the option of last resort. Bankruptcy is a legal way to discharge your personal and business debts. Most of your assets will be liquidated to satisfy existing debts. You won’t have access to credit for a year or two. After that, you can start rebuilding your financial life again.

Remember that your first option is to always pay your debts as agreed. If for some reason you are unable to do this, you should look at these alternatives.

Take a look at the plan that I used to get out of debt.

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How To Handle Debt Problems

Mark — Wed, 20 Apr 2011 00:25:19 +0000

Whose credit hasn’t taken a hit over the past few years? The global economic crisis has had an effect on the finances of households everywhere. The real estate market has turned south as property values took a dip. Banks have tightened up their lending standards, making it far more difficult for borrowers to get access to capital at a time when they need it the most. Despite these issues, there are ways for you to manage your debt problems. We’ve compiled some suggestions for you: Below is a sponsored post from Debt Advisory.

Refinance your existing mortgage

You can refinance your old mortgage and get more favorable terms. Your credit score does not have to be perfect to qualify for an adverse credit mortgage loan – although you may not get the lowest rate possible, you can get at least a far more reasonable rate. Interest rates are near historic lows in the United Kingdom and you can reduce your monthly payments by shaving a substantial amount of interest from your existing loan.

Improve your credit score

You can boost your credit score by paying off your old bills. Bills that have gone into collections can be paid off by using a systematic approach to debt reduction: You can either use money gained from refinancing or allocate extra money each month to pay down old debts. Your credit score will improve as derogatory information drops off your credit – you won’t have to worry about phone calls and letters from creditors harassing you anymore.

Modify your current home loan

Anyone that is falling behind on their mortgage will need to make some changes immediately. After all, you don’t want to lose a home that you have been making payments on for years. Bankruptcy is the option of last resort and should only be undertaken when you have no other choices. It is possible to discuss the option with your existing lender a way to reduce the monthly repayments. You can try to do it yourself or hire a company to act on your behalf.

As you can see there are a number of tools available to individuals that can help with debt problems. All of these options are designed to keep you from insolvency. The key is to find the program that works the best for you and brings your bills down to a more manageable level. These options are a pretty good place to start. On top of this, working with a professional debt management company like the Debt Advisory Line can make this process considerably more effective. Get in touch with us now and we’ll gladly work out a solution tailored especially to your needs.

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My Financial Posts From Around The Web

Mark — Mon, 18 Apr 2011 02:26:45 +0000

It’s been awhile since I have taken the time to post my financial writings from around the Internet. So, today I am taking the time to list my content from around the world. These are the articles that I have written over the past week. These include good dividend stocks, tax tips, and investing advice.

Seeking Alpha post on 3 Stocks That A Dividend Investor Could Love

Seeking Alpha post asking Is Citigroup A Value Play?

Savings. com post on The Sector That Thrives During Economic Booms And Busts

San Francisco Chronicle article on 4 Signs That The U.S. Financial Market Is Fragile

WTEN presents the 7 Most Common Tax Mistakes

Benzinga post on 3 Signs To Look For Before Investing In Financial Stocks

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My Stock Investing And Personal Finance Posts From Around The Web

Mark — Wed, 16 Feb 2011 08:33:41 +0000

These are a few of my posts from around the blogosphere that were picked up by some larger sites.

Minyanville post on How To Find Value Stocks In An Improving Market.

Salon.com post on The Hidden Costs Killing Your Finances.

Savings.com post on How To Profit From A Stock Market Drop.

Mark Riddix dot com post on My Multiple Income Stream Strategy.

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Would You Rather Be Rich Or Financially Comfortable?

Mark — Tue, 08 Feb 2011 13:49:30 +0000

I am always reading stories about celebrities that have gone broke after years of earning millions of dollars. It doesn’t matter if they were sports stars, television stars, or stars of the big screen; they all have one theme in common. They often wind up bankrupt due to squandering millions of dollars frivolously. This may have something to do with the fact that they often receive riches in an instant and not over time. The celebrity life is not as easy as you think. There are lots of other things that go along with the fame and fortune.

I am going to present two scenarios and you tell me which one would be your ideal lifestyle.

Case Number 1: Filthy Rich

You would make millions of dollars over the course of your lifetime. You would be able to buy just about anything that you want including homes, cars, clothes, jewelry, and electronics. You could eat at the finest restaurants and enjoy many of the best things in life. Your vacations would be glamorous because you would be able to afford to travel to the Swiss Alps or the islands for vacation whenever you like. Your whole life would be lived in the perpetual limelight.

Wealth would also bring the other trappings of fame and celebrity with it. Your every move would be watched, dissected, and scrutinized. Every article of clothing that you wore would be judged and your every action monitored. This means always having to purchase new clothes, cars, and items. You can’t be seen in the same outfit! You are a celebrity. No more quick runs to the store or the mall to pick up something. Every trip and dash to the store would have to be carefully planned.You would have to make sure that you are looking your best at all times. If not, you will end up on the cover of TMZ or the National Enquirer.

This would be the price for your fortune.

Case Number 2: Financially Comfortable

You would never make millions of dollars in a given year but would make a solid income. Your annual salary would range from $80,000 to $120,000 during your career. You would make enough money to own your home, pay off your cars, put some money away for retirement and to help send your kids to college. You would not be able to buy everything that you wanted but you would be able to meet all of your financial needs.

When you retired, you would live a debt free existence and have enough money to live a comfortable lifestyle. You wouldn’t worry about money as you would have an income steam that takes cares of your living expenses. You would have enough money to live better than the average person but not enough to live like a celebrity.

This may sound like an easy answer but it really is not. I suspect that the answers will likely vary since most people have different goals for their lives. The goals of some individuals are to join the ranks of the super rich. They would like to enjoy the best of everything and be amongst the rich and famous. Other meanwhile may not need all of the excess and would be happy to know that they are able to take care of their basic needs in life.

So, which lifestyle sounds better to you? Do you want the lifestyle of fame and fortune or do you want the existence of anonymity and comfort? Are you looking at building wealth over the long term or would you prefer instant riches? The choice is yours!

Photo by: Gawd

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