Retirement

What is an IRA?
An IRA is an Individual Retirement Account. It is a personal savings plan that provides income tax advantages to indivduals saving money for retirement purposes.

Then what is a 401K?
A retirement savings plan that allows a worker to save for retirement and have the savings invested while deferring current income taxes on the saved money and earnings until withdrawal.

Ok I heard of Social Security many times...but what exactly is it?
Basically it is a social welfare program in the US which includes old-age and survivors insurance and some unemployment insurance and old-age assistance. It helps pretty much pay for a lot of stuff.

Why is it a big issue?
Lately it has been facing many budget deficits which will hurt the future of so many people.
We might not care about it now, but we will when we reach retirement. We possibly might not have enough money to help the elderly. Personal savings might not be enough for retirement, so social security is basically like a backup plan. If the backup plan is gone, you're in trouble.

If we dont look the retirement funds now, we will procrastinate and it will bring severe consequences to the economy of the US. There will be no assistance or help from the government (maybe) and it will harder to live life happily in a retirement.

investments

Bonds are a form of indebtedness that is sold to the public in set increments, normally in the neighborhood of $1,000. In return for loaning the debtor the money, the lender gets a piece of paper that stipulates how much was lent, the agreed-upon interest rate, how often interest will be paid, and the term of the loan.

Stocks is Ownership of a corporation indicated by shares, which represent a piece of the corporation'sassets and earnings.

Mutual funds are pools of money that are managed by an investment company. They offerinvestors a variety of goals, depending on the fund and its investment charter. Some funds, for example, seek to generate income on a regular basis. Others seek to preserve an investor's money. Still others seek to invest in companies that are growing at a rapid pace. Funds can impose a sales charge, or load, on investors when they buy or sell shares. Many funds these days are no load and impose no sales charge. Mutual funds are investment companies regulated by the Investment Company Act of 1940. Related: open-end fund, closed-end fund.

Credit Cards

PROS: fast, easy, not big, don't have to have the money on hand, rewards

CONS: The main disadvantage to credit card usage is its cost to you in interest and fees. Wise use of credit means understanding those costs and acting accordingly. Keep track of your spending to ensure that you can repay your credit card bill in full when it comes due each month.

APR(Annual Percentage Rate):The yearly interest rate charged on outstanding credit card balances.

If you over spend and don't pay the loan they have the right to raise your apr and make you poor

To apply just look in your mail for credit card appalications, or go online and fill one out. But you need to find a good card. One that has a low APR and good rewards, a long grace period( the time to pay the bill). and it has to look awesome.

Tips: 1)choose wisely

2)Have the money

3)understand the contract

http://www.practicalmoneyskills.com/personalfinance/creditdebt/cards/

http://network.nationalpost.com/NP/blogs/wealthyboomer/archive/2009/05/04/funny-money-personal-finance-cartoon-aimed-at-teens.aspx

You're buying a House... o.o

Process of Obtaining a Home Loan

Step 1 : Get started on the loan application. It can be done on the phone with a loan officer or even apply on the Internet. Make sure it is completely accurate and complete, or they might deny the loan.

Step 2: Loan processing. Once the application is complete, it will go to a processor. They will analyze all the numbers like your income and how much cash you are bringing into the deal.

Step 3: Underwriting. After it has been processed, it will go to the underwriter and check all the mistakes (if any) that the processor/loan officer made. They will also check everything to see if the requirements of the loan have been met. They will then decide if the loan application is approved or not.

Step 4: Closing and Funding. Once the underwriter approves the loan, it will go into closing. Closing is the process where the lender's office communicates with the title company in order for settlement. At this stage, the money is made available for the loan.

Step 5: At the Settlement Table: The paperwork is done. The buyer and the seller will meet and sign contracts.

Step 6: The Closing Costs. There are many closing costs that have to be paid. They are like bills/taxes when you finish sealing the deal.

Why are down payments Important?

1) You can eliminate Private Mortgage Insurance.

2) Small mortgage, which means less interest paid.

3) Instant equity.

Time is of huge importance for your mortgage loans. The shorter your loan term, the larger your payments have to be to get that loan paid off in time.

Differences of Fixed and Flexible expenses and friends :)

FIXED: These are the things you need to pay for. Things like electricity and water. Basically the utilites.
You need to set aside money to pay for these things.
FLEXIBLE:These are the things that you don't necessiarical need. Fast food, pop, candy, things like that.

Friends:You need to get an savings account to live life with money :) So the first thing you need to learn is the difference between compound and simple interest.

• Compound-Compound interest is paid on the original principal and on the accumulated past interest.

  *If you start with $500 and put in $50 every month and it is compounded annually with an interest rate of 5.5% you will have $48,343.63 in 30 years
  

• Simple-Simple interest is calculated only on the principal amount.

  *If you start with $500 and put in $50 every month and it is simpled annually with an interest rate of 10% you will have $20,5000 in 30 years

Remember spending is good if you have the money, also having a savings account can save your butt.

top things to know-

http://money.cnn.com/magazines/moneymag/money101/lesson2/



The interest calculator

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

http://www.ehow.com//video_4767850_identify-expenses-as-mixed-fixed.html

video about expenses. its about businesses but its basically the same thing for personal. Its the link above

Don't be like the U.S.

Keeping a personal budget is what everyone should do. It helps you save money and you will be happier later in life. In the next few posts we (Mario and I(David)) will tell you the do and don'ts of keeping a budget.