Archive for Personal Finance

Your Budget Goals – Is It Time To Revise?

bgbudgetOdds are that you routinely re-evaluate the big choices that you make in your life all of the time. As you become more educated about the benefits of a healthy diet, you might make changes to the foods you eat. Completing a degree might make you reconsider your career choice. A change in your family situation might even make you rethink the house you own. As the circumstances around you change, it only makes sense to re-evaluate other parts of your life.

Re-evaluating your budget than re-evaluating any other part of your life. As you achieve your goals you will need to set new ones – and be sure to be on the lookout for anything that could be a budget helper. As you struggle to make some goals, you may realize that you might need to reconsider those goals. Whatever the outcome of your old budget goals, it’s always a good idea to assess them and determine which ones still work for you and which ones need replacing.

Savings Goals
Savings goals commonly need to be re-evaluated every time you meet your goal. For instance, if you were saving to pay for a winter vacation, you don’t want to simply stop saving after you have paid for you trip. Think ahead to your next vacation, or other major purchase, and start putting away the money you’ll need for it. If your income increases, you may want to consider putting all of that increase (or at least a good portion) towards your savings goal to fund it faster.

Debt Reduction Goals
Debt reduction goals are another type of goal that is in constant need of updating. If you set a goal to pay off one line of credit, maybe a consumer charge card like a Lowe’s card, you’ll need to set a new goal once you’ve paid that account in full. Tackle the next debt on your list of debts and make paying it off your new goal.

Unaccomplished Goals
Sometimes, through no fault of your own, you just can’t make one of your goals happen. Maybe your goal was to pay off your credit card debt in 2010. Then you were laid off from your job in June and took three months to find a new job. It’s just not realistic to think you would still be able to pay off your credit card debt in the time you originally allotted. The important thing to do in these situations is to recognize that your original goal isn’t going to happen and set a new goal in its place. Instead, try something like not accumulating any additional credit card debt while you’re between jobs. You just need to make sure that you’re working towards something.

Re-evaluating your budget goals doesn’t have to be a monumental task. By simply keeping in touch with your financial situation, you won’t find it hard to recognize when you’ve met a goal or when a goal has been placed outside of your reach. Keeping your budget goals in line with your changing life is the best way to guarantee financial success.

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Thinking of Investing in Bank Loan Funds? Here’s What You Need to Know

Investing

The following article is a guest post. Bank loan funds can be a good investment. They often have fairly high yields with less risk than some other high-yield investments. They can bring some stability to your portfolio as well as bring you the benefits of diversification. But just like any other investment, bank loan funds are not without their risks.

If you’re thinking of investing in bank loan funds, it’s important to understand what they are and what the potential risks are. Some investment professionals advise steering clear of bank loan funds altogether, especially in uncertain markets. But if you know what you’re doing, and you’re willing to assume the risk, bank loan funds can bring a stable rate of returns to your portfolio.

What Are Bank Loan Funds?

A bank loan fund is an investment vehicle that lets investors buy shares of corporate bank loans. Banks and insurance companies may make these loans to companies with less-than-perfect credit, but that in itself isn’t a reason to worry about not getting your money back. More than 80 percent of companies that have defaulted on their bank loans have been able to pay the investors that own shares in these loans. When the economy is doing well, you’re probably not going to need to worry about losing money on bank loan funds. Just like a lot of investments, the losses come when the economy tanks.

Upsides of Bank Loan Funds

One of the best things about bank loan funds is that they offer a higher rate of interest than you’ll get with CDs or savings bonds, but at what many consider to be a comparable level of risk. Bank loan funds offer returns as much as two percent better than those of CDS or Treasury securities. These funds offer floating rates, which change whenever short-term interest rates rise. Every 30, 60, or 90 days, bank loan fund yields will be reset. When interest rates are trending upward, that’s good news for your returns.

Bank loan funds also have a fairly stable share price. Though you might be worried about getting your money back if the company that took out the loan declares bankruptcy, you can rest assured that these funds invest in what are known as senior secured loans, which will be the first ones to be paid back in case the company in question declares bankruptcy. You’ll probably still get your money back even if a company defaults on its loans.

If you choose an investment vehicle such as a bank loan fund, you’re getting a diversified product, just like with a mutual fund. You won’t be buying just one company’s loan, so if one company defaults on its loan, it won’t affect the value of your investment much.

Downsides of Bank Loan Funds

So, what are the cons of investing in bank loan funds? For one thing, the floating rates discussed above can be less of a perk if overall interest rates go down. Furthermore, you can’t take your money in and out of a bank loan fund whenever you want; depending in the rules of the fund you choose, you’ll only be able to make withdrawals at designated times, like monthly, quarterly, or yearly. Many bank loan funds require investors to leave their money in the fund for the first year and there might be fees to pay if you remove your money from the fund within the first three years. Investing in these funds can also be expensive; high expense ratios as compared with bond funds, for example, can really cut into your profits.

Hand and CalculatorLike other investments, bank loan funds are hit hard during times of recession. While returns can be much higher than those of CDs or Treasury securities, they can also be significantly lower. In October 2008, bank loan funds saw returns drop by a whopping 13 percent. That’s a lot, considering an average fluctuation in returns is about 0.5 to 1.5 percent a month.

Bank loan funds also have a liquidity problem. Because the market for bank loan funds hasn’t been around long — about 20 years — there aren’t as many buyers and sellers in the market as there are for some other markets, so it can be hard to liquidate bank loan fund shares. If a bank wanted to sell off a large fund, prices across the industry would drop enormously.

Many investors are wary of bank loan funds, but they can be a good investment if used as part of a diversified portfolio. They’re especially good in prosperous times, but you should be aware that they do tend to drop in value quickly when the market goes down.

How Can A Chronic illness Or Age Affect Health Insurance?

Health Care Costs In AmericaThe following article is a guest post on behalf of HBF.

Chances are that if you have a chronic illness, or if you are a senior, you are going to be concerned about health insurance more so than many other people. The amount you spend in medical costs is likely to be in the high range so you want to make sure you are covered, see more at HBF.

Prior to the instigation of the Affordable Care Act there were many examples of people being refused health insurance when they had a chronic illness. Things have now changed, since the act came into being. Insurance providers are no longer allowed to refuse health insurance based solely on health grounds. In the case of the senior population Medicare is still in place for people aged 65 and over.

So if you have a serious health problem you’ll be covered?
If you purchase a health insurance plan in the newly created marketplace then an insurance provider is not permitted to refuse your application, or to cease your plan, based on the state of your health. As of 2015 this will also apply to any health insurance purchased outside of the marketplace.

What happens with your healthcare if you’re a senior?
As you get older, so your health care costs can rise dramatically. This makes it vitally important for you to ensure that you have sufficient health care coverage. This is the reason for the existence of the Medicare system. There are several different parts to this system, all of which apply to different costs and provisions.

Part A Medicare
Part A Medicare does not require the payment of any premiums. It’s designed to be a safety net to provide basic provision for the hospitalization or convalescence of those who qualify. You should be aware that you do not get full coverage and could still be liable for very high charges if your period of hospitalization is lengthy.

Part B Medicare
This type of Medicare covers 80% of costs for outpatient visits and therapy sessions. You have to pay premiums for this coverage; these payments are made straight from Social Security checks. Even with this cover there is still a good chance that you will experience high costs depending on how much health care you receive.

Part D Medicare
Part D Medicare is intended to provide towards prescription costs. It is a good idea to check with your pharmacist to see what level of this type of Medicare you require. It’s important to note that you need to apply for Part D Medicare as soon as you are entitled at the age of 65. If you fail to do so you stand the chance of being penalized with higher premiums for the rest of your life.

The most recent addition to Medicare
Medicare Advantage came into being as part of the The Balanced Budget Act of 1997 when it was known as part C Medicare. The premiums for this provision have a tendency to be high but the providers are usually reliable and reputable. It’s a definite improvement on the basic Medicare provision for seniors.