(MONEY Magazine) -- If you're in the market to sell your home, you probably feel you can't catch a break. Nearly five years into the housing bust, when many experts thought the real estate market would at least have stabilized, sales and prices are still dropping in most of the country.
In February existing-home sales tumbled 9.6% from the previous month, and the median price of a single-family home dropped to $157,000 from $163,900 the previous year, according to the National Association of Realtors. (Latest home prices)
You can't count on things turning around soon, either. At the current sales pace, it would take 8.6 months to clear out the 3.5 million existing homes listed today.
With the boost from the recent homebuyer tax credit gone, anyone who decides or is forced to put a house up for sale enters a market where houses often linger a full six months -- even a year -- without any bites.
Put part of the blame on stiff competition: Foreclosures and short sales, which accounted for 39% of sales in February, sell for about 15% less than conventional homes.
"It's dreadful out there for sellers," says Patrick Newport, a U.S. economist at forecasting firm IHS Global Insight.
Fortunately, there is one glimmer of good news. Bargain hunters, too, know that home prices are down some 32% from their peak. In a recent CNNMoney survey, three-quarters said that it was a good time to buy a home. But translating that interest into an actual sale can require some extreme measures.
It's not enough to show buyers your house is a deal: You have to convince them it's a total steal. That means slashing your price, bringing in a pro to pretty it up, and creating a killer website for your home. Here's how to do it right.
Slash Your Price, Bigtime
Sellers are still loath to accept the extent of the toll the bust took on their homes' value, says Tara-Nicholle Nelson, consumer educator for the housing website Trulia.com.
Many also give in to the temptation to list the property above fair market value to see what happens. Big mistake. About a quarter of sellers in the past year initially listed too high and were forced to knock the price lower, according to Trulia.com. Even in cities that have held up well, such as Charlotte, 25% of sellers resort to at least one price cut, and often two.
6 cities slashing prices
Think you can always drop the price if your home doesn't sell? Bigger mistake.
"The first 30 days on the market are the most important," says Norwalk, Conn., realtor Elizabeth Kamar. That's when your place attracts the most attention and gets the most showings. The result: You often end up with less than you would have if you priced it right to begin with, says Kamar. So get aggressive right out of the gate.
Undercut your competition. In normal times listings of similar properties in your area would give you a good sense of what your home might sell for. Today there's a big gap between what sellers want and what buyers are willing to pay.
Instead, figure out what you can realistically expect to get by asking your realtor to show you what houses similar to yours have sold for in the past three to six months. If more than a couple of the comparable properties were foreclosures or short sales, look closely at the photos and descriptions of those former listings. Distressed homes should be included in your comps if they are in move-in condition, says Las Vegas realtor Paul Bell.
Once you have a handle on your likely sale price, list your home a bit beneath that, says Rockaway, N.J., agent Ellen Klein. You don't have to undercut by much to attract attention, because that price will probably still be about 10% or 15% below what other homes are listed for. Even if you're competing with lots of foreclosures and short sales, your price should generate enough interest to attract more than one bidder, pushing up the final price to where it should be.
When Dorchester, Mass., realtor Julie Simmons wanted to sell her own home in January, she listed it at $460,000, about $5,000 to $10,000 below what she thought she'd sell for.
"I knew I had to attract attention," she says. Even in a harsh winter, she received four offers in less than two weeks -- and sold for $465,000.
Take out the ax. No bites within 30 days? Make a big move.
"When a property sits, people start thinking it must be listed too high," says Klein. To stimulate interest, make a giant cut -- as much as 10% of the asking price, and even more in an area where prices are still falling. That should be enough to warrant a second look from buyers who passed the first time, and to bring in a new pool of potentials who are hunting in the lower price range.
Last year Montclair, N.J., empty nesters Peter and Lauren Meyer decided to downsize from their seven-bedroom home to an apartment in the same town. They put their home on the market for $1.1 million, more than their realtor suggested. Six months and four price cuts later they pulled it off the market at $889,000.
"At that point we wrestled with lowering the price further, but we were ready to move on," says Peter. The couple relisted their home for $799,000 and it sold for $808,000.
Play hardball. It's okay to reject low-ball offers if a buyer won't budge. But if a buyer is willing to negotiate, push aside feelings of anger or insult and start counteroffering, says Mabel Guzman, president of the Chicago Association of Realtors.
Ideally you'll be able to negotiate within $10,000 to $20,000 of an acceptable offer. Then, "using incentives as carrots and sticks can make it easier to reach an agreement," says Guzman. For example, if your buyer refuses to dicker, you might offer to leave behind the appliances. Or maybe you'd rather take the reduced price but have the buyer agree that you take 60 days, not 30, to move out.
Hire a Stager
There are people who want to sell, and there are people who have to sell. Kathy and Rex Roberts are among the latter. Based in West Hartford, Conn., the couple, who have two children, have been living in different cities since early December, when Rex, an IT auditor, started a new job in Silver Spring, Md., after a layoff.
Before and after: Manhattan loft makeover
Listed that same month, their solidly built three-bedroom 1956 colonial has had no offers, despite two price cuts (it's currently at $389,500). Between rent on Rex's new place and their carrying costs on the house, they're paying a budget-straining $4,000 a month. "We need to sell," says Rex, "but we're not willing to drop the price again."
So in March they tried something new: professional home staging. Staging, increasingly popular with homeowners trying to sell mid-range houses, can extend from simply rearranging existing furniture to repainting, replacing fixtures, and bringing in new furnishings. The goal: to highlight the house's best features while making it as easy as possible for buyers to imagine themselves living there. Veteran real estate brokers interviewed by MONEY say that proper staging can speed the sale and often increase the price too. The key is to get it done right.
Start with an open mind. Staging demands a psychological shift that many homeowners find challenging: thinking of your house not as your home but as a set. That means scrubbing away evidence that you actually live there. Your goal: the homey yet impersonal look of a Pottery Barn catalogue.
Find the right stager. The ASP (accredited staging professional) designation is a plus -- it indicates the stager has gone through some basic training -- but it isn't essential. Get names from realtors or at realestatestagingassociation.com, then review the stager's online portfolio of before-and-after photos. Next, call homeowner references and ask how fast their homes sold after staging and whether they think the work helped.
Establish a budget and ask the stager to work within it. Stagers typically charge $150 to $400 to walk through your home and give recommendations for each room. You can then execute the plan yourself or hire the stager to do it for an hourly fee, usually $100 or so, plus the cost of any new paint or furnishings.
If you make big changes, costs can add up -- but "I can often make a huge difference using what homeowners already have," says Mary D. Brooks, a stager and realtor from Breckenridge, Colo.
See whether your realtor will pay. If you're on the hook for a full 6% commission, you have significant negotiating power. "I'm happy to pay for staging because I know it works," says realtor Paul Aspelin of Victoria, Minn.
As for the Robertses, after getting advice from stager Kara Woods, owner of Stage to Move in Danbury, Conn., they painted their lavender dining room a soft gray and removed excess furniture, among other things; a professional stylist redid the living room (see above). "It's incredible how much bigger and more modern it looks," says Kathy.
Find the Right Hook
These days it's going to take far more than a FOR SALE sign in the front yard and a spot on the multiple-listing service to get potential buyers in the door. That means getting the word out in a creative fashion -- and finding a realtor who is willing to do the same.
"The more eyeballs that get on the listing, the better," says Katie Curnutte of the real estate information website Zillow.com. To do that, you need a multipronged marketing plan of attack.
Create a great site. About 90% of buyers begin their search on the Internet, according to the National Association of Realtors. Make sure your home's online presence has a dozen or two photos: Having 20 instead of five photos will almost double the number of hits you'll get, according to Zillow.com. See the sidebar at right for more ways to keep potential buyers clicking on your site.
Vulture investors flipping their way to real estate profits
Throw money at them. Incentives can perk buyers' interest just as much as price cuts, says Matt Brown, director of business development at ForSaleByOwner.com. In fact, many buyers will agree to a higher price if their upfront costs are lowered, since they often run short on cash.
If you can afford it, offer to cover the buyer's closing costs or pay the first year's property taxes or condo or homeowner association dues. However, those freebies may be practically standard, particularly in areas rife with distressed properties.
In that case, says realtor Guzman, you might be able to bring buyers to the door by tossing in an unusual bonus, such as a $1,000 gift card (throw in one for the buyer's agent as well); a belonging they mentioned loving, such as the pool table or plasma TV; or a $5,000 credit to use in the home as they wish. (You can even pay upfront points so that they can get a lower mortgage rate, if you can swing it.)
Be aware, though, that you must disclose any such gifts or payments when the offer is agreed on, and some lenders will not approve them. If so, you might have to find another incentive that the bank doesn't object to.
Showcase super condition. Yes, some buyers are hunting for foreclosures in rough shape that they can nab for a song. Yet just as many shoppers don't want -- or don't know how -- to put in that sweat equity. So hire an inspector to identify every problem with the home, even seemingly minor issues such as dripping faucets, and fix them.
"If an outlet doesn't work, why get the buyer wondering what else is broken?" asks Beth Foley, an associate broker in Holland, Mich. Tell your realtor to give anyone who tours your home a copy of the inspection report and your list of fixes.
Spread the word online. Having your home listed on a major website like Realtor.com isn't enough. Ask your realtor if you'll get an "enhanced" listing on the site, where your home gets top promotional billing. Many realtors will create a website just for your home. You also want to get your listing on alternative sites like Craigslist or even Facebook.
In 2009, when Karen Mauro put her small, historic two-bedroom Orange County, Calif., home on the market she thought it would be a tough sale. Realtor Lisa Blanc listed the property at $467,500 and spread the word not only through the MLS listing but also with an update on her Facebook page. A Facebook friend of Blanc's passed the info to someone she knew was looking for that kind of house. Within a week, Mauro had an offer for $460,000.
Stay away -- far away. In better times you may not feel obliged to drop everything to accommodate prospective buyers' schedules. Today, if buyers can't get in on their time, they'll skip it, says Summer Greene, who manages realtors in the Fort Lauderdale area. So be prepared to show a perfectly clean home at a moment's notice. And disappear (along with your dog, if possible) for all showings and open houses so that prospects can imagine themselves in your house -- an impossible task when your family is vegging on the couch.
When Betty McCoy began showing her Prairie Village, Kans., three-bedroom Cape Cod - style house, for example, she kept a list of must-do chores -- including emptying wastebaskets, filling the dishwasher, and making the bed and walked out every morning with the place spotless. On the weekend she holed up at a local mall.
"Every time I thought I could go home, a new person wanted to see the house," recalls McCoy. But a few extra hours at the mall paid off in spades. In just a few days McCoy had an offer for her home -- for the full listing price.
Source http://money.cnn.com/
Tuesday, 3 May 2011
The set-top box is dead; long live the home gateway
The set-top box has become the most hated device since HBO adopted Videocipher, and it appears to be on its way out.
Predictions of its death are rising by the earnings call. But what might be dying is not so much the device as the way the device was originally envisioned. The set-top box as protector of content and changer of channels is probably dead--or sucking in its last breaths.
The home gateway, its next iteration, is alive, well and worming its way into residences. At least that seemed to be the underbelly of the messages coming out from a variety of sources last week.
Time Warner Cable's (NYSE: TWC) Glenn Britt took pride in explaining how his MSO's true purpose in life is to deliver high-speed broadband services and again proclaimed that advanced consumer electronics were going to kill the set-top box. Maybe not tomorrow, he was cautious enough to say, but the end is near.
Ken Morse, CTO of Cisco's (Nasdaq: CSCO) Service Provider Technology group, speaking at a Light Reading-sponsored conference, made Scientific-Atlanta veterans shudder when he announced that "Set-tops are clearly moving to the point where they are either a piece of software that lives in another device or they're virtualized totally in the cloud."
And Motorola Mobility (NYSE: MMI), a company built on cable boxes--the bread and butter of the former General Instrument--now made it clear that it's mostly involved with building and selling cellphones.Cable boxes admittedly make money but, as Chairman-CEO Sanjay Jha made clear during an earnings conference call, Motorola's focus is bigger than a box on top of the television set and its R&D efforts are going towards "investing in the transformation to an all-IP network and cloud-based multi-screen consumer experiences."
So that's it. The cable box is dead. The FCC doesn't need to worry about opening it up because those who use it and build it don't want it. It's an artifact from the past: a way to change channels, to protect content that's now freely available from the Internet and multiple other sources, and to extract a monthly fee from consumers who hate the device with a passion usually reserved for the New York Yankees.
The problem with writing that obituary is that as long as pay TV provides make the effort to protect their content--and because it is pay TV they will always make an effort to protect content--something will have to do the job. It may not be a set-top box as configured today, but frankly, those monstrous consumer electronics devices that cable operators have been providing to their subscribers are hardly set-top-sized boxes anyway. When was the last time you saw a cable box sitting on top of flat screen TV?
If sitting on top of a TV is the criterion, cable "set-tops" have been dead longer than unmetered Internet access. That's not the point. To protect the service and to facilitate new services, there must be a device between the TV and the viewer. It could be a gaming box--certainly Microsoft is looking at TV yet again. It could be a computer or some other such device fueled by Google or Apple. It could be a tablet or a telephone. It might not be a set-top box--but then again it might be the latest iteration of a set-top box--a "home gateway" that controls not only the television but the computer, the tablet and other devices around the home.
The guess here is that the set-top is going to go the way of the converter box. It will still be there in some form; it will just have another name and, eventually, its own standard or loathing.--Jim
Source http://www.fiercecable.com/
Predictions of its death are rising by the earnings call. But what might be dying is not so much the device as the way the device was originally envisioned. The set-top box as protector of content and changer of channels is probably dead--or sucking in its last breaths.
The home gateway, its next iteration, is alive, well and worming its way into residences. At least that seemed to be the underbelly of the messages coming out from a variety of sources last week.
Time Warner Cable's (NYSE: TWC) Glenn Britt took pride in explaining how his MSO's true purpose in life is to deliver high-speed broadband services and again proclaimed that advanced consumer electronics were going to kill the set-top box. Maybe not tomorrow, he was cautious enough to say, but the end is near.
Ken Morse, CTO of Cisco's (Nasdaq: CSCO) Service Provider Technology group, speaking at a Light Reading-sponsored conference, made Scientific-Atlanta veterans shudder when he announced that "Set-tops are clearly moving to the point where they are either a piece of software that lives in another device or they're virtualized totally in the cloud."
And Motorola Mobility (NYSE: MMI), a company built on cable boxes--the bread and butter of the former General Instrument--now made it clear that it's mostly involved with building and selling cellphones.Cable boxes admittedly make money but, as Chairman-CEO Sanjay Jha made clear during an earnings conference call, Motorola's focus is bigger than a box on top of the television set and its R&D efforts are going towards "investing in the transformation to an all-IP network and cloud-based multi-screen consumer experiences."
So that's it. The cable box is dead. The FCC doesn't need to worry about opening it up because those who use it and build it don't want it. It's an artifact from the past: a way to change channels, to protect content that's now freely available from the Internet and multiple other sources, and to extract a monthly fee from consumers who hate the device with a passion usually reserved for the New York Yankees.
The problem with writing that obituary is that as long as pay TV provides make the effort to protect their content--and because it is pay TV they will always make an effort to protect content--something will have to do the job. It may not be a set-top box as configured today, but frankly, those monstrous consumer electronics devices that cable operators have been providing to their subscribers are hardly set-top-sized boxes anyway. When was the last time you saw a cable box sitting on top of flat screen TV?
If sitting on top of a TV is the criterion, cable "set-tops" have been dead longer than unmetered Internet access. That's not the point. To protect the service and to facilitate new services, there must be a device between the TV and the viewer. It could be a gaming box--certainly Microsoft is looking at TV yet again. It could be a computer or some other such device fueled by Google or Apple. It could be a tablet or a telephone. It might not be a set-top box--but then again it might be the latest iteration of a set-top box--a "home gateway" that controls not only the television but the computer, the tablet and other devices around the home.
The guess here is that the set-top is going to go the way of the converter box. It will still be there in some form; it will just have another name and, eventually, its own standard or loathing.--Jim
Source http://www.fiercecable.com/
How I spend my money
By using these strategies and tactics, I've reduced my monthly expenses significantly. But I still make mistakes.
Last month I shared a new financial framework I've been developing, one that stresses earning, spending and saving as the building blocks of personal finance. Then I elaborated by sharing how I make money. Now I'm turning to the other half of the basic personal-finance equation: spending. Or, more precisely, the lack of it.
Instead of talking about theoretical ways to cut costs, I'm going to share the things that Kris and I do (or have done) in our own lives to put frugality and thrift into practice.
StrategiesThough I could (and will) list some of the individual tactics I've used to reduce spending, they're less important than the broader strategies I've implemented. These strategies are the guiding principles that frame the way I look at spending. From them, I'm able to develop specific habits to help me pinch my pennies.
Try the 50-30-20 budget
Here are a few of the strategies I've developed:
I practice conscious spending. I write a lot about conscious spending, by which I mean the intentional decision to buy (or not buy) any given thing. I used to be a compulsive spender. I'd just buy whatever I wanted -- often without reason. Mostly, I've mastered that. Now when I buy, I buy with purpose. (Or try to, anyhow.)
I avoid recurring costs. A few years ago, I had subscriptions to three newspapers, a couple of online computer games, and a dozen magazines. I had a monthly phone bill, a cable bill, and a bill for the Internet. I had hundreds of dollars in recurring costs each month. Gradually, I've cut these costs to the essentials. I've ditched the home phone and the cable television. I've canceled the computer games and most of the periodicals. I've learned to avoid subscription fees whenever possible.
I try to be patient. It used to be that when I wanted something, I wanted it now. I'm still like this, really, but I've learned the power of patience. I use the 30-day rule to make sure I'm not buying on impulse. And if I really want something, I consider practicing predatory shopping -- waiting for the bargains and extreme markdowns so I can save big bucks.
I avoid the middle. Lately I've come to realize that "the middle" is where I used to waste a lot of money. Mid-quality and mid-priced stuff is often a poor deal. Instead, I try to buy at either end. If I know I'll use something often, I pay for top quality. (I still try to find it on sale, of course.) Otherwise, I try to buy used (or low quality). One example is my wardrobe. I built much of it from inexpensive clothes found at local thrift stores. The rest of my clothes are more expensive, higher-quality items. (The key concept here? I'm getting great "cost per use" on the things I buy. When I bought from the middle, my cost per use was high.)
I've reduced my exposure to advertising. Though listed last, this may be most important. Radio, television, newspapers and magazines are all vehicles for marketing. They're there to persuade you to buy. When I was exposed to a steady diet of this stuff, I bought. I couldn't help it. (And neither can you. You, with no training, are no match for corporations that spend millions of dollars learning how to persuade people to buy.)
These are just five of the broader concepts I use to guide the way I spend. In turn, these broad strategies lead to individual tactics I use to practice frugality and thrift. And what are those tactics? Let's look at a few.
TacticsSometimes people want to know if I follow my own advice. "Do you really do all the things you write about?" they ask. Well, I don't do all of them, but Kris and I try to do as many as possible. I've already mentioned the 30-day rule and "predatory shopping." Here are some other tactics I use to keep costs low:
I drive as little as possible. When the weather turns nice in Portland, Ore. -- which it will do eventually, right? -- I bike or walk for errands. And I'm still trying to make the bus a part of my routine. Biking and walking don't just save me money; they also help me stay healthy. (I just wish we lived in a more walkable neighborhood.)
We share with friends and neighbors. The real millionaire next door and I have a pretty good system going. I use his pruning ladder; he uses my greenhouse plastic. He fixes our flagpole; Kris bakes him cookies. He mows our lawn in spring; I mow his lawn in summer. And so on. I do this sort of thing with other friends, too. By sharing tools and resources, only one of us has to own any particular item.
When possible, I buy used. Not everything is available used. And sometimes I'm not patient enough to wait for what I want. But there are plenty of times when I'm able to find books and CDs and DVDs and clothes and furniture for cheap, either at the local thrift store or on Craigslist. For example, some of my best yard tools were bought for just a buck or two at estate sales.
I don't watch television or listen to the radio. I don't say this to be "holier than thou." It's a choice I've made. It gives me more free time, but it also means I'm exposed to fewer ads. (Kris and I do get shows via iTunes, but they're commercial-free.)
A tactic from my wife: "When I used to read the catalogs that came in the mail, I'd always find something to buy. Now, though, I've taken myself off most of the mailing lists, and I automatically dump any catalogs that still come into the recycling. I buy a lot less stuff because of this. When I need something, I look at the appropriate catalog. Otherwise, I don't let myself be tempted."
We grow (and preserve) some of our own food. If you follow our garden project, you know that Kris and I have berry plants, fruit trees, herbs, and a vegetable garden. You also know that Kris makes prize-winning pickles and preserves. We don't save a lot of money this way -- but we do save some. Since we (especially Kris) enjoy this activity, it's also a hobby that gives us back something for our time and efforts.
When it makes sense, we buy in bulk. There are some things we use all the time. If we can buy in bulk for less -- and if the items won't spoil -- we stock up. Kris also avoids buying a lot of prepackaged ready-to-eat foods; buying the quality ingredients to make our meals from scratch is cheaper. To save time and effort, we sometime cook in bulk and freeze portions for later. Again, cooking and baking are a hobby here, so we don't mind the loss of convenience foods as we cut costs. (Plus we think our stuff is tastier!)
We keep our furnace thermostat at 58 degrees. When I'm home during the winter, I bundle up. (Well, to be honest, I take a lot of hot baths too. But mostly I bundle up.) In the evening, we bump the temperature to 64 or 66. (We don't have air conditioning, so during the summer we simply open the windows and sweat on the really hot days.)
We use a clothesline -- when the weather cooperates. Kris rigged up an improvised clothesline one summer. Then we found a carousel line at an estate sale (which I carried home, walking two miles). When it's warm, this saves us a few bucks per month on electricity. Plus it prolongs the life of our clothes.
We're gradually learning more about DIY home maintenance. I'm not afraid to call in an expert, but I'm also learning that there are some projects we can do ourselves. I have a feeling this summer will be full of them, actually. It's been a while since we focused on home maintenance.
We cut services we don't use. It can be tempting to keep your landline or cable TV, even though you don't use them much. But I found that one of the best ways to improve my cash flow was to kill these services. I've never missed them.
I self-insure whenever possible. I have high deductibles on our insurance policies, which lowers our premiums. Instead, I have extra money in my emergency fund to cover minor problems. I save the insurance for catastrophic needs. (This also means I don't buy extended warranties -- except on laptop computers.)
These are just some of the things we do to keep our costs down. To be honest, I wish we did more. There are so many ways we could trim our spending. It's tough to keep them all in mind in day-to-day life, though. (Which is why it's so important to develop high-level strategies. It's easier to remember a handful of basic strategies than to remember dozens of individual tactics.)
Calculator: Is your budget in balance?
Note: I want to stress that we don't cut costs on everything. We're frugal, yes, but we're frugal with a purpose. We use these tactics to curb our spending on the things that aren't important so that we can spend on the things that do matter to us. For the past two years, of course, that's meant travel. But for me, it also means my gym. And my Mini. And my Portland Timbers tickets. And we support our city's many excellent restaurants by splurging on excellent dining. I choose to spend less on some things so that I'm able to spend more on others.
Victory?By using these strategies and tactics, I've reduced my monthly operational expenses significantly, freeing money to be put into savings or used for other priorities. But I'm far from perfect. I still spend money on things that I shouldn't, and I still make mistakes.
How do your finances stack up?
I recently subscribed to The Economist, for instance. I love the magazine, and in theory, a subscription is a fine idea. Reality is different. I paid something like $120 for 52 weekly issues. That's a lot of money, and it hurt to write the check. It hurts even more to see that I'm not reading the issues as they arrive. They stack up next to my recliner. Once a month, I spend maybe 10 minutes flipping through the stack before sticking the pile in the recycling bin. It's like recycling money. I'd be better off buying the occasional issue on the newsstand.
So, as I say, there are lots of little areas left for me to improve on. And that's fine. I've made a lot of progress, and I'm willing to be patient as I continue to master the art of spending.
Source http://money.msn.com/
Last month I shared a new financial framework I've been developing, one that stresses earning, spending and saving as the building blocks of personal finance. Then I elaborated by sharing how I make money. Now I'm turning to the other half of the basic personal-finance equation: spending. Or, more precisely, the lack of it.
Instead of talking about theoretical ways to cut costs, I'm going to share the things that Kris and I do (or have done) in our own lives to put frugality and thrift into practice.
StrategiesThough I could (and will) list some of the individual tactics I've used to reduce spending, they're less important than the broader strategies I've implemented. These strategies are the guiding principles that frame the way I look at spending. From them, I'm able to develop specific habits to help me pinch my pennies.
Try the 50-30-20 budget
Here are a few of the strategies I've developed:
I practice conscious spending. I write a lot about conscious spending, by which I mean the intentional decision to buy (or not buy) any given thing. I used to be a compulsive spender. I'd just buy whatever I wanted -- often without reason. Mostly, I've mastered that. Now when I buy, I buy with purpose. (Or try to, anyhow.)
I avoid recurring costs. A few years ago, I had subscriptions to three newspapers, a couple of online computer games, and a dozen magazines. I had a monthly phone bill, a cable bill, and a bill for the Internet. I had hundreds of dollars in recurring costs each month. Gradually, I've cut these costs to the essentials. I've ditched the home phone and the cable television. I've canceled the computer games and most of the periodicals. I've learned to avoid subscription fees whenever possible.
I try to be patient. It used to be that when I wanted something, I wanted it now. I'm still like this, really, but I've learned the power of patience. I use the 30-day rule to make sure I'm not buying on impulse. And if I really want something, I consider practicing predatory shopping -- waiting for the bargains and extreme markdowns so I can save big bucks.
I avoid the middle. Lately I've come to realize that "the middle" is where I used to waste a lot of money. Mid-quality and mid-priced stuff is often a poor deal. Instead, I try to buy at either end. If I know I'll use something often, I pay for top quality. (I still try to find it on sale, of course.) Otherwise, I try to buy used (or low quality). One example is my wardrobe. I built much of it from inexpensive clothes found at local thrift stores. The rest of my clothes are more expensive, higher-quality items. (The key concept here? I'm getting great "cost per use" on the things I buy. When I bought from the middle, my cost per use was high.)
I've reduced my exposure to advertising. Though listed last, this may be most important. Radio, television, newspapers and magazines are all vehicles for marketing. They're there to persuade you to buy. When I was exposed to a steady diet of this stuff, I bought. I couldn't help it. (And neither can you. You, with no training, are no match for corporations that spend millions of dollars learning how to persuade people to buy.)
These are just five of the broader concepts I use to guide the way I spend. In turn, these broad strategies lead to individual tactics I use to practice frugality and thrift. And what are those tactics? Let's look at a few.
TacticsSometimes people want to know if I follow my own advice. "Do you really do all the things you write about?" they ask. Well, I don't do all of them, but Kris and I try to do as many as possible. I've already mentioned the 30-day rule and "predatory shopping." Here are some other tactics I use to keep costs low:
I drive as little as possible. When the weather turns nice in Portland, Ore. -- which it will do eventually, right? -- I bike or walk for errands. And I'm still trying to make the bus a part of my routine. Biking and walking don't just save me money; they also help me stay healthy. (I just wish we lived in a more walkable neighborhood.)
We share with friends and neighbors. The real millionaire next door and I have a pretty good system going. I use his pruning ladder; he uses my greenhouse plastic. He fixes our flagpole; Kris bakes him cookies. He mows our lawn in spring; I mow his lawn in summer. And so on. I do this sort of thing with other friends, too. By sharing tools and resources, only one of us has to own any particular item.
When possible, I buy used. Not everything is available used. And sometimes I'm not patient enough to wait for what I want. But there are plenty of times when I'm able to find books and CDs and DVDs and clothes and furniture for cheap, either at the local thrift store or on Craigslist. For example, some of my best yard tools were bought for just a buck or two at estate sales.
I don't watch television or listen to the radio. I don't say this to be "holier than thou." It's a choice I've made. It gives me more free time, but it also means I'm exposed to fewer ads. (Kris and I do get shows via iTunes, but they're commercial-free.)
A tactic from my wife: "When I used to read the catalogs that came in the mail, I'd always find something to buy. Now, though, I've taken myself off most of the mailing lists, and I automatically dump any catalogs that still come into the recycling. I buy a lot less stuff because of this. When I need something, I look at the appropriate catalog. Otherwise, I don't let myself be tempted."
We grow (and preserve) some of our own food. If you follow our garden project, you know that Kris and I have berry plants, fruit trees, herbs, and a vegetable garden. You also know that Kris makes prize-winning pickles and preserves. We don't save a lot of money this way -- but we do save some. Since we (especially Kris) enjoy this activity, it's also a hobby that gives us back something for our time and efforts.
When it makes sense, we buy in bulk. There are some things we use all the time. If we can buy in bulk for less -- and if the items won't spoil -- we stock up. Kris also avoids buying a lot of prepackaged ready-to-eat foods; buying the quality ingredients to make our meals from scratch is cheaper. To save time and effort, we sometime cook in bulk and freeze portions for later. Again, cooking and baking are a hobby here, so we don't mind the loss of convenience foods as we cut costs. (Plus we think our stuff is tastier!)
We keep our furnace thermostat at 58 degrees. When I'm home during the winter, I bundle up. (Well, to be honest, I take a lot of hot baths too. But mostly I bundle up.) In the evening, we bump the temperature to 64 or 66. (We don't have air conditioning, so during the summer we simply open the windows and sweat on the really hot days.)
We use a clothesline -- when the weather cooperates. Kris rigged up an improvised clothesline one summer. Then we found a carousel line at an estate sale (which I carried home, walking two miles). When it's warm, this saves us a few bucks per month on electricity. Plus it prolongs the life of our clothes.
We're gradually learning more about DIY home maintenance. I'm not afraid to call in an expert, but I'm also learning that there are some projects we can do ourselves. I have a feeling this summer will be full of them, actually. It's been a while since we focused on home maintenance.
We cut services we don't use. It can be tempting to keep your landline or cable TV, even though you don't use them much. But I found that one of the best ways to improve my cash flow was to kill these services. I've never missed them.
I self-insure whenever possible. I have high deductibles on our insurance policies, which lowers our premiums. Instead, I have extra money in my emergency fund to cover minor problems. I save the insurance for catastrophic needs. (This also means I don't buy extended warranties -- except on laptop computers.)
These are just some of the things we do to keep our costs down. To be honest, I wish we did more. There are so many ways we could trim our spending. It's tough to keep them all in mind in day-to-day life, though. (Which is why it's so important to develop high-level strategies. It's easier to remember a handful of basic strategies than to remember dozens of individual tactics.)
Calculator: Is your budget in balance?
Note: I want to stress that we don't cut costs on everything. We're frugal, yes, but we're frugal with a purpose. We use these tactics to curb our spending on the things that aren't important so that we can spend on the things that do matter to us. For the past two years, of course, that's meant travel. But for me, it also means my gym. And my Mini. And my Portland Timbers tickets. And we support our city's many excellent restaurants by splurging on excellent dining. I choose to spend less on some things so that I'm able to spend more on others.
Victory?By using these strategies and tactics, I've reduced my monthly operational expenses significantly, freeing money to be put into savings or used for other priorities. But I'm far from perfect. I still spend money on things that I shouldn't, and I still make mistakes.
How do your finances stack up?
I recently subscribed to The Economist, for instance. I love the magazine, and in theory, a subscription is a fine idea. Reality is different. I paid something like $120 for 52 weekly issues. That's a lot of money, and it hurt to write the check. It hurts even more to see that I'm not reading the issues as they arrive. They stack up next to my recliner. Once a month, I spend maybe 10 minutes flipping through the stack before sticking the pile in the recycling bin. It's like recycling money. I'd be better off buying the occasional issue on the newsstand.
So, as I say, there are lots of little areas left for me to improve on. And that's fine. I've made a lot of progress, and I'm willing to be patient as I continue to master the art of spending.
Source http://money.msn.com/
Encryption ending campaign to kill Bin Laden
The first sign for Mr. Obama to know Osama bin Laden had been killed when a member of the naval task force sent to the White House short code "Geronimo-E KIA"
"Geronimo" as the password for the election campaign two groups consisting of 12 member task force of U.S. Navy SEAL to kill Osama bin Laden in the house has a wall with barbed wire surrounded in Abbotabad, Pakistan on all Updated recently. Members are taken to task on two goals helicopter.
White House officials are clearly not entirely sure they would find bin Laden in the house looking like a fortress in this Abbotabad, by terrorist was wanted in the world could have left when task force on its way to the place.
But first the good from the beginning to the raid, when the members realized SEAL who had fled the U.S. hunt for a decade. They sent a message of "Geronimo. "
After searching for 40 minutes, occasionally interrupted by the gun battle, bin Laden was dead and password confusing "Geronimo KIA-E" has been sent, in the sigh of relief permeated the White House. "E"refers to the "enemy"that the enemy while the other is short for "killed in action"that was destroyed in the mission.
Bin Laden had been shot twice, one found in the head and a chest, a senior official in the Bush administration revealed.
However, the password is not sent to SEAL evidence finally proved implement terrorist attacks on 11 / 9 is really dead. When additional evidence is collected, from ID, ie facial recognition and analysis of DNA coupling, the White House is continuing to discuss. Obama eventually ended the discussion by saying briefly: "We've caught him. "
Meanwhile, the group has broadcast encryption fully expect the terrorist was wanted in the world as SEAL Team Six (SEAL Team Six) The development of special war Navy.
Brennan, counter-terrorism adviser to Obama said they had tried to "complete the mission safely and in secret", not bin Laden a chance to return fire. And the Brennan campaign was called "moment of decision" in the war on terror and they had "cut is a solid investment. "
Current government officials are looking to Obama to decide whether to publish images of Osama bin Laden identified or not. Published photos will prove bin Laden was actually dead, but some officials fear they could cause the U.S. outcry.
"Geronimo" as the password for the election campaign two groups consisting of 12 member task force of U.S. Navy SEAL to kill Osama bin Laden in the house has a wall with barbed wire surrounded in Abbotabad, Pakistan on all Updated recently. Members are taken to task on two goals helicopter.White House officials are clearly not entirely sure they would find bin Laden in the house looking like a fortress in this Abbotabad, by terrorist was wanted in the world could have left when task force on its way to the place.
But first the good from the beginning to the raid, when the members realized SEAL who had fled the U.S. hunt for a decade. They sent a message of "Geronimo. "
After searching for 40 minutes, occasionally interrupted by the gun battle, bin Laden was dead and password confusing "Geronimo KIA-E" has been sent, in the sigh of relief permeated the White House. "E"refers to the "enemy"that the enemy while the other is short for "killed in action"that was destroyed in the mission.
Bin Laden had been shot twice, one found in the head and a chest, a senior official in the Bush administration revealed.
However, the password is not sent to SEAL evidence finally proved implement terrorist attacks on 11 / 9 is really dead. When additional evidence is collected, from ID, ie facial recognition and analysis of DNA coupling, the White House is continuing to discuss. Obama eventually ended the discussion by saying briefly: "We've caught him. "
Meanwhile, the group has broadcast encryption fully expect the terrorist was wanted in the world as SEAL Team Six (SEAL Team Six) The development of special war Navy.
Brennan, counter-terrorism adviser to Obama said they had tried to "complete the mission safely and in secret", not bin Laden a chance to return fire. And the Brennan campaign was called "moment of decision" in the war on terror and they had "cut is a solid investment. "
Current government officials are looking to Obama to decide whether to publish images of Osama bin Laden identified or not. Published photos will prove bin Laden was actually dead, but some officials fear they could cause the U.S. outcry.
Monday, 2 May 2011
Home sweet home? Now is the time to leverage your home equity, says Thrivent
Given the economic turbulence of the past several years, the greatest asset that many Americans have is their home. With interest rates still near historical lows, now might be the time to tap into your home equity to help consolidate debt, embark on a home improvement project, start an emergency savings fund or even help pay for college.
Given the economic turbulence of the past several years, the greatest asset that many Americans have is their home. With interest rates still near historical lows, now might be the time to tap into your home equity to help consolidate debt, embark on a home improvement project, start an emergency savings fund or even help pay for college.
Home equity loans and home equity lines of credit (HELOCs) are two of the most common ways for homeowners to borrow money by leveraging the equity they have in their home. Each offers its own unique benefits and both can offer considerable tax benefits, according to Thrivent Financial Bank.
The first step in determining which home equity product is right for you is to answer one simple question: How will I use the money?
“Many people are aware that now might be a good time to borrow against the equity in their home,” said Jill Aleshire, executive vice president of Thrivent Financial Bank. “However, slowing down and taking a closer look at how to best use that equity is the best thing you can do to start the process. “
Thrivent Financial Bank offers the following tips to help you decide if tapping your home equity is the right choice for you.
Appreciating assets
Home equity loans and HELOCS are meant to improve your long-term financial well-being, so think about how best to use the equity toward assets that will increase in value (appreciating assets). Ask yourself, “Will this earn value in the long run?” A college education or a home improvement project can be justified as appreciating investments if they result in a higher lifetime income or property value.
Emergency reserve savings
Home equity loans and lines of credit can be a good option if you are in need of protection against job loss, medical emergencies or home and vehicle repair.
First-time debt consolidation
One of the most common uses for home equity loans and lines of credit is debt consolidation. Because the interest paid may be tax-deductible and the interest rates can be lower than many creditors’ rates, some homeowners borrow against the value of their home to pay off debt.
Needs, not wants
Using your hard-earned equity for extraneous purchases is not a good use of your loan. If you don’t need the funds now, consider waiting to take out a home equity loan until you have a specific need. Borrowing once against the equity in your home can be a great way to strengthen your finances if used wisely, but be careful not to make a habit of borrowing. Limiting your loan spending to needs, not wants, is a good way to keep yourself in check.
Source http://www.echopress.com/
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Do you believe your savings on commission will be your reward after you attend a seminar or two on selling your own home? A home sale is a complex series of transactions with multiple parties. Not only is it time consuming, consultation and coordination with professionals at every level is necessary. Attendance at a seminar or two does not make you an expert on home selling.
The average person will buy two to three homes in one lifetime, unless they are a property investor. A top producing REALTOR will average 5-10 transactions per month. A REALTOR with knowledge and experience in the profession will be able to enhance your bottom line on a home sale. Here are some common questions I am frequently asked by For Sale by Owner sellers.
Q: I recently attended a seminar on selling my own home. Won’t this enable me to do it on my own?
A: The seminar was probably sponsored by a lawyer, closing attorney, titling company, or lender. The facts you can obtain in three hours or less are not enough to teach you how to get more money for your largest investment: your home.
Q: How do REALTORS sell homes quickly?
A: A staggering 80% of home sales are done through a Multiple Listing Service. REALTORS have access to this. With a listing on MLS sellers have the entire membership of the MLS working for them. Sellers may have as much as several thousand members depending on the area or residence. An MLS listing is the most effective way to bring in qualified potential buyers.
Q: What information is most critical when selling a home?
A: A seller needs to know what the state requires as well as what the lender requires when it comes to home sales transactions. He or she also needs to know the timeframe for all transactions. If time frame is not adhered to the contract can become null and void.
Q: I live in a residential community and am selling my home. How do I deal with the Home Owner’s Association effectively?
A: Do you know the timeframe for the Home Owners Association (HOA) packet in your area? If the HOA package is not received in the required timeframe of your state then the buyer may cancel the contract with no penalties to the buyer. These matters are of the utmost importance when dealing with an HOA.
Q: Why does a home seller even need a real estate agent?
A: If there is no middle party to negotiate between the buyer and seller, you can become deadlocked on terms, have your property tied up, or end up in litigation. If your property is tied up for months you might have missed the right buyer who is willing and able to pay the price you want. Also a REALTOR will not have the emotional ties to the transaction that a seller has. The REALTOR is also separate from the buyer’s objectives.
Q: Doesn’t hiring an attorney take care of contracts?
A: If you think an attorney drawing up a contract makes you free and clear of worries and responsibilities – you’re wrong. The attorney does not have the time to stay on top of this to make sure everything required is done on the home before closing. If you do want the attorney to handle the details, you’ll pay a lawyer’s fee, which is usually $100 per hour and up.
Q: How does a REALTOR arrive at a market price on a home?
A: A REALTOR will price your home much like an appraiser would. A REALTOR compares your home to what has sold in the area in the past three months. They know the inflation record in your area. A REALTOR’s research also consists of checking court records to see what has sold in this area. This covers home sales not listed on MLS, but by law has to be recorded at the court house for a specific area.
Q: How can a REALTOR possibly improve my bottom line on home sales, when I’m saving on commission?
A: On every listing I have sold, I have procured for my sellers $10,000-$50,000 above what they thought their property would sell for – after they had paid all the fees including commission. A majority of For Sale by Owner’s homes have sold for less than what a REALTOR would have obtained.
I would like to reiterate the importance of the seller selecting a REALTOR who knows the ins and outs of contractual agreements and has some experience behind him or her. Hiring an experienced REALTOR to help sell your home will the wisest investment you’ve ever made.
About The Author:
Elaine VonCannon is a REALTOR with RE/Max Capital in Williamsburg, Virginia, and she manages investment property as part of her business. Elaine is also an Accredited Buyer's Representative as well as a Senior Real Estate Specialist. She has helped numerous clients invest in and make money on property in Southeastern Virginia.
Source http://www.healthywealthynwise.com/
Sunday, 1 May 2011
Legislation seeks to curb Medicaid 'gaming'
Bill supporter: Alan Sadowsky, a senior vice president at the MorseLife senior living facility in West Palm Beach, says legislation would keep wealthier patients from circumventing the law.
As Florida struggles to reduce state spending, the debate over who qualifies for costly Medicaid long-term care assistance has reached a high pitch.
An individual can have no more than $2,000 in assets and monthly income of $2,022 to qualify for Medicaid. Florida has many low-income citizens who genuinely fit into that category. But many other individuals move assets to loved ones to qualify.
Two bills before the Florida Legislature - House Bill 1289 and Senate Bill 1356 - would make it more difficult to transfer wealth before applying for Medicaid.
The debate over the issue has gotten downright testy, probably because it involves billions of dollars. Start with State Rep. Larry Ahern, R-St. Petersburg, sponsor of the House bill.
"People are gaming the system," he said. "We heard testimony about kids buying new cars and taking vacations with their mother's money while the mom is in a nursing home and her care is being paid for by Medicaid."
Alan Sadowsky, senior vice president of the Morse-Life facility in West Palm Beach, which includes 280 nursing home beds, agrees that legislation is needed.
"I've seen people who I know are wealthy and a month after they get here they are on Medicaid," Sadowsky said. "They don't want their money to go to long-term care. They want it to go to their kids. So they transfer their money and make themselves 'technically poor.' "
Sadowsky said the amount paid by Medicaid per patient is $50 to $60 less per day than it costs to provide care, and his facility is forced to make it up through other means.
"The long-term health facility is left holding the bag," he said. "If this bill tightens up eligibility, not so many people will be able to circumvent the law."
Penalizing responsibility?
But attorney Howard Krooks of Elder Care Associates in Boca Raton, who helps clients protect savings and investments, sees it differently.
"This bill rewards people who didn't save as they went along, and the people who worked their butts off and saved, it penalizes them," he said. "And if you look at the salaries pulled down by executives of some of these nursing home companies, I don't think they are losing money."
Ahern said it is the attorneys, like Krooks, who specialize in elder law who are "making money off of this," in ways that he calls "legal fraud" and "morally reprehensible."
Total Medicaid spending in Florida in 2009 - the last year for which numbers are available - was $15.1 billion. Of this, 67 percent was paid for with federal money - $10.2 billion. The remaining 33 percent was paid by the state, totaling $4.9 billion.
In separate legislation, Florida lawmakers want to funnel almost all of Florida's Medicaid recipients into state-authorized, for-profit health maintenance organizations, which would steer elderly people away from nursing homes and into at-home care.
But nursing home care is inevitable for some.
Some Americans buy long-term care insurance. But some can't afford it, including people with pre-existing conditions, and end up on Medicaid.
However, Ahern said, too many people who do have means also end up on Medicaid. His bill, sponsored in the Senate by Dennis Jones, R-Seminole, would allow state investigators to more closely monitor asset transfers made by would-be Medicaid recipients.
The bill specifically targets "personal services contracts" by which individuals often pay family members for everyday care, "rather than hiring strangers to help them," Krooks said. Those services can include being assisted with bathing, dressing, feeding and being taken to the supermarket. By transferring funds to loved ones, the patient lowers his assets and qualifies for Medicaid.
The bill would require that such payments not exceed what a person would pay on the open market for those services and would require much stricter accounting .
According to Ahern's bill, the payment must be "computed in a manner that clearly reflects the actual number of hours to be expended and (that) the contract clearly identifies each specific service and the average number of hours required to deliver each service each month."
The bill also would make it harder for a spouse to separate his or her assets from that of the patient when Medicaid eligibility is calculated.
Federal law allows a spouse to protect $109,560 in assets - not counting basic holdings such as a dwelling, household goods and a vehicle. According to Krooks, that allowance can be increased, and often is, for people who have expenses - for example, their own medical costs - that will require much more in assets for them to stay above water.
Source http://www.palmbeachpost.com/
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