1. Don’t bite off more HOME than you can chew. How much house can you comfortably afford? For most people the answer is a house with a purchase price of no more than 3x their annual household income. Rationale: The cost of a home includes much more than the monthly mortgage payment. It’s also property tax, insurance, upkeep, etc. Typically these costs run 2%-3% of the price of your home each year. Assuming a 20% down payment, a 30-year fixed rate mortgage, and interest rates in the 5%-6% rate, the 3x your income rule of thumb will translate into total housing costs of roughly 30% of your gross income.

2. Don’t let your CAR drive you to the poor house. The same logic applies to your car. Most people can comfortably afford a car that is 1/3rd of their annual income. If you make $60,000 you can comfortably afford a car that costs $20,000. If that seems low – now you know why so many Americans are in financial trouble. They are driving it. A car has many other costs than simply the monthly payment. There’s insurance, gas, parking, maintenance, etc. If you follow this rule of thumb, your total transportation costs should be 10% or less of your gross income.

3. Don’t let your KIDS kick you in the wallet. Kids are expensive. From a purely clinical standpoint the Dept. of Agriculture estimates it will cost $220,000 to raise a child born in 2008 from diapers to age 18. And that figure is before you add in the cost of college! Deciding to be a parent is a major financial obligation. Don’t make it worse by over-indulging your love bundles.

4. Don’t forget to ask “How high is too high for higher EDUCATION?” It used to be good debt was defined as mortgage and student loan debt… and bad debt was everything else. Not any more. We’ve now learned that too much of a good thing can indeed be bad. Rough rule of thumb, don’t take on more in total education debt than you think you are going to earn on average annually during your first 10 years after graduating (from college or grad school). In plain English, if you think you’ll make $50,000 a year, don’t take out more than $50,000 in loans. The logic behind this is that if it takes you more than 10 years of paying 10% of your income a year in student loan repayments, it’s going to be tough to meet your other financial obligations.

5. Don’t underestimate the need to feed your RETIREMENT nest egg. How much will you need to retire? A simple rule of thumb is to multiply your current income by 25. So if you make $50,000 a year and want to maintain that standard of living in retirement, you’ll need a nest egg of at least $1,250,000. Understanding as early on in your working life as you can what “your number” is will help you see how important it is to plan for this savings goal.

© 2010 SingleMindedWomen.com All rights reserved. Permission to reprint this article must be obtained from SingleMindedWomen.com.

Want more financial love? You can follow Manisha on Twitter at @ManishaThakor and sign up for her email updates here. Manisha Thakor, personal finance expert for women, can be reached via her website, www.ManishaThakor.com.

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The US savings rate touched 5% in the 2nd quarter of 2009 and has been hovering steadily over 3% since then. While that’s still a far cry from the double-digit savings rates we saw in decades past, it is a big improvement from the negative rates of personal savings we had at the start of this millennium. However, there are many savings myths still floating around out there. Here are 7 Savings Myths – Busted!

1. I can only save a little bit, so it’s not worth it. Would you tell your child in the morning, “Mommy only has time for one hug – so I’m not to give you any?” Be loving with your money too. Every little bit really does count. According to Coinstar, Americans have $10 billion of loose change rolling around. Small bits really do add up. I met one couple that saved $7,000 in 6 months by depositing change and all bar-tending tips into a big, previously unused flower vase in their bedroom.

2. I’ll START saving money when I make more money. I hear this all the time – but it doesn’t happen. I’ve met people who can save on incomes of $30k and who can NOT save on incomes of $300k. Once you are making a living wage it comes down to a mindset. It depends on how you value happiness today versus security tomorrow.

3. If I earned more money it would be EASIER to save. Not always true. Lifestyle creep has an insidious tendency to kick in as you make more money. You wear a fancier suit and then you feel like you need fancier shoes, and then a fancier a car, and then a house….

4. I want to be a good parent, so I need to give to my kids now so they can have a better life. First, the money you save early on is the most valuable. But worse, you are teaching kids to be dependent. Boomerang kids are a huge issue. 75% of 18-24 year olds right now are getting some form of economic help from their parents and for 40% are getting $10,000 or more a year!

5. I can always get a loan if things go wrong. Wrong. Lenders want to lend you money when you don’t need it. Why? Because they are sure you can pay them back. The worst possible time to be approaching a lender is when you are in dire straights.

6. Saving is all about deprivation. Nope, saving is all about spending. It’s just spending that you’ll do in the future. You are not saving up all that money to sleep on it – it’s to spend during tough times, for enjoyment, and/or when you are retired. Read YOUR MONEY OR YOUR LIFE for more on this (one of my all time favorite personal finance books!)

7. Saving means cutting out all the small fun stuff. Well start with the big stuff. Your home, car, kids, education, and health care will likely eat up 50% of your income. Look for savings there first.

Want more financial love? You can follow Manisha on Twitter at @ManishaThakor and sign up for her email updates here. Manisha Thakor, personal finance expert for women, can be reached via her website, www.ManishaThakor.com.

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As a travel agent, I can’t tell you how many times, when asked about purchasing travel insurance, people have said to me, “I’m going. I need this vacation no matter what happens.”

What’s important to realize is travel insurance is not only about not going—it’s about not losing everything because your plans change unexpectedly.

The biggest advantage of travel insurance is flexibility. It’s having the option to cancel in an emergency and not suffer unnecessary financial loss.

Travel insurance comes in many forms and with different restrictions. Although these should be explained in detail by your travel professional, here are a few examples.

Lost at Sea

What would happen if while on a cruise, there is a family emergency, or you end up in a hospital because you slipped by the pool? Of course you would want to get home ASAP.

If you had travel insurance, chances are your policy would cover your hotel room when the ship leaves you behind and it may also cover your airfare home.  In addition, your travel insurance will reimburse you for your remaining vacation days that were lost.

Natural and Other Disasters

Perhaps you didn’t know anyone who had a trip planned to New Orleans during one of the worst disasters in recent times, but did you do know there were thousands that couldn’t get there or leave for weeks?

In extreme cases such as these, airfare penalties are usually waived due to lack of options if you had travel insurance.

The same situation applies to terrorism. On 9/11, all travel was suspended for days. Would you want to pay all your hard-earned money to an all-inclusive resort if the airline you chose said it wouldn’t fly you there? Try asking for your money back in Italy because there’s a problem in New York.

People Problems

Being single and traveling with a friend can be your greatest joy but it can also become your greatest nightmare.

Ever plan a trip with a friend only to have them back out at the last minute? Traveling with a companion, especially when single, is a lot trickier than traveling with a spouse whose schedule is usually entwined. It’s not the case with a friend whose own life complications can deter travel plan, leaving you to sightsee alone or lose your money because he or she canceled. Insurance can safeguard such situations.

When Outside Issues Interfere

We can’t control weather, sickness, death, loss of a job, airline strikes, bankruptcy, swine flu or natural disasters, and we can’t control others. But we shouldn’t accept the loss, especially when it’s within our control to prevent it.

Anything at any time can force a cancellation. Without protection, money will be lost especially if it’s not outside the required time to cancel without penalty. If you don’t opt for travel insurance and there is a problem within the penalty period, it will become your loss because you neglected to take the protection offered to you.

The rule of thumb when deciding whether or not to purchase travel insurance is to protect what you can’t afford to lose. Remember, loss of loved ones, hospital stays, pandemics, and extreme weather all happen when we least expect it. You must consider the cost of insurance as part of your overall vacation expense not an additional cost that can be “saved.” The loss that can be incurred by not taking insurance can make future vacations a thing of the past.

Jody Yetti, a single woman business owner and seasoned traveler, has been in the travel industry for more than 20 years. She owns Jody’s Travel & Concierge, a full-service lifestyle management company for single women and other savvy travelers, located in Moriches, NY. Jody can be reached at jjy510@aol.comor www.jodystravelagency.com.

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There’s no better time to buy a house than now. If you’re in the market for a new house, you should look at foreclosed homes being held by banks. Here’s why:

1. Foreclosures can be an opportunity for home buyers to get a steal of a deal on a home that simply needs some TLC…but they can also be a stressful transaction that only ends in a big money pit if you’re not careful.

There are many risks that are unique to a buying a foreclosed property, but the risk can be mitigated if buyers and their agents take certain precautions.

It’s important to look at the neighborhood you’re buying in though: if there are a tremendous number of foreclosures, you may not be getting much of a deal…foreclosures and short sales will drag down the value of the entire neighborhood. Ideally you want to find a foreclosure in a neighborhood that doesn’t have very many of them.

2. There are risks that are unique to foreclosure transactions.

Some of them can be mitigated and some can’t. It’s vitally important that you assemble a real estate team—an agent, a title company, an inspector, and a settlement attorney—that are very familiar with the risks you’ll be facing and know how to structure a transaction to protect you as a buyer.

3. Be careful of the pitfalls when buying a foreclosure home.

Property condition is the most common surprise for buyers—having a home inspection contingency WITH a right to void the contract if you don’t like the results is critical. Home inspectors aren’t all-knowing though…you need to be prepared to come across some issues even after the transaction closes and have some cash in reserve to deal with them.

Foreclosed properties frequently have a host of title issues, or “clouds on title” as they are known. If a buyer isn’t paying their mortgage, chances are high they aren’t paying other bills either—things like condo or HOA fees, property taxes, or other items—which may result in additional liens on the property that need to be paid in order for a buyer to have clean and marketable title. Oftentimes the bank selling the property will require the use of a specific title or settlement company but buyers would be well advised to hire their own attorney to conduct a title search when purchasing a foreclosure.

4. Buying a foreclosure home as an investment property.

Foreclosures can be excellent investment properties, but obtaining financing for an investment property is a very different process than getting a loan from an owner-occupied property. Typically it will require a much higher down payment and carry an above-market interest rate. Managing an investment property isn’t easy, either—you need to be prepared for the middle-of-the-night phone calls from tenants when there’s a problem with the property.

5. Financing a foreclosure home.

Generally, financing for buying a foreclosure home is the same as in a traditional sale. The exception is if the property has severe damage and will not serve as adequate collateral for the loan. In that case, a lender may require certain repairs to be made prior to approving your loan. The problem comes in when the selling (owner) bank refuses to make those repairs, effectively creating a stand off and bringing the transaction to a halt.

If a property is in need of serious repair, a buyer could consider special rehab loan programs, like FHA’s 203(k) program.

6. Determining the fair market value of a foreclosure home.

A buyer should be looking at comparable properties in the same general area that sold recently, and then make adjustments for property condition—the same as with any transaction. Banks often look at some ‘qualitative’ factors in an offer, though: a quick settlement, taking a property in ‘as is’ condition, and cash financing are all very attractive to a selling bank and they will take that into account when considering your offer.

7. Foreclosure homes on the MLS.

Most foreclosures ARE listed in the MLS, and the mechanics of the process are very similar to a traditional sale, with the exception of the additional risks to a buyer noted above. Banks hire listing agents to put their Real Estate Owned (REOs) into the multiple listing service to maximize the exposure of the property.

The real estate outlook for 2010

I wish I had a crystal ball for this one. There has been talk for several years about the pending ‘shadow inventory’ that may flood the market in 2010 or 2011. The key to the real estate market isn’t just supply vs. demand. Because so much of the purchase price is typically borrowed, we need to look at interest rates vs. prices for a true measure of affordability. Right now, interest rates are still at historical lows which, combined with lower prices, is putting us in the middle of one of the most affordable housing periods in recent history.

The best piece of advice for a single woman purchasing a foreclosure home is to work with a team of professionals familiar with the unique risks in a transaction like this who can serve as an independent sounding board when you find yourself getting caught up in the excitement of buying a home.

Katie Wethman, CPA, MBA, Realtor is the Managing Director of the Wethman Group with Keller Williams Realty in Northern Virginia. Katie is licensed to practice real estate in Virginia, Maryland, and the District of Columbia. She issues market commentary and real estate advice at her blog at http://blog.wethmangroup.com

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Time and again money is cited as one of the top causes for fights in relationships and divorce. One way to prevent wallet wars is to engage in financial foreplay. But first, some basics…

What is financial foreplay? The process of getting to know your sweetie’s most intimate feelings about money.

Why is it so important? As one of my favorite personal finance bloggers, April Dykman, highlights in her piece “Do Savers Seek Out Spenders?” academic studies show we are hardwired to be attracted to our financial opposites. There is quite literally something intoxicating about “financial otherness” in the early stages of a relationship… a feeling that can (and usually does) wear off after you walk down the aisle. So as personal finance columnist Ron Lieber of The New York Times wisely points out, it’s important to identify your financial differences before you commit to debt do you part. In this spirit, here are 3 fun questions you can ask your honey about money.

1. Fill in the blank with any word except EVIL: “Money is the root of all…” This simple question reveals a lot about how you each think about money. Some people will say “opportunity or freedom” while others will say “fights or problems.” This is a playful way to initiate a talk about how money was (or wasn’t) discussed when you were each growing up.

2. Fill in the blank: “Rich people are…” This is another super telling question. Some people will say “hardworking, driven” while others will say “lucky or spoiled.” This question can help you broach your feelings about saving, spending, and financial goals. Some people want to die with their spending perfectly timed to leave $0 in their pockets while others want to live off their interest and never touch their principal.

3. Scenario analysis - today you get $20 million & a diagnosis of a rare disease that will leave you dead in exactly 10 years. What will you QUIT & what will you START? The most common answers I hear are quit my job and start traveling. This question is a great way to highlight your core priorities, and make sure they are complementary. If you love your honey “only because” she is a neurosurgeon or he is an investment banker – but her/his dream is to be a yoga instructor… you may want to talk about that!

Have you ever experienced financial tension in a relationship? Leave a comment for Manisha below.

Manisha Thakor, personal finance expert for women, can be reached via her website, www.ManishaThakor.com.

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Do you ever feel like your possessions are holding you hostage? Or perhaps that you’ve bitten off more stuff than you can chew? If you’ve ever suffered the pangs of financial indigestion, you may be one of the millions of Americans suffering from… lifestyle creep.

What is Lifestyle Creep?

Not to be confused with “Keeping Up with The Joneses,” lifestyle creep occurs when the more you have, the more you think you need. Here’s an example. You get a new pair of pants. But they don’t go with your old shoes. So you have to get a new pair. Then your bottom half looks so spiffy you feel the need for fresh top. In this dandy outfit, however, you no longer look so good in your old clunker of a car so… well, you get the point. Here are 3 signs that “the creep” might be happening to you:

1. You have a public storage unit. An amazing 1 in 10 Americans have them. As of year-end 2009 there was 2.4 billion square feet of public storage space in the US. To put this in perspective, if you lumped them all together they would be 3x the size of Manhattan island – under one roof! Yeesh, that’s a lot of stuff. If you’ve got a storage unit key jingling around in your pocket, it could be a sign that your lifestyle is literally bulging at the seams of your home. [Big hat tip to my friend Francine Jay, author of Frugillionaire who first brought this to my attention in her wonderful blog.]

2. Your house has more toilets or TVs than occupants. My grandmother’s house had 1 toilet and 1 TV for 4 people. No one lost life or limb. Think about your home right now. How many toilets do you have? How many people are living in your home? Or do it with TVs – the point is what we as Americans think we NEED has gotten horribly confused with what we WANT.

3. You frequently come home from a shopping trip – only to find that you already have what you just bought. One of my all-time favorite books is Elaine St. James’ Simplify Your Life. In this book Elaine talks about the “nail file theory.” It says that if you have only one nail file you always know where it is. As soon as you have two, you can never find one when you need it. If you find yourself out and about picking up things (ranging from household cleaning supplies to clothes) only to find when you get back home that you already have that item or something similar… it may be a sign that you’ve got so much stuff you can no longer keep track of what you own. In short, you may have come down with a case of lifestyle creep.

Have you ever experienced lifestyle creep? If so, I’d love to hear your experiences…

Want more financial love? You can follow Manisha on Twitter at @ManishaThakor and sign up for her email updates here. Manisha Thakor, personal finance expert for women, can be reached via her website, www.manishathakor.com.

Synopsis:

Spent is Avis Cardella’s timely, deeply personal, and shockingly dramatic exploration of our cultural need to spend, and of what happens when someone is consumed by the desire to consume.

This is a must-read for everyone that thinks the key to happiness is acquiring stuff.

Order a copy of Spent today

But in college, when it was time to choose a career path, I got stuck on having to be a CPA. Preparing taxes? Is that what I have to do if I love numbers? I also loved being with people and having big conversations about growth and relationships. So I started to fantasize.

Lesson #1: When you’re stuck in a place or a habit or a state of mind, fantasy is the way out.

Out in the world, there was a positive conversation women could be having around money, that wasn’t happening. Instead, there was disparaging chatter that we didn’t know how to balance our checkbooks, or that we spend money irresponsibly. More alarming than the chit chat was the realization that it held some truth. College women were signing up for credit cards and getting into debt, myself included. We didn’t pay attention to how much things cost, or whether we had enough income to cover them.

I got excited. I could help! I zeroed in on my agility with numbers and my love of working with people and defined my own field. I decided to investigate people’s financial chaos, and counsel them to create financial clarity. I would help them to feel more empowered to make better decisions with their money, whether that was to get out of debt, or to get a handle on their monthly cash flow.

Enjoying myself outlandishly, I fantasized again about reaching thousands more women than I could reach one-on-one, and eventually, Green Sherpa was born, an online money management advice tool.

Lesson #2: Make an exercise of defining what you love and then dreaming it.

Maybe your fantasy is as simple as to get a job. Or to quit your job and to go back to baking. Maybe your fantasy seems absolutely unreasonable and silly to imagine. But wait! Fantasy opens doors. We can’t be creative if we’re living in fear of the creative process. If you gave yourself a moment to sneak in your unreasonable dreams, what would they look like? How would they sound? How would they affect your cash flow?

Lesson #3: Even when you’re not stuck, fantasy makes you grow.

I love my job, but when I was a kid, I wanted to be a professional tennis player. Recently I began to wonder, what if I still wanted that—today, at age thirty-something, to become a professional tennis player? I made a practice of imagining what that would be like, how fulfilling it would be. I found a great book on a playing professionally, and before long, a friend got in touch and asked if I wanted to join the local circuit. I’m not a professional tennis player. But if I hadn’t started toying with what seemed unrealistic, just for the fun of it, I never would have created that opening in my life, to re-engage in tennis on this level.

The assumption is that you can let your fantasy drive your reality. Want to make better money? Live your dream job every day? Play professional tennis at the age of 50? Get in touch with those ultra fantasies. Go for them like you believe they can occur. Then notice what starts to happen after a week. A month. Which fantasy will be the beginning of your next opportunity?

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But a few months ago, she found herself in her own dire financial straits. Faced with a mountain of bills, debt, and no way to pay her rent, she was forced to call her parents to ask them for a loan. That night was a wake-up call – she vowed to get herself out of debt and into financial solvency.

In Hot Broke Messes, Trejos takes readers along with her on her journey. She meets with a financial planner and a therapist to deal with all the issues young people face today – from credit card debt and student loans, to impulse buying and emotional spending, to the cost of having a social life, to buying a house with someone during a potentially impermanent relationship and more.

Trejos learns what causes these problems in herself, how she can fix them, and how she can pass that advice on to other young people going through the same experiences.

Even better, she shows readers how they can address these problems without completely giving up their lives – no “give up your latte a day” type advice here! Trejos’ personal and unique voice, along with her experiences that everyone can relate to, will lead readers to relatively painless financial security.

Order a copy of Hot (broke) Messes today!

Achievable, Measurable, Realistic

The way to reach a goal is to break down a desire into action steps. Each of those steps will lead to the next in achieving your goal. And, each step should be achievable, with measurable results that are realistically attainable. This works for marathons, money matters, relationship skills…anything you want to achieve can be broken down in this way.

Let’s talk money. If you want to diversify your investment portfolio by 2011 (or you want to START an investment portfolio) ask yourself these questions:

Is it achievable?

Are the results measurable?

Are the results I’ve set realistic?

Is it achievable to diversify, or to start? Yes. Now make it measurable by setting a date and quantity. For instance, resolve to take 20% of the portfolio and put it in new types of investments by June 15, 2010. Lastly, ask yourself: are those numbers realistic to achieve in six month’s time? If so, you’ve got a clear goal.

Results in Action

Now set some action items that will help you achieve it. What needs to go into this goal to make it happen? Consider your level of knowledge, and what information it will take to achieve your goal. Then write down concrete tasks you can complete, all guided by dates and times. For instance,

- Over five weeks, reach out to five financial planners and ask what they are recommending to their clients.

- Every Saturday morning, spend a half hour on Kiplingers Personal Finance page.

- Calendar dates to spend a half hour talking to two of your closest friends and family whose advice you trust.

- From your research, plan out the action steps you are choosing to get your portfolio diversified by 20%.

- Then invest.

© 2010 SingleMindedWomen.com All rights reserved. Permission to reprint this article must be obtained from SingleMindedWomen.com

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