Mentor

Author: it-teaam

  • 10 Best Wall Street Movies Of All Times

    10 Best Wall Street Movies Of All Times

    What are the 10 Best Wall Street movies of all time?

    In Hollywood money flicks, there is often a blurred line between the art of the deal and the art of the steal.

    If you’re looking for an escape this holiday season, then look no further than these best business movies for all the highs and lows of Wall Street and the brighter and darker sides of money.

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    1. Wall Street

    Starring: Michael Douglas and Charlie Sheen

    Plot Summary: A young stockbroker becomes involved with a wealthy corporate raider

    Memorable Quote: “Blue Horseshoe loves Anacott Steel.”

    2. Boiler Room

    Starring: Giovanni Ribisi, Vin Diesel, Ben Affleck and Scott Caan

    Plot Summary: A college dropout lands a job at a successful suburban brokerage firm only to learn that not everything is what it seems on Wall Street

    Memorable Quote: “A sale is made on every call you make. Either you sell the client some stock or he sells you a reason he can’t. Either way, a sale is made. The only question is who is gonna close? You or him?”

    3. Catch Me If You Can

    Starring: Leonardo DiCaprio, Tom Hanks, Christopher Walken and Martin Sheen

    Plot Summary: The incredible true story of Frank Abagnale, Jr., one of the greatest counterfeiters in U.S. history who, before his 19th birthday, successfully poses as a Pan Am airline pilot, Georgia doctor and Louisiana prosecutor

    Memorable Quote: “Two little mice fell in a bucket of cream. The first mouse quickly gave up and drowned. The second mouse, wouldn’t quit. He struggled so hard that eventually he churned that cream into butter and crawled out. Gentlemen, as of this moment, I am that second mouse.”

    4. Ocean’s Eleve

    Starring: George Clooney, Brad Pitt, Matt Damon, Julia Roberts, Andy Garcia, Scott Caan and Casey Affleck

    Plot Summary: Danny Ocean and his 11 accomplices plan the biggest heist in Las Vegas history

    Memorable Quote: “Because the house always wins. Play long enough, you never change the stakes. The house takes you. Unless, when that perfect hand comes along, you bet and you bet big. Then, you take the house.”

    5. The Wolf of Wall Street

    Starring: Leonardo DiCaprio and Jonah Hill

    Plot Summary: The life and times of Jordan Belfort, a real life Long Island penny stockbroker who played hard on Wall Street and partied even harder

    Memorable Quote: “The only thing standing between you and your goal is the story you keep telling yourself as to why you can’t achieve it.”

    6. Glengary Glen Ross

    Starring: Jack Lemon, Kevin Spacey, Ed Harris and Alec Baldwin

    Plot Summary: An office of New York City real estate salesmen have less than one week to generate sales before all but the top two will be fired

    Memorable Quote: “A-B-C. A-Always, B-Be, C-Closing. Always be closing.”

    7. Margin Call

    Starring: Kevin Spacey, Jeremy Irons, Paul Bethany, Penn Badgley, Demi Moore and Zachary Quinto

    Plot Summary: An inside look at a large Wall Street investment bank during the 2008 financial crisis

    Memorable Quote: “There are three ways to make a living in this business: be first, be smarter or cheat.”

    8. Enron: The Smartest Guys In The Room

    Starring: Ken Lay, Andrew Fastow and Jeffrey Skilling

    Plot Summary: The true story of the collapse of energy giant Enron, which ranks as one of the biggest scandals in Wall Street history

    Memorable Quote: “Back in those less complicated times, there were lots of industries that operated more or less by rote: the old banker’s motto, for instance, was “3-6-3″: take money in at 3 percent, lend it out at 6 percent, and be on the golf course by 3 P.M.”

    9. Trading Places

    Starring: Dan Ackroyd, Eddie Murphy, Ralph Bellamy, Don Ameche and Jamie Lee Curtis

    Plot Summary: In this modern, comedic take on Mark Twain’s The Prince and The Pauper, the lives of a wealthy commodities broker and a street hustler are switched in the Wall Street of the Mid West: Chicago

    Memorable Quote: “Think big, think positive, never show any sign of weakness. Always go for the throat. Buy low, sell high. Fear? That’s the other guy’s problem. Nothing you have ever experienced will prepare you for the absolute carnage you are about to witness. Super Bowl, World Series – they don’t know what pressure is.”

    10. It’s A Wonderful Life

    Starring: James Stewart, Donna Reed and Lionel Barrymore

    Plot Summary: A man’s guardian angel shows him what life would be like had he never been born.

    Memorable Quote: “Dear George: Remember no man is a failure who has friends.”

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  • Save $200 On Uber With This Credit Card Hack

    Save $200 On Uber With This Credit Card Hack

    If you’re in the market for a new credit card, and also use Uber, then this credit card hack may save you money.

    American Express is offering $200 in annual Uber ride credit for cardholders of The Platinum Card® from American Express.

    How It Works: Uber Credit Card Hack

    If you have a Platinum Card, you will receive $15 of Uber ride credit each month from January to November, plus $35 each December.

    To qualify, you need to link your Platinum Card to your Uber account, but you do not have to pay for your Uber rides with your Platinum Card.

    You will also be automatically enrolled in the Uber VIP program, which in select cities, will pair you with top-rated Uber drivers.

    What’s The Catch

    1. The Platinum Card has an annual fee of $550 (up from $450 previously), so this is not a free hack.
    2. Each Uber ride credit is only available in the U.S. and can only be used in the given month. Therefore, you cannot roll over the monthly credit to the subsequent month.

    Is It Really Worth Paying This Annual Fee To Get $200 In Ride Credit?

    The Uber ride credit is only one of several benefits included with the Platinum Card. Among others, some of the annual benefits include:

    1. $200 in airline fee credit
    2. 60,000 in membership rewards points after spending $5,000 in first 3 months
    3. 5x membership rewards points for flights booked directly through airlines or American Express Travel
    4. 5x membership rewards points for travel booked for eligible hotels through amextravel.com
    5. $100 fee credit for Global Entry or TSA Pre✓®
    6. Access to 1,000+ airport lounges in 500 cities across 120 countries
    7. No foreign transaction fees
    8. Starwood Preferred Guest Gold status and Hilton Honors Gold Status

    Why Is American Express Offering The Uber Ride Credit?

    The new benefit is viewed as a proactive move to thwart competition in the premium credit card space from rivals JPMorgan Chase and Citi.

    In the post-financial crisis regulatory environment, banks have gravitated toward investments in credit cards as compared with more capital markets-intensive businesses.

    JPMorgan Chase offered the Chase Sapphire Reserve Card ($450 annual fee) last August, which included up to a $1,500 sign up bonus plus $300 in travel credits, among other benefits.

    Citi’s Prestige Card ($450 annual fee) also offers a host of travel benefits such as airport lounge access and complimentary hotel stays, $250 in airline credit, 40,000 Thank You Points after $4,000 in purchases within three months, among other benefits.

    Like the Chase Sapphire Reserve Card and the American Express Centurion Card ($2,500 annual fee; $7,500 initiation fee), American Express will begin to make the Platinum Card out of metal.

    Which Credit Card Offers The Most Value

    While each credit card offers unique benefits and each cardholder’s ideal benefits may vary, analysts at Barclays write in a research note that the Chase Sapphire Reserve Card offered the most value relative to the Platinum Card and Prestige Card.

    According to Yahoo Finance, which cited the Barclays report, “The Amex Platinum card is still at a 14% discount of total value to the Citi Prestige and a 27% discount of total value to the Chase Sapphire Reserve.”

    Barclays estimated the lifetime value of The Platinum Card at $5,800 compared with $7,995 for the lifetime value of the Chase Sapphire Reserve.

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  • Increase Your Credit Score 100 Points With These 5 Strategies

    Increase Your Credit Score 100 Points With These 5 Strategies

    Your credit score may determine whether you qualify for a student loan, mortgage, auto loan or credit card. Your credit score also may be used when you apply for insurance, rent an apartment or purchase a cell phone. However, you may be asking, “How can I increase my credit score?” Your decision to increase your credit score is one of the best investments that you can make in your financial life.

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    In this guide, you will learn how to increase your credit score by up to 100 points with these five strategies:

    1. Check your credit report
    2. Build a credit history
    3. Don’t open or close multiple credit cards at once
    4. Keep credit card utilization low
    5. Pay bills on time

    1. Check Your Credit Report

    It is essential that you get a copy of your credit report and check it carefully.

    The Federal Trade Commission found that 5% of consumers had one or more errors on their credit report. There are three major credit bureaus: Experian, Equifax and TransUnion. Each credit bureau collects information on your credit history and develops a credit score that lenders use to assess your riskiness as a borrower. Under federal law, you are entitled to view your credit report every 12 months from each credit bureau. Since each credit bureau may have different information about your credit history, your credit score may vary across the three lenders.

    For a free copy of your credit report, you can visit Annualcreditreport.com.

    If you find an error, you should report it to the credit bureau immediately so that it can be corrected. Your credit score will not improve over night, but the sooner you take action, the better.

    2. Build A Credit History

    If you already have a credit history, but want to improve your credit score, you need to demonstrate that you are financially responsible. To do so, you need to develop a financial track record in good standing.

    Credit card companies, for example, closely monitor both your payment history and account age (how long the account has been open in good standing). If you have a credit card, start by making small purchases and paying off the balance in full each month. The longer that you can keep open a credit card in good standing, the better (so that you can increase your account age). Consistent on-time payment history and a long account age demonstrate both financial discipline and responsibility.

    3. Don’t Open or Close Multiple Credit Cards at Once

    Opening multiple credit card accounts at once will result in several hard inquiries to your credit report, which can cause your credit score to drop (at least temporarily).

    Credit card companies also will view you as a risky borrower. Likewise, if you have multiple credit cards, do not close them all at once. Even better, if you have an older credit card and it does not have an annual fee, you should consider keeping it open to demonstrate a longer credit history.

    4. Keep Credit Card Utilization Low

    Lenders evaluate your credit card utilization, or the relationship between your credit limit and spending in a given month. If your credit utilization is too high, lenders consider you higher risk.

    Ideally, your credit utilization show be less than 30%. For example, if you have a $10,000 credit limit on your credit card, ideally you should spend less than $3,000 in a given month. If you can use cash instead of a credit card to reduce your credit utilization to 20% or even 10%, your credit score should be even higher.

    Here are some ways to manage your credit card utilization:

    • set up automatic balance alerts
    • ask your lender to increase your credit limit (this may involve a hard credit pull so check with your lender first)
    • rather than pay your balance with a single payment at the end of the month, make multiple payments throughout the month

    Credit utilization is reported to the credit bureaus monthly at your closing date. Therefore, anything you can do to reduce your balance during the month before your closing date will help improve your credit score.

    5. Pay Bills on Time

    Paying your bills on time is a major contributor to your credit score.

    Whether it is your utility bill, rent or student loan payment, you should always pay your bills on time. Failing to pay your bill on time can hurt your credit. FICO scores are weighted more heavily by recent payments so you can “override” a past missed payment by developing a pattern of more recent on-time payments.

    Therefore, if you have a delinquent payment, pay off the balance. However, missing a payment altogether can stay on your credit report for seven years.

    To avoid a late or missing payment each month, enroll in automatic payment with your service provider. Some service providers, such as student loan lenders, provide a financial incentive when you enroll in auto pay.

    For example, you may be eligible for a 0.25% interest rate deduction with your student loan lender when you enroll in automatic payments. If you have a choice to enroll in auto pay with your bank or directly your service provider, choose your service provider to ensure that your payment arrives on time each month.

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  • 6 Smart Ideas To Retire Rich

    6 Smart Ideas To Retire Rich

    Investing is one of the best strategies to build and preserve wealth and save for retirement.

    If you are planning to retire in the next few years, then it’s never too early to start planning to retire rich. Here are 6 smart ideas to retire rich.

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    1. Move to a state with no state income tax

    If you’re thinking of downsizing, selling your home and moving, then you should consider relocating to a state with no state income tax.

    Currently, there are nine states with no state income tax: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.

    New Hampshire and Tennessee, however, tax dividends and income from investments.

    Be sure to check for other taxes such as property taxes and sales tax, for example, that might be levied in lieu of state income taxes.

    2. Move to a state with no tax on Social Security or pension income

    According to CCH, the Tax Foundation and Vertex Research, there are 12 states that do not tax Social Security or pension income: Alabama, Alaska, Florida, Mississippi, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington and Wyoming.

    3. Sell your stuff on OfferUp

    If you are downsizing, moving or want to monetize unused items in your home, consider selling your belongings for cash on OfferUp, a mobile marketplace to buy and sell merchandise. With over 33 million downloads and more than $14 billion in transactions, OfferUp is now the largest mobile marketplace in the U.S. You can buy a sell everything from furniture and electronics to cars and boats for free through the OfferUp mobile app.

    4. Work remotely to generate extra income

    If you would like to generate extra income, but do not want the burden of full-time employment, then consider working remotely or part-time. FlexJobs is a professional job service that helps you find telecommuting jobs as well as part-time and freelance assignments. Currently, FlexJobs features over 32,000 jobs at nearly 4,800 companies.

    5. Refinance Parent PLUS Loans

    If you borrowed a Parent PLUS loan for your child to attend college, and your child has now graduated, your retirement is an optimal time to refinance Parent PLUS loans.

    A direct Parent Loan from the federal government for undergraduate students, also known as a Parent PLUS loan, has higher interest rates than student loans as well as fees. There are two ways to refinance Parent PLUS loans:

    • As the parent borrower, you can refinance the Parent PLUS loan in your name; or
    • Your child can refinance the Parent PLUS loan in his or her name

    If your child refinances Parent PLUS loans into a student loan, he or she will need to have sufficient income and credit history to be approved for the student loan refinancing and also will be financially responsible for the student loan. Since the federal government does not refinance Parent Loans or student loans, you or your child would refinance with a private lender.

    If your child refinances the Parent PLUS loan into his or her name, the parent borrower could act as a co-signer to help him or her receive a lower interest rate. A co-signer, however, would be financially responsible for the refinanced student loan.

    6. Remove yourself as a co-signer of a student loan

    If you are a co-signer of your child’s student loan and no longer want to be financially responsible for your child’s student loan, your child can refinance their student loan with a private lender. In this case, you as the parent co-signer would no longer be financially responsible for your child’s student loan (and your child would have full responsibility).

    If your child already refinanced his or her student loan with a private lender, and you are a co-signer to your child’s student loan, you should check with the lender regarding a co-signer release option (which would absolve you the parent borrower of financial responsibility).

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  • 6 Powerful Personal Finance Trends For 2021

    6 Powerful Personal Finance Trends For 2021

    Investing Is One of the Best Strategies to Build and Preserve Wealth and Save for Retirement

    Has your personal financial advisor discussed with you the Top Personal Finance Trends For 2021?

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    If not – or if you don’t have a personal financial advisor – here is a head start for what to expect in personal finance trends so you can be best positioned for success in 2021:

    1. Personal Finance Trend #1 – Lower income taxes

    President Donald Trump has stated that he will seek to simplify and lower federal personal income taxes in several ways.

    • 25% (for those earning more than $75,000, but less than $225,000, in income) or 33% (for those earning more than $225,000 in income). This means that the top income tax rate would fall from 39.6%. The brackets for single filers would be half these amounts
    • Second, he has called for a repeal of both the 3.8% Affordable Care Act (or “Obamacare”) tax and the alternative minimum tax.
    • Third, the standard deduction for married joint filers would increase from $12,600 to $30,000 (and from $6,300 to $15,000 for single filers), with personal exemptions and head of household filing status eliminated.
    • Fourth, itemized deductions would be capped at $200,000 for married joint filers ($100,000 for single filers).
    • Fifth, the estate tax would be eliminated.
    • Sixth, he has proposed an above-the-line deduction for taxpayers with dependents, including eldercare and children under age 13.
    • Seventh, Trump has proposed taxing carried interest as ordinary income, rather than as capital gains as carried interest is currently taxed. (If you have investments in private equity and hedge funds, this would adversely impact your net investment returns).

    What To Do: Major tax reform will be a priority for the incoming Trump administration and Republican-controlled Congress. However, the final tax plan may differ from what was proposed during the election, and the impact to your personal income taxes may vary. Pundits have already weighed in on who benefits and who loses under the proposed tax plan. You can speak with a tax professional now regarding how any anticipated changes may impact your personal income tax situation so that you can plan accordingly for the year ahead.

    2. Personal Finance Trend #2 – More Student Loan Options

    Trump may revive the role of private lenders in the issuance of federal student loans.

    This means a potential reduction of the federal government’s role in student lending and a corresponding increase in the role of private lenders.

    In 2010, the Obama administration began originating all federal student loans through the Direct Loan program. Before then, in addition to the federal government, private banks also issued federally-backed student loans.

    Today, banks issue private loans, and several private companies service government-issued loans.

    Under Trump’s proposal, the federal government and private lenders may both originate student loans.

    What To Do: This proposal pertains to the issuance of new, direct federal student loans for incoming and current students.

    If you are looking to refinance your student loans now, this proposal would not impact you.

    If private lenders play an increased role in federal student loan issuance, it could lead to better customer service, streamlined process and tech-friendly features for consumers. More details are needed, however, on the exact role that private lenders would play.

    You can compare the best student loan refinancing rates on Mentor.

    3. Personal Finance Trend #3 – Cheaper travel

    Last year, the Euro and British Pound both weakened against the U.S. Dollar. Following December’s resignation of Italian prime minister Matteo Renzi, among other factors, the Euro dropped to a 20-month low against the dollar. June’s Brexit vote sent the British Pound to a 30-year low against the U.S. Dollar.

    Today, the Euro trades around $1.05 and the British Pound trades around $1.23.

    What To Do: If you believe in Euro parity (a one-to-one exchange rate between the U.S. Dollar and the Euro), you can short the Euro against the U.S. Dollar with the ProShares Short Euro ETF (NYSE: EUFX). If you think the Euro will rebound against the U.S. Dollar in 2018, you can long the Euro with the Currency Shares Euro Trust (NYSE: FXE). You can long or short the British Pound against the U.S. Dollar with the Currency Shares British Pound Sterling Trust ETF (NYSE: FXB). If you are looking for higher returns, each ETF strategy has a corresponding leveraged version (with corresponding higher risk).

    In the meantime, if you are looking for an international vacation destination, Europe is more affordable than it has been in years. If the U.S. dollar continues to strengthen against the Euro or British Pound (or both), travel to Europe will become even cheaper.

    4. Personal Finance Trend #4 – More automation of investment portfolios

    Companies such as Wealthfront and Betterment have led the charge to automate portfolio investment and simplify the investment process for retail investors. Tax efficient, lower cost, plug and play. Minimal work for you the investor. They monitor your portfolio. Fees are minimal – they charge you the same or less than an ETF.

    You can learn more on Mentor about the best investing options.

    What To Do: As technology and money management increasingly intersect, expect automation to play a prominent role in investing and portfolio management. If you are looking for a low cost, passive investment strategy for your portfolio, consider automated investing.

    5. Personal Finance Trend #5 – More online brokerage M&A

    Last October, TD Ameritrade agreed to purchase Scottrade for $2.7 billion comprised of $1.7 billion in cash and $1 billion in stock. The deal combined two of the leading U.S. discount brokerages, leaving only three other large-scale players: Fidelity, Charles Schwab and E-Trade.

    The deal, which is subject to regulatory approval, followed on the heels of E-Trade purchasing Options House three months earlier.

    What To Do: If there is more consolidation in the online brokerage sector, be sure you understand the fine print if your online broker is acquired. Your fees, customer benefits, local branch and financial advisor could all change.

    6. Personal Finance Trend – Rising interest rates

    Last month, the Federal Reserve unanimously raised its benchmark interest rate by 0.25%. The Fed also forecast three additional rate hikes in 2018, compared with two rate hikes previously anticipated. None of this is set in stone, however, as the Fed will weigh the economy, inflation, the labor market and other factors this year before deciding on any further rate increase.

    While savers can earn higher yield in their bank accounts, rising interest rates adversely affect consumer borrowers with variable interest rate student loans, mortgages, car loans and credit card debt in the form of higher interest costs.

    You can compare the best high yield savings accounts and high yield checking accounts here.

    What To Do: While the recent interest rate increase was minimal, further interest rate increases in 2018 could make interest costs more expensive. For new borrowers, one option is to lock in a fixed rate loan so that your interest rate stays the same regardless of interest rate changes. This is especially advantageous for mortgage and student loan borrowers. If you currently have variable rate debt, you should consider refinancing into a fixed rate loan. For example, student loan borrowers can refinance with private student lenders and convert variable interest loans to fixed interest loans.

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  • 5 Signs You Will Never Be Rich

    5 Signs You Will Never Be Rich

    When is the last time that you did a financial life check?

    Whether you live paycheck to paycheck or earn a sizeable salary, your financial habits may be creating obstacles on your path to building sustainable wealth.

    The path to prosperity is not driven by how much you earn, but rather the smart financial decisions that help you invest in your future.

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    Here are 5 ways that you may be working against your financial interest and creating a roadblock to financial freedom.

    1. You don’t maximize your retirement benefits

    If you are not maximizing your retirement benefits each year, then you are missing out on your financial future.

    Pay yourself first.

    When you pay yourself first, you contribute the maximum amount each year to your 401(k), or your IRA. If you are self-employed, then open a SEP IRA.

    But what if you have other debt obligations (like student loans or a mortgage) and cannot contribute the maximum amount each year to your retirement plan?

    You don’t have to choose between saving for retirement and paying off debt. Do both.

    At a minimum, contribute enough to your 401(k) to receive an employer match, and always make your required minimum monthly debt payment.

    You should apply any remaining funds to whichever is higher – the interest rate on your debt or the expected investment return in your retirement account.

    2. You don’t have an emergency fund

    Starting an emergency savings fund won’t make you rich, but it will help protect you in a time of unexpected need.

    You never know when an emergency will strike. Whether it’s an unforeseen medical expense, home repair or unemployment, don’t get caught off guard.

    Be proactive. Build a financial foundation with at least six to nine months (or more) of cash to cover expenses.

    Keep your emergency fund cash in its own bank account so it does not become co-mingled with cash for daily spending needs.

    3. You live beyond your means

    As Warren Buffett said, “Do not save what is left after spending, but spend what is left after saving.”

    Living beyond your means is the fastest way to never achieve financial freedom.

    Build an emergency fund, save for retirement and pay down debt. Invest in yourself first.

    If you want to spend money you don’t have, it’s a recipe to deplete your savings and incur unnecessary debt.

    4. You have too much debt

    If you can’t pay off your full credit card balance each month, then you shouldn’t have a credit card.

    The interest rate on your credit card is likely higher than the average investment return in the stock market. If you have credit card debt, that lost opportunity cost can significantly hurt your bottom line.

    If you have existing credit card debt, take this action step to get out of debt and save money.

    You might be able to obtain a personal loan at a lower interest rate than your existing credit card interest rate.

    For example, if you have $10,000 of credit card debt at 15% interest and can obtain a personal loan at 6% interest (depending on your credit profile and other factors), you can consolidate your credit card debt and potentially cut your interest payments by more than 50%.

    5. You haven’t refinanced your student loans

    Refinancing your student loans allows you to consolidate your existing private and federal student loans into a new, single student loan with a lower interest rate.

    The result is lower monthly payments, which frees up extra money to repay more student loan debt, save or invest.

    Depending on your degree, loan balance and interest rate, you could save up to $30,000 with student loan refinancing.

    What if you can’t get approved to refinance your student loans?

    Make financial changes. If you can’t get approved now, you can still get approved in the future.

    Improve your credit score by becoming more financially responsible. Create extra income with a side hustle. Pay down credit card debt, or refinance with a personal loan. You can check out our top private lenders for personal loans.

    If you implement these 5 changes, you can be on a clearer path to achieve sustainable wealth.

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  • What is a Personal Loan?

    What is a Personal Loan?

    A personal loan is an unsecured loan typically from $1,000 – $100,000 with fixed or variable interest rates that can be used to make a large purchase or to consolidate debt.

    The term “unsecured” means that there is no underlying collateral attached to the loan. For example, if you borrow a mortgage for your house, your mortgage is a “secured” loan in which your home is the collateral. If you default on your mortgage, your lender will then own your home.

    Since a personal loan is unsecured, there is no underlying collateral attached to a personal loan. As a result, the interest rate on an unsecured loan such as a personal loan is higher than the interest rate on a secured loan such as a mortgage because the lender is assuming more risk.

    However, interest rates on personal loans are often much lower than the interest rates on credit cards, which typically range from 10-20% (or higher).

    Depending on your credit profile, you may be able to qualify for a low personal loan interest rate and save money compared to a credit card. The interest rate on your personal loan will depend on several factors, which may include your credit score, credit history and debt-to-income ratio.

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    When Should You Use A Personal Loan?

    Personal loans are best for purchases that you plan to repay in less than five years. Unlike student loans or mortgages that are spent on specific purchases such as education or a home, respectively, personal loans can be spent at your discretion.

    1. Debt Consolidation

    Debt consolidation is one of the most popular reasons to obtain a personal loan.

    When you consolidate your debt, you combine all your existing debt into one loan so that you can make one monthly payment instead of multiple monthly payments.

    If you can obtain a lower interest rate by consolidating your debt compared with your current credit card interest rate, then a personal loan can help you to pay off your debt more quickly.

    If you have existing credit card debt, for example, you might be able to obtain a personal loan at a lower interest rate than your existing credit card interest rate.

    For example, if you have $10,000 of credit card debt at 15% interest and can obtain a personal loan at 7% interest (depending on your credit profile and other factors), you could potentially cut your interest payments by more than 50%.

    When you consolidate your debt, you should reflect on how and why you acquired this debt. Understanding the how’s and why’s are even more important than lowering the interest rate with a personal loan.

    Was it a bad spending habit? Lack of a monthly budget? Cash flow constraint? Need more income? Creating a monthly budget to monitor your income and expenses will help you better manage your monthly cash flow.

    Comparing Personal Loans And Credit Cards

    First, you need to compare the interest rate on your credit card with the interest rate on the personal loan to determine which interest rate is lower. Responsible financial borrowers should be able to obtain a lower interest rate with a personal loan.

    Second, you need to understand that if you do qualify for a lower interest rate, how many years you will have to repay your personal loan compared with your credit card debt and whether you are comfortable with the repayment period.

    Having a shorter-term loan repayment period can not only save you interest costs, but also instill discipline to retire your debt more quickly.

    2. Medical Expenses

    If you have a medical emergency or unexpected medical expense and are unable to pay the full cost in cash upfront, a personal loan can be a better solution than a credit card. Often, you can qualify for a higher loan amount with a personal loan than a credit card, which may be necessary for your health expenses.

    3. Home Improvement

    If you need to complete an emergency home repair or a small home improvement project, and cannot take a home equity loan, access a line of credit or mortgage refinance, then a personal loan may be an attractive option.

    A personal loan can make good financial sense for a home renovation project if the renovation improves the financial value of your home (and the cost to borrow the personal loan is less than the expected appreciation of your home as a result of the renovation project).

    Other Uses For A Personal Loan

    Wedding –  According to The Knot 2016 Real Weddings Study, the average cost of a wedding last year was $35,329. In Manhattan, the average cost is $78,464 – more than double the national average.

    If you are planning to get married, and you do not have the financial resources to pay for your wedding, then your best bet is to consider a smaller wedding and find ways to cut costs without borrowing. If that is not feasible, then a personal loan can save you interest costs compared to a credit card.

    Other Key Life Events – Personal loans can be obtained to help pay for other key life events, including an engagement ring, baby, moving, honeymoon and many other uses.

    However, your best bet for a personal loan is debt consolidation so that you can lower your interest rate, repay your debt more quickly and be on your path to achieve financial freedom.

    The good news is that there is no prepayment penalty for paying off your personal loan early so you can pay off your personal loan anytime. And you can choose a fixed or variable interest rate.

    With the help of technology, you can learn your new rate online within minutes. Plus, technology has lowered the fees for a personal loan, which means more money in your pocket and less in theirs.

    Credit Card Consolidation Can Help Cut Your Credit Card Interest Rate by up to 50%

    Unsecured personal loans can help with credit card consolidation and cut your credit card interest rate by as much as half. Personal loans can also help with major purchases, major life events (engagement ring, moving, wedding or new baby), home repairs, a vehicle purchase or a vacation.

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  • 7 Student Loan Changes To Expect This Year

    7 Student Loan Changes To Expect This Year

    Here are 7 student loan changes to watch for in 2018 and what you need to know:

    Student Loan Changes #1: Student Loan Forgiveness

    Today, the standard repayment period for federal government student loans is 10 years. Under an income-driven repayment plan, payments are capped at 10% of a borrower’s income for 20 years (for undergraduate loans) or 25 years (for graduate student loans).

    Trump’s student loan proposal would raise the income cap, but shorten the repayment period. Under Trump’s plan, your monthly student loan payments would be capped at 12.5% of your income. After 15 years of monthly payments, your remaining student loan debt would be forgiven.

    What It Means For You: While Trump’s proposal raises the monthly payment cap from 10.0% to 12.5% of income, his student loan proposal forgives the remaining student loan balance five to 10 years sooner than the current income-driven repayment plans.

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    Student Loan Changes #2: Student Loan Repayment

    Trump also proposed to combine the existing repayment plans – Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE) – into a single plan to make it less confusing for borrowers.

    Under the PAYE and REPAYE income-driven repayment plans, you pay 10% of your discretionary income each month toward your federal undergraduate student loans for 20 years, at which point any remaining balance on your federal undergraduate student loan is forgiven.

    Under REPAYE, if you have graduate school student loan debt, the repayment period is 25 years before your remaining student loan debt is forgiven.

    What It Means For You: The existing student loan repayment plans may be combined into a single repayment plan – with further details needed to assess the impact.

    Student Loan Changes #3: Variable Rate Student Loan vs. Fixed Rate Student Loan

    When you borrow or refinance your student loans, you have a choice between a fixed interest rate and a variable interest rate.

    There are advantages and disadvantages to each choice.

    For 2018, pay attention to interest rates. Last December, the Federal Reserve unanimously raised its benchmark interest rate by 0.25%. The Fed also forecast three additional rate hikes in 2018.

    While this is good news for savers in the form of higher yielding savings accounts, higher interest rates adversely affect consumer borrowers with variable interest rate loans such as student loans (as well as credit card and mortgage debt) in the form of higher interest costs.

    While the December rate hike was minimal, there likely will be additional rate increases this year. If you currently have variable rate debt, you should consider refinancing into a fixed interest rate loan. If you are borrowing a new student loan, you should consider a fixed interest rate student loan.

    Student Loan Changes #4: Role of Private Sector & Banks

    President Trump wants to increase the role of the private sector – particularly private lenders such as banks – in the issuance of federal student loans. Why?

    Trump believes that the federal government generates too much “profit” from issuing student loans, and wants private sector lenders to participate in federal student loan origination.

    Currently, only the federal government issues all federal student loans through the Direct Loan program.

    Prior to 2010, the federal government issued student loans and private banks issued federally-backed student loans.

    What It Means For You: How can student loan borrowers benefit from banks and other financial services companies increasing their participation in student loan origination? There may be several benefits, but prospective student loan borrowers would, at a minimum, be looking for lower student loan interest rates, better customer service and a more simple student loan application process.

    Student Loan Changes #5: Colleges & Universities: Financial Responsibility?

    The high cost of tuition at many colleges and universities has led students to borrow more to fund the cost of their education. Financial aid, scholarships and other financial support help offset the cost of higher education.

    However, Trump has called on colleges and universities with large endowments to help lower the cost of tuition, or face potential loss of tax exempt status.

    “If the federal government is going to subsidize student loans, it has a right to expect that colleges work hard to control costs and invest their resources in their students,” Trump said in a speech last October. “If colleges refuse to take this responsibility seriously, they will be held accountable.”

    What It Means For You: The proposal would seek to increase risk sharing and financial responsibility between the federal government and colleges and universities. Currently, there is a mismatch in risk sharing and financial responsibility: colleges and universities set tuition rates, but the federal government assumes all default risk on federal student loans. If the proposal is implemented, tuition rates could decrease and therefore students would borrow less debt.

    Student Loan Changes #6: Proposed Legislation

    Over the past year, there have been multiple legislative bills proposed in Congress to help alleviate the student loan debt burden. Here is a rundown of some of these bills:

    • Reauthorization of the Higher Education Act: the primary law that governs higher education, including student loans, which is reauthorized every five years
    • Stop Taxing Death and Disability Act: a proposal to stop taxing forgiven student loan amounts once the borrower has died or become disabled
    • Simplifying The Application For Student Aid Act: a proposal to modify the Higher Education Act and simplify the Free Application for Federal Student Aid (FAFSA) to allow borrowers to continue to use income tax returns from two years prior to the application date (rather than only one year prior)
    • Various Employer-Sponsored Student Loan Repayment Plans: proposals to create incentives for employers to help their employees repay their student loan debt

    What It Means For You: There are multiple legislative bills in various stages in Congress. Stay tuned.

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  • Why Warren Buffett Made $12 Billion Last Year

    Why Warren Buffett Made $12 Billion Last Year

    Investing Is One of the Best Strategies to Build and Preserve Wealth and Save for Retirement

    This article also appeared in Forbes.

    Warren Buffett made $12 billion in 2016 and reclaimed his position as the second richest person in the world, according to Forbes’ billionaire rankings.

    How did he do it?

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    There are three primary reasons behind his investment performance:

    1. The Election

    Although Buffett supported Hillary Clinton during the 2016 election, and even provided free trolley rides for voters to travel to the precincts, it was Donald Trump’s victory that helped propel a broad stock market rally. Buffett’s Berkshire Hathaway, which has gained 11.5% since election day on November 8, captured nearly half its share price increase in the two days after the election.

    But, the broader stock market rally doesn’t explain the whole story. Buffett’s underlying stock picks may provide guidance for your investment portfolio selections heading into 2019.

    2. Bank Stocks

    Buffett has been a long-time fan of banks and other financial services companies, including Wells Fargo, American Express, Bank of America, Goldman Sachs and others. Let’s look at Bank of America as an example. In 2011, Buffett invested $5 billion in Bank of America in exchange for $5 billion of preferred stock and warrants to purchase 700 million shares of Bank of America stock at an exercise price of $7.14 per share. At the time, Bank of America traded at about a 50% discount to tangible book value. Today, Bank of America’s share price is $22.45 and trades at about a 30% premium to tangible book.

    Why have financial stocks as a sector risen almost 17% since the election?

    President-elect Trump’s agenda to deregulate the banking industry, lower taxes and increase infrastructure spending are all positives for bank stocks. Further, if the Federal Reserve continues to raise interest rates in 2019 (following its rate increase this month), banks will earn more net interest income, which increases earnings. Since the financial crisis, banks have been focused on expense reduction and maintaining adequate regulatory capital. This led to a curtailment of certain lending activities and a retraction in risk-taking. Under a pro-growth Trump presidency, particularly one with less regulation, banks could look to redeploy excess capital and augment lending.

    Heading into 2019, per the latest public filings as of September 30, 2016, Buffett’s top 5 bank and financial services holdings include: Wells Fargo, American Express, U.S. Bancorp, Moody’s and Goldman Sachs.

    3. Airline Stocks

    Buffett also disclosed this quarter that Berkshire invested in three airlines: American Airlines, Delta Airlines and United Continental Holdings. CNBC confirmed in November that Berkshire also holds a position in Southwest Airlines.

    An investment in the airline sector is a rarity for Buffett, who has historically shunned airline stocks due to significant capital requirements and low investment returns. Not to mention that since 2000, dozens of airlines have filed for bankruptcy protection, including American, Delta and United. Buffett initially lost money in a $358 million preferred investment in USAir in 1989 (the value dropped to $89.5 million by 1995), although his investment later recovered and proved profitable.

    That said, Berkshire has invested in the aviation sector, including holdings in NetJets (which sells fractional ownership in private jets), Precision Castparts (an aerospace parts manufacturer) and FlightSafety (a pilot training company).

    A bet on airlines may signal Buffett’s belief that airlines stocks are poised for a performance turnaround in 2019 after a relatively flat 2016 before rising about 15% post-election.

    The consolidation in the airlines sector – United and Continental, American and U.S. Airways and Delta and Northwestern – has reduced the number of carriers and helped bring more financial stability to the sector. Consolidation has also helped mute airline capacity expansion, which historically hurt airline profits.

    If Buffett believes that economic growth will outpace airline capacity, airlines may stand to benefit.

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