Check out the 5 financial tips for the 2nd week of August 2012.
Tip no 1 - Failure to keep track of your bank account can easily cost you money via overdraft fees.
Check your bank account from time to time. If you don't get time to go to the bank once a month, then check your account online. This will let you know about the past and current financial transactions. Not keeping any track on the bank account can be fatal. For instance, you've taken out a payday loan in your state. The lender has your banking details and debits a specific amount every month. It may happen that lender becomes greedy. He may debit an extremely high amount to increase his profit margin. In that case, your account may go into negative and the bank may charge overdraft fees. You won't even come to know about this until it is too late.
Tip no 2 – Un-reimbursed work expenses and charitable donations are tax deductible.
If you have spent money due to work related purpose and the employer has refused to reimburse you, then you may get tax benefits. If you had to spend dollars for purchasing business suits or going for a business trip/business meal, then you can get tax deductions. Likewise, you can get tax benefits for charitable donations also. Just make sure you contribute to an organization which has received 501© (3) tax exempt status from the IRS. You may also contribute to churches.
Tip no 3 - Take out a mortgage loan that you will be able to repay.
You may need to take out a mortgage loan to buy your dream house. In that case, make sure you take out a mortgage loan as per your affordability. Use an online mortgage calculator to estimate your monthly mortgage payments. Calculate the interest rate and fees on the mortgage. Calculate your monthly income and find out if you can afford to make the mortgage payments.
If you feel that monthly mortgage payment amount is very high, then it is better to not opt for that loan. Borrow an amount which you can pay off within a certain number of years. This will help you protect your assets funds.
Tip no 4 - Buy adequate health insurance for your parents to keep them protected when they grow old.
Parents will become old one day. They'll need advanced medical care at those times. Health insurance will help you take care of their health care needs without getting financially crippled. Make a comparative study of the health insurance policies. Choose a policy which will be suitable for your parents.
Under the new health reform law, it will be mandatory for the people to get their health insured. If you love your parents, then get them insured right now. Buy adequate health insurance so that your parents get the best health care at old age.
Tip no 5 - Mortgage lenders usually prefer borrowers who use 40 percent or less of their monthly income to make payments against their debts.
Mortgage lenders check debt-to-income ratio of the borrowers. The preferred debt-to-income ratio is 40%. This means that the ratio of your debt to income should be around 40%. In short, nearly 40% of your income should go towards your debts. If your debt-to-income ratio is much higher than 40%, then you'll face difficulty in obtaining a mortgage loan. Even if a lender agrees to overlook your debt-to-income ratio, then also he'll charge an extremely high interest rate. This will invite financial troubles in future as you may face problem in making the monthly mortgage payments.