Could P2P Lending Help Your Finances?

One of the financial opportunities becoming increasingly popular in the United States is peer-to-peer (P2P) lending. P2P lending exists to help borrowers and lenders find each other. In many cases, P2P lending allows ordinary people access to financial opportunities that they might not normally have.

P2P lending involves lenders (often “regular folks”) offering funds in $25 increments. Borrowers try to raise money a little at a time from several lenders. This way, the borrower receives the money, and lenders can help out . . . without taking a huge risk. Unfortunately for Canadians like me, I found out P2P lending isn’t an available option yet. This is mainly due to having separate provincial securities regulators, instead of one federal regulator like the SEC.

The idea is that you can use services like LendingClub and Prosper to lend money to your peers, and receive a return that is competitive with returns you might see elsewhere. You can also borrow from your peers and get a loan that you might not otherwise qualify for. Whether you are a lender or a borrower, P2P lending might be able to help your finances.

Lending Money to Others: An Increasingly Popular Investment Strategy

If you are looking for better returns on your money, particularly in a low-rate environment like what we have now, P2P lending might be able to help.

You can see reasonable returns when you lend money to others. In many cases, it’s possible to see annualized returns of more than 5%. While 5% or 6% doesn’t seem like a big deal when you compare it to long-term stock market returns, it can still be a viable alternative to bonds. Besides, try finding those types of returns when you go to the local bank and open a savings account or even a CD.

Of course there are risks. You need to understand that you are lending money to someone else. You are hoping that they will repay the principal, as well as some interest. With P2P lending, you set yourself up to risk losing money if the borrower defaults on the loan. Be aware of that before you decide to invest using P2P lending.

With careful screening of borrowers, though, you can reduce your risk. P2P sites rate borrowers’ credit so you can see which are more likely to make on-time payments. Choose those with better credit ratings, and you can improve your chances of being paid. If you want better returns, though, you can invest in notes from borrowers with questionable credit. Take a chance on borrowers with D credit, and you could see much higher returns, as long as there isn’t a default.

One strategy is to take a dumbbell approach with P2P investing. On one side, invest half your portfolio in notes with the highest credit rating. On the other side, balance it out with D, E, and F borrowers. For some investors, this works well.

Borrowing Opportunities with P2P Lending

Maybe you aren’t in a position to lend money to others. Maybe you want a loan, but have been unable to get one from the bank. In those cases, P2P lending might be able to help. Many borrowers find that they can get a debt consolidation loan, business loan, or some other loan for a lower interest rate than what is offered by a bank or credit card.

However, you will need to convince lenders to fund your loan request. As with more traditional lending, your credit score matters. Even though your credit situation matters (and will influence your interest rate), with P2P lending your personal story often matters even more. You need to make a convincing case that you deserve the money and that you are serious about repaying the debt.

Realize that, in many cases, websites that facilitate P2P lending run it as an all-or-nothing funding operation. If you don’t raise what you say you need, you don’t receive any of the money. The would-be lenders who did offer you money will have their funds returned to them; they can invest in another borrower.

You will also need to make your payments as agreed, or risk seeing a hit to your credit score.

Before you jump into P2P lending, carefully consider your options and your situation. I believe it can be a great way to get a nice return on your money but unfortunately I can’t participate in Canada yet. However, those of you in the U.S. can benefit from P2P lending – but you need to make sure it works for you, whether you decide to lend money to others, or whether you decide to borrow.

Have you tried P2P lending? Has it worked out for you? Leave a comment!

Tom Drake is a husband and father, as well as the writer behind the well-known Canadian Finance Blog. He covers budgeting and investing for a mostly Canadian audience, but the topics often apply universally.

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The Benefits of Paying Your Auto Insurance by Credit Card

Some auto insurance companies try to convince you to pay your premium with a credit card, and will even offer incentives for your cooperation. While I generally oppose the use of credit cards for any purpose where it isn’t absolutely necessary, there’s a strong case to be made for using them to pay your annual car insurance premium.

To be clear, we’re not talking merely about allowing your auto insurance company to make monthly debit charges to your credit card to pay the premium in installments, but to use the card to pay the entire balance with one payment. That’s where the advantages kick in.

1. You might get premium discounts.

Auto insurance companies will usually offer you a discount if you pay your entire premium up front. Or more to the point, you will not have to pay the add-on fee you will have to pay with a monthly installment plan. But some will give you an additional discount if you pay the entire balance up front with your credit card.

My own auto insurance company offered me a 12% discount if I pay the full balance on my credit card. That seems like an awfully generous discount, but it must make sense for the auto insurance companies.

For one thing, paying with a credit card means the company will get the full premium immediately, and that always has value for insurance companies. For another, there’s no waiting for a check to clear, or dealing with the risk of bounced checks. Credit card payments ensure prompt, seamless cash flow to the insurance company.

As impressive as the discount seems to be, it has to be measured against the interest rate carry charges of adding the annual premium to your credit card balance. If the interest rate being charged on your credit card is 12%, the 12% discount offered by the auto insurance company will work in your favor only if you pay the entire balance off in something less than 12 months.

If the balance is still sitting out there in full in one year, taking the discount for the annual payment will begin to work against you.

2. You could get credit card rewards.

Another possible benefit of paying the premium with your credit card is the possibility of earning credit card rewards. This will vary depending upon the rewards program you have with your credit card issuer. Some may permit you to accumulate rewards based on bill payments while others don’t.

The benefit isn’t enormous either. You may be getting a reward equal to no more than 1% or 2% of the amount of the payment made. Still, that can be significant if your annual auto insurance premium is several thousand dollars. And that’s not hard to have if you have multiple drivers and cars listed under the same policy.

3. You’ll have one less bill to pay.

Paying bills is stressful, not the least of which because after you’re done paying this month’s bills, you can rest only in the uncomfortable knowledge that you will be doing the same thing next month, the month after that, and every month for the rest of your life. But by paying the full annual premium at one time, you are eliminating at least one bill from the roll of bills you have to pay every month.

Though paying a large annual premium will cause a disturbance in your budget at the time you make the payment, it will improve your cash flow for the rest of the year. If you are a saver, this won’t be a problem. Having one less bill each month means that much more money to save. When the next annual premium comes due, you’ll be ready with the cash to take care of it – or to pay off the credit card balance right after using it to pay your auto insurance bill.

4. You’ll have no risk of a missed payment.

A soft benefit of paying the premium upfront is that there is virtually zero risk of missing a monthly payment. This can be especially important when it comes to insurance. Insurance is one of those products that can lapse if you don’t make your payments on time. If that happens, there’s a possibility that the insurance company will file a report with the state indicating that you no longer have insurance through their company.

This is easily remedied just by making your payment. But that could expose you to the risk that you may one day be pulled over by a police officer whose records will show that you are not currently carrying proper auto insurance coverage. And then you’ll have the courts to deal with.

Admittedly this is an unlikely scenario, but it is a possibility and it does happen to people all the time. The one-time payment, however, will make this a non-issue in your life.

Final Thoughts

If you do choose to use a credit card to pay your entire auto insurance premium at one time, just be sure that you pay off the charge as quickly as possible. Obviously it will be best to pay it off as soon as the credit card bill comes due. But as we saw in our 12% example above, you need to calculate at what point monthly interest charges begin costing you more than what you save with the upfront premium discount.

That needs to be your drop dead point, or the point after which using your credit card to pay the premium is no longer working to your advantage.

The entire purpose of paying your auto insurance premium with your credit card is to gain a significant financial advantage. If you are unable to get the full benefit of that, then the entire arrangement is best avoided.

Do you ever pay your entire auto insurance premium using a credit card? Leave a comment with your thoughts!

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Side Businesses: The Best Way to Prepare for Retirement?

We often think of starting or having a side business as either an opportunity to earn more money, or as a bridge into full-time self-employment. Both of those possibilities are certainly there, but a side business can also be the best way to prepare for retirement.

Consider what you can accomplish by having a side business . . . .

1. Have an extra income stream to fund your retirement portfolio.

Sure, a side business can generate extra income that can be used to pay off debt, to purchase major assets – like a new car – or even to fund travel and vacations. But you could also create it as a dedicated cash flow specifically for the purpose of providing funding for your retirement portfolio.

The combination of stagnant wages and rising prices has made it very difficult for many households to save money for retirement. A side business could become the primary source of funding for retirement, while your regular job provides for all of your other living expenses. The ability to generate $10,000 or so per year from a side business could mean the difference between a comfortable retirement, and living on Social Security alone.

Also think about how income from a side business could supplement any retirement provisions you are already making. If you already participate in a 401(k) plan at work, you can use income from your side business to fund either a traditional or Roth IRA. The extra income may also enable you to make larger contributions to your company plan. For example, as a result of having the extra income, you may be able increase your contributions to your employer 401(k) plan from 10% of your salary to 20%.

That may not only help you create a better retirement, but it could also open up the possibility of early retirement.

2. Set up retirement accounts based on your side business.

A side business also opens up the possibility of creating additional retirement accounts that are tied to the business itself. Even if you have a 401(k) plan on your regular job, you can set up a solo 401(k) for your side business as well. This will enable you to be funding two separate 401(k) plans at the same time.

And though your employer 401(k) may limit your contributions to a certain percentage of your income, a solo 401(k) for your side business will allow you to make dollar-for-dollar contributions into the plan up to $17,500 per year, or $23,000 if you’re age 50 or older.

Under this scenario, you could conceivably use your entire income from your side business to contribute to your solo 401(k) plan. Adding that to your contributions to your employer plan could cause the value of your combined retirement portfolios to explode in just a few years.

3. Raise retirement capital by selling the business before retirement.

Some business owners are able to retire as a result of selling their businesses for a very large amount of money. That isn’t possible with all businesses, but if you have one that has substantial assets, including intangible assets like copyrights, trademarks or market recognition, you may be able sell your business at a substantial profit.

Selling the business could provide a substantial boost to any retirement savings that you already have. And the return on investment of that capital could provide additional income in retirement.

4. Have an extra source of income in retirement.

Even if you don’t sell your side business before retiring, it can still make a substantial contribution to your retirement plans.

Statistically, few people will have sufficient money at retirement to be able to afford the traditional “full-time” version of retirement. Most will have to supplement their Social Security and investment income with some form of earned income activity. If you already have a side business up and running by the time you retire, you will have the earned income question covered.

You can keep your side business going for as long as you feel able to do so. This can cover the first few years of your retirement, which will not only enable you to continue increasing your retirement portfolio, but it will also help you to avoid withdrawing money for living expenses.

Simply avoiding tapping your retirement portfolio for five years could improve your chances for the comfortable full-on version of retirement. A side business will help you do that.

If you are looking for some sort of angle that will either help you to get your retirement planning going, or supplement the plans you already have, give serious consideration to starting your own side business. It’s one of the best retirement steps you could possibly take.

What are some side business ideas you’ve been thinking of starting? Leave a comment!

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Why Investing Your Emergency Fund Isn’t a Good Idea

One of the major disadvantages in a long-running bull market in stocks is that people start to get a little bit greedy. They want to invest any money they have in an effort to make more money in a market that seems like a sure thing. That can include retirement money, borrowed money, money in the cookie jar – and even the family emergency fund.

On the surface this can seem like a prudent step. You’re attempting the use any money that you have to make more of it. But while it’s perfectly alright to maximize returns, you still have to have some money that is not invested in risky assets of any kind. An emergency fund is the perfect example.

1. An emergency fund isn’t an emergency fund if it’s invested.

It’s one thing to seek a higher interest rate on your emergency fund, but quite another to invest it in equities. Once you do, an emergency fund ceases to be an emergency fund, and becomes a general investment account. That defeats the entire purpose of having it in the first place.

While investing an emergency fund in stocks or mutual funds can seem brilliant when stock prices are rising, it will look downright foolish if the market turns down and the emergency fund is largely depleted without ever having provided for a single emergency.

2. An emergency fund is your last line of financial defense.

A lot of investors are not at all comfortable having money that isn’t earning much more than 1%, especially when the stock market can turn double-digit returns. But an emergency fund isn’t like other accounts. It’s your last line of defense against financial disaster or a career crisis.

An emergency fund is doing its job just sitting in the bank, earning a very low rate of return, and being available just in case. It doesn’t need to do anything more than that in order to serve its purpose. If an investment contains any form of risk whatsoever, it does not belong in your emergency fund.

3. Jobs tend to disappear at the same time investments fall – in a major way.

There’s a more tangible reason to avoid investing your emergency fund in risk-type assets like stocks and mutual funds. Declining stock markets and deteriorating economies usually go hand-in-hand. And when the economy falls, it takes the job market down with it.

Imagine your emergency fund declines by more than 50% – because you had it invested entirely in mutual funds you thought were completely safe – and then finding out that you’re about to be laid off. The thought of that possibility should end any ideas about investing your emergency fund in anything more risky than certificates of deposit or money market funds.

4. At least some of your money must be in completely risk-free vehicles.

No matter how well the stock market is doing, at least some of your money should be in completely risk-free investments. This includes a certain percentage of your actual investment portfolio. You should have at least a small percentage of your portfolio in cash or cash equivalents if for no other reason than the fact that it enables you to buy bargain stocks when the opportunity presents itself.

But you should also hold certain positions outside of your portfolio in cash as well. Proper diversification requires that at least some of your money – even if it is a minority percentage – be invested in mutually exclusive assets. While it is isn’t possible to invest money in assets that will rise when stocks are falling, you can keep money in vehicles that will remain stable when the market drops.

Your emergency fund should be part of that cash-based investment scheme. And it’s not so that can be a source of capital for future investment in stocks, but for the possibility that you may slip on a financial banana peel and need the cash to survive.

5. You’ll make better investment decisions keeping your emergency fund separate from investments.

One of the advantages to a well-stocked emergency fund that is often forgotten in prolonged bull markets is that having it can actually make you a better investor.

An emergency fund provides you with a cash cushion that separates your survival from your investments. If you do run into a problem with either income or a rash of unexpected expenses, your ability to tap your emergency fund will prevent you from liquidating investment assets at inopportune times.

In addition, simply having money sitting in the bank to cover any short-term emergencies will eliminate the panic factor that could cause you to make irrational investment decisions.

Start seeing your emergency fund as a strategic part of your overall investing strategy. It’s the part of your portfolio that you keep fully sheltered from risk, so that you are free to pursue risk-type investing elsewhere in your portfolio.

Have you been tempted to invest your emergency fund? Where do you currently keep your emergency fund? Leave a comment!

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What You Need to Know to Be a Successful Real Estate Investor

Historically, real estate has been one of the very best investment vehicles. Not only has it competed favorably with stocks, but it has probably been the primary way that middle-class people build wealth. But there’s a big difference between being a homeowner and being a successful real estate investor.

The degree to which you can be successful investing in real estate largely depends on your attitude and your understanding of the business before getting in. There are a few guidelines worth understanding before taking the plunge.

1. Never – ever – underestimate what you’re getting into.

Real estate tends to be more complicated as an investment than most people anticipate. And it is certainly more involved than investing in paper assets, such as stocks, bonds or certificates of deposit. Real estate is hands-on; in order to make it work you have to embrace that reality.

Many people mistakenly believe that real estate is an easy investment, simply because they have owned a house before, they’ve read real estate books or attended seminars, or because they see so many people making money in it. But no matter how easy it may look on the surface, never underestimate what you’re getting into by investing in real estate.

Properties can require costly major repairs, tenants can bring lawsuits, and market values can break against you. It’s often difficult to anticipate these problems, let alone deal with them. You have to be aware of the many unique risks in real estate as an investment . . . and go in with the proper attitude and willingness to do whatever it takes.

2. The most fundamental “secret” of successful real estate investing: buy below market.

Through much of the past 30 or 40 years, it’s been possible to make money in real estate just by buying a piece of property and waiting long enough for the value to rise. But today that is no longer the case. As we have discovered in recent years, real estate prices can go down as well as up, and you need to be prepared for that possibility.

The most important factor in being a successful real estate investor is made when you purchase a property. You cannot simply buy a house or building at current market values – you must pay below market price. Not only will this practice give you a built-in profit when you buy, but it will also provide a measure of insulation in the event that property values fall.

This is important whether you are buying a property to rent out, for a short-term flip, or for a long-term hold. The less you pay for a property, the less it will cost you to own and maintain it, and the more profit you will have at the time of sale. None of that will be possible if you simply pay the going market price for property.

3. Don’t count on rising property values to make your investment pay off.

In past decades, real estate investors have made mistakes purchasing properties that soon after fall in value. Prices can fall as well as rise, and you can never know when the market will turn.

You have to think of real estate in much the same way that you would an investment in stocks. You have to get into it at the right time, and buy intelligently, otherwise you might get burned. In addition, each property is a standalone investment, and has to be profitable in its own right. You may not be saved from a bad deal by a rising market.

4. Tenants have legal rights – you need to know what they are.

Ownership rights with rental property are very different than they are with an owner-occupied property. Though you may be the owner of a rental property, you do not have unlimited rights. Your tenants, as occupants of the property, have significant legal rights that may stand in the way of your ability to manage the property exactly the way you want.

For example, you’ll need to comply with state and local laws in regard to both condition and amenities of any rental units. The property must meet safety standards, and you may be required to provide certain amenities, such as a stove and refrigerator, depending upon local law.

In addition, eviction of a tenant – even for non-payment of rent – isn’t always as easy as it seems it should be. For example, if it is a family with children, it may take many months to evict the nonpaying tenant. You may also be required to perform certain maintenance routines in order to maintain the safety of the property. If you don’t, and there is an injury, you could face legal action.

Before buying any property that you intend to rent out, be sure that you are thoroughly familiar with both tenants’ rights and landlord responsibilities under the law.

5. Borrowing money for investment property isn’t as easy as it used to be.

Up until about 2007 it was fairly easy for investors to get mortgage money to buy property. You could buy with as little as 10% down, and sometimes you could do so with limited income documentation and even damaged credit.

That isn’t true anymore. Expect to make a large down payment – at least 20 to 30% of the purchase price – and to be required to fully document your income. You’ll also need substantial reserves after closing, in order to cover the cost of unanticipated repairs and maintenance. Not only will you need the extra cash, but the lender will require that you have it. In lender parlance, this extra cash is referred to as “cash reserves.”

That last point is extremely important, since it is close to impossible to get a second mortgage on a rental property today. Beyond the basic mortgage, you’ll need to largely be self-funding for the future needs of your properties.

Real estate has never been easy as an investment, and that is more true today than ever. Before taking the plunge, be sure that you thoroughly understand the local market, the law as it relates to landlords and tenants, financing options, and realistic expectations for future returns. Oh, and have plenty of money! Real estate investment is no longer possible to do “on a shoe string.”

Are you thinking about investing in real estate? Are you a successful real estate investor? Leave your thoughts in the comments!

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7 Warning Signs You Could Lose Your Job

If you’ve ever lost your job in the past, then you can appreciate that it usually comes with very little warning – at least not the official kind. However, no matter how much employers try to hide problems, they usually will give all kinds of signs in advance. Pay attention – they can be easy to spot.

1. An increase in the number of closed-door meetings.

Unless it is historically the norm in your company, if you see a lot of closed-door meetings that’s a good sign that something big is getting ready to happen, and often that something is a termination or two.

This doesn’t necessarily mean that you’ll be the one getting lopped off. But if this is occurring in combination with any of the other events below, or you find that you are the one consistently being excluded from the closed-door meetings, consider yourself forewarned.

2. Your boss stops sharing information with you.

In order to bring about the smooth functioning of the department, a boss needs to share a significant amount of information with their subordinates. If that information suddenly stops coming your way, this is one of the best indicators you could lose your job and have to rely on an emergency fund.

This is especially significant if your boss is been particularly generous in sharing information with you in the past. A sudden stop means your fortunes have changed – for the worse.

3. You get demoted.

Some employers will terminate people immediately. Others will use a less direct method. That will often involve a demotion of some sort. If you’re demoted, it’s a sure sign that either your employer is no longer satisfied with your performance, or you’re being passed over in favor of others deemed to be more qualified.

Because of the legal complications of termination, an employer may choose demotion in the hope that you will see the signs and leave on your own. That will cut down significantly on the possibility that you might file a wrongful discharge lawsuit. In addition, the demotion will represent tangible evidence that you were failing in your job, and it can provide some measure of legal defense on their part.

4. You’re asked to train or “cross train” another employee in your job.

This one can be tricky – some companies wake up one day and decide that everyone in the department needs to know everyone else’s job. It can be an excellent management strategy, but take careful note of who is cross-training who.

If you find the cross-training is primarily centered on you training someone else to do your job, that can be a sign that you are a short-timer. The company wants you to train someone else to do your job to minimize the impact of your departure.

5. Your last review was a bad one.

If your last job review was unsatisfactory, you’re almost automatically on probation. The poor job review functions as something of a notice of termination. The company has officially warned you – and documented its case – that they’re not happy with your performance. Any subsequent incidents could be grounds for termination without further notice.

6. Your company is having financial troubles.

If your company is experiencing financial troubles, no one who works there is safe. That doesn’t necessarily mean you’ll be targeted for departure, but financial troubles often represent a cleanup effort within a company, to get rid of people who are determined to be low performers or troublemakers of one sort or another.

If you had a bad review, or a history of conflict with one or more influential people in the company, financial troubles could have you facing the prospect of losing your job ahead of your coworkers.

7. Your company “merges” with another.

This is one of the most complicated situations in which to anticipate a job loss. There are at least four reasons for this:

• Mergers tend to be very messy early on – nothing is certain.
• No matter how much a merger is considered to be a marriage between equals, it almost always involves a superior company taking over an inferior one. If you are employed by the inferior company, all bets are off.
• One of the primary reasons for mergers is the elimination of duplicate functions through the combination of operations, which is to say that there will be layoffs.
• Talk of job eliminations subsequent to a merger is always accompanied by official denials by both companies. The company fully intends firings, but they want to do them on their own timetable. That means there will be little advance warning as to when the ax will fall.

None of that offers guidance as to what to do in the event of a merger. The best advice perhaps is to seriously consider whether your company is the superior or the inferior in the transaction. If yours is the inferior – meaning that it is essentially the company being taken over – your days are probably numbered. You’ve simply come into the merger on the wrong side of the deal.

Signs that you can lose your job aren’t necessarily a call to immediate action. But you should take it as a warning to freshen up your resume, brush up on your interview skills and put out a few feelers.

Are you concerned you’re going to lose your job? What are you doing about it? Leave a comment!

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4 Types of Online Degree Scams to Avoid

Getting an education – and a degree to prove your expertise – can be a worthy way to improve your mind and increase your marketability in the workplace.

In today’s business world, it’s possible to get an online degree at a reasonable cost. If you work hard, it’s also possible to get an online degree fast.

However, you do need to be careful and choose an MBA program carefully. Not all online degrees are the same. Many people have fallen victim to online degree scams that took their money and provided very little in return.

Types of Online Degree Scams

It is important to note that there are legitimate programs that can help you get an accredited bachelor’s degree or master’s degree. Unfortunately, there are also plenty of degree scams that promise an online degree fast – and at little cost to you. Here are some of the common online degree scams to watch out for:

1. Degree Mills

This is the easiest to spot. You simply pay for what looks like a degree from a respected institution. You might go through a “life experience” test that claims that your knowledge is equivalent to a degree. In some cases, though, a degree mill just provides you with a counterfeit degree that you can use to get an advantage when applying for a job. This, however, is fraud; you can go to jail and pay a hefty fine when you become involved with a degree mill.

2. Fly-by-Night

This type of online degree scam claims to be a school – but isn’t. You are often told that it only takes a few months to earn your degree, and the fee seems reasonable. You use your credit card to pay for enrollment, and after a few weeks you realize that you haven’t been contacted, and that you can’t log in and complete your coursework. The scammers have your money (and possibly your credit card information), and you have nothing.

3. Unaccredited Online Degree Programs

There are official accreditation bodies, including the U.S. Department of Education and the Council for Higher Education Accreditation. Some online degree programs are not accredited at all. This means that you may get an education of some sort, but the degree you receive will not be recognized, and won’t do you much good as you look for a job.

4. Accreditation Mills

Some online degree programs try to boost their legitimacy by saying they are accredited. However, just as there are degree mills, there are also accreditation mills. These bodies do not offer rigorous standards. Accreditation by these organizations is not recognized by the Department of Education or the Council of Higher Eduction Accreditation is practically useless. Such degrees are not worth your time or money.

Warning Signs of an Online Degree Scam

Scammers prey on the natural desire to get something cheap and easy. Online degree scams offer an education faster than you thought possible, for less than you imagined it would cost. While there are some truly good deals out there in online education, if it sounds too good to be true, it probably is. Here are some of the most common signs of an online degree scam:

• You only need a credit card to “get in.”
• After doing your research, you find that the institution is not properly accredited.
• You pay for a degree at a single flat rate, rather than paying on a per-course basis, or paying by the quarter or semester.
• It is difficult to contact someone to discuss the program. There are no phone numbers, and you are not offered a way to contact course instructors.
• The program takes a very short period of time, usually a matter of months.
• The website focuses on the degree, but doesn’t say much about the type of education you will receive.
• The site owners or company headquarters are in another country.

Before you enroll in an online degree program, do online research. Check education forums and the Better Business Bureau. Also check accreditation with the Department of Education and the Council for Higher Education Accreditation. This can help you identify which programs will provide you with a real education, and which are just scams.

What concerns do you have about online degrees? What are your thoughts? Leave a comment!

This article was originally published November 1st, 2010.

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7 Easy Ways to Increase Your Income

Who doesn’t want to make a little more money? If you are looking for easy ways to increase your income, there a number of options you can choose. Realize, though, that in many cases the easy buck isn’t going to provide you with a large income, although changing some of your habits could eventually pay off.

As you consider how to make every little bit help with your financial situation, here are some easy ways to make a quick buck and at least get a little more cash in your pocket:

1. Donate plasma.

I think this has to top every list of easy ways to make more money. Nearly anyone can do it, and you can get between $35 and $50 a donation. This is something you can do two times in any seven-day period, as long as there are two days between each donation. Get on a regular schedule, and you can increase your income by up to $800 a month.

2. Take online surveys.

Yes, this is still a Thing. You can spend a few minutes taking online surveys for a few bucks. If you sign up for a serious site, like Inspired Opinions, run by Schlesinger Associates, you can make some serious money with the help of focus groups. I once made $200 for being part of a one-hour phone focus group. Depending on how often you take surveys, you can make anywhere from $50 to $500 (or more) a month.

3. Turn your car into a billboard.

I’ve actually seen a few cars around my town that sport advertisements. If you don’t mind having your car wrapped, or if you don’t mind having some other ad placed on your car door or back window, you can sell ad space on your car. Depending on how many ads you sell, and what is reasonable for your area, you can make as much as $700 a month or more.

4. Monetize your hobby.

If you already spend time on a hobby anyway, you can monetize it so that you can at least offset some of the expenses associated with it. Many people, though, find that they can turn a hobby into a steady source of income. If you are doing something fun, it’s rarely considered hard to do. Turn your hobby into a money-maker, and you could have a solid side income.

5. Complete various tasks online.

There are a number of websites that allow you to make money online doing various (and often simple) tasks. However, you won’t make a lot of money. On Fiverr, you can do tasks for $5 at a time. You can also make money on Mechanical Turk doing simple things like helping come up with article names. You won’t make a ton, but you can do a few things each day when you have a few minutes, and it can add up to a couple hundred dollars a month.

6. Try online rebate and points programs.

You can earn extra money through online rebate and point programs. Websites like eBates provide you with the opportunity to rack up rewards points. You can also use programs like MyPoints to earn points that can be redeemed toward gift cards. While not straight cash, gift cards are still useful and can be used like cash. I know people that end up with what amounts to as much as $200 each month, just by shopping using a special add-on to the browser, and by planning purchases.

7. Write articles online.

Okay. I admit that this is only easy for some people. However, there are a number of websites, from Yahoo! Voices to Hubpages to Squidoo that allow you to write and earn money. Some of them pay a few dollars up front for your work, but many of them pay you based on traffic. So you can earn residual income over time. I still earn about $50 a month from traffic to articles on Yahoo! Voices and Hubpages from years ago. That’s not bad, considering I don’t actually do anything to earn that money actively.

What is your favorite easy way to make more money? Leave a comment!

This article was originally published November 30th, 2012.

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How to Improve Your Credit and Buy a House

If you want to buy a house with bad credit, the drop in housing prices over the last few years may be a little frustrating. Real estate is still on sale but it may be tough to get approved for a home loan with bad credit. It doesn’t mean that you absolutely won’t be able to buy a house, but it does mean that you will face some challenges and need to work on improving your credit.

Bankruptcies and Foreclosures

If you have a low credit score, with no bankruptcy or foreclosure, you might be able to purchase a home now. You will have to pay a higher interest rate, and you might not get the best loan terms, but you probably won’t have to wait – as long as you have a large down payment and a credit score above 500. (If you have a small down payment, you might not be able to get a bad-credit mortgage with a score below 580.)

Waiting periods apply if you have had a bankruptcy or foreclosure. Most lenders won’t offer you better rates until a bankruptcy is four years behind you and it has been at least two since a foreclosure. In order to qualify for a FHA loan, you have to be at least two years away from a foreclosure, and you can get a loan with as little as a 3.5% down payment.

Improving Your Credit to Buy a Home

So what should you do if you don’t have any recent bankruptcies or foreclosures and would like to buy a home but have bad credit? Your first move should be to try and improve your credit score. Here are three ways to begin improving your credit score:

1. Make your payments on time and in full.
2. Pay down your debt, reducing your debt-to-income ratio.
3. Avoid applying for very much new credit.

One way to build a history of making regular payments is with a credit card, but you may not qualify for one if you have bad credit. One option is to open a secured credit card, where lenders are willing to give you a credit card if you provide collateral in case you don’t make your payments.

As long as you use it responsibly, making regular purchases and paying down the balance each month, this can be a fast way to help your credit score.

Other Ways to Improve Your Qualifications

Other things that can help you improve your qualifications for a home loan include:

1. Earning a regular wage.

Self-employment offers a different challenge. If you are self-employed, you should be able to show tax documentation of regular earnings. However, self-employment income isn’t going to be viewed by lenders as favorably as a salary. Show that you have been steadily employed for at least a year or two.

2. Saving up for a down payment.

If you have poor credit, you can improve your chances with a down payment of at least 10%. If your credit score is lower, approaching 600 or below, you might need 20% down. If you have a credit score of less than 500, there is a good chance that you will need a 35% down payment to qualify.

3. Having a letter of explanation.

If you have a compelling explanation for your low credit score, a letter of explanation might be required. You can explain extenuating circumstances (such as job loss or medical catastrophe) that led to your poor credit. You can also describe what you are doing to improve your financial situation.

When you have bad credit, it is still possible to buy a house. However, you will need to work hard to improve your credit score at least a little, and you may have a couple other hoops to jump through.

Are you trying to buy a house with bad credit? Tell us about your journey in the comments!

This article was originally published April 30th, 2011.

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Where to Invest Your Money

Where to open an investment account is a commonly asked question of new investors and it’s easy to see why you’d be overwhelmed when trying to decide.

There are a number of options out there, and what you decide should be based on your investing goals, as well as what makes sense for your present finances. Here are some of the most popular options for investing your money, along with a brief overview of the pros and cons of each:

Tax-Advantaged Retirement Accounts

Most people are at least vaguely familiar with the concept of investing in tax-advantaged retirement plans. If you have a “regular” job, chances are that you are investing in a company plan – most likely a 401(k).

The main advantage of investing in a company retirement plan is that often you are able to receive a match from your employer. This is free money that goes directly toward building up your retirement plan. And, of course, you have a tax advantage, either a tax deduction now, or the ability to avoid paying taxes on distributions from your account later.

The biggest problem with company plans is that you might be limited in your plan options. Be careful of putting too much of your money in the company’s stock. That can be a recipe for disaster if your company runs into trouble. Additionally, with a company plan, you might not have access to the Roth option you want, or the fund you prefer is not available in the fund.

You can look at some of these 401(k) investment alternatives in order to get the flexibility and options you want. However, if your employer offers a match, you should at least get that before you invest elsewhere. Other tax-advantaged retirement plans can be used once you have your maximum employer match taken care of.

Mutual Fund Companies

Many mutual fund companies make it easy for you to invest your money. Big companies like Vanguard and Fidelity put together a wide variety of fund types so you can achieve the desired asset allocation of your portfolio mostly in one account.  The great thing about funds is that they can provide you with a way to add diversity to your portfolio without trying to pick individual stocks. Many mutual fund companies even offer ETFs now.

Of course, if you do put all your money in the hands of one mutual fund company then your investing options are limited to the funds offered by that company. Although the many different fund companies and fund options can make it a challenge to compare performance and costs across a lot of funds, it pays to do your research and find the mix that best fits your investing goals.

Something else to be aware of: Choosing actively managed funds can erode your returns due to the fees you’ll pay. Most mutual fund companies also offer low-cost index funds and ETFs that can provide you with the chance to invest for less. Realize, though, that you may not be able to trade individual stocks without opening a specific brokerage account with the company.

Online Brokers

If you are looking for a wider range of investment opportunities, online brokers can probably give you more options than a mutual fund company or your company retirement plan. You can usually get access to mutual/index funds, individual stocks, ETFs, and options with the help of an online broker.

In addition many online brokers have IRA options, so you can open a retirement account with the broker.  The nice thing about this approach is that it typically gives you access to more types of investments for your retirement money.

Here are some of the things to consider when you’re looking at choosing an online broker:

• Commissions & Fees
• Investment Products & Mutual Funds
• Customer Service
• Trading Tools
• Banking Services
• Research

Several major personal finance magazines like SmartMoney and Kiplingers publish annual broker reviews where they test out each brokerage and rank them on these and other factors. Whether you’re looking for cheap online trades, the ability to consult with a professional over the phone, or some periodic face to face time – one of these surveys will probably give you some guidance to help evaluate the discount brokers and which would be best for you.

Where to Invest?

What you choose depends on your investing needs and your comfort level with evaluating and choosing investments. Of course you’re not limited to just one of the above options, many people have money in retirement accounts at work, mutual fund companies, and with an online broker.

For example, if you’ve already maxed out your retirement accounts, and you are looking for a way to trade individual stocks, an online broker can be a great option. A mutual fund or online broker can also be a great supplement to your company plan – especially if you aren’t particularly impressed with the offerings.

Whatever mix you choose, it’s worth the time it will take you to write down what you’re looking for in an investment account and then compare your options. Doing your research can result in lower fees and more investment choices so be sure to put in the time when choosing the best investing account for your money.

Where else can people invest their money? Where do you invest yours? Leave a comment!

This article was originally published June 18, 2011.

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