EOnline.com

In our popular Celebrity Financial Mistakes feature, we pointed out Burt Reynolds’s inglorious fiscal past, declaring bankruptcy once before:

After a red-hot career in the 1970s, Burt Reynolds bought himself a helicopter, multiple vacation homes, and a sprawling Florida ranch, but his divorce from actress Loni Anderson left him broke (though he got to keep the ranch).

Unfortunately for him, that ranch appears to be his money curse — because it’s now in foreclosure.

To make matters worse, Reynolds claims he didn’t even realize he hadn’t made a mortgage payment since September 2010, saying in a statement: “I am as surprised as everyone. I thought my career and my life could not be going better. To all of the people who have had such faith in me and stuck by me through thick and thin, thank you. I know it is not the end of the world.”

Considering that he last filed bankruptcy just 13 years ago, it seems Reynolds could use a little assistance in the money-management department — preferably from someone who’s willing to tell him that securing his financial future needs to be more than Gunsmoke and mirrors.

PawprintsCrossStitch.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

First, we should start by mentioning that yes, you can buy a house with less than 20 percent down. The question is, Is it financially wise? There are some substantial benefits to a large down payment, so be informed and proceed knowing the following facts.

1. You will avoid private mortgage insurance (PMI). If you buy a house with a down payment under 20 percent, you will pay PMI until the loan-to-value ratio hits 80 percent. According to the Mortgage Bankers Association of America, that fee is typically .5 percent of the loan per year (so $1,500 per year on a $300,000 loan).
2. You can get better interest rates. According to Bankrate.com as of today, if you wanted to get a 30-year mortgage for $300,000 in the D.C. metropolitan area, the best interest rate is 4.125 percent with 20 percent down. But if you put only 5 percent down, that rate goes up to 4.25 percent. It doesn’t sound like much of a difference, but over 30 years, it amounts to an extra $7,873 in interest you will need to pony up to the bank.
3. Your offer will be more attractive. In the event of a bidding war — particularly over a short sale or foreclosure, where the bank gets to choose the bidder — having a “clean” offer is a huge benefit. Being able to provide a large down payment in cash could mean the difference between getting your dream home and continuing your search.
4. You start off with more equity. Think about it this way: With 20 percent down, you already have a decent amount of equity in your house. If you put only 5 percent down, any downward fluctuation in the real-estate market could put you underwater so that you owe more than the house is worth.
5. You demonstrate good financial discipline. Homeownership is not typically less expensive than renting, and expenses will always pop up. Having the discipline to save up 20 percent of a home’s value shows that you know how to save and can handle budgeting for the unexpected.

ScholarshipExperts.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

At the beginning of the summer, we brought you our tips on finding your first apartment. Now it’s time to make your space your own. Read on for our advice for doing so on the cheap.

1. Buy secondhand furniture. Ikea may be cheap, but it isn’t necessarily the least expensive way to furnish your apartment. Stalk Craigslist and Kijiji for deals on used furniture in your area and you can score excellent deals on high-quality pieces (just don’t forget to negotiate — sellers expect it!). One caveat: A lot of cities are experiencing a bedbug epidemic, so it may be best to steer clear of upholstered furniture and used mattresses unless you can be certain they’re pest-free.
2. Vet your roommate(s) carefully. When you sign a lease with other people, you’re tying your home life to them. So first make sure you’re all on the same page about the financial rules and who is responsible for paying each bill on time. Nagging a previously good friend for his share of the rent every month or begrudging her for eating your cereal is a surefire way to erode friendly feelings fast.
3. Use a good credit score to negotiate on utility deposits. Got a great FICO score? That could be your ticket to getting utility companies to reduce or waive deposits on starting service. At the very least, it doesn’t hurt to ask. If your credit score could use some rehab, here’s how to go about it.
4. Read the fine print on interest-free loans. It’s par for the course for appliance stores to offer zero-percent interest on purchases for a set period of time. But miss a payment and the interest rate becomes exorbitant. Before you splurge on an awesome media center or laundry set, know what you’re putting your signature to.
5. Don’t always buy in bulk. Going to a big-box store to stock your pantry is always a good idea, right? Not necessarily. Everything you buy and don’t use for a long time is money that’s sitting in your pantry instead of earning interest in a bank account, so bulk-buy wisely. (For more tips on saving money on groceries, click here.)

StarPulse.com

R. Kelly is in trouble again, although at least this time it’s not a big-time felony mess.

The Associated Press reports that he hasn’t made a mortgage payment on his Chicago mansion since June 2010, leading JP Morgan Chase to initiate foreclosure proceedings against the R&B singer:

Crain’s reports the Olympia Field home’s appraised value fell 26 percent in a year, to $3.8 million in 2010. The original 1999 loan was for $3.5 million.

The principal due is more than $2.9 million.

The R&B singer’s spokesman, Allan Mayer, declined to comment about the foreclosure. But he tells The Associated Press that Kelly isn’t in financial trouble.

If his spokesman is right and R. Kelly is not in dire financial straits, that makes this foreclosure all the more disappointing.

The home’s appraised value is higher than the balance on his loan, which puts him in a better position than the millions of Americans who are underwater on their mortgages. But based on this information, it just seems like R. Kelly got tired of paying what he owed on a property that is declining in value, and that makes it an ethics issue for him to walk away.

However, he may get what’s coming to him: Illinois is a recourse state, meaning the lender can come after him to pay for the balance of what he owes. I hope he’s saving the profits from his ongoing “Love Letter” tour, because he’s going to need them.

Lowes.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

Maybe you’ve just graduated and need to find a new place to live, or perhaps it’s time to say adios to your roommates and get a place of your own. Moving can be one of the most stressful experiences in life, but if you follow our advice, you can minimize the financial drama and be kicking back in your new living room in no time.

1. Get your credit in tip-top shape. Many landlords use your credit score to assess your trustworthiness as a renter. Pull your credit report — you can do this three times a year for free from AnnualCreditReport.com — to make sure it’s an accurate representation of your financial history, and give yourself some time to clear up any cases of mistaken identity or erroneous information.
2. Save up for a security deposit. Depending on your city, you’ll probably need to come up with a deposit worth at least two months’ rent before you take possession of an apartment. Start saving early so you’re not crunched for cash right around the time you’re itching to buy furniture for your new home.
3. Be aware of moving scams. WalletPop.com has a good article on identifying the most common scams perpetuated by moving companies. If a mover gives you references, check up on them before you give them access to all your worldly possessions.
4. Review your lease carefully. Never sign anything you haven’t read in full. If you don’t understand the terms of your lease, ask for clarification rather than assuming it’s boilerplate. Trust your gut if something seems fishy, even if it means walking away from the “perfect” place. You don’t want to get stuck with major bills and heartache if something goes wrong.
5. Protect yourself by inspecting the apartment. Take a video camera through your new pad before you’ve moved in your furniture so you have a record of its condition. Take written notes of chips in the paint, a rotted window sill, and any appliances that don’t look factory-fresh, and give a copy to your landlord. It will come in handy when you move out and want to get your deposit back.

Econ4U.org

If you caught our new billboard in New York this week or are just new to Econ4U, we have some great resources to help you make a budget — whether it’s your first or your twenty-first.

Here’s a crash course in parsing your paycheck and making the most of what you earn:

• It won’t take long for you to figure out the difference between your gross pay and your net pay — in other words, the wage you think you make compared with the pay you get to take home. Your gross pay isn’t terribly helpful since a big chunk of that is money you will never see, so for budgeting purposes, calculate your net pay and work from that.
• The Federal Insurance Contributions Act (FICA) is a federal tax that funds Medicare and Social Security. In most years, it is the 7.65 percent taken out of the paychecks of everyone who works, no matter how little they make. (In 2011, the Social Security portion of the tax has been reduced from 6.2 percent to 4.2 percent; Medicare, which provides government-paid health insurance for Americans over age 65, has stayed firm at 1.45 percent.) Your employer has to kick in a matching amount on your behalf.
• The town you live in can make a big difference in your bottom line, based on localized tax laws. Check here to see if you’d save a bundle by moving across state lines.
• Got bad spending habits? Here’s your quick cure for quitting them. You’ll see ways to boost your savings immediately.

Once you’ve got a handle on all that, stop on by our Budgeting 101 page and get started!

HuffingtonPost.com

In the home-buying process, the first question you must answer is “how much house can I afford?” And in an effort to determine that amount responsibly, you may have googled for a calculator like this one on CNNMoney.com, which will tell you that you can spend between 28% and 36% of your gross income on a mortgage.

But just how realistic is that advice? Let’s run some numbers.

Say the Smith family earns $52,029, the median household income (in 2008, the most recent year for which data is available). They have saved a 20% down payment on the median home price – which currently rests at $140,000 – for a down payment of $28,000. The national average interest rate for a 30 year fixed mortgage is 5.01% right now, so we plug that in as well. And we’ll also assume the Smiths are making $300 monthly payments on student loans, car notes, and credit-card debt.

The calculator reports the Smiths can buy a house valued between $192,162 and $217,016. That’s up to 55% more than the average home is selling for right now.

Surprised? We are. The lending guidelines on which this calculator and its copycats are based tell people they can afford to spend more on housing than they really can.

For example, if you’re spending 36% of your gross income on a mortgage, another 25% or more on taxes, and then you’re responsible for other monthly expenses like debt repayment, groceries, utilities, healthcare, home maintenance, and transportation, what exactly is left over for a rainy day? If you followed that advice, saving anything would be basically impossible for the average household. It’s a recipe for falling behind.

At Econ4U, we often talk about “living within your means.” But to figure out what that really means for your household, you may have to ignore commonly accepted rules of thumb and use your head instead. After all, that’s where your brain resides.

Parents.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

When you get the news that you have a baby on the way, you’re suddenly facing a deadline to revise your financial plan to include the newest member of your family. Miss that deadline and you’ll be in trouble, as Nadya “Octomom” Suleman has learned. (She evidently didn’t listen to us when we warned it would cost at least $78,336 annually to raise her brood of 14.) Not sure where to get started? Read on.

1. Beef up your emergency fund. Assuming either you or your partner will not be working immediately after the birth of your child, you will need to make sure you have enough money to cover your expenses right off the bat. While 93 percent of companies offer some paid maternity or paternity leave, you’ll want to feel financially secure during this time and a funded emergency account can give you peace of mind.
2. Run the numbers on a larger place. Current statistics from the Department of Agriculture estimate that raising a child from ages 0 to 18 will run a middle-class family $222,360. Of that chunk of change, the largest proportion — 32 percent — goes to paying for housing, such as rent or mortgage on a home with an extra bedroom. That means if you’re able to economize on housing, it will save you the most money in the long run.
3. Pay off some debt. Use the next nine months to try to pay off one debt, be it your car, a credit card, or a student loan. Take your wins where you can get them and it will be one fewer bill to worry about when a newborn is demanding your attention.
4. Figure out your child-care situation in advance. It may help to come up with several different budgets: one where both partners return to work immediately, one where part-time work is possible, and another assuming one parent stays home to care for the baby. The national average for full-time day care for an infant runs around $8,150 per year, or $679 per month — and up to 50 percent more in major cities and areas with a high cost of living. Check local rates for the best estimate.
5. Save for your hospital bills. Even if you have insurance, you can still expect to pay for certain services rendered while giving birth. For example, induced labor, epidurals, and private rooms aren’t always fully covered. CostHelper.com estimates the average insured new parent pays between $500 and $3,000 out of pocket for delivering a healthy baby. Account for that expense in your newly revised budget.

TheBrandsClub.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

You’re probably not thinking about tax season right now, but fall is a great time to revisit your tax planning strategies. Here are a few tips to make the most of your money before December 31 creeps up on you.

1. Stock up on health supplies. If you participate in a company-sponsored flexible spending account (FSA) for tax-free health expenses, start thinking about ways to avoid leaving money on the table. Stumped about what to get with your dough? Glasses or contacts, cold medicine, first-aid kits, ice packs for treating injuries, and heart-rate monitors all qualify. Drugstore.com even stocks a FSA store full of qualifying goodies. But do it fast: Starting in 2011, you won’t be able to run up a drugstore bill with your FSA dollars. The new health-care law prohibits spending FSA money on anything you don’t have a prescription for (with insulin as the exception).
2. Make your home more energy efficient. Holiday weekends (like the one three days from now) are a great time to buy new appliances at a steep discount. And through the end of the year, you can qualify for a 30 percent credit (up to $1,500) on approved doors, windows, and roofs as well as high-efficiency furnaces, water heaters, stoves, and heating and air conditioning units installed in your primary residence.
3. Save tax dollars when you refinance your home. If you’ve taken advantage of low mortgage rates this year to refinance your home, don’t forget that you can deduct all unamortized points on an old refinancing as well as points on the new loan.
4. Identify charities you want to support. Charitable donations are deductible through December 31 for the current tax year, but pouring money into worthy coffers can be a low priority at year end when you’re busy playing Santa. Make your annual donations now before your wallet starts feeling pinched by the holidays.
5. Begin to max out your retirement savings. If you qualify for an IRA or Roth IRA and haven’t begun making contributions for 2010 yet, start by socking away a little right now. The contribution limit is $5,000 if you’re under age 50, and you have until April 15, 2011 to get it all in there. So put away $625 a month for the next eight months to max the fund out — it will hurt a lot less than trying to come up with $5,000 on Tax Day.

But if you’re saddled with a huge car payment, struggling to pay your rent or mortgage, or throwing money away on high-interest debt, then those savings don’t seem to matter as much to your bottom line.

In other words, if you can’t make ends meet month after month, clipping coupons isn’t going to be enough to bridge that gap.

The solution? Find ways to slash your biggest expenses first — before cutting back on smaller budgetary line items. Here are a few tips to get you started:

• Maximize your tax deductions throughout the year to avoid scrambling to remember them all when it’s time to file your annual return. Keep files on all your charitable donations, deductible interest on student loans, medical care, and other qualifying expenses.
• Aim to spend no more than 30 percent of your income on housing, whether that’s rent or mortgage (and don’t forget to factor in property tax and insurance). If you can spend less on housing and still live in a safe area, do it.
• A rule of thumb: If you have to take out a car loan you can’t pay back in under three years, you can’t afford your ride.
• Most savings accounts right now are paying around 1 percent APR in interest. If you have credit card balances or student loans to pay off, you’re likely paying more than 1 percent on that debt, so your emergency fund is actually costing you money in the long run. Make a dent in it today.

Forget fine-tuning — overhaul your budget to see the biggest savings.