Unfortunately, too many consumers wait until they are actually applying for a major loan before they check their credit. If you are planning to apply for a major loan — especially if you want to apply for a mortgage loan — it’s better if you check your credit first, and then take steps to improve it.

Avoid Unpleasant Surprises

It’s important to check your credit report so that you can avoid unpleasant surprises. About six months before you actually apply for a home mortgage loan, look at your credit report and get a feel for your credit situation.

Are there errors on your credit report? Do you see fraudulent accounts? These are problems that need to be repaired before you apply for your big loan.

Another reason to check your credit report is so that you can get a good idea of where you stand in general. How do lenders see you? This can be a huge deal later on down the road. Look at your credit report now, and get a good idea of whether or not lenders will think that you have too much debt, or that you have missed too many payments.

Once you know how you appear to creditors, it’s time to work on improving your credit before you get to the point of applying for a major loan.

Repair Your Credit

Most of the time, credit repair takes a concerted effort, and a little time. While there are some credit repair companies that can help you move the process along a little bit faster, the truth is that it can take between 60 and 90 days to start to see some improvement. And if you have bigger problems with your credit, repair can take a year or more.

Begin repairing your credit as quickly as you can. In some cases, your credit can be repaired by correcting mistakes on your credit report and having fraudulent accounts closed and removed. This can take some time, but it is usually fairly simple.

For other problem issues with your credit report, you need to take a more active approach. You might need to pay down debt so that your credit utilization and your debt to income ratio are reduced. You might also need to make an effort to pay on time so that you can start improving your payment history — which is the most important factor in determining your credit score.

Bottom Line

Even if you “know” that you have good credit, it’s a good idea to check your credit report before you apply for a major loan. Mortgage lenders are quite picky about who they approve, and what terms you will get. Even someone with good financial and credit habits can end up with a lower credit rating due to mistakes and fraudulent accounts.

Double-check your credit situation a few months ahead of time. That way, you will have some time available to you to repair your credit and bump up your score enough to get approved and to perhaps even get the best possible interest rate for your situation.

When I travel, I like to use my credit card. Credit cards are great for travel because they come with a certain level of fraud liability protection. Plus, they can be used almost anywhere you go, and they are very convenient.

On top of that, when you plan your credit card use just right, you can end up with a vacation that is more cost-efficient than you imagined.

Using Your Credit Card on Vacation

One of the ways to get the most out of your credit card is to spend using your rewards card. You rack up the rewards, and then, as long as you pay off the card each month before you start accruing interest, you don’t have to worry about extra charges.

This principle can work on vacation as well. Save up the amount of money you will need to take your trip, and put it in a high-yield savings account. Now, while you are on vacation, use your credit card for everything. This can be especially effective if you have a cash back rewards card. You can earn cash back for vacation spending that would have been part of your summer anyway.

If you have a card with rotating cash back categories, your vacation can be a great time to boost your reward earnings in certain categories. Make sure that you log into your account before you go and activate your quarterly cash back bonus. Depending on the categories, you can really clean up. If one of the cash back categories during your vacation is gas, and you are on a road trip, your gas purchases will earn you 5% cash back, instead of the regular 1%. If you know the bonus categories, you can take advantage of them while you are on the road.

Even if you don’t have a cash back credit card, you can use credit rewards to your advantage on vacation. My parents regularly use their Marriott card, since they stay at Marriott properties regularly. They earn free nights faster, and on a trip to England a couple of years ago they were able to stay for free because of the rewards they had earned. If you are a traveler who uses a single hotel chain a lot, or prefers a specific airline, you can boost your rewards faster with a connected credit card. This can help you when you go on vacation to get a portion of your vacation for free.

Don’t Overspend

It’s tempting to go wild while on vacation and overspend. It’s important that you don’t, though. You want to make sure that you stay within your vacation budget. You don’t want to carry a balance on your credit card and get stuck with expensive interest charges. Also, be aware of how using your credit card in another country can affect your bottom line. Many cards charge foreign transaction fees. Hopefully, the rewards you earn while on your trip will at least offset the cost of the foreign fees.

With a little planning, your credit card can be a great asset on vacation, protecting your funds and allowing you to earn enough in rewards to offset some of the costs.

image credit: creditcards.com

One of the trends gaining a little traction right now is using prepaid debit as a replacement for a checking account.

While a prepaid debit card can be useful in some cases, it might not always be the best way to handle your finances.

Prepaid Debit: Replacing a Checking Account?

In recent years, prepaid debit cards have evolved into products that can function as checking accounts. You can arrange to have your paycheck directly deposited to your prepaid debit card, and you can use your prepaid card anywhere that accepts credit cards. Some prepaid debit cards even come with a savings account option — complete with an APY (if you choose the right card).

It’s even possible to find some prepaid debit cards that waive monthly fees, or have fees of between $3 and $5. For those who don’t want to pay fees of between $7 and $9 a month for a checking account, a prepaid debit card can seem like a good options.

Pitfall of Prepaid Debit: The Fees

Many prepaid debit cards (particularly those that are endorsed by celebrities) come with a number of fees. Some cards have more than 20 fees that you are subject to! From fees charged when you open an account to monthly fees to fees for reloading your card to fees for checking your balance, there are a number of ways to pay for access to your own money.

If you decide to use a prepaid debit card as a replacement to your checking account, forget about the cards pushed by celebrities. Instead, look for low-key cards, like the Green Dot card, and some of the cards from American Express. Mango Money can also be a good choice. These cards charge fees, but they are generally low, simple, and restricted to only a few actions. Plus, some of them waive fees when you make a certain number of transactions, or arrange for direct deposit to the card.

Who Should Use a Prepaid Debit Card?

You can still find free checking accounts, but in some cases they can be hard to qualify for. If you have credit problems, or if your account has been flagged in ChexSystems, you might not be able to open a free checking account.

Instead, your only option might be a second chance checking account. These accounts, aimed at those with lower incomes and credit issues, can be expensive, charging up to $15 a month for an account. If you are in a situation where your checking options are limited, a prepaid debit card can be a good choice.

Pay $5 a month for prepaid debit card beats paying $11 to $15 a month for a second-chance account. Plus, with the prepaid debit card, you can take advantage of free direct deposit and avoid the hefty fees often charged by check-cashing businesses.

Find out if you can get a free checking account. If you can’t, and you are truly “unbanked,” it can make sense to go with a prepaid debit card. In these cases, while you work to rebuild your financial reputation, a prepaid debit card can replace a checking account.

For those looking for yield, CDs don’t often come to mind. While your money is usually safe in CDs, you won’t earn a high yield.

One way to earn a higher yield, though, is to consider a market-linked CD.

What is a Market-Linked CD?

A market-linked CD is pretty much what it sounds like: The return on the CD is influenced by securities. A market-linked CD can be linked to a single equity, or to an index. As the equities involved do well, the CD offers a higher rate of return. When the market falters, though, you run the risk of a lower return.

A market-linked CD’s return is based either on the difference between the start point and the end point, giving you a return equal to any increase, or by taking an average of the equities’ performance at different milestones during the maturity of the CD.

In most cases, a market-linked CD will guarantee your principal, and possibly a small rate of return, in line with most other CDs. However, the fact that the CD is linked to a higher-yielding investment product means that there is the chance of better returns over time.

It’s important to understand, though, that there are some limits to what even a market-linked CD will earn. Some of the limits are brought on by:

• Interest cap: Many banks and credit unions put an interest cap on their market-linked CDs in order to keep from having to pay too high a yield.
• Participation rate: There might also be a participation rate associated with your market-linked CD. A market-linked CD might have a participation rate of 75%, meaning only 75% of the market return is factored in. If the market returns 10%, this means that you will only see a return of 7.5%.

Realize, too, that if there is an interest cap, it will limit what you can earn — even if your participation rate would normally allow you to see higher gains.

Things to Keep in Mind with a Market-Linked CD

A market-linked CD operates like other CDs. You have a set term, and if you take your money out before your CD matures, you will be charged penalties.

Additionally, be aware that some banks and credit unions issue CDs with call features. This feature lets the issuer recall the CD prior to the term being up. The CD is redeemed at the call price, which limits how much you might earn in a given period. Some CDs like this have a call period, which means that once the call period is up, the bank or credit union can’t redeem it early.

If you have a five-year CD with a call period of two years, that means that the issuer can redeem it at any time within that two-year period. If a bank feels that the market is going to keep rising, it might call in the CD, and then you would have to get a new CD with a different participation rate, or with some other alteration in terms.

Before deciding if a market-linked CD is right for you, do a little research, and consult with an investment professional who can help you understand the pros and cons.

When it comes to your career, it’s important to portray confidence. Soft skills are becoming increasingly important in the workplace, and if you want to advance, you need to develop these skills.

There is nothing “softer” and harder to define, though, than confidence.

Confidence and Career Advancement

When it comes to career advancement, confidence is one of the biggest keys. In fact, studies find that confidence can help you more than talent and/or education.

If you are able to portray a confident attitude, you will be viewed as more competent — even if you really aren’t. When you are confident, people instinctively see you as a leader, as a good communicator, and as someone who is probably right.

Think about it: Do you harbor a little resentment toward someone who was promoted above you? That person might have made mistakes, and might not work nearly as hard as you. Even if you are more competent, you might not get the promotion if the other candidate is more confident. Confidence makes a bigger difference than you might think.

Now, if you could take your skills and knowledge, and then add a dash of confidence to the situation, you could very well become an unstoppable career force.

How to Portray Confidence

If you want to come across as more confident in your job, you need to take active steps to portray it in your nonverbal cues. Jacquelyn Smith, at Forbes, offers 10 items that can help you signal confidence to others:

1. Eye contact: Make appropriate eye contact. Don’t shy away from others. You do have to strike the right balance so that your confident eye contact doesn’t turn into uncomfortable staring.
2. Handshake: Should be full and firm (but don’t squeeze). Shake up and down once or twice and make eye contact and smile, according to Forbes.
3. Gestures: These should be meaningful and purposeful. Use gestures that emphasize what you’re saying, but avoid gestures that undermine your confidence, such as fidgeting, or playing with your clothes, hair, or accessories.
4. Clothes: Professional and well-tailored. Your clothes should fit you, and complement your body type. Dress for the job you want.
5. Posture: Stand tall and straight — and don’t be afraid to take up space. Use armrests, and stand with your feet slightly apart. Your posture, and the space you take up, indicates a certain level of power, authority, and presence that makes a difference.
6. Facial expressions: Make a conscious effort to bring your facial expressions in line with what you’re saying. The Forbes post points out that this can take practice, since we’re used to letting emotions dictate our facial expressions. You need to practice hiding the emotions that would lead others to assume a lack of confidence.
7. Initiate: You should be the one to make eye contact, offer to shake hands, or speak up. That puts you forward, and shows your confidence.
8. Voice tone: Like facial expressions, you need to make sure that your voice matches what you want to convey.
9. Full attention: When you communicate open body language, and when you offer your full attention, others see you as confident and engaged.
10. Respond: Make sure you are responding to the cues of others. When you respond, you turn your interaction into one of equals, and offer your own confidence in your abilities.

Investors who are a little more experienced with DIY investments, and who are interested in options, can get a great deal by using OptionsHouse.

OptionsHouse specializes in options, and offers access to discounted stock trading as well.

Fees for OptionsHouse

If you are looking for low, low prices on your investing, OptionsHouse is a great choice. First of all, there is a $3.95 flat rate for trading stocks. This is a lower price even than the $4.95 transaction fee charged by TradeKing.

You will have to pay according to a different scale for transactions on very large orders (more than 50,000 shares), or on OTCBB trades ($0.005 per share) or shares that are less than $2 apiece. Overall, though, this is a great deal for those investors that like to regularly invest in stocks, and trade stocks, especially since OptionsHouse doesn’t charge extra from after-hours trading.

When it comes to trading options, you have a couple of different plans to consider, depending on how often you trade options:

• Less frequent traders: You can trade up to 5 single-leg contracts for $5 and then you pay $1 per contract for each contract beyond that. You can also get up to 10 spreads for $10.
  
• Frequent traders: If you trade more frequently with larger orders, you pay a flat fee of $8.50 plus $0.15 per contract on options, and $12.50 plus $0.15 per contract on spreads.

It’s possible to change your plan through the platform daily, so you can adjust your pricing structure to fit your trading plan for the day.

The main drawback to the pricing structure with OptionsHouse is that you have to phone in buy and sell orders on mutual funds. Mutual funds are fairly inexpensive, as trading goes, at $9.95 apiece. However, the fact that you have to call in to accomplish the trade is somewhat off-putting and inconvenient.

Other Features

One of the biggest weaknesses of OptionsHouse is in terms of its other features. The trading platform is simple and straightforward, but isn’t very advanced. On top of that, there isn’t a lot of research or third-party reports. It’s especially hard to find reliable information on ETFs and mutual funds at OptionsHouse.

Instead of focusing on fundamental research, OptionsHouse takes a look at technical analysis. You can see quite a few good charts for different equities, making it a great tool if you are a day trader, interested in frequent trades and using technical analysis to determine when to enter and exit positions.

When placing orders, be aware that even equity orders are done in legs, so you have to get used to trading stocks a little differently than you would with other discount brokers. For options traders, though, the order ticket system is intuitive and easy to use.

Bottom Line

OptionsHouse really isn’t for the novice investor. While the customer services via phone is good during its regular business hours, the rest of the time it’s not the best. If you need hand-holding, OptionsHouse probably isn’t for you.

However, if you are a seasoned options trader, and you want to save money on fees as you execute your trades, OptionsHouse might be just the ticket.

CLICK HERE to visit OptionsHouse.com

The last year is over and we’re well into tax season.

However, if you’re still looking for a few deductions, it’s possible for you to benefit from some really last minute tax breaks. You can still make previous year contributions to your IRA and/or HSA.

Contribute for the Previous Year Until April 15

You have until April 15 to make a previous year contribution to an IRA and/or HSA. I made use of the previous year contribution this year with my HSA. I was $1,000 short of maxing out my HSA contributions for 2012, so I went ahead and made that contribution. It counted as a previous year contribution, and boosted my tax deductions.

It’s also possible to do this with a Traditional IRA (you don’t deduct Roth IRA contributions from your income). If you haven’t maxed out your IRA contribution for the last tax year, you can still do so. However, note that if you choose a previous year contribution, you should make the contribution before you file your taxes. So, even though you technically have until April 15, my accountant says to just make the contribution by the time you file your tax return.

How to Record the Previous Year Contribution

It’s vital that you correctly record your previous year contribution when you make it. If you make your contribution online, you usually have a choice of boxes to check. Be sure to indicate the previous year contribution by checking the correct box.

Realize that you can’t use the same contribution for two different years. Whether you contribute to an HSA or an IRA, you need to make sure that you only claim the money for one year or the other. If you make a previous year contribution, you can’t count that same contribution for this year’s taxes. Carefully consider which year you want your contribution to be in before you make your move.

How It Can Help

In many cases, taking a last minute tax deduction like this can be quite helpful. A tax deduction lowers your income, and that can affect your marginal tax rate, as well as dictate whether or not you are eligible for other tax benefits.

There are some tax credits and tax deductions that are phased out when you reach a certain income level. If you are close to the phase out point, an extra deduction, in the form of a contribution to an HSA or an IRA, can be very helpful. The deduction might be just enough to keep your income below the threshold you are concerned about.

Another way that your last minute contribution to an IRA or an HSA can help is by keeping you in a lower tax bracket. If you are right on the cusp of a new marginal bracket, your contribution can keep you below that bracket. It doesn’t matter a whole lot, since marginal brackets ensure that your income isn’t all taxed at the same rate. It steps it up more gradually as a result. However, to some taxpayers it does matter.

Carefully consider your position, and consider getting help from a trusted tax professional. With the right strategy, you can still contribute to an HSA or IRA for the previous year.

When looking for the best IRA rates and performance, many investors have been considering target date retirement funds. Before you decide that a target date fund is a good way to set it and forget it when it comes to your retirement, it’s a good idea to stop and consider the pros and cons of these types of funds.

What is a Target Date Retirement Fund?

One of the fundamentals of investing is the idea of asset allocation. As you age, and get closer to retirement, you are supposed to rebalance your portfolio so that your asset allocation stays on track.

A target date retirement fund is supposed to take care of this for you. You invest, and then, as you reach age milestones in the approach to retirement, your asset allocation changes within the fund. You choose your target date fund based on when you plan to retire, and everything is just supposed to be taken care of on your behalf.

Will a Target Date Fund Really Work for You?

The real question, though, is whether or not a target date fund will really work for you. The biggest issue with a target date fund is that it makes the assumption that the market will always act consistently. While, over time, volatility does tend to even out, timing does matter to some extent. As you start investing, you will discover that when you exit a position, or sell your shares, does matter.

If you need to retire right at the time there’s a crash, and your target date fund doesn’t take that into account, you could be in trouble. Another issue is that your fund’s automatic rebalancing might come at a low point in the market, meaning that you might be selling low as part of the routine rebalancing.

There have been difficulties with target date funds in the past, and there are concerns that this situation might not benefit your IRA.

Choosing Investments for Your IRA

When deciding what to put into your IRA, it makes sense to think about your goals, and what investments you think are most likely to help you reach those goals. A target date fund might not be a horrible choice for a portion of your IRA, but it’s probably not the best choice for you to base your entire retirement on that single fund.

As with all investing, appropriate diversification is the key when investing in your IRA, whether it’s a Roth or a Traditional IRA. Consider a mix of assets that reflects your risk tolerance. And make an effort to be at least a little involved. While it’s tempting to take a set it and forget it approach, and rely on someone else to manage everything, that’s not always the best option. While you don’t want to be constantly trading, and adding up the fees, it’s important to pay attention and rebalance at least once or twice a year.

Don’t let target investment funds be a crutch for you. Instead, really think about your retirement portfolio, and make decisions for your IRA based on your long-term needs.

One of the questions I am most often asked is where someone should start when it comes to investing.

For many would-be investors, the whole situation seems daunting. How do you get started? And how do you know which investments to pick?

The good news is that getting started is relatively simple; for the most part all you need is $25 and access to a computer. And if you aren’t sure about where to start with your investments, index funds are a good place to begin.

What are Index Funds?

Index funds basically track a particular index. You can find them in mutual fund format, or you can invest in them as exchange traded funds (ETFs).

An index fund might follow an all-market index, giving you some exposure to the entire range of listed companies, or it might follow a smaller index. You can find index funds that follow the Russell 2000, or you can diversify your holdings with a fund that follow a foreign index.

To start, though, many investors are likely to find that an all-market fund is a simple way to get started. Your success follows the overall success of the stock market. (Over time, this can be a good thing, since, historically, the stock market has let to lose over a period of 25 years.)

It’s also possible to use index funds to invest in bonds. There are bond index funds that can help you build a portfolio according to the principles of modern portfolio theory, using stocks and bonds in your make-up. It can be a good way to add a little diversity without too much trouble and expense.

You can invest in index funds with most online brokers, and you can use dollar cost averaging with them, so it makes it easy to start and invest a little at a time, if you don’t have a lot of resources to devote to investing right now. You can increase your investment as your finances improve.

Moving Beyond All-Market Funds

While an all-market fund can be a good place to start, you can move on. Use your index fund as a way to get started on something with acceptable risk so that your money begins growing. But, while your money grows, consider other options.

Educate yourself about other investment products. Learn about financial ratios and value investing, and how to pick a solid stock, including the possibility of investing in dividend stocks. You can also learn about other types of investments, including options and futures, and decide whether they are appropriate for your investment situation. You can even look into ETFs that are based on commodities and currencies.

However, before you start getting too exotic in your investments, it makes sense to know what you are getting into. You should understand the investments you make, rather than investing without a good working knowledge of how different financial instruments and products work. Starting with index funds gives you a chance to use something easy to understand, and just get started, while you research other options and determine what works best for you.

Life insurance is one of those things you get for the benefit of others. Adequate life insurance can help your family provide for their needs after you are gone. If you have dependents who rely on your for their financial maintenance, it makes sense to get life insurance.

When you decide on what type of life insurance to get, you normally have two main choices:

1. Term
2. Whole life

While there are some other options, this is the choice that most people need to make when choosing life insurance coverage.

Term Life Insurance

This is life insurance that is bought for a specific period of time. Once the term is over, you no longer have coverage. You can usually buy term life coverage for anywhere between five years and 40 years.

One of the most common terms is 20 years. This is a term that is usually sufficient for the insured’s children to grow to adulthood. I have a 30-year term life policy, designed to get me to retirement, and provide enough coverage to pay off our debts so that my husband and son don’t have to worry about the mortgage and car payments.

As we get closer to paying these obligations down, the life insurance pay out can be used for other items, such as helping pay for my son to attend college.

Term life insurance is generally fairly cheap. It’s possible to get a large amount of life insurance at a relatively low price when you choose term insurance. However, once the term is over, all of the money you paid in premiums is gone (unless you have a policy that promises a partial return of premium if you outlive the policy).

In some cases, you are offered the option of a hassle-free renewal of your policy for another term. You might see a premium increase, but it is normally not as high a price as you would pay if you were getting insurance new at your age.

Whole Life Insurance

Rather than expiring at the end of a specific period of time, whole life is designed to provide a benefit to your heirs no matter when you die. Whole life insurance (and it’s cousin, universal life insurance) remains in effect as long as you pay the premiums on time.

In many cases, it’s possible to find a whole life insurance policy that builds cash value. So, as you continue to pay premiums, a portion of what you pay benefits you. Insurance companies invest the money, and you benefit from some of it.

The cash value usually builds at a very slow rate, though. However, over time, it can add up to a somewhat decent amount — although it is unlikely to fund your retirement. You can also borrow against your cash value, providing you with emergency assets.

Whole life insurance is usually more expensive than term life. Because it is meant to cover your entire life, there is a greater chance that the life insurance company really will have to pay benefits to your survivors.

Consider your needs, and evaluate how much life insurance you need, and then decide whether term or whole life is most likely to fit your situation.