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There has been a lot of news recently about Alzheimer’s becoming a rapidly growing problem among the elderly. One study indicated that Alzheimer’s cases are likely to double every 20 years, adding to an already devastating problem for many families. Alzheimer’s usually begins with dementia and the gradual loss of cognitive and mental abilities, progressing to the point where the victim needs help to perform nearly all of the activities of daily living. There are several important financial issues related to growing old and here are several things to think about as you help your loved ones through the aging process.

Money Management Abilities Could Diminish Early: One of the signs of dementia and cognitive problems is that routine management of finances becomes a difficult challenge. A recent study found that simple tasks like counting change, writing a check, balancing a checkbook, or interpreting a financial statement become difficult in the early stages of dementia and Alzheimer’s. As your loved ones grow older, you should make it a habit to review their finances and make sure they aren’t having any problems managing their money. Catching problems early can save massive headaches caused by financial mistakes and can be an early indication that other problems are on the horizon.

Power Of Attorney: A power of Attorney is an essential document to have in place for a relative getting older, especially if they are beginning to make questionable decisions. This document is designed to transfer the authority to make decisions from one person to another. For cases where dementia and the onset of Alzheimer’s are a possibility, a durable power of attorney allows the principal to take over the financial decisions for a person who’s unable to make responsible decisions on their own. You can also write a “springing” power of attorney in many states that takes effect in the case that a specified event “springs” up.

Medical Directives: This document outlines the preferences of a person in case of an accident or illness where the person is not able to make a decision for themselves. For instance, in the case of a stroke that incapacitates a victim, the medical directives can be used to dictate how aggressively the medical staff should treat the effects of the stroke. Thinking about these issues before they happen can help a person to have a plan in place in case of an unforeseen accident, sickness, or disease. Your directives can also dictate who should make these important decisions in your behalf.

Will: A Will is a legal document that outlines your wishes for the distribution of your property in the event of your death. To be valid, a will must be in writing, signed, and witnessed by two individuals that must also sign the document. Having a will in place while a person’s mental abilities are still strong will ensure that the individual’s wishes are carried out. Many families are divided after the death of a loved one when there are no specific instructions on the distribution of the estate.

In one of President Obama’s first big moves as President, he announced a $787 billion stimulus package that was intended to give a kickstart to the economy. One of the purposes of the money was job creation, and he specifically predicted that 4 million jobs would be either saved or created thanks to the massive stimulus. This was several months ago, and unemployment has marched steadily higher since then. The lack of apparent job creation is putting some heat on the Obama administration as nearly 10% of Americans are actively looking for jobs and millions more are stuck with jobs that make them unhappy. To his credit, President Obama warned that it would take time to see the impact of these stimulus dollars. After the last recession ended in 2001, job losses continued for over a year before employment numbers started to improve. Still, it’s worth taking a look at where the stimulus dollars have gone and what kind of impact they have had, as well as the potential impact left in the dollars that have not been spent yet. – State Spending: Over ten percent of the stimulus dollars have been awarded California, the most populated state in the US and one with an economy smaller than only 7 nations in the world. Of the $12.3 billion given to the state, over $5 billion has already been spent. According to stats released recently, the money saved or created 100,000 jobs so far in California alone this year. Similar statistics are available for every state, where citizens can track the amount of money awarded, the amount of money spent, and specific projects that the funds have helped to fund. Some of the job creation numbers are foggy, as states report only jobs that can be directly attributed to stimulus dollars while federal numbers include jobs that are saved or created indirectly as a result of the spending. An example of this would be restaurant workers who are able to keep their jobs because they work near a site where jobs have been created or saved from stimulus dollars. – Available Funds: In all, $499 billion in stimulus dollars are available for spending. Much of the spending will be done by states and some will be used to fund federal projects. More than $132 billion is still available and has not been promised to any state or project. Another $256 billion has been made available to spend but has not yet been claimed by states, agencies, or municipalities. Some of the agencies responsible for granting the money have specific criteria that need to be met before the funds are awarded with the goal of making sure that the money is spent on projects that have been effectively planned and are designed to create or save jobs. – Tax Savings: If you believe the numbers being thrown around by the government, 97% of American households will see some form of tax savings as a result of the stimulus package. The most common tax savings are coming in the form of less money being taken in federal withholding from each paycheck. Other tax savings and incentive plans include the $8000 credit for first time homebuyers, the ability to deduct sales tax on auto purchases, and tax credits for people paying college tuition.

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When it comes to our finances, we often look at the big picture of where we are in life compared to where we want to be. We make plans for the future in hopes of achieving our financial goals, but we don’t pay as much attention to the smaller decisions that we make with our money daily. No matter where you’re trying to go, getting there requires small steps in the right direction.

Unless you receive a financial windfall, it’s difficult to make big changes that affect your financial life overnight. But there are several small things that you can focus on that add up to make a big difference. None of these tips are secrets, but taking the time to focus on these small things will give your bigger dreams a better chance of coming true.

– Have a System and Discipline: There are a million ways to keep track of your money and spending and it’s up to you to find the right one for you. Whatever you choose though, keep track of your income and your outflows. When you go to the store, spend only what you planned on spending. It’s amazing how many people don’t understand where their money goes each month, but it’s easy to figure it out with a little organization and discipline.

– Save Systematically: Most people want to save more money or pay off debt, but building a savings account or paying down a credit card balance takes time. Since you can’t snap your fingers and make either of these things happen, set up an automatic payment plan. If you’re paying off debt, the payment goes to your credit card company. If you’re saving money, then you’re paying yourself. Either way, you’re much more likely to stick to a plan if you establish automatic transfers every month or every paycheck.

– Don’t Leave Money On The Table: If your employer put a stack of money on you desk that represented between three and six percent of your yearly salary and offered to let you keep it, you’d gladly take it. Yet many employees literally leave money on the table when they choose not to take advantage of a company match and contribute to their 401K. Your first source of saving should be your 401K when there is a match involved and the power of compounding interest will work wonders on the “free” money from your employer.

Be Able To Sleep At Night: Hopefully your finances don’t keep you up at night, but you probably know someone in that situation. Someone who is overextended is likely to struggle if they’re looking for financial peace of mind. The steps described above will help you sleep better at night. Another “peace of mind” idea includes having enough insurance in place that an unforeseen event won’t derail you financially.

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We have all heard the warnings about the future of Social Security. People worry that the program is going to run out of money and that future generations are putting aside money today for a program that they will never get to benefit from. To an extent these worries are well-founded, although the panic that sets in when younger people talk about social security is probably overdone. There are problems in the system that runs Social Security but there is also time to address these problems and find solutions.

In the meantime, many Americans are now facing the decision of when to start taking social security and how to make the most of the program. Many start taking benefits as soon as they are eligible at age 62, but there are drawbacks to taking the money early. Here are some ways to maximize the benefits of social security.

– Keep Working: There are a few benefits to working longer instead of retiring. First, delaying your social security payments means you’ll receive bigger payments when you do start your income stream. Second, the amount of social security you receive is based on your 35 highest-earning years. Most people earn more money late in their career so replacing a few of the work years from your 20’s with income years in your early 60’s can increase your social security payments. Finally, taking advantage of a few extra years of putting money away in a 401K or retirement plan will make you less dependant on Social Security, which is never a bad thing.

– Repay What You’ve Already Taken: Another way to increase your social security payments once you start receiving them is to repay the amount you’ve received. For instance, if you start taking payouts at age 65, you could add up the amount you’ve received when you turn 70, pay it back without interest, and immediately start receiving a higher payout. Some investors use this strategy by taking early withdrawals, investing those funds on their own, collecting interest, and then repaying the principal years later to increase their monthly income. This plan has risks but the reward can be substantial if you live long enough to make the higher payments worth paying a lump sum from an investment account.

– Strategize With Your Spouse: When you’re married, you have a choice to receive your own benefit or 50% of your spouse’s benefit, whichever is higher, if you wait until full retirement age to collect. A couple can maximize their Social Security payments if the lowest wage-earner starts taking benefits as soon as possible and the highest wage-earner waits as long as possible to start taking benefits. If the husband is the higher-earner and he passes away first, then the wife gets to step up her income to his benefit, which usually means a pay raise for her.

Social Security strategies are complicated but they can make a huge difference in the quality of life you’ll enjoy as you get older. Take the time to talk to a planner that can examine your situation and advise you on ways to maximize your social security payments.

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One of the most important decisions for parents and grandparents to make if they hope to fund a college education for their children and grandchildren is to determine the best type of college savings plan to use. In recent years, 529 plans have grown in popularity and become the most common college saving vehicle. There are several advantages to a 529 plan compared to other options available, including bank savings accounts, custodial accounts, and Education IRAs. 529 plans offer 5 distinct advantages over these types of accounts.

Tax Management: From a tax standpoint, 529 plans can’t be beat if the money is used for expenses related to college. You don’t get a tax deduction when you contribute, but the money you put into the plan grows on a tax-deferred basis and the distributions taken are completely tax-free if the money is used for college expenses. Depending on the state you live in, there could be state tax advantages as well, including an upfront deduction for 529 plan contributions made in some states.

It’s important to understand that the earnings in a 529 plan are taxable if they are used for non-college related expenses, and a 10% federal tax penalty is incurred, so it’s important to make sure the money is likely to be used for education expenses.

Control: One of the drawbacks to many traditional college savings accounts is that the child can legally take control of those funds when they reach adulthood. In a 529 plan, the owner of the account controls the funds at all times and can decide when the money can be taken out of the account. If the owner decides to withdraw the funds and use them for their own purposes, most plans will not stand in the way.

Convenience: There is a stack of paperwork required to open a 529 plan, just like any other financial account, but once the account has been establish, a 529 plan is a very easy way to save for college. In most cases the owner can either choose from an age-based or a risk-based portfolio, which is then professionally balanced and monitored until the funds are needed. You don’t have to spend hours researching investment strategies in order to take advantage of the benefits of saving for college.

Flexibility: With a 529 plan, it’s easy to change investment options or even rollover the money into a 529 plan sponsored by a different state at no cost. It’s also possible to replace a beneficiary with another child in the family if those funds could be better used to benefit a child other than the original beneficiary. Since we can’t always tell which of our children will pursue a college education when we begin saving for them, the flexibility of these plans allows you to use the money where it makes the most sense for your family.

Contribution Limits: With a 529 plan, there are no limitations as to who can invest. Many investment vehicles, especially those that feature tax deferral, have strict income requirements. Also, some college savings plans, such as Education IRAs, have strict contribution limits that make it difficult to grow the account quickly. A 529 plan allows anyone to contribute, regardless of income and without an annual contribution limit. Many plans allow overall contributions in excess of $300,000 for each beneficiary.

In a rush to refinance or complete an original mortgage application and lock in low interest rates, many homeowners are less sensitive to mortgage fees and costs than they used to be. There are always going to be fees for a mortgage product but every lender discloses those fees differently. It’s important as you’re preparing to close on or mortgage that you ask for a good faith estimate that lists all the estimated fees associated with your particular loan.

The fees you pay are important because they help to determine whether or not the low interest rate you’re locking in is worth the cost of the loan. Sometimes a slightly higher rate is better than a low rate if it comes with more moderate fees and costs. As you review this good faith estimate, here are four fees that you are likely to see and an outline of what those fees cover.

– Application Fee: This fee can cover a lot and is labeled with many different names. This fee could also be called a processing fee, an underwriting fee, or an administrative fee. Many loans will break it down into smaller fees in each of these categories. This fee is justified because there is a lot of work that goes into running a loan through the pipeline, but try to avoid getting dinged with multiple fees with different names for the same basic thing.

– Appraisal Fee: Appraisal costs are going up because the government is requiring appraisers to fill out additional paperwork for every home they appraise that takes close to an hour to complete. Another new regulation prohibits lenders from communicating with appraisers about a particular property, increasing the chances that the appraisal won’t support the desired loan amount. Appraisers have to get paid whether or not the borrower qualifies for the loan, so this is a standard fee that will be a part of essentially any loan application. Some lenders occasional make promotional offers to waive the appraisal fee, but you can be sure that they’re making up that amount by increasing fees in another area.

– Government Fee: 56% of all outstanding loans are either sold to or insured by Fannie Mae or Freddie Mac. This fee is based on a couple of factors. First, a good credit score makes the fee smaller. Second, the fee will be higher if the borrower is trying to access cash as part of a home equity loan. Finally the more equity you have in the home above the value of the loan, the smaller this fee will be.

– PMI: Private Mortgage Insurance, or PMI, is required for any borrower without at least 20% equity in their home. The amount of PMI you might be asked to pay goes up as your credit score worsens, another reason to keep your credit score as strong as possible. A good lender can help you structure your loan to keep PMI as low as possible, but it’s an important cost to factor into any loan where you don’t have at least 20% equity in the home.

The housing market has been a buyers market over the past year or two, with buyers holding most of the power in the negotiating arena. First time homebuyers have had an even greater advantage as they have been given an $8000 tax credit for purchasing a home this year and they don’t have to worry about selling another home before moving in. For “move-up” buyers who are trying to get out of in house and into something bigger, then challenge has not been finding a home they like, but instead selling the home they’re in.

A bridge loan is a loan that is written against the value of a home that’s for sale and is designed to provide cash to the owner to they’re able to proceed with purchasing their next property. Historically, bridge loans have been used in less than five percent of real estate transactions. Many more are applied for, but most are never used because the seller is able to arrange for the sale of their home in a timely manner.

– Adds Liquidity to the Market: With so many potential home buyers hesitant to act on a home purchase without knowing that a buyer is in place for their existing home, inventory is sitting on the market for much longer than it used to. Many experts agree that the housing market needs to see sales volume picking up to lead to a sustainable recovery and bridge loans are one financial tool that can add liquidity to a clogged up marketplace.

– Provides Flexibility to Buyers and Sellers: No one likes the idea of having two mortgage payments or being forced to accept a lower offer just to get out from under a home. In a normal housing market, it’s reasonable to think that a well-priced home could sell within a few months of hitting the market. In this market, there is no such feeling of certainty and sellers are hesitant to become buyers until they have cash in their pockets. With bridge loans, sellers can access cash and proceed with a home purchase regardless of when their existing home is able to sell. Bridge loans can last for as little as a few days and as long as several months.

– Great Deals Available: Many lenders are real estate brokers are working to stimulate buying in the housing market by offering bridge loans with little or no interest charged to the borrower. A zero percent bridge loan means that a seller can access enough cash to finance their next purchase without worrying about paying a lot of interest to finance that loan. The target market for these bridge loans is a homeowner with an average home moving up into something more upscale. This portion of the market has seen particularly slow sales volume and real estate agents and lenders hope to stimulate buyers into “moving up” with a little less worry tied to the sale of their existing home. These deals won’t last forever, but they’re worth looking into for the potential home buyer wondering why first time homeowners are the ones getting all the incentives to buy.

According to numbers released at the end of July, the number of homeowners in trouble that are actually receiving help in the form of a modified mortgage payment is staggeringly low. Only 9% of homeowners with a home in some stage of foreclosure have received much needed assistance. Banks and loan service providers have pledged to increase these numbers, but there are five roadblocks that are interfering with many homeowner efforts to modify their loans. Knowing about these obstacles can help you to find your way around them.

– The Paperwork Jungle: Modifying a mortgage loan is a paper-intensive process, and a form neglected or filled out improperly can derail the entire process. The mess of paperwork is magnified because most borrowers are asked to fill out forms for both Fannie Mae or Freddie Mac and the institutions servicing those loans. Homeowners are being asked to appease multiple approving bodies, many of which have different requirements. Efforts are underway to create a standard set of forms to be used by all financial institutions, but for right now it’s vital that you go through the painstaking effort of completing the entire stack of required forms correctly. 

– Stale Information: One of the problems being experienced by some borrowers is that after providing current financial documents to loan processors and waiting for several weeks for their loan to be modified, the information becomes outdated and new information is required. It’s a frustrating cycle for borrowers who often have to start over when their application for modification is rejected. One possible solution is to send each paystub you receive to your lender as your loan is being modified.

– Lack of Clear Communication: There are some borrowers receiving modification applications from their lenders unsolicited, and others who have been asking to apply for months without hearing back from their lender. Many homeowners are still not sure if they qualify, or what they would have to do to get qualified. Finally, many borrowers find the packet of information that is sent with most applications complicated and overwhelming, causing them to give up before even starting the process.

– Inexperienced Loan Processors: Part of the problem in getting thousands of mortgage loans modified is that it requires thousands of employees to make that happen. It’s great for job creation, not so great for borrowers needing help. Financial institutions have hired thousands of new workers to help handle the flood of applications, but training these new employees is taking a great deal of time and slowing the flow of applications making it through the process.

Technology: Finally, many borrowers run into problems with technological issues such as having to fax in documentation or access and open pdf files. Fax machines have caused major problems, from missing pages to information that is unreadable, many applications stall due to simple fax-related issues. Ironically, the solution to this problem will probably be provided through better technology, as a web-based application process is likely to emerge from at least some institutions at some point. This would make the application process easier and allow for applicants to follow their application more carefully and accurately.

A favorite element of using credit cards for many people has been the enticement that they were earning points to rewards. Customers who spent more using their credit cards and built up debt balances were rewarded with airline tickets, hotel stays, cash, or catalogs filled with almost anything else a person could desire. Some companies, under financial pressure, have eliminated their award programs entirely over the course of the past year. Most card issuers are reporting that 12% of the balances owed them are currently not being repaid, and that number is expected to increase even more.

A growing number of companies are continuing to offer award programs, but they are changing the way that customers can qualify for those awards. Instead of award spending, card issuers are now rewarding consistent and timely payments from customers. Here are some of the incentives and programs card issuers are offering to customers in hopes of enticing payments.

– Consecutive Timely Payments: Some card companies are willing to lower the interest rate being paid by customers for those making regular payments on time. For instance, Citigroup has issued a card that offers awards and reduces the interest rate by a quarter of a point each time the customer makes three consecutive minimum payments on time. Other companies have started similar programs to reward customers for making payments on time and paying off certain percentages of their outstanding balance.

– Customer Education: Many credit card companies are offering their customers access to tools and resources designed to help them understand the consequences of credit card debt. It’s hard to imagine credit card issuers promoting healthy credit habits to their customers even as recently as a year ago. Card companies are depending much more on their customers to repay their outstanding debt than they are on customers to rack up additional debt that they may not repay in the future. Many card issuers have online tools for their customers, including calculators that can help customers develop a strategy to pay down their debt in the most efficient way possible.

– Flexible Interest Rates: One of the best incentives a customer can receive in order to stay on top of their credit card payments is the opportunity to decrease the interest rate associated with their debt. TD Bank, for example, is offering a flexible rate credit card that allows the interest rate to change based on how much of their balance they pay off. Making a payment of at least 10% of their outstanding balance guarantees that they will receive the lowest possible rate. Discover has also issued a credit card that repays one month worth of interest to a customer after six consecutive monthly payments.

These incentive plans aren’t going to motivate every customer to make substantial payments on their credit cards, but some customers will make an extra effort to take advantage of these offers. The true awards that should be motivating credit card holders are the benefits of getting out from under the burden of credit card debt. There’s nothing wrong with taking advantage of the incentives being offered by card issuers to help you get to a life without credit card debt.

If you’re in the market to buy a home, welcome to one of the best buyer’s markets in history! Home prices across the country are sharply lower than they were a couple of years ago and sellers are desperate to get out from under mortgages that have become difficult to pay for many homeowners. Over 1.5 million Americans have received at least one foreclosure notice in 2009 already, and banks are sitting on millions of dollars worth of homes that have been foreclosed on. When banks get desperate, they become very willing to make a deal.

There are several reasons why this is a more attractive time to consider buying a foreclosure than ever before. Consider these factors:

Price: Depending on the area that you’re considering buying in, some homes prices are down more than 50% from their peak in 2006 and 2007. The homes that have been foreclosed on usually trade hands at a discount even deeper than the normal market discount. The longer banks hold on to these homes, the longer they hold on to the costs associated with the properties. Banks aren’t interested in paying property taxes and maintenance costs for homes that they have taken possession of.

One recent foreclosure in Stockton, California sold as a foreclosure for $129,000 in a neighborhood where its market value was probably at least twice that high. Banks just don’t like being in the business of owning homes.

Tax Benefits: Many potential homeowners looking at foreclosures are first time home buyers, and they have some extra incentive to buy during the next few months. A tax credit for first time homebuyers of $8000 is available through November of this year, so it makes sense for these buyers to be making offers on homes available on the market today.

Demand: If you’re in the market to buy a foreclosure, you’re well aware that you’re not the only buyer out there looking for a home at a bargain price. Many REOs–industry jargon short for Real Estate Owned by banks and lenders–are purchased the same day that they become available. As a buyer, you need to know what you’re willing to spend and then watch the inventory closely because the best deals on the market are not going to last long. In fact, one California lending executive said recently that for every REO home on the market, there are ten prospective buyers.

The growing demand for foreclosures has led to a much smaller inventory than normal. REO homes on the market are down 26% from a year ago and the inventory is likely to stay limited as buyers continue bargain hunting in the foreclosure market. The inventory will also be affected by fewer foreclosures if President Obama’s foreclosure prevention plan has a positive impact and reduces foreclosures.

Buyers looking at foreclosures should let their realtor know that they’d like to look for deals on the REO market and they should be prepared to act fast. Buyers who are ready to act fast can take advantage of great deals in this market for foreclosures.