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Posted
Oct 10 2007, 06:29 AM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog Five Cent Nickel . Have you ever thought of borrowing money from your IRA? While 401(k) plans typically have loan provisions, IRAs don't. That being said, it is possible to take a short-term loan from your IRA without exposing yourself to taxes or penalties. You can withdraw funds from your IRA for 60 days without running into tax-related issues. This 60-day window is intended to allow investors to roll their account over from one IRA custodian to another. However, nothing in the IRS regulations says you have to put the funds into a new account. After all, you could change your mind before completing the rollover and decide to put the money back where it came from. Hence, you could actually pull money from your IRA, use it to bridge a short-term rough patch, and then stick the money back in before the 60-day window is up. No fuss, no muss. A few things to keep in mind before you decide to do something like this: First, you can only do this once within a
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Posted
Nov 05 2007, 09:20 AM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
Pardon us while we get a broom. Our hair literally fell out when we read Stacking Pennies ' post about co-signing a family member's loans . She agreed to co-sign student loans for her sister (whose own credit had been damaged by past financial choices) and unwisely allowed the sister to sign Pennies' name on the loan documents. Thus, it was a total surprise when Pennies learned she is obligated to pay off $23,000 in loans if her sister does not make good on the debt. This is a touching story about a sister's desire to help and a wake-up call for anyone considering the same decision . You can go only so far to save other people from their own mistakes. Pennies says she regrets co-signing the loans. "But it is family, and it is money for education, and it is hard for me to turn my back on that," she writes. We can only hope this works out for the best.
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Posted
Nov 08 2007, 07:04 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
Matt, an active-duty Marine, is a guest poster at Poorer Than You , and he presents his personal-finance advice in military terms . ("Perhaps the best deal about being in Iraq is that my pay is increased by effectively 33% due to my tax-free status, in addition to my 'special incentive' pay that I receive while over here," he writes.) He urges readers to build a reserve and launch an assault on debt. "Gear up with the weapons of personal-finance war: a budget, a disciplined mind-set, and a strong will to win," he says. Every once in a while you may need to "call in supporting fire" and depend on family members for help, but do so on a very limited basis, he advises. Borrowing money from family could become a financial minefield.
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Posted
Nov 14 2007, 11:01 AM
by
Donna Freedman
Rating:
Money Blog: Smart Spending Blog - MSN Money
A month ago today, I became debt-free – made the last payment to a relative who had lent me some money. This loan had allowed me to throw a big chunk of cash against credit card debt accrued during divorce proceedings. (Lawyers bill by the hour, you know.) Once the credit card was paid in full, I started repaying the family loan. As money came in through diligence or chance, I’d let it build to $300 and then write a check. I'm not sure why $300 became the magic number; it just sounded good. Now I'm debt-free: no student loans (I'm blessed with a scholarship), no car payment (please let it last another six or seven years), no credit card debt (and there won't be any more). It feels about how you'd think it would: pretty darned great. 'A perpetual grin' This relative wasn’t dunning me. But it bothered me to owe money. Some people count sheep; at night I would lie in bed counting ways to stretch available funds to reach the next $300. Reading some postings from a Smart Spending message board
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Posted
Dec 18 2007, 12:38 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
In case you missed the news, the Federal Reserve Board has proposed rules to curb the type of lending abuses that helped create the subprime-mortgage debacle. You can read the mainstream media report or you can enjoy Sellsius' snarky take on "More rules for those who hate rules." For instance, one of the rules would restrict prepayment penalties. Sellsius says: "It does not take much to figure out that steep penalties for paying off a loan early would limit consumers' refinancing options. Hmm ... you don't pay back the bank, they're unhappy; you pay them back early, they're still unhappy. You just can't please some people."
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Posted
Jan 17 2008, 01:05 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
Call it "peer-to-peer" or "social" lending, the online enterprise of loaning money to others outside the confines of a brick-and-mortar bank is taking off. The Silicon Valley Blogger says this "brave new world" is expected to grow by as much as 800% in the next three years, and she plans to be a part of it -- on the lending side. Her post at The Digerati Life explains how Prosper.com, Lending Club and other P2P services work, and how investors can reduce the risk of losing money.
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Posted
Jan 25 2008, 12:38 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
Before his happy experience with CashCall, "Chris B." wrote at CashCall's "testimonials" page, "I have never dealt with a company who was willing to give the little guy a chance without feeling like I was selling my first born." Well, maybe not your firstborn this time, but how about the roof over your firstborn's head? CashCall's Web site advertises loans with interest ranging from 24.58% APR to an astronomical 141.42%. At CashCall, you can conveniently look up the interest rates available in your state. The highest in California, a 99.25% APR, applies to a $2,600 loan with a payment schedule of 42 payments of $216.55. So, after you subtract the $75 loan fee, you're paying $9,095.10 to borrow $2,525. In all fairness, we must mention that the site also lists a $2,600 loan at 26.88%, and, according to the Web site, there is no penalty for prepayment.
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Posted
Jan 25 2008, 04:33 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
It was just a matter of time before some snarky blogger began commenting on the applications for loans at Prosper.com, the peer-to-peer lending site. If you apply for a loan at Prosper and your credit history isn't great, you might show up on Prosper lender Kyle M. Stephens' radar screen. You'd better have a thick skin or a generous sense of humor. This is particularly true if you have violated Kyle's first rule for Prosper applicants: Post a photo, and make sure you're dressed in business attire, unlike the woman who posed with large sunglasses and an outfit that exposed her navel and then some. Her photo is available at Kyle's site. "Oh, what the heck," Kyle relented, "wearing that may give her a better chance of getting the loan." He added, "If I have any readers, let's take a poll in the comment section. Sunglasses or no sunglasses? I vote she wears them." He also examined her financial information. "The other thing that really stands out for me is that her housing is only $675 a month, but she lives in San Francisco. Maybe she lives in a hostel," he wrote.
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Posted
Mar 07 2008, 04:20 PM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
How does Patrick at Cash Money Life really feel about tax refund anticipation loans? He writes, "The refund anticipation loan is quite possibly one of the worst things to happen to taxes since ... well, taxes." First of all, why not wait the 10 to 14 days it will take the IRS to get your money to you electronically. "Unfortunately, some people aren't satisfied with mere days. They want it now!" Patrick says. "Enter the refund anticipation loan," which he calls "essentially payday loans that are guaranteed by your tax refund."
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Posted
Apr 08 2008, 02:12 PM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
Congratulations to Randall at Credit Withdrawal for winning the dumbest purchase ever contest held by "Debt Kid." Randall won a Nintendo DS Lite for sharing his story about how he bought vinyl siding for his house for $20,000 from a traveling salesman. Here's why this was such a stupid purchase: Randall did no research on the siding -- "They could have put up wallpaper on the outside of the house for all I knew from siding," he says -- did no reference checks on the contractor, and financed the entire job with a 14% loan without reading the fine print. He didn't find out until he tried to refinance his house years later that the loan amounted to a second mortgage on his home. Ouch.
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