Choosing Between Fixed Rates and Variable Rates

When taking out a loan, finding the lender that offers the best interest rates is a very important step. Depending upon the loan that you’re applying for, however, you might find that you have to make certain decisions before you can determine which loan offer really has the best rate. One of these important decisions that you might have to make is whether or not you want to have your interest at a fixed rate or at a variable rate.
Fixed and variable rates are most common when dealing with mortgage loans, though there are other types of loans that offer both types of interest as well. If you’re not sure which type of interest would be best for you, or what the main differences are between the two types, then the information presented below might help you to make an important decision concerning your next loan.
Fixed Rates
Fixed interest rates are rates which will not fluctuate as time goes by, regardless of how much national interest rates may rise or fall. They are often used as part of a promotion, with low introductory fixed rates being replaced by either variable rates or a higher fixed rate after six months or more have passed. Generally, the only way to change a fixed interest rate is to refinance the loan and get either a lower fixed rate or a variable rate on the new loan agreement.
Variable Rates
Unlike fixed rates, variable rates fluctuate in response to changes in national rates. When national rates increase, a variable rate loan will also increase… but when national rates decrease, the variable rate will do the same. Variable rates are the most common type of interest rate, and are generally used for small loans, credit cards, and many other types of debts. It can be difficult to predict exactly how much you will pay in total with variable rates, but if national interest rates stay low then you may end up paying much less than originally estimated.
Advantages and Disadvantages of Fixed Rates
Fixed rates have several advantages and disadvantages, and may or may not be right for you and your loan needs. They provide security against increases in national rates, meaning that you might end up paying a much lower rate if you’ve locked in a lower fixed rate than the current national rate. If national rates fall, however, you may end up paying more than you would with a variable rate. Promotional fixed rates are generally set low, but as they only last for a limited amount of time you might end up paying a much higher rate once they expire. Fixed rates can make budgeting easier, however, due to the fact that all payments should be for the exact same amount.
Advantages and Disadvantages of Variable Rates
Like fixed rates, variable rates have their own advantages and disadvantages. While they can occasionally lead to lower interest rates than their fixed counterparts, the fluctuations of national rates will generally bring them up again before you’ve finished repaying the loan. Variable rates can sometimes grow to several times the rate you were originally paying in a matter of months, though there is always the possibility of having just as sharp of a drop as well. With variable rates most loans will have the same monthly payments, though the number of payments may be extended or the final payment may be a different amount due to the fluctuating interest that has been accrued over the loan term.

12 steps become a millionaire

12 steps to become a millionaire You don't have to own the company or be a CEO. Here's how to build a rich nest egg one paycheck at a time.By Kiplinger's Personal Finance Magazine
A number of the people profiled in "Millionaires tell how they did it" made their millions as entrepreneurs. But working for the Man doesn't mean you have to be a wage slave or resort to buying lottery tickets to strike it rich. The trick is to maximize your income on the job (and know when to move on), make the most of your employee benefits and tax breaks and use that extra money to start investing.
1. Keep your eyes peeled for better ways to do your job. Streamline a procedure, shave costs, create a new profit center, become an expert on a specific topic, volunteer for a company committee -- anything that will make you stand out as a prime candidate for a promotion or a pay boost.
2. Don't be afraid to negotiate. In a study of master's degree graduates from her university, Carnegie Mellon economics professor Linda Babcock found that those who negotiated their first salary boosted their pay by 7.4% compared with those who didn't bargain.
3. Get your ducks in a row and your numbers on paper. If possible, quantify how much your efforts add to the company's bottom line. If that's not feasible, spotlight your value with comparable salaries for workers in your position from a Web site, such as Salary.com, or from a professional association.
4. Plot your strategy when it's time to move on. Create a professional-looking page on MySpace that tells prospective employers why you're an exceptional candidate, recommends John Challenger of the outplacement firm Challenger, Gray & Christmas. And don't neglect more conventional networking: Join a professional association or show up at school reunions toting business cards.
5. Contribute as much as you can to your 401(k) and other tax-deferred retirement plans. You'll not only build a bigger nest egg, but you'll also cut your tax bill. In the 25% federal tax bracket, every $1,000 you contribute to a 401(k) trims your taxes by $250. And you'll save on state income taxes, too.
6. Flex your tax-saving muscle. Contribute pretax dollars to a flexible spending account to pay for dependent care or out-of-pocket medical expenses. If you set aside $1,500 per year and you're in the 25% bracket, avoiding federal income and Social Security taxes means Uncle Sam will subsidize almost $500 of your expenses.
7. Review your tax withholding. If you're expecting a refund this spring, you're having too much tax withheld from your paycheck -- and making an interest-free loan to Uncle Sam. That's no way to become a millionaire. Put more money in your pocket by using Kiplinger's withholding calculator and then filling out a new Form W-4.
8. Stash savings in a Roth IRA if you're eligible. Withdrawals in retirement, including decades of compounded earnings, will be tax-free. This year, income-eligibility limits for a Roth increase to $114,000 for individuals and $166,000 for married couples.
Invest like crazy 9. Don't delay. The quicker you get a jump on putting money aside, the easier it will be to stuff a seven-figure cushion. If you start at age 25, for example, investing $286 per month will get you $1 million by age 65, assuming you earn 8% annually.
10. Invest automatically, either through your employer's retirement plan or by setting up a regular deposit to a mutual fund or broker. You'll never miss the money, and you'll avoid two big mistakes: buying too much when stock prices are high and not buying at all when prices fall.
11. Watch for fund fees. The more you pay, the tougher it is to earn an above-average return. The typical hedge fund, for example, takes 20% of any gains, a huge hurdle to overcome. A better bet: no-load mutual funds with expense ratios of 1% or less. If you trade individual stocks, watch those commissions.
12. Keep it simple. Be wary of get-rich-quick schemes or sales pitches for complex investments, such as oil-and-gas partnerships, that trade on the millionaire cachet to lure investors into buying high-fee products they don't understand. Most millionaire households accumulate their wealth over the long term by sticking to a regular investing plan in a balanced portfolio.

Idea Credit Cards

Credit cards By Bankrate.com

Just because many Americans have overdosed on debt doesn't mean using credit cards is a bad idea. In fact, there are times when a credit card is clearly the best choice.For starters, you usually get far more purchase protection with a credit card than you do with cash or check. That helps when you buy a $1,000 laptop that suddenly has a damaged screen a week after you walk out of the store, particularly if the store manager and the manufacturer insist it's your fault.Save-the-day features kick in when you travel. Credit cards often include free car-rental insurance and some travel insurance, though offers vary with each issuer.And if a thief picks your pocket, your liability is much lower than with a wad of cash.Add in airline miles, rewards points and cash back, along with the interest-free loan if you pay the balance every month, and you'll find a lot of credit card experts using their cards to charge everything they can."I try to buy everything with a credit card," says Scott Bilker, author of "How to Be More Credit Card and Debt Smart." "I hate using cash, because if you lose it, it's gone. With credit cards, the bank's money is gone."You just have to be careful to use them in your favor. It takes work: research and phone calls."

Sociability Trumps Money

Opinion: Laura Rowley
Among the studies reviewed, researchers analyzed a survey of college freshman in 1976, who were asked to rank their happiness. Twenty years later, a follow-up survey of the same people found that those who scored in the top 10 percent in well-being reported average salaries of $62,681, compared to $54,318 for the bottom 10 percent. But the next-to-happiest group was earning the most: $66,144. Analyses of long-running panel studies from Australia, Germany, and Britain produced similar results.

On the other hand, if you define success in terms of relationships, the joyful 10s are the clear winners. In a survey of current college students, the "very happy" group was more gregarious and ranked higher in self-confidence, energy, number of close friends, and time spent dating. (Those who ranked themselves merely "happy" had higher grade point averages, attended class more frequently, and were more conscientious.)

"The 10s are more sociable and positive, so people like them," says Diener, and the global survey demonstrated similar results. (I interviewed several millionaire entrepreneurs this week and they all ranked themselves 10s. Energy, confidence, and relationships may be the key.