Contact Us
Mental Health
Financial advice
Youth Matters
Techno Corner
  Finance | Financial advice | Immigration | Special Needs | Accounting | Business | Labor Law | Asset Protection

Francis Vayalumkal

Most homeowners would love nothing more than not to have to put that mortgage check in the mail every month. But trying to pay off your mortgage ahead of schedule is not something to be undertaken lightly.

You must make sure you are financially secure, with no other significant debt, and have money in reserve for emergencies. Learn to calculate your Debt to Income Ratio.

There also are compelling arguments for not paying off your mortgage ahead of schedule. If you are inclined to take some risks, you could invest the money instead. Your investment could conceivably earn enough money to offset the benefit of paying off the mortgage.

Or maybe you would just like to enjoy your money now. By allotting less of your income toward your mortgage, you have more money available for vacations and other uses. Or, you could use the money for home improvement, which can make your home more comfortable and valuable when you are ready to sell.

In a haste to be rid of your monthly mortgage burden, you cannot afford to mortgage your financial future.

Make sure you will be able to finance your children's college education and your own retirement.

And finally, there's the matter of the tax deduction that mortgage payments bring. Be sure to factor increased tax liability into your financial projections before you make a decision.

If you are in a debt-free financial position where you can pay off your mortgage more quickly without sacrificing other aspects of your life, there are a few ways to accomplish this. Naturally, you will have to consult your lender to see what you can and cannot do. Here are a few of the most popular options:

1. Increase your payment schedule. Bi-weekly mortgage payments have become increasingly popular as a way to pay off a mortgage more quickly.

2. Make lump sum payments. Depending on the terms of your mortgage agreement, you may be able to make lump-sum payments at specific times. For example, you could earmark your bonus check of $5,000 to pay off part of your mortgage.

3. Shorten the time frame of your loan. You could elect to refinance and change your 30-year mortgage to a 15-year mortgage. Bear in mind, though, that your monthly payments will be considerably higher.

4. Increase your payments. If your financial situation has improved and you are making more money, you may be able to make higher payments or balloon payments. Most loans will allow you to increase your payments in this manner with certain restrictions.

5. Refinance at a lower interest rate, but pay the same amount each month. If you maintain a 30-year mortgage, but the interest rate drops from 6.25 percent to 5.10 percent, the money you were paying in interest can go toward the principal.

Remember, the first step is to make sure you can afford to pay off your mortgage more quickly. If you can, talk with your lender to find out which of these strategies is best for you.

Francis Vayalumkal is a mortgage banker with Regions Bank and can be reached at (813) 719-0303

Finance | Financial advice | Immigration | Special Needs | Accounting | Business | Labor Law | Asset Protection

Nitesh Patel

After watching the powerful images and later learning about the economic and social impact of recent natural disasters here and abroad, many of us instinctively dug into our wallets and made donations. According to Giving USA, charitable donations rose 6 percent in 2005 to more than $260 billion, fueled by disaster relief giving. (Giving USA Report, Giving USA Foundation - June 2006)

Yet, if you're like many Americans, it probably seems as if whatever you donate won't be enough to make a real difference in these situations. Will your $25 or $50 or $100 really help?

The answer is 'yes'. Although corporate foundations give millions each year, individual giving continues to be the largest single source of donations, accounting for over three-fourths of all charitable giving in 2005. (Giving USA Report, Giving USA Foundation - June 2006). Representatives from most charitable organizations would agree that even the most humble gift is appreciated and does help.

The good news is that you don't need to be wealthy to achieve your philanthropic goals and support a favorite charitable organization or a cause that's close to your heart. One long-term strategy that can effectively reach your philanthropic goals is giving the gift of life insurance. The gift of life insurance is an affordable and flexible way to maximize your contributions to help you to leave behind a legacy for future generations.

There are several ways to structure a gift of life insurance, but the end-result remains the same - the organization benefits. As the beneficiary of a life insurance policy, a charity receives proceeds on a tax-free basis upon the donor's death. Either the charity or a donor applies for a permanent life insurance policy on the donor's life and names the charity as both the owner and beneficiary of the policy. The donor's gift of the annual premium is income tax-deductible since the charity is the owner.

For those who want to maintain control and access to a policy's cash value without an income tax deduction, but still have the charity receive the insurance proceeds at death, the donor may retain ownership of the policy and simply name the charity as a beneficiary. Either way, you're able to leave your mark on a cause you believe in through life insurance.

Another more immediate strategy to support a non-profit organization is to make a charitable distribution from your IRA. A recent tax law change (Sec. 1201 of the Pension Protection Act of 2006 and Sec. 408(d)(8) of the Internal Revenue Code of 1986, as amended) allows tax-free "gift" distributions.

Previously, if an individual wanted to take funds from an IRA to give to a charity, he or she would be required to first take distribution of the funds, which were fully taxable as ordinary income. This could create quite a tax burden. The new law allows IRA owners age 70˝ or older to give up to $100,000 directly to the charity.

For some donors, these gift strategies may be the answer to "what else can I do?" The bottom line is that supporting a charity or organization you believe in -- either through the gift of life insurance or gift distributions from qualified retirement accounts -- is an easy way for you to leave your mark. All it takes is a simple call, a little paperwork, and a heart that wants to make a difference.

Nitesh Patel is a financial representative with the Northwestern Mutual Financial Network based in Clearwater for The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin). To reach Patel, call (727) 799-3007 or e-mail

Finance | Financial advice | Immigration | Special Needs | Accounting | Business | Labor Law | Asset Protection

Kamlesh Patel


The sign at your bank or savings and loan states that your accounts are insured up to $100,000. Knowing the rules of the Federal Deposit Insurance Corporation (FDIC) can help you extend your protection beyond this amount.

Generally, the FDIC insures only $100,000 per person per institution. Thus, if you have more than one account in a single bank, only $100,000 of the aggregate of your accounts is protected. Amounts over that are uninsured.

To increase your protection, you can simply spread your accounts over a number of different banks. Remember, however, that accounts in different branches of the same bank will be aggregated. Only $100,000 will be insured if, for example, you have $40,000 in Branch A and $90,000 in Branch B.

Because joint accounts are insured apart from separate accounts, you can increase your protection by placing some funds into a joint account. If you and your spouse have a joint account and each of you has a separate account, the three accounts can be insured to a total of $300,000. As with personal accounts, however, all joint accounts held by the same persons will be aggregated.

Different types of accounts are also aggregated. For example, if you have an $80,000 certificate of deposit, a $10,000 checking account, and a $30,000 savings account all at the same bank, $20,000 of the total will not be insured. Individual retirement accounts (IRAs), however, are separately insured to $250,000 as are some trusts.

Finally, the FDIC's protection includes both principal and interest. Once the account grows to $100,000, any additional interest earned will not be insured.

Review your accounts with your banker to be sure you have the protection you need.


There are new IRS reporting requirements that will affect many of you reading this article, since you might serve on the board of a nonprofit organization. Many of these organizations are small (less than $25,000 in receipts annually) and, under prior rules, were not required to file any reports or registration statements with the IRS. However, in 2008 that is no longer the case.

Small tax-exempt organizations must now file an electronic notice with the IRS on an annual basis, regardless of the amount of income they receive. The notice is Form 990-N. If this form is not filed for three consecutive years, the organization will automatically lose its tax-exempt status. If the status is lost, the only way to get the tax-exempt status back would be to reapply as a nonprofit organization with the IRS - a time consuming and potentially expensive process. However, some small nonprofit organizations remain exempt from filing even the Form 990-N, such as churches and/or other religious organizations.

The electronic registration Form 990-N can be accessed either from the IRS Web site ( or by going directly to the filing Web site ( The information to be reported is generally not much more than the organization's legal name, address, a principal officer, the annual tax year, and an affirmation that the annual gross receipts of the organization are normally less than $25,000. The deadline for filing Form 990-N is May 15 for calendar-year nonprofit organizations. Obviously, that date has already passed for 2007 calendar-year organizations, but that isn't critical, since there are no penalties for filing late. The important consideration is that the organization does not miss filing three years in a row, thereby jeopardizing its nonprofit status. So now is the time to alert your other nonprofit board members and insure that the required filing is undertaken quickly.


Sometimes in order to serve your customers better you have to get rid of the problem customers. Problem customers tend to complain about your prices or rates. They are slow-payers, and they may be rude to you and your employees. They may have had problems with your competitors, and they make unrealistic demands on your business. Problem customers are a drain on the resources of your business, and chances are they are not profitable.

- Separate the best and the worst. You should evaluate your customer base to determine your best and your worst customers. Then decide which of the worst customers can be salvaged and which should be eliminated. You can do this by determining the profitability of each customer.

- Some can be salvaged. Some unprofitable customers can be salvaged by reducing the costs of servicing them. Eliminating discounts, changing payment policies, increasing prices, and even renegotiating contracts can help. Customers who are profitable but are still problematic because of the way they deal with your company can be saved if you can eliminate the source of the problem.

- Change your policies. If an individual customer is a problem because of unacceptable behavior, refuse to deal with that individual. If the problem customer is a slow-payer, change your sales terms to them. If you sell merchandise, have the slow-payer pay for freight or have them pay COD. For any returned merchandise, charge a restocking fee. If your business is service-oriented, have the slow-paying customer pay a large deposit before you begin any work.

- When it's time to say goodbye. There are several ways to eliminate a customer. Suggest that the customer try a competitor or just be blunt and tell the bad customer in person or by telephone exactly what the problems are.

You should view the elimination of your worst customers as a way of making your business better, more productive, and more profitable. But don't let restrictive policies for dealing with bad customers affect the liberal treatment your good customers deserve and expect.

Kamlesh H. Patel, CPA, can be reached at (813) 949-8889 or e-mail or

Finance | Financial advice | Immigration | Special Needs | Accounting | Business | Labor Law | Asset Protection

Satya Shaw

A successful retirement does not just happen; you have got to plan for it. The long ramp toward retirement focuses on saving and investing, but once retirement starts emphasis shifts to spending and safeguarding. Even though the greatest challenge in retirement, and probably your greatest fear, is outliving your money, most people spend less time planning their retirement than they do planning a vacation.

What does retirement planning involve? Here are the steps: First, determine what you would ideally like to do in retirement, and then discuss it with your spouse and other loved ones. Will you spend your time traveling, enjoying hobbies, helping others, working part time, or what? Second, estimate the retirement income you'll have from savings, Social Security, pension and all other sources. Third, estimate your expenses making sure to take account of inflation, taxes and health care costs, which are likely to be an increasing part of your budget.

Steps two and three should be done for each five-year period of your retirement and then revised annually. Fourth, if you have more income than needed, you only need to safeguard your investments to make sure they're not lost or shrunk by bad decisions. If you have insufficient money for retirement (expenses exceed income), then you'll need to postpone retirement, work part-time or possibly use a Reverse Mortgage to access the equity in your home. Either way, it is highly recommended that you minimize your exposure to loss and maximize the full potential of your financial resources by working with a financial adviser. They can help you determine the risk you can afford, investment options and how to position your money for best results without sacrificing safety. Retirement is going to be long, filled with uncertainties, including emergencies, and going it alone is one of the greatest risks you can take.

Be realistic in your planning. For example, be aware that for a couple age 65, there is a 50 percent probability that one will live beyond age 90. Acknowledge that even a low rate of inflation can make a big difference in prices over the 20 to 30 years you'll be in retirement. For example, average inflation of 3 percent means $1 today will be worth only 55 cents in 20 years and 41 cents in 30 years. Since 78 million boomers are entering retirement over the next two decades, the price of everything related to retirement, especially health care, is likely to rise faster than overall inflation. Inflation is a cruel tax for those on fixed incomes, and chances are your income in retirement will increase a lot slower than prices.

The boomer explosion is going to overwhelm government-provided services and benefits. This means that the relative benefits of Social Security and Medicare are going to shrink under the pressure of increased retirees. There will simply be more people receiving entitlement benefits than workers paying the bills. Every study, government and private, indicates there will be a shortage of money to support these programs. To pay for this shortfall, the government must raise taxes of all types. The increased taxes, inflation, relative decrease of benefits combined with escalating medical care costs will be especially burdensome for those in retirement without rising incomes from wages and salaries.

If you haven't evaluated it yet, investigate the risk you're taking with your retirement money. Would you have a loss if the stock market lost ground? You might if your money is still in your ex-employers 401(k) plan, or if you own securities, even mutual funds, whose value is determined by the market. Generally, investments in stock have done well long term, but you may need your money before a long time. From November 1973 to October 1974, the S&P stock market index fell 48 percent, and it took over six years to recover. The last bust in the stock market was 2000-2002, and we have yet to fully recover. In the meantime, inflation marches forward with the shrinking dollar purchasing less. Much of your income in retirement is likely to be derived from your savings and investments, and you simply can not afford risk of loss and the compounding of inflation. If you lose some or all of your retirement money to bad investments, you'll increase dramatically your chances of realizing your greatest fear: outliving your money.

How do you safeguard against the challenge of too many years and not enough money? Like law and medicine, financial planning is best left to professionals. Your job in retirement is to enjoy life free of investment worries.

Satya B. Shaw, CPA, can be reached at (813) 842-0345.

Contact Information
The Editor:
Send mail to with questions or comments about this web site. Copyright © 2004 Khaas Baat.

Anything that appears in Khaas Baat cannot be reproduced, whether wholly or in part, without permission. Opinions expressed by Khaas Baat contributors are their own and do not reflect the publisher's opinion.

Khaas Baat reserves the right to edit and/or reject any advertising. Khaas Baat is not responsible for errors in advertising or for the validity of any claims made by its advertisers. Khaas Baat is published by Khaas Baat Communications.