Monthly Archives: May 2018

How to Manage Debt More Effectively

There are many people in today’s society that do not know how to manage their debt effectively. Because of this they are over run with debt repayments and can never seem to get on top of their finances. I want to show you how you can manage your debt more effectively so that you can begin on the road towards becoming rich.

Debt is a problem that is extremely prevalent in today’s society. Almost everyone knows someone who is overrun by extreme debt, and it is likely that you have some sort of debt that you could manage more effectively.

Debt is a complicated matter because often dealing with debt is an emotional problem, not just financial. If the way we managed our finances was purely logical then we wouldn’t be in debt in the first place. When managing debt we have to take our emotions into account. Often people are unable to follow a plan because emotionally it offers no reward.

The advice many financial planners give to people who are in a lot of debt is to consolidate their high interest debt into a low interest loan (such as a home loan). That way they only have one repayment to make and they can slowly but surely pay of their debt. The problem is they don’t take emotions into account. These people then find they have a cleared credit card and will go out and spend money on their credit card, putting them in even more debt than before.

Another problem people have with reducing their debt is that they are constantly trying to reduce their means by living frugally. The more debt they have the more frugal they try to live. This does not offer any emotion reward either as life is extremely tough as you are trying to pay off debt. Even once all of the debt is paid off people still do not find themselves rich.

A more effective way to manage debt is to focus on cashflow instead of of the figure of the debt. Your goal should be to get rich by increasing your means, and to pay off debt at the same time. This offers the best emotional reward, and it is financially logical. It is just a little more creativity and intelligence than the methods most financial planners recommend.

The goal is to generate enough passive income (income that you don’t have to work for) to pay for the interest on your debt, and to pay off your debt over time. Most people focus on putting a lot of money onto their debt to pay it off quickly. I am suggesting that you minimise the cashflow impact your debt has. Do what you can to lower the interest rates you have to pay on your loan, then lower your monthly repayments by paying just the interest (or the interest plus a little extra). Let me just state in the moment that I am not a financial advisor and I am not telling you that you should do this, I am just educating you of a method you might like to use. Always seek financial advise before choosing how to manage your debt.

Now you can use the extra money you would have used to pay off debt to invest in an asset that generates passive income. I like to invest in positive cashflow real estate. It offers the advantages of leveraging the banks money, and you get both capital appreciation and rental income. Now you can use the passive income to offset the interest repayments on your loan. The goal is to get your passive income to equal your interest repayments, plus a little extra.

Once you achieve this you can then forget about your debt, as your asset will be paying it off for you. This offers maximum emotional reward as you don’t have to live below your means, and you are building wealth. Eventually your asset would have paid off your debt completely and instead of being left with nothing, you now have an asset that continues to generate you income each and every month. You have increased your means and you now have increased you skill set so you can continue to invest and get richer and richer. Now doesn’t that sound like a more effective way to manage your debt?

Your next step towards becoming rich is to increase your financial IQ through education. By educating yourself in the area of finances you will be able to get a greater return on investment and you will be able to earn more with less work and less risk. Does that sound good to you?

How To Manage Finances While At College

Entering college must have been the dream of your life. When you were living with your parents, you might have often seen them worried about different things. You might have also noticed one thing that nearly all the worries would be related to money. Now that you have left home and stepped into college, the dilemma is a lot similar. The only difference is that it’s not your parents in the picture now, it is you. Your parents might be wealthy enough to run an IT business and gain security certification or security training for it, but when you are at college, you are pretty much on your own. Now that you are the one who has to make ends meet, here are some tips to follow.

The most successful option is to have a part-time job. Many students go to the college in the morning and work at different places when they are off from college. Many colleges might also offer you on-campus jobs. These jobs are really helpful because they offer to pay your tuition fee, your food plans or even your books expenditures. Another highly sought after option is to work at small dine-ins. Choose any job that suits your money requirements and your study schedule.

Setting up a proper budget is the key. Make an estimate of your total monthly expenses. Consider your utilities, insurance, bills, food, gas, etc. Grab a pen and a paper and start writing down the exact amount you are going to allot to your preferences. Make sure you write down the exact amount. Also, make sure that you do not spend more than that in any case. Be strict and stay disciplined about your budget.

Also set up an emergency fund. Life is uncertain and you never know when anything wrong might happen to your money schedule. In order to save it from any disturbance while you are unwell, set up an emergency fund, and make sure you do not take out money from it unless it is truly an emergency. A savings account is another step in maintaining your budget. Turn to the bank that suits your situation and your financial needs. A lot of banks offer college students different savings account with feasible benefits and interest rates.

Saving is what it is all about. Save money on every little thing that you buy. When you shop for utilities, go for wholesale rates, and opt for better buys. Similarly, you do not need to buy extra expensive clothes or shoes. Go for what is moderate in price and still good to appear. You can also save money on food. Instead of dining out regularly, eat at home. When you are going out with your friends, take special care in spending. If you think you cannot afford to head out, dare to say no.

The time you spend at college might be the best time of your life. Many people might complain of having limited money, but they cannot deny that despite being less fortunate with money, they still happen to enjoy. Enjoy your life at college but keep the saving spirit fresh within you.

8 Tips to Take Control of Your Finances

How to manage your finances is one of the important components of having a good life. Whether you have a smaller income or a better one, you will truly save yourself from a lot of worries and trouble if you know how to manage your finances well.

(1) Set priorities carefully plan your finances. Know your wants and your needs. Do not be confused with what you need and what you want. If you want to make big purchases like getting a home or a car, careful planning will be your key to make it a little easier.

(2) Make a budget. It is always helpful to make a guide on your spending for the next few months. Having a plan on spending is very much helpful for you to see how much you can afford to spend in a month. Make a list when you go to the grocery or when you go shopping and keep reminding yourself to stick to the list. Sticking to your budget today is definitely one good way of being free from financial worries later.

(3) Do not spend more than what you earn. Do not splurge on spending with your credit card if it is not clear where you will get payment for it the next month. Thinking about spending a lot today hoping you will get a job the next month is a no-no.

(4) Manage your debts. Pay your credit card promptly and do not go over your credit limit. Late payments and maxing out your credit cards will cost you expensively. When credit card companies are giving you lower interest rates, you might end up having to pay for higher fees. Late payments and overspending will likely stain your credit report in the end as well. Knowing how to manage your debts is indeed one huge step in learning how to manage your finances.

(5) Save. Make it a habit to save and include savings on your budget. Allot a percentage of your income as your savings. Having a good amount of savings regularly always helps you face your future with confidence and will save you from a lot of financial worries.

(6) Be informed. If you are borrowing money, making investments, or renting anything, always be informed with interest rates and the terms and conditions. When dealing financial transactions, it is always wise to read the fine prints. This way you will save yourself from financial troubles later on.

(7) If you want to invest your money, be wise. Know your market, know the feasibility and success rate of your investment. Especially these days where the economy is down, you also have to be careful where to invest your money. Find and study the opportunities with lower risks.

(8) Think your way out of debts and overspending. Indeed, it may be difficult for some to overcome the habit of overspending and splurging on many things in life. If you are facing the same situation, try to train the power of your mind to manage your thoughts on spending. Resist the urge to do unplanned spending by waiting for a day or two. In the end you might find out you don’t exactly need it.

If you want to live a good life, know how to manage your finances as this comprise a big part of being happy and worry-free in life.

How to Manage Your Money

Do you want to learn how to manage my money better? In my article I will be discussing 7 important tips which will help you in managing your finance properly.

First keep in mind that what is your income, if you are spending more than you earn it means you are not managing your finance properly. Listed below are 7 important tips through which you can manage your finance properly:

  1. You can make budget on monthly basis which will help you to spend according to your need.
  2. Another important step is to constantly check your bank statements or review your bank statements and try to consider getting rid of your debt as quick as you can.
  3. Make a life style which fits according to your financial limits .It includes your standard of living, your clothing etc. You must avoid showing your self more than what you actually are.
  4. The most important aspect which has to be considered by you is to save money for tomorrow. You can start saving with a penny. This saving can help you in different type of situations.
  5. You can manage your debt on regular basis by paying or clearing your debts on monthly basis and try to avoid the excess use of credit card as it will only increase your debts and will further increase your financial problems in the days to come.
  6. Try to earn some additional income apart from your regular income. Doing some kind of part time job is the option you must consider.
  7. Try to make as much as deposits to the banks, as banks are offering high interest rate on savings. It will assure you that you are managing your finance properly and efficiently.

Managing Finances in a Relationship

Most breakups in a relationship are caused by financial disagreements. From a dating couple to married ones if money issues are not well agreed on, there could be looming trouble. At my pre-marital counseling class, I got a chance to hear different views on how couples manage their finances and realized that it is not a matter of how much money couples have but how they agree on the use of the money.

One of the couples shared their way of dealing with money and this impressed me; they pooled together all their income and sat down each month end to jot down their monthly budget. Each person got some pocket money for personal use thus it did not matter how much one contributed to the pool. But of course this can only work if both parties are open about their income.

Currently with more women being empowered, some couples have found themselves in a relationship where the woman earns more than the man. This can cause a strain on the relationship especially if the woman looks down upon the man or if the man is in denial that he is earning less. It is therefore important that a couple accepts each other as they are and plan for their income as a couple rather than compete on who earns more.

Couples can open a joint account, invest in insurance for the family, buy property, buy shares in the stock market and enjoy the power of pooling funds together.

In case of further problems, couples can also get a financial advisor or a successful couple to emulate.

False Sense of Financial Security

You are currently living the ‘American Dream’. Right now you are blissfully married, you have two kids, a dog, the nice home with a white picket fence, you drive an SUV and a station wagon and you are in debt. Your story is just like millions of other people out there. Okay, so your story isn’t exactly as I just described but its pretty similar. In fact the debt part is probably the only absolute truth. You are able to make all of your minimum monthly bills and are making ends meet – or so it seems. You’ve been drawn into the false sense of financial security and assume that you know how to manage money. The reality is you may be in too much debt. I’ve created a list of ten warning signs indicating that you might be in over your head.

  1. You have little to no savings
  2. You are only able to make the minimum payment on your credit cards and other bills
  3. You have been denied credit
  4. You use cash advances from your credit cards to pay other bills like heat and hydro
  5. Once in a while you’re late with your bill payments
  6. You keep buying things with your credit card adding to the balance
  7. You don’t even know how far in debt you are
  8. Your bank accounts are overdrawn and once in a while you bounce checks
  9. You have one or more credit cards that are close to the limit or are maxed out
  10. You have been secretive to family and friends about your debt and over spending

Does one or all of these statements sound like you? Even if just one of those is true you might be in some sort of financial trouble and may need to learn how to manage money all over again. The good part is you can. The bad part is you need to start taking control of your finances ASAP. The longer you wait, the worse the problem will get. Finances are something that can’t be ignored or forgotten about.

STEP 1: Now is the time to create a check list and go through it. Sift through these ten things and find out the parts that correspond with your life.

STEP 2: Find a way to correct those problems. You have no savings? Start creating your emergency fund. Add $25 a week or any amount that is possible to increase that balance to $1000. You keep adding to your credit card balance? Start buying things with cash and start making larger payments to your credit card. The list goes on and on but you have to fix those problems.

STEP 3: Set goals and start making them into reality. Next week isn’t the best time to begin making goals. Start today – better yet, start right now. Don’t set your goals too high, create financial goals that are able to achieve like cutting your hydro bill by 5% or 10% or save some cash by quitting smoking. Small steps are key to goal setting and learning how to manage money.

Being lured into a false sense of financial security is easy if you don’t know the signs of serious financial problems. If you have gone through this list and have found any matches it might be time to start fixing those problems before your security becomes a huge issue. Understanding how to manage money can be simple and everyone is able to make it happen.

Simple Personal Finance Management Tips

It is important that we start saving for a rainy day as early and as soon as possible. Personal finance management is essential in today’s day. In today’s capitalist society most people don’t think twice about taking loans to buy unnecessary and expensive things. The recession however has woken up most people and scared them into learning to manage their finances. Because of the daunting nature of this task or because of insufficient knowledge most people never know how to effectively manage their finances.

Getting started

There are many steps to follow during personal finance management. These are some of the most essential ones you need to know to get you started.

Prepare your Budget

Preparing a budget will help you to curb overspending. Total your net income from all sources like work salary, any mutual funds, alimony, etc. Prepare a list of all your monthly expenditures and how much it is going to cost. These would include your bills, shopping and household budget, insurance premiums, etc. This is a great way to learn to adjust your expenses and create an estimate of your actual monthly expenses.

Saving

After preparing a budget the next thing you need to do is save money. Preparing a budget gives you an idea of where you overspend. Depending on your income, open a saving account and contribute a suitable percentage of it towards your account. This account should be used only in the case of emergencies.

Invest

Investing is a great way to earn a little extra income. The best place to invest is in the mutual fund of a reputed company. There is minimum risk involved when investing in mutual funds compared to other stocks. Further more you can leave the worrying caused as a result of volatile stock markets to experienced and professional fund managers.

Insure

Insurance is a great way to secure your future. It also reduces the risk of needing to empty out your saving account in the case of an emergency. You must at least take out insurance for your house, car and life. Choose a reputable company whose premium rates suit your income to avoid defaulting and wasting your money.

Tax Planning and Retirement Planning

Plan your tax so as to minimize the amount of your taxes. Reducing your income will bring down your taxable income. An easy way to do this is to contribute towards a retirement plan at work. As a result you can also plan for your retirement while planning your tax. You can also deduct your taxable income by donating to charity. State tax and mortgage interest will also deduct your taxable income. Having more dependents or getting married is another way to deduct your taxable income. You can also get tax credits for adopting children or college expenses.

Personal finance management gets more complicate every year; these simple tips are all you need to get started.

The Best Way to Make Sure Your Savings is Growing

When you are trying to set up a budget for your family or for yourself and you have debts, then you really have to know how managing finances can help you save more money and pay off your debts. There are many things you have to include in your budget and there are many ways you can go about making sure you are set when it comes to your budget. This is an important thing to understand because your finances are very important.

  1. Make sure you include all your expenses

Most people forget to include everything in their budget as far as their expenses and this is what throws them off when they end up having to pay for something that they did not budget for. You have to include yearly expenses and expenses that you don’t have to pay every month. This is very important to your budget.

  1. Always include some savings

Even if it is only a few dollars a week or month you need to include some savings when you are managing finances. This is very important to your overall budget and financial picture for the future. You may need this savings for something in the future that will be unexpected and without it you could be in a very bad financial spot. Savings can keep you from gaining more debt as well.

  1. Be realistic

Most people also struggle with setting up a realistic budget. If you get paid a couple times a month and you know exactly what you are going to make, then your budget should be very easy, but do not forget to leave extra room and money for entertainment. A good way to get a picture of what you really spend is to go ahead and track each penny you spend for a full month or two.

Tips For Auto Financing

If you have never purchased a car from a dealership, or have previously purchased but never been sure how the finance process actually work, here are some helpful tips. Financing has become the most common method of purchasing a new (or used) vehicle. The steep rise in auto prices makes it difficult for most consumers to simply lay cash on the barrelhead. Therefore, it makes sense to know on what criteria your loan will be based.

o Your Credit Score – Few things are as integral to your auto loan as your credit score. This will dictate what interest rate you are offered, the length of auto loan available to you and much more. In fact, your credit score is the largest contributing factor to the entire loan process. If you do not know what your credit score is, the best choice is to get a free copy of your credit report from one of the credit bureaus (one from all three is a better option), though you’ll have to pay for the actual score.

o Your Down Payment – The amount of money that you use as a down payment is a vital part of what determines your loan payments. The larger your down payment is, the lower the amount of money that you will have to finance. This helps you reduce your monthly payments and, when combined with a strong credit score, can help you receive the deal that you want.

o The Market – While your credit score plays a role in the interest rate that you receive, the current market conditions also play a large part. Many consumers are unaware of what the current market conditions are and, thus, have no way of knowing if they are receiving the best interest rate or not. Interest rates fluctuate based on the economy; knowing what those rates are will help you attain the best deal possible.

o The Source of Your Auto Loan – Many consumers mistakenly believe that it is easier to obtain financing through the dealership. While it may be more convenient, it is certainly not the only, or even best, method. Local banks and credit unions can offer you a viable option, as can online lenders. By having your financing already in place, you can avoid the expensive hassle of dealer financing and get a better deal on your new vehicle.

o Your Trade In – The value of your trade-in vehicle is an important part of the process. The more your vehicle is worth (to the dealer, not market price), the more money you will receive for your vehicle. Never think that you will receive fair market value for a trade-in. Dealers will pay only what they feel the vehicle is worth. This value includes how easily they can sell the car (demand) and how many similar cars they currently have (stock).

By ensuring that you know these areas of information, you will be able to ensure that you remain in control during the purchase process, as well as ensure that you pay the lowest price for that new car.

How to Manage Your Finance During Recession

Managing your finances is one of the most difficult jobs for any person. And when it comes to managing your finance during recession, you really need to take some helpful tips from a financial adviser. But this will also be a costly task as the financial adviser will also charge his fees. Here’s an outlook into the matter. As you proceed reading this article, you will be able to gather some important useful tips on how to manage your finance when you are falling into the lap of recession.

Before we start to discuss where and where not to utilize your available finance during recession, let’s get to know what a recession actually means. Reduction in an economy’s GDP or gross domestic product for a period of continuous three quarters is referred to as recession. However, NBER, National Bureau of Economic Research formally defines a recession as three consecutive quarters of falling real gross domestic product. Surviving during recession is not an easy task. Many people who were earlier making it from paycheck to paycheck are now held with no or little money. Generally, recession lasts for about 6 to 18 months. But this duration may somehow seem to be a longer one as people go on with lesser money in hand.

We present to you some helpful tips on how to manage your finance during a recession;
1. Make it a habit to check your bank account on a regular basis. Maintain a statement of coming in and going out of cash. Always try to make the payments on time as this will not increase the interest rates on them. Keep an up to date cash flow forecast.

  1. Try to reduce your daily expenses as much as you can. This involves the calculation of every single penny being spent on buying the daily needs. Stick to necessities. Make a clear account of each single penny being spent. Each single penny is essential during the recession times for which you will appraise yourself later.
  2. Credit cards increase debts. As long as you carry a credit card with yourself, you are sure to spend on unnecessary things which will ultimately increase your debts. So try as much possible to keep away your credit cards.
  3. Avoid borrowing money from anyone. As long as you continue to borrow money, you keep yourself sinking in to the weird situation of recession. This way you can never come out of recession with a stable financial standing.
  4. Continue to pay the premiums. When you continue paying the premiums, if any, you are in a way securing your money. This is because this premium amount will come back to you and that too as a huge amount. Also if you pay the premium which is going from a long time then you save those premium amounts which have already been paid in the past. And if you discontinue paying the premiums then you may lose the amount which has already been paid.
  5. You should look for extra sources of income other than your ongoing one. This is how you can increase your income. No matter if extra income comes to you in smaller amounts, but do keep looking for options to generate it. For at least, something is better than nothing. Do not waste time rather spend it on earning extra for yourself. It would certainly help you in longer run.

You have to, at any cost manage your finance during recession as there is no other way getting out of it. Managing your finance and earning extra income seems to be the only mantra to keep yourself going during recession.