Category Archives: Finance

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.

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?

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.

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.

Debt Stacking How to Manage Money

Do you have a plan in trying to eliminate your debt? Are you tired of making the minimum payments on each outstanding balance and never being able to make any progress?I want to go through what debt stack is and how to manage money and get rid your debt as fast and reasonably as possible. Something that is more interesting is you can follow the debt stacking formula to help create the retirement you’ve always hoped for!

What is Debt Stacking?

I have discussed this in one of my previous post but I think this is worth another look. Debt stacking is an easy principle of eliminating all debts in a triangle type formula. It is a proven theory and it can be easy plus you can get rid of your debt two or three times more quickly then you may have thought possible.

HERE’S WHAT TO DO:

STEP 1: Create a list of all of your current debt. Put each amount in order from the lowest amount to the largest.

STEP 2: Set up an emergency fund in a savings account. The lowest amount you should have is $1,000. You just never know if or when you may need it.

STEP 3: Always make the minimum payments every single month that is required on all of your debt until the first one is paid off.

NOTE: If you usually pay extra on one or more of your balances each month, apply that extra amount to first item (of the lowest balance) on your list. (for example if you pay $200 extra each month on item number 3 switch that amount, regardless of interest to the lowest balance)

STEP 4: Once the lowest debt has been paid, use that money against the next lowest balance (the second one) on your list. This will help speed up the amount of time it will take to pay off the second balance.

STEP 5: Repeat that same process to the next debt or until all have been eliminated. Remember you are not spending any more money and it will accelerate the process.
REMEMBER: For this to work effectively you must not create any new debt.

Let’s look at a typical example:
TYPE: AMOUNT: REQUIRED MONTHLY INTEREST RATE:
PAYMENT:

Credit Card $7,500 $150 16%

Car Loan $10,800 $350 8.5%

Student Loan $14,600 $365 7.25%

Mortgage $139,000 $940 7%

TOTALS $171,900 $1,805 —–

If you only made the minimum required payments:

It would take 32 years to be completely out of debt.

In those 32 years you would have paid $205,485 in INTEREST for a total of $377,385.

If you apply the Debt Stacking Formula:

It would take just 12 years to pay off that same debt.

In those 12 years you would have paid just $86,343 in interest for a total of $205,485.

It may seem too good to be true but this is an easy process that works. You are not making any changes to your monthly payments, just a different approach. Every situation is different but debt stacking can work for anyone.
How Debt Stacking would help with retirement:

Once all of your debt has been eliminated, take the same total minimum required monthly payment of $1,805 and invest it. Do that each month for the next 20 years. You would have been paying that amount for another 20 years anyway. If its invested at 8% you will have $1,179,533 in 20 years. Nothing in your lifestyle has changed.

Basically debt stacking will dramatically reduce the amount of time it will take to pay off your debt and it will also reduce the total amount of interest you will pay AND it will help create the nest egg you have always wanted. That sounds pretty great doesn’t it?

When it comes to paying off debt you don’t always see results. It’s hard to stay focused and maintain hope when those large balances don’t seem to disappear until the last few years. The key is to pay as little interest as possible so you will have more of your money in your bank account down the road. I hope this post helped you understand debt stack and taught you a little more about how to manage money.

Until next time,

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.

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 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.

How to Manage Money

If you are similar to everyone else you probably feel as though you could make more money and don’t know what to do with the money you have. The mega wealthy know how to manage money and are able to manage the lifestyle we all dream of. Here are a few helpful ways that you can turn your finances around and help you to be far more wealthy than you imagined.

Better Time Management at Work

There are ways to be smarter with how you spend your time at your job. Many of us relish the ‘water cooler meetings’ but is it the best use of your time? Probably not. Instead of talking about the most recent episode of 24, learn to be an expert on a certain part of your job, figure out something new, or find a way that will cut costs. The more you put into your job the more you will get from it. Make yourself stand out as the perfect person for any promotion or salary increase. If you’re truly motivated enough you might even discover yourself in your bosses chair.

Negotiate Your Salary

When most people begin a new job they are usually too scared to negotiate their salary and take whatever is offered. Statistics show that those that negotiated how much they want to make increased their salary by almost eight percent versus the people who did not. What’s the worst case scenario? You might just get the big fat pay raise that you want and create new ways of how to manage money.

Be More Charitable

It’s amazing how well the ‘pay it forward’ mentality works for the rich. The average household with an income of over $500,000 gave away over 6% of what they make to charities or special causes. Not only does giving back to those who need it will supply you with a lot of satisfaction and you can write off donations come tax time. If you are really on top of your finances you may even be able to put yourself into a lower tax bracket.

Own Your Own Business

As the old saying goes ‘You can never get rich by working for someone else.’ It takes a lot of work, determination, headaches and sleepless nights to own your own business. On the other hand, the sense of accomplishment, excitement and financial rewards of having your own business are immense. Before you quit your job and start a franchise that sells chocolate covered bananas, do a lot of research and make a business that can sustain you and your family. The more {preplanning you do|you plan and discover how to manage money properly, the more successful you will be. The rich don’t become wealthy by chance.

Strategize Borrowed Money

The wealthy often borrow as much money or more than the average person but they way they borrow money is very different. The wealthiest people in the world are half as likely to have credit card debt and they are also less likely to have auto loans. Most of the wealthy carry mortgages much like the average person and they are three times more likely to have loans on real estate investments. The rich know how to manage money better than most people because they wisely borrow.

Buy Into Real Estate

Do you think Bill Gates or Donald Trump rent their homes? If you want to get ahead with your finances and stay ahead you must buy real estate. Don’t purchase outside of your budget. Try to buy something that you can afford and can even fix up and sell in a couple of years for a major profit. By renting, your money is being wasted. Chances are your mortgage payment will be as much or less than you are currently paying in rent.

It may take baby steps but if you want to get ahead with your money and follow these tips of how to manage money. The wealthy aren’t rich by fluke. They usually take calculated risks and are rewarded financially in the end. You have it in you to make the same kind of decisions and start making the money you’ve always dreamed.

How To Manage Personal Finances

Knowing how to manage personal finances is the cornerstone of being able to successfully build wealth. Accordingly, how to manage personal finances has never been as crucial a subject as it is right now! It has been four years since the start of the “Great Recession” and the ensuing jobless recovery. The housing market remains depressed while home foreclosures and short sales continue at a distressing rate.

How Are You Doing?

If you were a true member of the “wealthy class” in America at the time of economic tsunami and not overly burdened with debt or other forms of exposure to financial loss, you are probably still relatively comfortable and perhaps even profiting from the current economic situation.

If you and yours resided within any level of the “Great American Middle Class”, the odds are better than even that you’re experiencing some degree of financial hardship. The economy has taken a long-term change for the worse, presenting you with the challenge to survive and overcome.

The weak financial foundations of an alarming number of Americans were exposed by the meltdown of “08-09”. Too many individuals/households, some with excellent incomes, were living on the bubble while not employing sound principles on how to manage personal finances.

Those who were experiencing the most financial distress may have also suffered through bankruptcy and/or home foreclosure. Now, as we wrestle with the post collapse “New Economy”, what will it take for working class / middle class Americans to regain viable financial status and direction? What should we be doing now?

Seek Information About Managing Your Personal Finances

It is probably accurate to state that most adults are intuitively aware of timeless maxims such as, “do not live beyond your means” and “save for a rainy day”. The problem is that too many people simply don’t follow this advice. In the New Economy, Americans will have to seek information on how to manage personal finances and acquire the discipline to apply it. In addition to becoming better money managers, we must also find ways to earn more income in an environment of fewer jobs and stagnant salaries/wages

Some of the elements comprising the “weak financial foundations” mentioned above are:

  • Excessive materialism / impulsive buying
  • Lack of savings
  • Excessive use of “toxic” debt such as credit cards
  • Living from paycheck to paycheck
  • Not developing spending & savings plans based on budgeting finances
  • Depending on too few sources of income

Commit To Your Own Rescue

Focus on three areas.

  1. Address bad habits and commit to learning how to become much better at managing your personal finances at all levels. Intelligently manage your use of credit (especially credit cards) and learn to use budgeting finances as the basis for controlling spending and anchoring your overall long-range personal financial plan.
  2. Regardless of your background, education or experience, find ways to generate income from multiple sources. It can be done.
  3. Gain a working knowledge of how to invest, which, along with saving money will create wealth for your future and potentially that of your descendants. There are plenty of books, courses and online resources to help you. If you seek the services of a financial professional, make sure that they are certified and do not have a financial interest in any investment products that they may present to you.