Thu

06

Feb

2014

Finding Funders Online

Now it’s time to do the hard work of sourcing out grants for your NGO. Thankfully, the Internet has made this task easier—and cheaper for NGOs who also wish to maximize their resources. You only need to use your computer with an Internet connection to search and even apply for funding.

 

There are two types of international funders:

 

1) Corporate and

2) Independent.

 

Corporate foundations are formed using funds from a company while independent foundations are those that are formed by individuals, a group, or family. If The Foundation Center (http://www.foundationcenter.org/) is the main resource in the United States, similar organizations also exist in other regions in the world. The main ones are The European Foundation Centre, Imagine Canada, United States International Grantmaking, and Grantmakers without Borders.

 

The European Foundation Centre (http://www.efc.be)

 

The European Foundation Centre (EFC), based in Brussels, Belgium, is composed of international foundations and corporate funders. In its database, you can search more than a thousand of these potential funders that work in or have an interest in Europe. However, you have to pay an annual membership fee of 5,000 € to access the profiles of the funders there. You need to become a member because the EFC only supports the work of its members and does not give grants or any kind of financial support nor does it provide services directly to grantseekers.

 

When you already have subscribed to EFC, you will have access to the members-only area of the website where you can update your organization’s profile, view the full profiles of all EFC members, submit a request for information, and find contacts in the funder database. One of the best ways to make full use of the EFC’s vast plethora of resources for potential international funders is to study the funder’s profile carefully. The reason why reading their profiles is important is because you can find if your organization treads on common ground with a corporate funder who might be willing to give you the monies you need.


A funder’s profile gives such a fertile ground of information that will help you decide if they are worth making initial contact. A funder’s name (both in English and another language), location, its primary address and contact person, mission, background, geographic focus, related organizations, program areas, types of support given, application procedures, restrictions, accepted languages, type of funder, legal status, and other important information about its staff and budget can be found in the funder’s profile.


Take a very careful look at the program areas that it focuses in as this gives you the funder’s area of focus. Usually, the EFC has members that provide funding for those organizations that do work in Central and Eastern Europe, culture, disabilities, education, environment, AIDS/HIV, minorities, and the youth.


If the membership fee is too stiff for your organization as of the moment, the EFC does give you a stepping stone in its Resource centre, specifically the tab that points to “Advice for grantseekers.” You can find links to Websites on Fundraising; European Resources; Foundations and Corporate Funders; Guidance for Nonprofits; and Resources for Students.


Imagine Canada (http://www.imaginecanada.ca/)


Another international subscription-based funding database website, Imagine Canada aims to support and strengthen nonprofits and charities so that these organizations can also give support to the communities they serve. Its members are Canadian charities and nonprofits that work for the good not only of Canadian communities but also of communities worldwide. By becoming a member, you get to engage and network with other members; have access to education and resources; get discounts; and get recognized. A one-year membership costs $550 while a two-year membership fee is $1000.


Perhaps the most valuable resource for organizations looking for potential funders is Imagine Canada’ GrantConnect (http://grantconnect.ca/). This was formerly known as the Canadian Directory to Foundations & Corporations. They call this updated feature an “innovative and comprehensive tool that connects charities with funders who share their cause.”


GrantConnect boasts of four dynamic searches—Funder Search; Quick Look-up; Gift Explorer; and People Seeker. It also has what it calls Imagine Canada Prospect Index which is an algorithmic ranking that gives the best funder matches for each charity. Its Detailed Funder Dossiers allow you to get the most comprehensive information for each listed funder, using multiple data sources to ensure that the information is fresh and accurate.


Subscribers also access a funder’s gift-giving history displayed in interactive tables and Google map. Another equally valuable feature is LinkedIn Connections which enables you to discover key influencers in your network by looking at the LinkedIn connections of the hundreds of funders. Management tools, customizable labels, monthly newsletter, and allowing multiple users from an organization are the other innovations that you can take advantage of if you subscribe to GrantConnect.


United States International Grantmaking (http://www.usig.org/ )

The USIG, a project of the Council on Foundations together with the International Center for Not-for-Profit Law, aims to “facilitate effective and responsible international grantmaking by U.S. foundations. Thus, it basically caters to grantmakers who want to fund organizations based outside the U.S. Still, you can find such helpful resources as country information; legal issues; global disasters and response; and links which, although targeted for grantmakers, are helpful for grantseekers as well.


Grantmakers without Borders (http://www.internationaldonors.org)


Global social change philanthropy is practiced by the public and private foundations and individual donors that are members of Grantmakers without Borders. It has around 160 members to date that gives grants globally. Although this is not a funding organization and therefore does not review proposals from grantseekers, it does give a lot of helpful information for organizations looking for prospective funders. Click on the “advice for grantseekers” tab under the site map and you will find links to international foundations and organizations that give grants as well as other helpful tips for organizations and individual grantseekers.


From the links in these international funders and funding databases, you have access to hundreds of other sources of funds for your NGO. Don’t neglect to search for local grantmakers in the country where your operations are centered in so that you have a whole spectrum of potential funders to apply for monies for your advocacies.


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Thu

06

Feb

2014

Grants for Business Startups and Expansion

Non-Governmental Organizations

 

A non-governmental organization, more popularly known as an NGO, is an organization that delivers programs at a local, national, or international level. It operates independently of government even if the NGO approval is given by the host country where it delivers its projects and/or services. NGOs provide projects in various areas— health, education, food stability, environmental conservation, information, and calamity response, just to name a few. Famous NGOs whose advocacies have made them famous worldwide include The Wikimedia Foundation (information); Oxfam International (humanitarian work); and CARE International (poverty alleviation). However, there are hundreds of thousands of NGOs making a difference around the nation and all over the world.

 

If you’re working for an NGO, then there’s a lot of good news when it comes to sourcing out funds. You can apply for funding not only from grantmakers in the United States but from foreign governments, foundations, and corporations as well. Compared to for-profit businesses whose funding sources are limited, NGOs are able to enjoy a wide variety of funding sources both in the national and international levels.



Eligibility for International Grants



Before you can apply for funding from both national and international funders, you have to make sure that you are eligible to apply for grants from them. This means that if you are an NGO based in the United States then you have to register as a nonprofit organization with the Internal Revenue Service. The 501(c)(3) status that it will give when you have complied with all the requirements is valid for all the 50 states. Furthermore, this means that your search for funding sources is limited only to grantmakers in the United States. You can pretty much forget international funders if you are operating solely within the country since the focus of these funding agencies is on giving their monies to NGOs with advocacies where they are located.



Now if you are a non-governmental organization with programs in a specific country or countries then you can source out funds from international sources. To ensure that you have NGO status in the country where you are operating in, you have to make sure that you register your organization with the proper authorities there. Follow the rules and regulations in the country where you have your programs so that you won’t run into any glitches when applying for grants. If you’re operating in multiple countries, you do have to follow the policies in each country where you have programs and seek approval letters from each of them.



It’s very important that you keep your NGO approval letters in a safe place. It’s recommended that you make not only physical copies but electronic ones as well of your approval letters and other important documents so that you don’t have to worry if you lose any of them. Approval letters are extremely important since funding applications generally require that these be attached together with other documents about your organization.




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When It Comes To Finances, Dream Big And Set Goals

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Wed

05

Feb

2014

Grants to Expand Existing Businesses

If you already have an existing business, there are federal and state grants that you can apply to. At the federal level, you can check out the Small Business Innovation Research Program (SBIR) and the Small Business Technology Transfer (STTR) Program.

 

The SBIR/STTR Programs

 

The SBIR/STTR Programs are intended specifically for domestic small businesses in the field of Federal Research/Research and Development. If you believe that your business has technological and commercial potential then you can try to see if you can qualify. Keep in mind, however, that the competition is very tough. The federal government awards these programs to stimulate technological innovation; meet federal research and development needs; foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged persons; and increase private-sector commercialization of innovations derived from Federal research and development funding.

The following agencies participate in the SBIR/STTR Programs: Department of Agriculture; Department of Commerce – National Institute of Standards and Technology; Department of Commerce – National Oceanic and Atmospheric Administration; Department of Defense; Department of Education; Department of Energy; Department of Health and Human Services; Department of Homeland Security; Department of Transportation; Environmental Protection Agency; National Aeronautics and Space Administration; and the National Science Foundation.

 

There are three phases to the SBIR Program. In Phase I, your small business must establish the technical merit, feasibility, and commercial potential of your proposed research/research and development efforts. This is where the federal government determines if the small business awardee is still eligible to receive further funding support.

In Phase II, funding is received based on the results that are achieved in Phase I and the technical merit and commercial potential of the project. Funding for this phase usually does not go above $1,000,000 total costs for 2 years. Phase III is the final phase and this is where the small business awardee pursues commercialization objectives after the initiatives achieved in the first two phases. No Federal monies are awarded for the final phase.



Your business can only qualify for these programs if it is organized for profit, with a place of business located in the United States; has at least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States, or at least 51 percent owned and controlled by another for-profit business concern that is at least 51% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States; and; has no more than 500 employees, including affiliates.

Funding Opportunities from your State

 

Business expansion opportunities are also available from your state since they usually earmark funds for this purpose. These grants are usually given to businesses that will also help stimulate the economy of the state. These are also awarded to businesses that advance causes that are generally beneficially for all. These include ventures that have to do with harnessing alternative energy; the environment; medicine; education; and science and technology.

 

To start your grant search to expand your business, you can go to your state’s Department of Commerce. Get right to the point when talking with the representative from your state government. Introduce yourself and your business, where you are located, the nature of your products and services, and the reason why you want to expand. Be courteous and thankful even if there are currently no opportunities for funding. They might even be able to point you out to other sources of funds where you can apply to.

 

If you cannot really find grants to make your business grow, you can always consider other options, such as obtaining a loan or continuing to work full time while working to make your venture grow. Don’t look for business expansion opportunities from only the federal and state governments. You can also try sourcing out grants from private institutions and grantmakers.

 

As we have said above, finding grants to start or expand your business is a tough job. Still, this does not mean that there won’t be any grants for you in the future. Just keep your eyes open to new opportunities by signing up for an organization’s mailing list—if that is provided or constantly monitoring new business funding opportunities in the Internet. Use your connections to find out if there are grantmakers who are currently accepting applications from entrepreneurs who wish to start or expand their businesses.



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Wed

05

Feb

2014

Grants for Business Startups and Expansion

Are there Grants to Help you Start or Expand your Business?

 

If finding grants for individuals is a challenging task than trying to find grants to start or expand your business is like trying to find a needle in a haystack. Generally, the federal government does not offer grants to help you start your own for-profit business or make it grow. Uncle Sam does not also give grants to help you cover your business operating expenses or pay off debts incurred by your enterprise. It used to do so back in the seventies and eighties, allocating money for CDCs or Community Development Corporations. However, this is not an available option now.

 

But this does not necessarily mean that you can’t find grants for your enterprise venture. There are still rare treasure troves of available grants if you’re looking for funding for your own business. Be ready to do a lot of searching, however, as these grants are not going to be easy to find.

When it comes to grants for start ups and expanding your business, you can look up business plan competitions, private grants, and state grants.



Business Plan Competitions

Business plan competitions, as the name suggests, are contests started by universities and other funders for the best business plan. Whoever can write the best business plan will receive grant money to be able to start their business. Yes, it’s a tough way to get a grant (but then again, getting any form of funding is not easy). If you’re joining a business grant contest offered by an educational institution, you are going to be competing against equally-brilliant postgraduate students. If it’s sponsored by an organization that accepts entries from all parts of the globe then you are up against the best international minds.

But the good thing about joining a business plan competition is that you learn a lot from it even if you don’t actually get to win. Some of the contests are designed so that feedback is given to all participants in whatever stage of the process. This means that even if your business plan is rejected outright, you still receive valuable insight from experienced mentors who can help you improve your business plan, the foundation for any ultimately successful enterprise. Those who advance to the next level of competitions can get the chance to attend conferences, workshops, and mentoring programs—all non-monetary benefits that any neophyte entrepreneur can certainly benefit from.



Here are some examples of business plan competitions that we have sourced from the Internet just by typing the keywords “business plan competitions” on Google.



1.       MassChallenge (http://masschallenge.org)



MassChallenge is the world’s largest accelerator program and startup competition that seeks to connect resources and entrepreneurs. Any early-stage startup from anywhere in the world in whatever industry can apply to MassChallenge. Benefits include mentorship and training, free office space, access to funding, and media, among others. They highlight the fact that they don’t put restrictions and take no equity from the participants.



2.       Harvard Business School New Venture Competition (http://www.hbs.edu/entrepreneurship/new-venture-competition/overview.html)



Formerly known as the Business Plan Contest, this competition sponsored by Harvard Business School gives an opportunity for students to put their entrepreneurship principles in practice. The winner gets $50,000 in cash plus in-kind services while the runner-up receives $25,000 in cash and in-kind services. For the business track, all teams are eligible to enter for as long as they have at least one Harvard Business School student. For the social enterprise track, all teams entered are eligible as long as they have at least one person who is: a) an HBS MBA student, b) a Harvard University Reynolds Foundation Fellow, or c) a full-time Harvard graduate student currently enrolled in the Social Entrepreneurship Collaboratory or the Entrepreneurship in the Social Sector course at KSG.



3.       Wharton Business Plan Competition (http://bpc.wharton.upenn.edu/competition.html)



In this 7-month platform, entrepreneurs and their teams fight for the Venture Finals which award three top prizes. The group with the best business plan walks away with The Perlman Prize which carries $30,000 cash prize and $15,000 of in-kind services. The contest is divided into two phases: Phase 1 is an advisory phase and is optional while Phase 2 is the competitive phase—you must enter Phase 2 if you want to compete for prizes.



There are still other business plan competitions offered by other institutions. Check them out weekly so you are updated on the newest contests and can prepare accordingly. Two other sources for listings of contests for budding entrepreneurs are Biz Plan Competitions (http://www.bizplancompetitions.com/) and changemakers (http://www.changemakers.com/).




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Fri

31

Jan

2014

How much should you Put into your Emergency Fund?

Three to six months’ worth of living expenses completes your emergency fund. The question now is: Should you go for three months’ worth or should you put in more? Only you can answer this question based on your job, your way of life, and the level of risk you are willing to take. If you have been with the same company for more than 15 years, for example, and are living a fairly good life (no major illnesses in the family, both spouses are working, etc.) then perhaps it’s safe to say that you have completed your emergency fund when you’ve put in three months’ worth of your living expenses in it. Government work is fairly stable compared to working for private companies so if you have no plans of quitting work for Uncle Sam then you could opt for the three-month rule as well.

 

However, if you are working on commission or are self-employed or are the sole breadwinner in the family, putting six months’ worth living expenses into your emergency fund would be prudent. The instability of commission-based income means that there will be times when there won’t be any cash flowing in. When you are on a single-income household, a higher emergency fund is recommended because any event that will mean a loss of that income can really cripple you financially.

 

Take note that the emergency fund is meant to be used for your expenses when you do not have any income flowing in yet. Thus, your calculation should be based on your monthly expenses, not your income. You dip into this to keep food on the table and pay for the utilities so you continue to have water and electricity. You do not use this to invest into your retirement while you are still weathering the financial storm.

So where can you find money for your emergency fund?

When you are already on the road towards financial fitness, you’d be surprised at the many avenues you can find to get the money you need to fully fund your rainy day savings. You can still sell stuff or work extra hours just to get that three-to-six months’ worth of living expenses together.



But remember the payments you used to make for your Debt Snowball? Well, now that you are totally debt-free except for your house, you can use the monies you used for your snowball and put those this time into your emergency fund.

 

It’s very important that every member in the family are into the entire plan, especially both spouses. As a couple, you should agree on anything about money. Secrets will not only ruin your budget, it will also destroy trust and cause problems in your relationship. Besides, once everyone is on the same page financially, you will serve as each other’s cheerleader and police. If one is feeling just how difficult staying on track is, the other can give that much-needed support and encouragement. If one is buying something that is not on the budget, the other can check and admonish.

Saving for your Own Home

 

When you are already at this stage—paid up all debts and already have an emergency fund—it is very tempting for those who are currently renting to buy a house of their own. Can you get that money for the downpayment from your emergency fund? Absolutely not!

Keep in mind that this fund is only for the rainy days. If you want to get a house of your own, you have to save for it. Let us repeat that: The money you should use for the downpayment should be saved up. Leave your emergency fund alone.



While a home is always a good investment, you should not rush into it. If you do, it will become another burden on you. If you save for a substantial downpayment, you get the advantage of having to make lower monthly payments in the course of the mortgage. However, if you are so eager to get a home with zero down, you will realize later on just how straining the monthly payments are on your budget. If you want to own a home, save for it first. By now, after doing your Debt Snowball and completing your emergency fund, you should already have sufficient experience getting the money together.



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Fri

31

Jan

2014

Getting your Emergency Fund Fully Funded

Completing your Three to Six Month- Emergency Fund



The third step in Dave Ramsey’s Total Money Makeover is to complete your emergency fund. If you remember, you started with just $1,000. Obviously, that amount is only good for those little emergencies that come your way, like a broken air conditioner or a minor car trouble that needs immediate fixing. But your starter fund can’t cover those real emergencies that are bound to catch anyone of us at one point in our lifetime—the loss of a job, a major illness, or death of the primary breadwinner in the family. It is for these events that you need to be truly prepared.

 

Fully-funded emergency savings should be able to cover three to six months of your living expenses. In figures, the amount can range anywhere from $5,000 to more than $20,000 depending on your lifestyle. If you are currently living on $3,000 a month and have a fairly stable job then having $9,000 in your emergency fund can be sufficient. But we will be covering in more just what a “fully-funded” emergency fund is later on in this report.

 

At this point, you should remember that this is the third step in your Total Money Makeover. You only complete your emergency fund after eighteen to twenty-one months when you have already wiped out all your debts through the Debt Snowball. At this point, you are only spending for the basics of food, utilities, and other basic necessities and the only debt you are paying for is the mortgage on your home. You can imagine just how easy it is going to be to completely fund your savings earmarked solely for emergencies.



The whole point of following the Total Money Makeover step by step is to modify how you think and view debt and money. Paying off your debt little by little also liberates you one step at a time. Now that you have nothing to pay up except the house and are making all your purchases in cash, you can now complete your emergency fund. When that dreadful and unwelcome thing happens, you still feel the blow but the financial damage that it will cause is not totally irreparable. You will not regress into getting into debt again to cover it.

Why you need an Emergency Fund



For many Americans who are still caught in the downward spiral of dependence on debt, the credit card is used as a go-to tool during those moments when we are caught in tight fix and have nowhere else to go. The problem is, using plastic for emergencies can only tide you over for so long. You will have to pay for it after a month. If you can’t, you will get interest—huge interest— slapped on you.

 

But what happens if the emergency persists? Let’s use the most common—and most feared—example of a real emergency: Getting fired. Without three to six months of emergency savings to use for the meantime, you keep on swiping plastic to cover the cost of groceries and make cash advances on it for your other expenses. Meanwhile you continue to hunt for a job. But what if you don’t get hi.

 

It is difficult to pay for debt as it is but it is even more challenging to pay for debt when you don’t have any income. This is why having savings which you must only dip into when the rainy days come is of paramount importance. But just what exactly falls under the term “emergency”?

 

Emergencies are those circumstances which take you unaware. Aside from getting laid off or fired, other situations that can qualify to be real emergencies include accidents or sickness requiring a high deductible before insurance kicks in; the death of the main breadwinner in the family; or a major car repair like a blown engine. If your house got severely damaged by a typhoon or earthquake then that qualifies as a real emergency, too.

 

What do not qualify as emergencies? School expenses like your son’s college tuition and miscellaneous; that vacation in some exotic Asian island; or even the startup money you need to start a new business are not emergencies. They are things that you should plan and save for. Even that mall clearance sale that temptingly offers that kitchen showcase at 80 percent off for one day only is not an emergency. If you don’t have the money, you can’t dip into your emergency savings funds to get what you want.

 

A savings fund is for those real emergencies that knock the wind off of you. It is meant to give you peace of mind so that whenever something happens that has to do with money, you know you’ll be able to face it and survive without drowning into debt.



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Fri

31

Jan

2014

Dave Ramsey’s Debt Snowball

Some financial experts recommend that the best and most practical way to tackle debt is to pay those with the highest interest rates first. This way, you don’t have to pay as much on interest. But for Dave Ramsey, author of Total Money Makeover, the secret towards becoming debt-free is to have “quick wins” by paying off the smallest balances first. He called his method as the Debt Snowball.

 

In the Debt Snowball method of getting rid of debt, you are asked to list all your debts (excluding the house) in order with the smallest balance first. Then once you already have this list, Ramsey says that you “pay the minimum payment to stay current on all debts except the smallest.” As for the latter, you are supposed to pour forth all your efforts in paying it completely until you have no remaining balance left.

 

Then, once that debt is fully paid, you move on to tackle the next debt on your list. Using the payment from the first debt and other extra monies you can find, you pay off the second debt. The same strategy is given for the third debt on the list, except that you now use the money you used to pay for the first and second debts and use that and other monies you may be able to raise to pay for the next debt. The same strategy is applied to all debts in the list until you have paid all your creditors completely.

 

What makes the Debt Snowball effective is that it boosts your morale when you see that you are actually making progress. No matter how small a debt you have just completely paid off, the sense of fulfillment encourages you to continue with your repayment scheme. Because you see that it actually works, the Debt Snowball gives you motivation to keep on going.

 

For this strategy to work, Ramsey reminds readers that they must stop borrowing. It makes sense. If you just continue to use your credit cards while working on the Debt Snowball, chances are that you’ll be snowballing perpetually. If you keep on paying off your debts, you’ll never get around to building your nest egg. It’s very important to stop using plastic while you are snowballing to ensure the greatest chance of success.

But what if you still can’t find the cash to start your snowball rolling? Ramsey says it’s time for so some drastic action. “You have to dynamite it. You have to get radical to get the money flowing again.” What are these radical steps you need to do to get the cash for your Debt Snowball?

 

The most obvious one is to start selling stuff you don’t need and yes, even the stuff you feel you need but can’t afford to have. Go through all the things you have and you’re bound to find something you can sell. Books, clothes, shoes, a piece of furniture, jewelry collection—whatever—all these can be converted to cash by holding a garage sale or auctioning them over on the Internet. But no one would want all my stuff—they’re worthless! We'll, always keep this inspiring quote in mind: One man’s junk is another man’s treasure. Remember, eBay started when founder Pierre Omidyar sold a broken (yes, broken) laser pointer for $14.83 on his site previously known as AuctionWeb.

Should you sell your home or your car? Ramsey only recommends selling the home if you “have payments above 45 percent of your take home pay.” For most families, the home is not the root of all money problems and does not have to be sold. As for the car or other vehicles you may have, the Total Money Makeover recommends: “If you can’t debt-free on it (not counting the home) in eighteen to twenty months, sell it.”

 

If you don’t have anything to sell or what you sold just wasn’t enough to get your Debt Snowball rolling, you can also take another radical step: Find ways to increase your income. This can mean working overtime or finding a second or even a third part-time job. It doesn’t matter Working long hours and feeling sleep-deprived for what seems like an eternity can be done temporarily—just for the time-being when you are paying off your debts. You can ease back into a more relaxed lifestyle (and feel truly stress-free) once you have taken the burden of monthly payments from your shoulders.

 

Those who have resolved to get themselves out of debt and be on the road towards financial stability by doing what it takes to legally augment their income in various ways find that despite the pain of parting with a beloved possession and/or the tiredness of mind and body felt after doing ten straight hours of work, they are energized. The inspiration comes from knowing that they are doing this for a reason. They know that they are going to face a better and brighter future not only for them but for their children as well when they have unshackled themselves from the chain of debt.



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Fri

31

Jan

2014

Tackling Debt One at a Time

Debt: The Real Foe

When it comes to building wealth, you have one real foe: Debt. Yes, your obligations to your creditors hinder you from becoming rich. Think about it: If you had no car payments to make, no credit card bills to pay, or no student loans to take care of, just how much of your income could go to your savings and retirement funds? A huge chunk, right? Without debt, you can even finish paying for the house years earlier!

Statistics from the Federal Reserve reveal just how much of an enemy debt is on the average American household’s quest to become financially rich: The average household credit card debt is pegged at $7,093 but when only the indebted household is considered, the average debt more than doubles at $15,204. The average student loan debt is $33,005 while the average mortgage debt is almost $150,000. These debts are only the tip of the iceberg. You also have to factor in the common things that American breadwinners normally continue to pay for month after month—a second car and personal loans taken from other sources, among others.

All in all, the monthly payments for these debts can eat up a third or more of one’s take home pay. Debts can make you lose opportunities to build wealth. For instance, if you were paying $1,500 per month for all your financial obligations, imagine just how much that same amount would grow in ten or twenty years if you were to invest it in mutual funds that offered a rate of return of 10 percent per year? As you can see, you can fatten your nest egg faster if you didn’t have to make all these monthly payments.

 

The reality, however, is that many American households have to make these monthly payments. They are saddled with seemingly insurmountable debt. The figures are so large that getting out of its deadly claws is seen as an impossible feat. However, if you really want to, it is still possible to get out debt without declaring bankruptcy. Make no mistake, the process is not going to be easy. It will take a lot of sacrifice from your end. But once you can finally call yourself debt-free, the benefits are going to be well-worth it.



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Fri

24

Jan

2014

Making Wise Decisions on Home Equity Loans

Home Equity Loans and Home Equity Lines of Credit

 

One of the good things about owning a home or at least paying the mortgage on it is that you build equity which you can borrow from when the need arises. These tools for credit come in two types—home equity loans and home equity lines of credit. Both allow you to fund certain projects like home repairs or improvements or even pay for your child’s college tuition. In exchange, they also put your home on the line so if you can’t pay, you risk losing that roof over your head.

There are fundamental differences between the two kinds of loans and choosing which kind best fits your situation is part of the smart shopper’s guide to getting this kind of loan. This report will give you the lowdown when you borrow against your home’s equity so you can make the most out of it and not have face the scary prospect of foreclosure in your future.

Home Equity Loan

A home equity loan, also called a second mortgage, is secured by your home. You can borrow up to 85 percent of the equity you have put up in your home and receive a fixed amount when your loan is approved. How much the lender is willing to grant you will also depends on other factors. They will take into account your income, credit history, and the market value of your home. Thus, it’s important that you get a copy of your credit report and your credit score at least six months before you plan on obtaining your loan. This way, you will be able to review it and check for errors and enhance your credit rating. The better your credit score, the more competitive interest rates you are most likely to get.

Just like your mortgage, you repay the home equity loan in equal monthly installments at a set interest. If you don’t meet the monthly payments, the lender could foreclose on your home. This is why it’s important that you already have a solid and doable repayment plan in place before you even start looking for a lender.

Whether you need this loan to pay for tuition or a major surgery, consolidate debt, or do home repairs or remodeling, you need to shop for the best deal around. Banks are just one source of home equity loans. You can also get quotes from mortgage companies and credit unions. If you know a trusted mortgage broker, you can ask him for recommendations as well. Do not hesitate to inform lenders that you are looking for the best rates and the most reasonable deal around. This way, you get to haggle and be able to get the best terms.

When negotiating a home equity loan, take note of the interest rates and other fees that might be added to your account. Remember, if you add to your loan amount loan processing fees, origination fees, lending fees, appraisal fees, broker fees, and others to your loan amount, you’ll surely end paying more for them over the life of your loan. So negotiate these as much as possible.

Finally, don’t forget to look over your contract carefully. Read it and if there are terms you don’t particularly like or was not reflected when you talked it over with the lender, point it out and renegotiate. If the lender won’t agree to your changes, don’t sign anything. There are always other lenders around who would be willing to come to terms with you. Finally, if you do get to sign the papers and decide that you want to cancel, you also have the right to do that under the three-day cancellation rule. This states that you can cancel the deal for any reason without incurring any penalty within three days from signing the loan contract.

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Fri

24

Jan

2014

Shady Home Equity Loan Practices to Watch Out For

There are various practices that some unscrupulous lenders could pull on you when you take out a home equity loan or a HELOC. If you’re not careful, you might end up paying more or worse, losing your home. Those who fall prey to these practices are usually the elderly who might not like to read the fine print and those who have credit problems and need money badly. You should always be wary of these shady practices as these violate federal laws on credit, debt collection, and discrimination based on age, gender, marital status, race, and national origin. If you see or smell something similar to the ones below, run!

One of the most common practices is the bait and switch. The lender gives you a set of loan terms that seems very reasonable when you’re still shopping for a loan. But when the time comes to sign the contract, you are given another contract that stipulates higher charges. Don’t make the mistake of confusing and just signing the contract. Be firm that you want to sign on what you had earlier agreed on.

Be sure to read the contract very carefully and note if there are additional charges for credit insurance and other insurance products to your loan. This is called insurance packing, where the lender puts in additional insurance that you don’t need into your home equity loan which can increase the amount you have to pay. Together with these unnecessary products, you might also want to check out for other fees that are not legal that are inserted into your loan. These are mortgage servicing abuses where you ultimately lose out.

We’ve discussed this briefly above but always be wary when you’re offered nontraditional loan products such as allowing you to pay the minimum payments that do not even cover the principal and interest due for a certain honeymoon period. Then when the time is up, you are faced with a balloon payment that you can’t anymore afford. Remember, failure to pay your home equity loan also means losing your home so you should not be slack when reviewing your repayment terms.

Finally, never sign blank papers or documents no matter who gives it to you. There have been cases where a contractor offers to improve a certain part of a home at a very affordable price. He says he can also arrange financing thru a lender if the homeowner can’t afford it. Sometime during the remodeling, the contractor hands a bunch of papers for the homeowners to sign, often threatening them that the work will not be finished without it. The end result is that the homeowners signed blank documents or documents which they were unable to read properly and to their dismay only later realized that they were being saddled with a very hefty home equity loan with outrageous terms.

A home equity loan or HELOC can help you get through rough times. But before you get it, you should strive to get the best deal and avoid scams that can make you lose your home.

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Fri

24

Jan

2014

Home Equity Line of Credit (HELOC)

A home equity line of credit or HELOC is likened to a credit card—and some lenders actually give borrowers one. It’s a revolving credit line that allows you to borrow as much as you need whenever you need it by writing a check or using the credit card linked to your loan. Just like a credit card, you are given a maximum credit limit (the amount of your loan) so you only pay the amount you actually used. Thus, if you have a credit line of $100,000 but you only used up $20,000 you only need to pay the $20,000 together with the interest.

Just like a home equity line of credit, your loan is secured by your home. If you don’t pay it off, you may be forced to sell your house to pay off what you owe. Again, this requires advance planning and a rock solid repayment plan from your end.

While you can borrow up to 85 percent of the appraised value of your home as in a home equity loan minus the amount of your first mortgage, a HELOC is different because you need to consider many things before you sign the contract.

Ask the lender if there will be minimum and maximum withdrawal limits for your HELOC and if there is a so-called draw period. The latter refers to the time when you can get money from your account. When the draw period is up, you won’t be able to borrow any more money from your credit line unless you can renew your loan. Now here’s the catch: When the property values dropped significantly in 2008, banks no longer renewed the HELOC of borrowers, leaving those who were looking to refinance as a way to pay for their loan with a very heavy debt burden. This is one risk that HELOC borrowers have to take.

Before taking out a HELOC, be sure that you get a clear idea of what your interest will be and how it is structured. There are different interest rates for these plans and you need to certain that you know when it will go up and whether you can afford to pay for it when it does. Many HELOCs have variable interest rates wherein you get to pay a very small amount in the first few months—even at a steeply discounted rate—and then goes up to the real market value for the rest of the repayment period. Be sure to on the periodic and lifetime caps of the loan so you can determine if you will still be able to pay it off in case the rate surges. There are also other lenders that are amenable to allowing you to pay very small monthly payments over the life of your loan and then make a balloon payment to pay off the balance afterwards. This kind of arrangement is risky and you’d want to avoid it as much as possible.

Now if you can find a HELOC with a fixed interest rate and has reasonable terms overall then by all means go for it even if the monthly payments are higher. The plus is that you are assured that you will be paying the same amount over the life if your loan.

As in a home equity loan, be sure to negotiate the closing costs and other fees. With HELOCs, you might also have to pay continuing costs such as an annual membership fee and a transaction fee. Be sure to read the contract carefully before affixing your signature so that you are clear on the terms. You are still covered under the three-day cancellation rule if you do decide to rescind the contract for whatever reason.

Check out www.adamscapgroup.com for more Information on How to Get the Best on Mortgage Deals.

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Fri

24

Jan

2014

Smart Car Loan Shopping

The Smart Shopper’s Guide to Getting an Auto Loan

 

The following ways will help you get the best deals on your car loan so be sure to keep them in mind before and during your trip to the dealership.

  • Choose your car based on how much you can afford for an auto loan.

Before you even go to the dealership, you have to have an idea of the car you want and how much you are willing to pay for it. This is more complicated than you might initially think. After all, how difficult could choosing a car be? But the price, make, and model are just the tip of the iceberg. You have to compute if the price range is within your capacity to pay so that means taking a close look at your savings and your budget and whether a car loan has a place there. If the car you like is not affordable, it might be necessary to find another kind or you might be willing to cut expenses somewhere else so that you can get the vehicle of your dreams.

Doing this is easier now, what with the Internet allowing you to visit websites that give you price ranges of various cars by brand and other criteria. Be savvy and do online searches so that you have a general idea of the type of car to buy that will be within your spending plan.

  • Be sure to shop in different places for an auto loan.

There are many sources of car financing so don’t immediately assume that the car dealership is the only place to get your loan. In fact, you can get more competitive rates in banks or credit unions (if you are a member) than at a dealership so be sure to include them when you go comparison shopping. Use the Internet to your advantage so you save time and energy when getting quotes. Be sure to compare apples to apples so that you know where the best deals can be found.

Other sources of financing include online financial institutions, getting a home equity loan, or borrowing from a rich friend or relative. However, you do have to watch out for some pitfalls. Some online lenders can scam you so you need to check that you’re dealing with a legitimate business. Getting a home equity loan to buy your car is very risky and not recommended because you are essentially guaranteeing your home for your car which means that you lose your home if you don’t make your car payments. Borrowing from rich friends and relatives can be ruin relationships if you don’t keep your promise to pay.

  • Get preapproved for a loan first before going to a dealership.

Just like getting a home mortgage, preapproval is the process whereby your financial information is reviewed and the lender gives you the range of loan that you can afford based on your debts, income, and other factors. Choosing a car becomes easier when you know how much you can actually spend. It also takes a lot of the stress out when you are already car shopping. Be sure to ask for a very competitive rate when you are getting pre approval from the lender. Some lenders literally give preapproved creditors blank checks so they can fill it out themselves and give to the dealer when they have decided on a car to buy.

  • Don’t discuss financing with the dealer before you’ve settled on the exact price.

Dealers are shrewd businessmen. Some of the more unscrupulous ones will give you a very tempting financing offer—a low-interest loan. But if you agree to it before you even know the price of the car you want to purchase, the dealer could simply jack up the price of the car so he still makes a substantial profit. You can haggle with the dealer by researching the prices of the cars you intend to get in consumer sites like Kelley Blue Book (www.kbb.com). Normally, the sticker price of the car is 5 to 10 percent of what he paid for it so if you do your research beforehand, you will know what this price is and can bargain more readily. As much as possible pay no more than 5 percent above the price the dealer got the car for.

  • Don’t reveal how much you can afford to pay per month until you can settle on the price.

In the same way that you don’t discuss financing until and unless you have already agreed on the price of a car, you should not reveal how much you are willing to pay each month for a car. They can do all sorts of mathematical calculations to match the monthly payment you are willing to fork out. For example, they can increase the interest rate or even the car price just so that they can match what you are willing to pay for each month. The figures may not even reflect the actual value of the car. So if you are pressed on how much you can pay each month, firmly but politely say that you want to see the cars first and get the final price first before discussing loans and terms.

  • Give a substantial down payment—20 percent or more—to your car purchase.

Yes, it is tempting to go with low down payment auto loans. But you’ll certainly bleed with the interest while you are paying it off. As much as possible, save at least 20 percent for the downpayment so that the monthly payments are manageable and the interest rates competitive. If you don’t have this kind of money for the downpayment, you can always downgrade to a less expensive model or get a used car instead.

  • Opt for short-term loans.

A car immediately loses value the moment you drive it away from the dealership. This is a fact. So why should you go for long-term car loans of five years or even more? Some defend longer term financing because it makes the monthly payments lower. The problem is, you are also paying a lot more in interest overall. In some cases, by the time you sell your car, you already have excessively paid a lot more for it. So don’t be tempted for long-term financing. Strive to pay off your car loan in four years or even less so you can free up your money earlier and use it for something more productive.

Here’s one more thing: You don’t have to change cars every now and then. A lot of Americans seem to be of the mindset that a car loan is a normal and perpetual part of the budget. You are not obligated to sell your car and get a new one every five years. For as long as you maintain it and take good care of your wheels, it should serve you faithfully for a long time.

Finally, if you originally opted for a longer loan term but later decide that paying it off earlier is better, be sure to read your contract again. You want to be certain that you’re not going to be paying penalties for paying off your loan early.

  • Beware of the add-ons.

Car dealers make a lot of money by putting addons into your car purchase so that you end up paying more. The FDIC Car Loan Shopping Guide states:” Service contracts, credit insurance, extended warranties, and other options are not required and can be costly over the term of the loan.” So be sure to read your contract before signing and don’t let the dealer coerce you into getting these things which are not really necessary. You’ll surely save a bundle.

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Sun

19

Jan

2014

Personal Finance Lessons You Ought to Know

Since personal finance is an entire course in college, you might think that you won’t be able to learn it without going back to school. This isn’t necessary. There are a plethora of resources—both online and offline—that you can use to enhance your financial literacy. You only need to comprehend the basic things to be able to manage your money well. We give a preliminary list below—you can always expand to other concepts as your knowledge becomes more sophisticated.

 

1. Budgeting. Knowing how to allocate your money, how to use a budgeting tool, and how to keep track of your budget are important first lessons in money management.

2. Credit and how it works. Credit is a regular part of our lives that we take it for granted. However, those car loans, mortgages, and credit cards come at a cost and it’s vital that you understand what these are. Related topics are credit reports, and credit scores.

3. Savings.Having an emergency fund for life’s most mind-numbing and pocket-emptying blows helps you ride out these threatening financial storms. Knowing the various types of savings accounts, their interest rates and fees, and the best banks to put your money are just some of the things you need to learn.

4. Investments.Savings are not enough. You also need to get acquainted with the various investment tools like stocks, bonds, and mutual funds and how they affect your financial situation. These investments are also crucial to helping you form a nest egg that will also secure your retirement.

 

5. Insurance.We buy insurance coverage to transfer the risk we would otherwise take for ourselves to the insurance company. Insurance firms give coverage for health, life, cars, and homes, just to name a few. There are many things to consider before you buy a policy and knowing what to look for is crucial if you want to get the most of the premiums you are paying.

6. Managing debt.This is one of the most crucial lessons that you need to know, especially if you are saddled with heavy financial obligations. Freeing yourself from debt is a must if you want to achieve true financial stability.

 

7. Filing taxes.You can’t escape taxes but you don’t necessarily have to pay more than what you really need to. Besides, you can lower your tax obligations by claiming exemptions and deductions. Whether you file your income tax yourself or depend on a professional to do it for you, learning about the intricate and complicated rules related to taxes forms a very integral part of your journey towards financial literacy.

8. Estate planning.It is your responsibility to ensure that your assets and wealth will go to the special people in your life you intend them to go to. You might not think that you have enough to warrant the preparation of a will but if you die intestate (that is, without a will) state laws will determine how your estate will be divided. The earlier you know about the basics, the more prepared you and your family will be in case you pass away.

 

Check out www.adamscapgroup.com for more Information on Guide to Investments.

 

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Sun

19

Jan

2014

Importance of Personal Finance Lessons

If you think personal finance lessons are only reserved for those who are in the world of business, think again. To be able to manage your money well, you need to know how to do it. You must grasp the basics so you are able to make the best decisions when it comes to borrowing, saving, and investing. Whether you like it or not, the things that you need to be able to live decently in this world revolve around money so knowing how to handle it is a must.

 

Let’s use a very common occurrence that a lot of Americans grapple with—budgeting. Living from paycheck to paycheck has become the norm for many and so is getting too deep in credit card debt. Many get a car or a house (or both) that’s too expensive to afford. All these symptoms point to one fact: The lack of basic knowledge about the correct allocation of funds and resources.

Budgeting is the foundation of effective personal finance and unless you know how to do it in theory and in practice, it’s going to be nearly impossible to have a stable financial future. The ability to save and invest will depend on how well you apportion your salary to ensure that you can meet the needs for today without sacrificing your future security.

 

Aside from budgeting, there’s also the need to be apprised about interest rates because they are always there. From credit cards to mortgage to savings to investments—the interest will determine how much you will ultimately end up paying. If you happen to be saddled with a car loan that is too steep in interest, you might end up not being able to afford it in the long-run. A mortgage loan with high interest rates will put you closer to foreclosure than if you were given a competitive market rate. When it comes to savings and investments, knowing which bank and investment vehicles give the best interest rates will allow you to maximize the returns on your money.

 

Credit reports and credit scores need to be understood as well since they play a vital role in personal finance management. Nowadays, you can’t afford to be irresponsible with your debts as doing so can have a disastrous impact on your life. Since your payment history is reported to the major credit bureaus, your chances of being able to obtain credit at the best interest rates and even your ability to get a job are affected if you don’t keep a clean credit record.

 

From a wider perspective, learning about personal finance is important because how you handle your money will ultimately affect your family and the country. Money issues are a common cause of divorce among couples and children often get affected.

 

Financial failures also impact communities and ultimately, the country. The recent housing crash and economic downturn that the United States is still reeling from up to today is an example of this. While financial and lending institutions are also to blame for the lax underwriting process that accompanied most mortgages during the housing boom that ultimately led to the housing bust, the homebuyers are partly to blame as well. A lot of them knew that they were getting a home that was too expensive for them. But lulled by the initial low or no-downpayment scheme, they decided to just go ahead and take a chance only to find out later that producing the extra money to pay the mortgage is almost next to impossible.

 

The way you handle your money has serious repercussions, not only to your personal life but to your family and society as well. Thus, it’s extremely vital that you take the time to learn about personal finance concepts.

Check out www.adamscapgroup.com for more Information on How to Get the Best on Mortgage Deals.

 

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Sun

19

Jan

2014

Learning Valuable Lessons from your First Job

Your first job is a very fertile ground for lessons that you can take with you as you proceed in your career. Even if you are only offered a modest monetary compensation, you can still make the most out of your first job by filling your cup to the brim with valuable lessons about the work, the people you work with, and the workplace you move around in. Always remember that these insights are more precious in the long run than the salary you are given. If you are just observant enough, the lessons you glean are going to serve you well in case you want to start your own company or are already gunning for a leadership position further on in your career.

So what are the lessons in your first job that you can carry with you as you move through your career?

 

1. The veterans in your workplace can teach you a lot. Don’t stay glued to your desk all the time. Find time to chat with those around during your breaks and you’ll find that they have a lot of things to teach you not only about the workplace culture but about their field as well. If you are genuinely interested in them, they will be more willing to share their knowledge and “secrets of the trade” with you. In addition to learning a lot of new things, you’ll find that it becomes easier to navigate the office and ask for help if you are on good terms with everyone.

 

2. Punctuality matters.Your time is precious. Your coworker’s time is precious. Your office’s time is precious. Since you want people to respect your time, you should also do the same. If you know that you are going to encounter traffic on the way to work then leave home earlier. Your superiors are going to notice that you are consistently on time for work and will factor this in during performance evaluations. Once you have ingrained the habit of punctuality, you’ll realize that it gets reflected in other areas of your life as well, making it easier to stay on top of things even during especially hectic days.

 

3. Preparation is essential. As the newbie in the house, you want to ensure that you don’t get laughed at during meetings so you made sure that you were always prepared. Looking at the agenda first so you know what the meeting is all about will help you generate ideas in case your opinion is solicited during the gathering. Later on in your career, you will realize that having your say in meetings will help you get noticed and advance in your chosen profession. You certainly don’t want to just pretend you know during meetings as this is a surefire way to get laughed at, so always be prepared in everything you do. That goes to everything else in your life as well.

4. Keeping your desk clean makes you more efficient. Different people have different work habits. Some like a cluttered workspace while others don’t. Research, however, has shown that a disorganized work area is bound to contribute to stress, anxiety, and burnout. Find a system of organization that works for you so that you tackle the most urgent matters first. As you advance to positions that require more responsibility, your organization skills are going to have to step up as well. Mastering this on your first job helps make this a habit that will serve you well in your future endeavors.

5. Having a life outside of work is necessary for your health and wellbeing.More and more companies are recognizing the value of helping workers balance the demands of both work and family. While you want to prove your worth at work so you can please your boss, there is no reason for you to linger in the office unless it’s absolutely necessary. Besides, you are bound to be more efficient in your job if you pursue your other interests outside of work. So take the time to exercise, to be with the special people in your life, to be active in your hobbies. Balance is the key to a successful life and career.

6. You are responsible for your money.Now that you are officially working for your keep, you get to receive your pay and are ultimately responsible for how it is spent. The good thing is that you have money to spare for life’s little pleasures. However, you also have to understand that you are going to be responsible for paying your own bills and saving for the future. Knowing how to allocate your money is something you learn from your first job which will you can carry into the future—especially if you want to start your own business.

 

7. There is no such thing as a stable job.Hopefully, you won’t get to experience getting fired on your first job but it’s important to realize that there is no such thing as job stability these days. The best you can do is learn all you can from your job, build your network, and save some money so that in the event that the rug gets pulled out from under you, you are not entirely caught by surprise. Gone are the days when you worked in one company all your life. Nowadays, you have to be prepared with whatever life throws at you so you can roll with the punches.

 

Check out www.adamscapgroup.com for more Information on Personal Finance and Budgeting.



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Sun

19

Jan

2014

Learning All You Can from Your First Job

Things to Expect in Your First Job

You’ve finally graduated from college, hurdled the interviews, and are now about to start your first real job. Congratulations! It’s certainly an exciting time as a new world awaits—the prospect of earning more money, of moving up the career ladder, and finally being able to do something you have always wanted to do.

 

But before you harbor dreams of immediately moving up the corner office right after graduation, a healthy reality check is in order. Understanding what comes with your first job is essential if you want not only to survive but actually thrive in your workplace. The realities that come with being the newbie in the office may run in contrast with the dream job you imagined when you were in college. However, the sooner you understand these, the easier it will be to take them in stride. It will also be easier for you to absorb the lessons you need to learn if you have accepted your rank as a neophyte wholeheartedly.

 

So what can you expect on your first job?

An entry-level salary. This is one of the realities that you will have to accept when you are new to the workforce. Even if you graduated at the top of your class and have solid part-time work experience related to the work that gives you a stellar resume, your monetary compensations should not exceed that of what the company usually gives to entry-level workers. Certainly, you can always negotiate with the employer before accepting the job but don’t set your sights too high. Remember, you still don’t’ have the requisite experience in this company and that is going to matter when it comes to determining your compensation.

A new culture to learn.No matter how much of an expert you are in the field, you will always have to adapt and adjust to the culture of a new workplace. Every company and the people who work therein have certain ways of doing things that they have followed through the years. No newbie can change that overnight. Thus, it is up to you to get a feel for the culture and adjust accordingly. This is going to require keen powers of observation on your part and the ability to be flexible when the situation calls for it.



The constant pressure to prove your worth.This is something that perhaps almost all fresh graduates feel when in their first job. You want to prove your worth to your colleagues and most especially to your boss. This can mean having days where you work long hours and forego lunch breaks. You are constantly challenged to prepare thoroughly for meetings which can be a source of real pressure. However, the rewards are going to be worth all the effort.

A lot of questions.Since you are new to your work environment, you can’t expect to learn everything you need to know in a day. It’s natural to have a lot of questions—and employers encourage you to ask them. You become more confident in your job if you know how to do it and the only way to do so is to ask if something is not clear. Don’t mistake asking questions for having no initiative. You don’t have to ask for every single detail—employers welcome workers who have initiative. If you already know how something is supposed to be done then do it even if you have to fill in the blanks along the way.

 

New people to meet . No man is an island—and you can’t afford to be one when you’re the new guy on the team. The veterans in the company are not going to know you exist unless you introduce yourself to them. Your co workers are valuable sources in information about your new workplace so don’t be afraid to strike up a conversation. Also, don’t confine yourself to the people in your department. Get to know everybody so that you widen your circle of associates.

 

Unwanted tasks sent your way.This is one of the things that not all trainees look forward to. Stuff that seasoned workers don’t want to do can get sent your way which can sometimes include going out for miscellaneous errands like buying pizzas for an emergency lunch meeting . Your boss might give you extra work on top of the responsibilities that you already have. You’ll just have to smile your way through the hard work and long hours. As you become more experienced—and that comes only with time—you will not anymore be the neophyte in the office and can delegate tasks to the next newcomer.

 

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Mon

13

Jan

2014

Use Cash Only

The Dangers Of Plastic



We live in a society where credit cards are a way of life. The ease with which plastic can be obtained adds to the proliferation of their use. But just because this is something that you can easily get, it does not automatically mean that it’s good for you. Some financial experts say that credit is a tool. Because of credit, you can obtain expensive things like a car and a house—necessities most people would otherwise not be able to buy with cash.



However, not all credit is good for you. In fact, the most common one—credit cards—can be very bad for your finances. If you don’t have the self-restraint when it comes to denying yourself the things which you know you don’t need then you can’t possibly own a credit card without putting yourself in danger financially.



One of the things that make credit cards so deadly is that you always believe that you have something to fall back on in case you run out of cash. In fact, a lot of people think of their credit cards as their rainy day fund—it’s something that can provide them with the money they need when they need it. The problem is that only a few people actually have the discipline to use their cards for real emergencies. Most see a sale and think that the situation is an emergency. So they take out their plastic, swipe it and bring the item home.



Research shows that more than half of American households are faced with high consumer debts brought about by credit card use. Because of the uncontrolled charges they make to their credit cards, they end up being unable to pay for them. Consequently, this puts them in trouble with debt collectors and ruins their credit score. The latter also brings its own set of problems. A lousy credit score can impact your ability to get a house or even get a job.



The ease with which credit cards are used is also the reason why they are dangerous to use. When you use plastic to pay for your purchases, you merely swipe it. You don’t feel that money is taken away from you. Since your credit limit is in the thousands of dollars, you won’t feel that you will run out of money any time soon. You only get the shock of your life when you receive your credit card statement each month and realize that you’ve spent more than you can afford to pay.



But wait. The bank is kind enough allow you to give only minimum payments, so you do. The problem is, you end up with a hefty interest afterwards and they just keep on adding up the longer you stay in debt.




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Mon

13

Jan

2014

How to Increase Your Take Home Pay Without Asking For A Raise

If you complain that your paycheck is not giving you enough money to live on then it’s time for you to give yourself an instant raise. This time, you don’t have to sweat about showing your boss your past achievements for the company (particularly if you don’t have much to show in that department). You can give yourself an instant pay raise without asking for upper management to increase your take home pay.

Here are some things you can do so you can take home a fatter paycheck each month:



1. Don’t pay more tax than you need to.

This is one of the easiest ways to get a bump in your take home pay. When you begin a job with a company, you are asked to fill out a form called the W-4. It basically determines how much money the Federal government should take from you. If you choose 0 personal allowances, you’ll most likely receive a tax refund when you file your 1040 individual tax return at the end of the year. However, this is not a good thing to do particularly if you always find yourself strapped for cash.



Instead letting Uncle Sam keep a huge chunk of your pay, you can increase your monthly paycheck by claiming the personal exemptions you are entitled to. You can do this especially if you have experienced a major life event such as getting married or having kids. Be sure to take only the exemptions you are entitled to so that you won’t end up having to pay the government taxes.



There are also other tax credits you can take advantage of to lower your tax bill. For example, if you contribute to a retirement savings plan like the 401k, you possibly qualify for a retirement savers’ tax credit which can shave up to $1,000 on your taxes. There are also other tax deductions and breaks that you can certainly qualify for. Be sure to review what these are on the IRS website.



After you have made changes in your W-4 form, be sure to submit it to your human resources department and you should be able to see a bigger paycheck in the next few months.

Another way to reduce your withholding is to take advantage of your employer’s Flexible Spending Account or Cafeteria Plan if it is offered. You can make contributions to these vehicles which you can use for medical care and general health- related expenses. Money you put to these plans are excluded from Federal, Medicare and Social Security taxes. This leaves you more money for each pay period since the earnings are not taxed.



2. Don’t waste your income on late fees and charges.

If you want to leave more money in your pockets, you should strive to pay your bills and other obligations on time so you don’t pay extra on late fees and charges. Credit card bills are notorious for their high interest rates and hefty penalties if you don’t pay on time. What does this tell you? If you are sure that you won’t be able to pay off anything you charge to plastic by the due date then don’t buy it. Being late by even just a day on your credit card payment can jack up your payment by at least $35! That’s a pretty hefty fee you certainly don’t want to shoulder.



To make sure that you don’t forget the bills that are due for the month, it’s a good idea to set up a system that will remind of your obligations. This can be as simple as a filing system at home wherein you separate the bills that are due for the month or you can opt to use technology to your advantage. For example, you can set up automatic payments through your bank account if there is such an arrangement offered by the credit card company. This way, you only have to set the schedule once and the company will deduct the payment you owe from your account.

You do have to remember a couple of things about this arrangement, though. First, you need to make sure that you do have money in your bank account by the time the payments are due so you don’t experience delays and get levied late fees. Second, do review your statements from the bank and from the companies to make sure that there are no errors. You also want to be certain that the payments you make are actually credited to your account.



3. Work on getting rid of debt.

The most surefire way to increase your cash flow in the future is to work really hard at getting out of overwhelming debt. Your take home pay may initially be sufficient but once you start making all the necessary payments to your creditors, you’ll notice that you are left with barely enough cash to get through the next payday. The natural consequence is to depend on plastic to make even the most necessary purchases like food and toiletries. Unless you get rid of debt, the cycle will continue and you will constantly live from paycheck-to-paycheck or worse.



Here’s the real deal: You need to take proactive steps to eliminate debt now so you can bring home a fatter paycheck in the future. The road will be rough, no doubt about it. But after you hurdle this difficult journey, you’ll reap the rewards. The lessons learned during this difficult time should also serve as your inspiration to not go this same route again. Once you have gotten rid of debt, strive to stay debt-free.



4. Pay yourself first.

In order to feel that you have a higher take home pay, you need to start paying yourself first. This basically means putting a portion of your money in savings. Experts recommend starting with 10 percent of your salary. But there is no reason why you shouldn’t bump that up to 15 percent or even 20 percent if you feel like it.



Arrange an automatic transfer from your checking account to your savings account so that you don’t have to include the money you pay yourself to your budget. Even if you have to cut down on restaurant meals or restrain yourself from buying the latest version of the smartphone, you can take comfort in the fact that your savings account is growing.



5. Prioritize your expenses

Differentiating the necessities from the luxuries is something you need to do so you can prioritize which things to buy and which to reserve for those times when you will have extra cash. Food, gas, debt payments, bills and childcare expenses (if you have any) are things that are considered necessary in the list of most people. However, this will depend on your lifestyle and income so you need to make your own list of priority expenses.



The best way to ensure that you are spending only on the things that truly matter is to create a spending plan. If you don’t use a budget, you’ll end up buying anything and wondering where all your money went at the end of the day.

Conclusion

The five steps outlined above detail how you can increase your take home pay without going up to your boss and asking for a raise. However, there are times when you feel that no matter what you do on your end, the money you are taking home just isn’t enough. If this is the case and you feel that you deserve it, perhaps you can consider asking your boss for a raise. Now this can be a scary prospect for most employees. However, if you believe that the time is right for you to broach the subject, you should do so.



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Mon

13

Jan

2014

Clear Away The Clutter If You Want To Succeed Financially

The Effects Of Clutter On Your Life And Finances



Financial success is always associated with making a budget, saving, getting out of debt, planning for the long-term and investing. But did you know that these are only secondary compared to the first thing that you need to do if you really want to make some headway with your finances? The first thing on your agenda should be to get rid of the clutter in your life.

This suggestion seems totally of out of this world, especially when you are thinking of how to get rid of a five-figure debt. However, if you consider the effects that clutter has on your financial life, you’ll soon realize that the two concepts are very much interrelated.



First of all, clutter causes you to look for things twice or three times over (or even more). When you are surrounded by a lot of unnecessary stuff, it is more difficult to find the things you need to attend to. This includes the usual, everyday things like car keys or your purse. When you can’t find the keys, you end up running late for appointments and ultimately feel stressed. If this happens on a daily basis, you put yourself close to chronic stress which can be harm your health. Medical experts say that chronic stress is the silent killer. It can cause diseases that can manifest in cardiovascular problems and other bodily pains. We all know what sickness can do to your finances even if you have health insurance.



Second, being disorganized can cause you to miss payments. If you just put all bills and credit card statements one on top of the other without an organized filing system, you’ll end up forgetting due dates and being delayed on your payments. When you don’t pay the bills on time, you pay extra for interest and other penalties. Worse, if you’ve actually forgotten to pay utility bills, you risk having your water and electricity supply cut off!



Finally, a lot of clutter can make you lose your peace of mind. Look around your house and if you’re having a hard time finding your bed from all the papers strewn around, you know it’s time to start cleaning up. An unkempt and very cluttered room will not make you think and plan effectively. The same goes for a dirty and disorganized work space. It makes you lose your efficiency on the job. How can you think of the most effective way to cut down your debt or create a budget if your mind can’t think straight because of all the clutter?



As you can see, clutter and your finances are intertwined. When you allow dirt, trash and unneeded things to pile up in your life, you are essentially blocking the flow of financial energy to your life. And as you already know, money matters can readily affect every other aspect of your life.



But perhaps one of the most important things to understand about clutter is that it makes you lose your sense of control. Have you ever walked into a room and see it so dirty that you feel overwhelmed at the thought of cleaning it? Well, this signals that you are not anymore on top of the situation. That helpless feeling of being unable to control circumstances can also spill over to other areas in your life, including your finances.



Check out www.adamscapgroup.com for more Information on Personal Finance and Budgeting.




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Mon

13

Jan

2014

When It Comes To Finances, Dream Big And Set Goals

Our choices mirror our lives. This is especially true when it comes to our financial decisions. Poor financial choices spell financial disaster. Excellent money moves will bring you closer to financial freedom. Mediocre decisions also translate to mediocre gains. But whatever your choices are, one thing is certain: The choice is definitely yours to make.



As far as money matters go, we are all faced with debts, bills to pay and barely sufficient income to pay all obligations while preparing for a secure financial future at the same time. Yet most of the time, the difference between success and failure lies in your resolve. If you believe that you can accomplish your goals and work towards achieving them, then you’ll be amply rewarded.



Once you have committed yourself to achieving success, the next thing you need to do is to set financial goals. And by this we don’t just mean setting any goal. You have to dream big. You have to set the loftiest goals you can think of. Later on, you can think of breaking them down to smaller and attainable pieces.



What if you haven’t tried setting goals before? Where do you start? The next few paragraphs will outline the steps.



1. Set a time for setting goals.

Determining your financial goals is an activity that requires clear thinking. You can’t really set clear aims for your financial future if you are multitasking. Try clearing an hour or two from your schedule this week so you can use that time specifically to determine what your financial goals are. If you already have a basic idea of where you want to be financially then perhaps an hour will be sufficient. If not, you might need more than that. Make sure that you don’t attend to any other business at this time.



2. Determine where you want to see yourself financially five to ten years from now.

This is the start of your self-exploration as far as your thoughts about money go. Don’t be afraid to write down the ideas that come to mind even if you think they are unachievable now. Of course, you need to focus on things that will put you on the path to financial security.



3. Choose a short-term goal, a long-term goal and a seemingly impossible-to-achieve goal from the list you have generated in the second step.

This is the step where you will officially start determining your goals. For your short-term goal, pick the one that you think you will be able to achieve in six months to one year. This could be something you want to buy, such as a laptop or any other gadget that will enhance your work or allow you to improve yourself professionally. This could also be paying down a small amount of debt.



The long-term goal refers to something you could possibly achieve in the next five to ten years. This might include paying large amounts of debts or perhaps saving for a house down payment. This kind of goal might be challenging but is still attainable for as long as you put your energies on making it happen.



Finally, the last goal you should choose is the one that you feel you would not be able to accomplish. However, it should be something you still want to achieve given the chance.

After you have chosen your goals, you should write them down on paper or type them in your computer if you feel more comfortable typing them down. The whole purpose of writing down your goals is to concretize them and make you responsible for them. One notable children’s educator has said that what goes to the head comes from the hand. Maria Montessori was referring to the importance of letting children practice their handwriting so the lesson sticks but this could easily apply to your goals. To really own your goals, you need to write them down.



4. Break your goals into attainable chunks.

Lofty financial goals can overwhelm you. Thus, it’s important to find out ways to attain these goals one little step at a time. For example, if one of your goals is to be able to purchase a $1,000 laptop within a year in cash, try to break down the price tag. Divide $1,000 by 12 to represent the amount you need to put away each month so you can gather the money by the end of the year. That would mean setting aside $83.33 a month so you can come up with the money. If you are paid twice a month, then divide that by 2 so you will know how much to set aside when the paycheck comes. Do this with your other goals, whether it is to pay down debt or save money for a car or house down payment.



The next step in breaking down these goals to attainable chunks is to determine what you need to do to be able to come up with the amount you need. Will you need to lessen the food budget? Perhaps you might need to stop eating out for a while. What if mere belt-tightening measures will not be enough? You might need to be a bit more aggressive. Outline what you need to do to earn extra money. Perhaps you can take a second job, sell things you don’t need or if you feel you deserve it, negotiate for a raise.



The whole idea of breaking down your goals is to make them specific and attainable. You’ve already seen the big picture when you chose the three goals that will describe where you see yourself in five or ten years. Now, you need to concretize what you can do on a daily, weekly or monthly basis to make that view a reality.



5. Track your progress.

It’s not enough that you write down your action plan for achieving your goals. Now, you need to constantly monitor where you are as far as achieving them is concerned. It would be ideal to track your progress on a monthly basis. Ask yourself if you were able to put to action your plans for the month. If you haven’t, determine the areas where you failed. Perhaps you overspent or went over the budget. Perhaps an unexpected expense came up and you had to realign funds. Whatever the reason, find out what is causing the leak so you can put a plug on it.



A word on unexpected expenses is appropriate at this time: You need to set aside funds that will be able to deal with these unseen emergencies. Without a rainy day fund, you’ll have a hard time achieving your financial goals since you will always be reallocating funds you’ve set aside for your goals. Experts recommend setting aside three to six months of living expenses to help you deal with financial emergencies.



6. Congratulate yourself for milestones achieved.

If you succeeded in saving money or paying debt then give yourself a pat on the back. Look at this as an opportunity to encourage yourself to keep pushing towards your goals. The road is definitely not easy as far as reaching financial security goes but if you see yourself taking baby steps and actually getting to where you want to go then you have something worth cheering about.



7. Don’t be afraid to realign your goals if they don’t anymore apply to your situation.

Although goals give you something to strive for, they are not set in stone. Sometimes, your values and your priorities change and this will consequently mean that you won’t have the same goal than the one you had originally worked towards. That’s okay. Just repeat this goal-setting process and start working towards your new goals. However, do keep this in mind: Don’t make any changes to your spending and saving habits until and unless you are very sure that you have a new goal to work for.

Conclusion

You might be wondering why we have placed so much premium on setting your goals. The rationale behind this is that you can never go anywhere with your financial plans without a set goal to strive for. In fact, goal-setting applies to all other aspects of your life, not only about money matters. For instance, if you want to be able to attend an Ivy League school, you need to excel academically, showcase your leadership skills and participate in co-curricular activities while you are still in high school so you can increase your chances of being accepted.

If your goal is to be able to design a computer program that will allow you to strike it rich even without a college degree, you need to expose yourself to computers and new trends in programming early on.



Don’t take goal-setting lightly. This is the first step you need to take to secure the financial future for yourself and your family. The rest will follow.



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Tue

07

Jan

2014

Finding Ways to Save

One of the reasons why many are not able to follow their spending plans is that they make seemingly little purchases that actually add up substantially when calculated on a monthly basis. Take grocery shopping, for example. It’s so convenient to just pick up anything and everything from the shelves! Or that cup of coffee you get on the way to work each morning? Try adding how much that costs you a month and you’ll surely be encouraged to drink one at home before going to work.

There are many ways to save so you can stick to your budget. Here are some suggestions:

 

1.  Make reading the labels of packaged food items a habit. Most of the time, you will find cheaper versions of more popular and expensive brands which have the same (if not richer) nutritional content. This can be tedious at first but when you get used to it, you’ll really save a lot on groceries.

 

2.  Use coupons. Clip coupons from magazines or print them out from online sites. You might only save a few cents to a dollar on each item but when you add them up on a monthly basis, the amount will be substantial. And while you’re at it, make it a point to buy in bulk the things or food items that you will use regularly. However, when buying canned goods and other processed foods, make sure that you purchase those that won’t expire very soon. Otherwise, they will just end up in the trash and you will just have wasted your money.

3.  Eat at home. Dining out is one of the reasons why so many people get derailed in their budgeting. Remember that each time you eat out, you’re not only paying for the food but for the labor and expertise of the chefs (and the waiters and dishwashers who will clean up your plate afterwards) as well as the ambiance of the place. Learn how to cook your own meals and you will see just how much you have saved in a month’s time if you minimize restaurant-hopping. While we’re on the subject of making your own meals, consider bringing your own lunch to work (and packing the kids’ lunches at school) as well.

4.  Review your insurance. Take a look at your auto insurance, for example. Perhaps you’re driving a 10-year old car and haven’t had an accident from the time you started driving it, consider just keeping the liability coverage and opting out on collision coverage. Look at your other insurance policies and see if there are ways that you can cut costs and save.

5.  Scrutinize your subscriptions. Do you go to the gym regularly? If you don’t take advantage of your gym membership, cancel it and exercise at home instead. What about your cable and Internet subscription? If you can’t watch all those channels and don’t need a very fast bandwidth then opt for a lesser channels and slower connection but cheaper subscriptions. What about your phone service? If you already have a mobile phone then you can choose to let go of your landline. After all, both phones serve the same purpose so why should you pay for redundancy?

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Tue

07

Jan

2014

How to Stick to your Monthly Budget

Monitoring your Budget

If you have created a budget, you have already hurdled the first step towards wiser money management. Now, the more important challenge is to stick to it. If you don’t, your budget will just be meaningless figures on a piece of paper. It will not do anything to help you reach that secure financial future that you have been dreaming of.

One of the crucial aspects towards successfully sticking to your budget is to monitor it. If you’re trying to observe a weekly budget then monitor it weekly. If it’s monthly, then keep track of it monthly. Review your spending and compare it with your budget to check if you have been faithful in observing your financial plan for the past month. If you have—and even have some extra dollars left over which you can add to next month’s budget—then congratulations! You are well on your way towards being financially secure.

But what if you were not able to follow your spending plan? Like many of us, the natural reaction is to simply give up. We immediately think that budgeting is so difficult that we raise our arms in despair and tell ourselves that we’re just not cut out for such a task. However, you are dooming yourself to a life of financial despair if you immediately forego making a budget. Instead, there is a more productive way to face such setbacks.

First, look at the reason why you were not able to stick to it. Perhaps you did not allocate enough. Take note that a budget is not meant to punish you. It is a smart way of fitting your money to your needs, savings, and investments so that you are able to live comfortably now while setting aside funds for the future when you won’t be as productive. When making your budget, make sure that you don’t base on it penny-pinching but rather on what you actually need and a bit more. If you make your budget too tight, you’ll end up reallocating other funds or borrowing from your savings thereby destroying it.

 

Next, check if you’re getting too caught up in the recording than in the essence of budgeting itself. Sometimes, it’s easy to just keep on listing the things you’ve paid for without really minding where you have placed your money. While keeping track of your expenditures is necessary, don’t equate it with budgeting. It is only one part of it. When you list all your expenses for the day, you must do so with the intention of making sure that you don’t go overboard with your spending allocations.

If the problem is that you’re getting bogged down by too many categories, try lumping together similar categories into one. This way, you simplify the record-keeping and focus on really following the budget instead of getting caught in the details.

 

Third, make saving a habit. Even if you have already allocated a certain percentage of your income to savings, try to save a few pennies where you can. It’s not the amount that really matters here. It’s the habitual act of saving that counts. Once you become comfortable saving little amounts, you will be encouraged at setting aside larger sums. When you see your savings grow, budgeting actually becomes more pleasurable.

Finally, make sure that your budget reflects the major changes in your life. Perhaps you acquired a brand new appliance that needs to be paid up each month for up to a year. Or maybe you just got married or had a new addition to the family—whether it’s a child or a new dog. Perhaps you were promoted and were given a raise. All these should be factored in when preparing your budget.

 

Don’t get tired of reviewing where you went wrong even if you have to do it for a few months at first. Over time, staying within your budget becomes easier as spending wisely and saving for the future comes more naturally.

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Tue

07

Jan

2014

Characteristics of a Good Budget

Now that you’re ready to create your own budget, let’s examine the characteristics of a good spending plan. By doing so, you have a guide as to how to create a budget that is suited for your personal circumstances and one that can easily be followed.


First of all, a good budget is realistic. It should reflect your present circumstances and lifestyle (with some alterations, of course, if you’re overspending). A budget should not be stifling—it should still give you a little elbow room to spend for things that you can’t do without once in a while. This is especially true in the early part of your budgeting when you’re still getting used to spending less.


Next, it should be flexible. A budget is not set in stone. When your income level or marital status changes so should your budget. If you started budgeting when you were still single, you can’t use the same budget when you already have kids—you’ll have to factor in their needs in the picture. If you suddenly lost your job, you might need to readjust some portions of your budget to be able to ride through this rough time. When you finally get another job then you can readjust your budget to reflect it.


Third, preparing the budget should work for you. That is, if you are the type who does not like to delve on the specifics then your budget should focus on the general items without losing track of the purpose budgeting in the first place. However, if you are the type who likes to write every detail then go ahead. Prepare a budget that is as detailed as like it.


The reason? Preparing a budget should be fun. It should not be something that you dread each month but something you look forward to doing. There is no right or wrong way to make a budget. For as long as you have the necessary categories there and have customized it to fit your income and lifestyle then you’re all set.


Fourth, a budget should include both expenses that occur on a monthly basis and those that don’t. When you make your budget, you normally include categories like groceries, utility bills, credit card bills, mortgage and car payments, and childcare payments. Because these expenses are recurring, they are naturally included in your spending plan.


However, there are expenses that don’t occur on a monthly basis but on irregular times throughout the year. This includes auto and home maintenance expenses, personal property taxes, homeowners insurance, and even the money you spend for gifts at Christmas. When your car breaks down, for example, and you don’t have the allocation for it, you have to dip into your savings to get it repaired. So when you’re making a budget, make sure that you include these items. Go back to past records to determine how much you need to allocate each month for such categories. If you don’t have them, research on the current national estimates given by experts. For instance, you’ll have to prepare at least $100 a month to make sure that you have enough standby funds for minor home repairs. It’s easier to break down the total expenses on a monthly basis so that you don’t get confused or forget to include these in your budget.


Finally, a budget should include a way of tracking your expenses. This is one of the most forgotten areas of budgeting. Make sure that you have a little notebook and pen to carry in your bag wherever you go so that you can list everything—yes everything—you have bought and paid for, either by cash or credit card. You don’t have to do it right then and there. But do keep receipts and remember everything so that you can do your recordkeeping before you go to bed that same day. By doing so, you will be able to check if you are really following your budget or not.


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Tue

07

Jan

2014

Budgeting Without Guilt

Examining your Views about Budgeting

 

There is no doubt that budgeting is integral if you want to meet your personal financial goals. For as long as you have a budget and stick to it, you know where to allocate your money, track your spending, and immediately identify where the holes are burning in your pocket and be able to do something about it before the damage threatens to overwhelm you.

But creating a budget and sticking to it is not always that easy. Our attitude is one of the reasons why doing something so essential for our financial success is challenging. Many people equate budgeting with pinching pennies and deprivation. Because of this, they don’t observe their budgets for long. Those who haven’t budgeted before in their lives hear of this and are afraid to even begin.

So before you start budgeting, review your feelings about it. If you hate the idea then it’s time for you to do a mind shift. You see, part of the success of sticking to a budget is believing wholeheartedly in it. If you don’t, you have already doomed it to failure. Even if you have not succeeded at budgeting before, this does not mean that you will fail again. Remember that this is a plan on how you will spend, save, and invest your money. It is not spending your money first and thinking later on where it went.

When you make budgeting a regular part of your weekly or monthly routine, you will find it to be quite liberating. You will get to see your savings grow which will further fuel your desire to continue observing it. It may be difficult at first but you will soon find that you can’t do without a budget. But this has to start with a positive mental attitude.

Reasons to Budget

Once you are ready to embrace budgeting as essential to reaching your personal financial goals, you are one step closer to creating your budget. But first, let’s understand why you need to budget in the first place. Here are the reasons why creating a financial plan is an absolute must:

 

1.  A budget puts you in control of your money.There is a reason why a budget is also called a spending plan. It allows you to plan what you spend in advance. Most of us handle money the other way around—we spend first and plan what’s left. This is the reason why we get into a lot of debt and depend on our credit cards for even the most basic necessities like food. The worst part of it is that most of the time, we don’t think we have a debt problem until such time that the debt has ballooned too much that we can’t pay even the bare minimums on our credit cards required each month!

When you have a budget, however, you empower yourself. You direct where your money goes. You control unnecessary spending without depriving yourself of anything. On the contrary, you are able to provide for your needs because your budget reflects what is truly important. A common example is eating out. Without a budget, you probably won’t mind having restaurant dinners three times a week. But if this costs you $30 for each meal then you’re spending $90 a week which translates to $360 a month. If you cooked your own meals at home, you wouldn’t even spend one-fourth of that amount! In fact, families allocate $300 to $400 for their food consumption each month—including that occasional restaurant treat.

 

2.  A budget allows you to save for things that really matter. When you have a budget, you categorize where your money goes. There is an allocation for food, toiletries, utilities, and savings, just to name a few.

Without a plan, you simply buy whatever it is you fancy. You see a scarf or a bag, you get it. You fancy pizza even if you just had dinner, you get it. While this may give you some short-term gratification, you won’t be able to get those that have lasting value—such as that dream house, that new car, or that grand trip to the Bahamas you have been planning for ages.

 

3.  A budget reduces financial stress.When you follow a budget, you won’t find yourself in overwhelming debt. You won’t avoid the phone because you know it won’t be a debt collector on the other end of the line. You won’t worry about the electricity being cut off because you can pay your bills on time. You will have an emergency fund set up so even if something unexpected comes up—a job loss or sickness in the family—you won’t be put in a financial bind.

4.  A budget secures you and your family’s future. This may seem so far-fetched now when you’re still in your late twenties or early thirties. But if you make it a habit of following a spending plan and putting money in savings and retirement accounts and other investments, you won’t have to worry that you will depend on your kids when you’re in the twilight years of your life. Moreover, you can even leave them a fortune before you pass on to the next life.



5.  A budget prevents divorce.Okay, perhaps not totally. But did you know that most separations are triggered by money problems? Couples usually start arguing when there isn’t enough money to take care of the needs of the family.

 

Talking about money matters with your husband or wife and making sure that you are on the same wavelength when it comes to allocating where your money goes ensures that you are operating as a team. When you don’t have to argue about finances, you have more energy to fix the other issues in your marriage.

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Mon

30

Dec

2013

Benefits and Drawbacks of Buying Stocks Directly from Companies

A lot of corporations are now “bypassing” brokers in the sense that they are offering stocks directly to the investors—the buying public. Those who approve of Direct-Stock Purchase Programs (DSPP) cite the low commissions that this form of stock-buying offers. Some companies also tout low or no initial deposits for as long as the investor commits to buying a certain amount of stock every month.

 

The problem is that while commissions are low, there are other fees that go along with it that can often equal how much you would spend if you had bought it from a broker. Sometimes, it can even exceed it. There are enrollment fees and fees for subsequent purchases. You also pay a fee if you want to sell your shares.

Then there’s the voluminous paper work that you have to go through if you want to apply DSPPs in various companies. You have to fill out each form separately and study the statements that each company will send to you. Finally, there’s that matter of diversification. You only have so much time and energy to study the different companies that you want to invest in so the chances are that you will be buying large numbers of stocks from a single company or few companies which will put your portfolio at risk in case things get rocky with these corporations.

 

Advantages and Disadvantages of Buying Stocks through a Broker

The other way to buy stocks is by setting up an account with a brokerage firm. Investors who are looking to save a few bucks shun brokers because of the fees to set up an account and the commissions that go along with it. However, if you look at the convenience and comprehensive service that these brokers give, you will find that you gain more when you get their services.

 

Before we explain further, it’s important to understand that there are two types of brokers—the full service brokers and the discount brokers. Full service brokers are those that go the whole nine yards when it comes to giving service to their clients. That is, they provide research and give advice on retirement planning, tax tips, and where to invest your stocks. The problem with full service brokers is that sometimes, their advice can be biased in favor of the companies they do business with. So if you want to just trade and do the researching on your own then you can go with the second type of broker—the discount broker.

Discount brokers are those that carry out buy and sell stock orders but do not give investment advice. Because they do not provide investment advice, they charge only small commissions. One of the advantages of going with a discount broker is that they give different avenues for investing—through the Internet, phone, or fax. They also give you access to a wide variety of investment options which help you diversify your stock portfolio. Most brokers also centralize purchasing and holding of stocks and consolidated tax-reporting which simplifies all the paper work for you.

When placing orders through a broker, just remember to buy larger shares so you can save on the commissions. At the very least, you can start with a hundred shares. In case this is not possible, it’s generally wiser to save for it first before buying the big chunk rather than buying a small number of shares at a time.

 

Finally, when it comes to putting your order with your broker, it is best to begin with market orders. You may have heard of limit orders but this form of stock-buying is best reserved for those who already have enough experience with the stock market. A market order is when you tell your broker to buy a number of shares of stock of a particular company at its current price. This is the most common method of buying stock.

When you place a limit order with your broker, you’re essentially telling him to buy a number of shares when the price reaches a particular amount or better. This kind of order is good until you cancel it and is usually used for highly-volatile or low-volume stocks. Again, if you are a neophyte in the world of stocks, it’s best to leave limit orders and stick with market orders.

 

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Dec

2013

A Closer Look at Stock Quotes

How to Read Stock Quotes

 

If you want to invest in stocks, one of the first lessons that you need to learn is how to read stock quotes or stock prices. These are the numbers you usually see on the screens of television networks that report on the performance of the stock market. Stock quotes are also available online and on business newspapers.

 

To get a stock quote, all you need is just the trading symbol of the stock, which is also known as its ticker symbol (e.g. GOOG for Google, KO for the Coca-Cola Company, and WMT for Wal-Mart). If you’re getting a stock quote from an online site, you can also look up the ticker symbol by simply typing in the name of the company. A stock quote has various components. Here’s a screenshot of the stock quote of Google Inc., the giant global technology company. An explanation of the components follows:

 

As you can see, the ticker symbol for Google Inc. is GOOG and it trades on the NASDAQ, the stock market that trades mostly on technology stocks. The big bold number refers to the Last Trade. This is the recent trading price for the stock. In this case, Google stocks traded at US$641.33 at the close of the August 3 trading day. The other data are as follows:

1.       Range.This refers to the price range that the stock traded at during the trading day. The lowest price Google traded at was $636.14 and the highest was $643.72

2.       52-Week Range. This is the price range which indicates the high and low prices which the stock traded at during the last 52 weeks. In this time period, the lowest price which Google traded at was $480.60 and the highest was 670.25.

3.       Open. This is the trade price of the stock when the market opens. For this stock, the opening price on the next trading day is $640.

4.       Volume.This tells the average volume of stocks that traded on the latest trading day. The average volume, meanwhile, refers to the volume traded for the past 30 days.

5.       Market Capitalization or Mkt cap. This refers to the current value of all Google stocks. To arrive at this value, you multiply the current price per share with the total number of outstanding shares. Google’s market capitalization based on this stock quote is pegged at $209.74 billion.

6.       Price-to-Earnings Ratio or P/E. Calculated by dividing the share price by the annual earnings per share, this is one of the statistics that tell potential investors a lot about the performance of a stock. Google has a P/E of 19 which generally indicates that this stock has the potential to increase earnings substantially in the future.

 

7.       Dividend/Yield.This refers to the dividend that the company pays to its stockholders. For many companies, the dividend is paid out every three months. Google does not pay dividends to its stockholders.

 

8.       Earnings per Share or EPS. This refers to the net income of the company divided by the shares outstanding.

 

9.       Shares Outstanding. As its name suggests, the shares outstanding refer to the number of shares that the investors and company insiders hold.

 

10.   Beta. This is a measure of the risk or volatility of the particular stock relative to the market or a particular benchmark.

 

11.   Institutional Ownership. This refers to the percentage of the shares outstanding that is held by institutional investors like pension plans. The institutional ownership of Google’s stock is pegged at 67 percent.

 

Now that you know how to read stock quotes, you can start buying stocks. But not too fast! You have to decide whether you want to get it directly from the companies or do it through a brokerage firm. Here are the pros and cons of each.

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Dec

2013

How to Choose the Right Investments

Before you plunge right ahead and start investing, you should first learn how to choose the right investments for your portfolio. Most financial advisers say that when you’re younger, most of your investments should be in ownership vehicles. These include stocks, real estate, and even running your own business. These might be volatile investment vehicles but the chances of growth are also high. Besides, in the event that your portfolio loses value, you still have time to recoup your investments.

How much of your portfolio should you put in ownership investments? The general guide is to subtract your age from 110 and answer is the percentage of your portfolio that you should allocate in ownership investments. So if you are 33 years old now and you subtract that from 110, the answer is 77. This means that 77 percent of your portfolio should be composed of the riskier ownership investments. The remainder can be placed in the “safer” investment vehicles like savings accounts and bonds.

As you may perhaps notice, the older you get, the less you are going to allocate for riskier accounts. This is because the nearer you are to retirement, the less time your investments are going to be able to recoup should their value plummet. Thus, you need to have more in safer investment havens. But since you can expect to live more years after you retire, you still need your portfolio to grow so you need to maintain some of your assets in ownership investments.

Aside from your age, you should also diversify your investments. This is has been the code practiced by many successful investors throughout the years. Allocating your assets in stocks, bonds, mutual funds, real estate, and small businesses will ensure that your portfolio remains relatively stable in case one part sustains a hard hit. The more diverse your portfolio is, the better your chances of having a restful sleep at night since you won’t have to worry that everything you have put in one asset class is in danger of going under.

 

Finally, you should make it a point to focus your investment on things that you know. While the importance of diversifying your investments cannot be underestimated, you should still invest more in vehicles that you are most knowledgeable about. For instance, if you have been exposed to stocks all your life then it only makes sense that you concentrate a lot here. However, if your parents have been running rental properties since you were little and they trained you early on how to run it—like asking you to get rent from the tenants—then you might be most comfortable investing in real estate. The whole idea is to put your money in businesses that you are most

comfortable with.

These are crucial steps you need to take before you start putting your money in any investment. When you’ve already set up an emergency fund, paid down your debts, start putting your money in retirement accounts, know the tax implications of investing, and chosen the right mix of investments, you are well on your way to investing successfully.

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Dec

2013

Getting Financially Fit Before You Invest

Before you can even consider buying stocks, bonds, real estate, or even starting a small business, it’s important that you get financially fit first. You have to see to manage your finances and allocate money where necessary so that when you finally do begin to invest, you won’t have to suffer setbacks because you were ill-prepared.

Here are the things you need to do to ensure that you are financially fit before you start investing:

Set up your Emergency Fund

We all know that life can throw us lemons when we would rather that it gives us chocolates. Medical emergencies, the loss of a job, or a natural calamity that damages our homes—all these are possibilities that we must be prepared for. To tide you over for these eventualities, you should have at least three months of living expenses stashed in a very accessible account. You could put it in a regular savings account or better yet in a money market fund so that you get the benefit of higher returns. When you have this emergency fund in place, you have something to tide you over in the event of emergencies.

What happens if you don’t take care of this first and plunge right ahead into investing? You could be forced to sell your stocks, real estate, and even your business at a losing price. In addition, you also find yourself hit with sky high transaction costs and taxes when you let go of these items at such short notice. So the best way to ensure that you will continue reaping the benefits of your investments even when you are laid off is to ensure that you have three to six months of emergency money to tide you while you are looking for a new job.

Pay Down your Debts

Now that you have done your homework and educated yourself about investing, you’re probably itching to set up a meeting with a broker your friend recommended. Hold your horses for a minute and ask yourself: Do I have existing debts that I need to pay off? If you have high-interest consumer debts such as those that you have from credit cards, it would be a good idea to take care of these first.

 

Think about it: If you are slapped with as much as 20 percent (or more) in annual interest in your credit card and it keeps piling up because you can only pay the minimum each month then any potential earnings that your investments will gain will just be swallowed up by the interest rate of your credit card. It’s a losing proposition. Before you think about buying stocks or bonds, evaluate how much debt you have and settle it first.

 

Should you pay your mortgage earlier? This really depends on your personal circumstances and the type of mortgage you have acquired. If good money management habits have given you the extra money to pay your mortgage faster, you can certainly do so. However, you have to keep in mind that mortgages usually have lower interest rates than credit card debt and with fixed-rate mortgages they remain constant until you have paid off your loan. So there is no rush to pay mortgage payments.

 

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Sun

22

Dec

2013

Why you Need to Start an Emergency Fund

If you believe that having credit cards to deal with life’s emergencies is perfectly all right, you need to start changing your mindset. Relying on plastic to tide you over in case you lose your job is a bad idea. You will be digging your way to even more debt and what happens if you can’t find work in two, three, four, or five months? The credit card bills will continue to mount. How will you pay?



This is why it’s important to actually have a cash emergency fund. Dave Ramsey encourages his readers to start saving $1,000 for use for actual emergencies like getting fired, having an unexpected pregnancy, and getting very sick. He also says that you have to start saving up for this fast.



When you have a cash emergency fund, you actually have money to spend for life’s calamities. These can happen to you any time so it’s always a good idea to be prepared. Take note that your emergency fund must only be earmarked for those real problems that life throws at you and not for those emergencies that we make up.



What are examples of our own made up emergencies? A very common one is a sale at the mall at 50 percent off. You think you absolutely need to have that piece of furniture sold at half the price. Problem is, it’s not in your budget. But you have money stashed in your emergency fund. Stop! A mall sale is not and never will be an emergency. You cannot use your emergency reserves to get that furniture even if it is given at 80 percent off and you don’t have money to buy it.



How to Start Putting Together your Rainy Day Fund



Now that it’s clear that your emergency fund must only be used for real emergencies, it’s time for you to start putting it together. How do you do that and how do you do so in the quickest possible time? There are actually many ways once you get revved up with your savings plan.

If your company allows you to render overtime work (and pays for it, of course) then ask your boss to give you more hours. Work like you’ve never worked before—without sacrificing family time, of course. Try to look around your house for things you don’t need and can sell over on eBay. You can also hold a garage sale in your neighborhood. Remember, one man’s junk is another man’s treasure, so don’t be ashamed to sell your stuff. If you have time for a part-time job then by all means get one. There are many opportunities to do freelance writing online if that is right up your alley.



Another source of money can be found in your budget itself. How much are you earmarking for those restaurant dinners? As you may very well know, eating out is costly. Start making your own meals and eating at home. Brown bag your lunches and make your own dinners. This will give you huge savings on your food money—savings that you can put towards your emergency fund. What about your gasoline expenses? If you can find a way to carpool then do so. Again, money saved here can be put in your emergency fund.



At this point, your neighbors and even some relatives and loved ones might think you’re crazy, but always stay focused on your goal. In a month or less, you should have your first $1,000 for your emergency fund put up.



When you already have your rainy day fund, you need to find a place to keep it. Your money should be readily available for you to use when a real emergency comes up but at the same time it must be inaccessible for those times when you are just making up your own “emergencies.” You can put this in a savings account that is not tied to any of your debts or you can keep it in a secret place at home which only you know how to get to. This takes a little creativity and imagination but the bottom line is to keep your emergency fund safe until such time that you actually need it.



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22

Dec

2013

Saving for your Emergency Fund

The Prerequisites



The first baby step on the road to Total Money Makeover, according to author Dave Ramsey, is to save $1,000 for your emergency fund. This is money earmarked solely for emergencies and nothing else. But before this can be done, you will have to take care of some details. These prerequisites are important because if you don’t accomplish them first, you are not going to accomplish your goal of putting together an emergency fund. A Chinese proverb puts it aptly: “The journey of a thousand miles begins with a single step.”



You can’t be a well-toned athlete overnight. You have to start at the beginning, strengthening your muscles and increasing your stamina with exercises and workouts. You have to watch what you eat as well. Then when your body is ready, your coach can start training you on the specialized techniques and strategies that apply to your sport. The road towards becoming a star athlete has to be taken one step at a time. If you attempt to learn the techniques right away without building your foundation first, you won’t be able to last long enough to get anything substantial from the training. In the end, you will most likely just quit out of sheer desperation.

The same thing applies in your quest to put together your emergency fund. You have to fulfill the following requisites or else you will just end up spending whatever you have placed there for your other non-emergency needs.



First, you need to resolve to be patient. Before you can accomplish all the next steps, you need to make a pact with yourself that no matter how tough the going gets, the more you must strive to be patient. Also, without patience, it’s easy for you to lose focus. At this point when your finances are in disarray, you might want to put your money on something else rather than putting your money in your savings fund.



Second, you have to set up a budget. Yes, this is one of the more challenging things about putting your financial house in order. You have to have a written budget for each month (or for a week, if your pay is given weekly) so that you know where your money goes and will have control over it. Budgeting allows you to track your money and curb your spending.



When you stick to a written budget, you are able to determine the areas where you are leaking money and will be able to do something about it right away. Best of all, a budget enables you to put your spending in order to ensure that you have money allocated for your emergency fund always. Of course, it goes without saying that you have to follow your budget. If you don’t, it’s just going to be something written on paper—a theory with no practical and relevant application to your quest for financial freedom.



Third, review your budget regularly. If you are doing a weekly budget then you have to have a new budget each week. If it is monthly, you have to make a new one each month. Remember, you cannot just be content with one budget no matter how much you think you already have all bases covered. No such thing as a perfect budget exists. There will always be room for adjustments, especially when you have already made headway with your debts and have money left over. If you don’t figure in the excess dough you have in a budget that you must follow, you’ll end up splurging and wasting your cash and missing out on the opportunities to grow your money.



Fourth, make sure that you and your spouse are on the same page financially. This means that if you are married, you have to agree on the budget. If one party does not agree, the other party must listen and both should come to an agreement about all the items in the budget. You have to agree that you will respect the budget and will follow it line by line to the letter. In case something comes up and you need to realign certain items in your financial plan, you have to tell your spouse and again, you have to agree.



Now, it’s very important that when something does come up and you find the need to alter your budget, you have to make it a point to balance what you need to take out. For example, if you need to spend $80 for a minor roof repair, you need to subtract $80 from another part of your budget so that you are still following your plan. Otherwise, you won’t be able to work towards putting your emergency savings together.



The final prerequisite is for you to become current with your creditors. Of course, you will have to take care of the basic necessities like food, shelter, and clothing first but once you have these in place, you have to start paying off your debts. When you are current on all your obligations, you can start saving for your emergency fund.



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Sun

22

Dec

2013

Steps to Overcoming Financial Ignorance

Solving your money woes starts with overcoming your financial ignorance. How do you do that? Here are the steps:



First, you have to acknowledge to yourself that you are not a born financial expert. No one is. If you want to be financially savvy, you have to work at it. That means you have to be humble enough to admit that your knowledge about money at this point is zero. A lot of us take offense at being called ignorant because we consider that a blanket term for a lack of knowledge about everything. But as we have discussed above, being financially ignorant is only confined to your lack of knowledge in the area of finances, not in any other area in your life.



You can be the best teacher to preschool children, guiding them in the basics of phonics and reading and simple math every day but that does not always mean that you are a good money manager. You can be the best car mechanic in town but this does not always make you a genius at budgeting money. Again, you are not born with some special innate knowledge about how to handle money. You have to learn that. How do you do that? Read on.



You have to educate yourself about money. No, this does not mean going back to college and learning about the basics of money management here—most colleges don’t include this in their curriculum anyway. It means reading good books about the subject. It means doing online research to scour articles and other related resources that teach you how to manage your wealth. There are literally thousands of websites on the Internet that focus on this topic so you should be able to find one that gives good advice.



As far as finding advice is concerned, just be wary when scouring online sources. A lot of those are from big credit card companies who, of course, want to encourage clients to keep on living on credit. If you are already burdened with debt, the first thing you want to do is free yourself from it so anything that will encourage you to get more and more credit cards is simply not the solution you need.



Third, keep on learning about how to manage money. It is said that the only thing constant in life is change. Although the principles of saving rarely change, other considerations like how you plan your retirement, what your 401k options are, and other federal rules and regulations that affect your bank accounts and other finances could be altered. You have to keep abreast of these happenings so that you will not be left behind and can adjust the way you manage your wealth accordingly. Even your budget has to be reviewed regularly so that you can make the necessary adjustments when something comes up.



Battling the Desire to Keep Up Appearances



One of the really ignorant things you can do is to try to keep up appearances so that you can appear respectable, decent, and likable to your friends, family, and yes, even former high school classmates. Perhaps it’s part of the human psyche that we crave for respect and attention. Most of the time, however, we tend to overdo our desire to “keep up with the Joneses.” Most of the time, we end up broke and in debt even as we dress ourselves outwardly in the most fashionable clothes, the newest cars, and the regular parties we throw to our families and friends. People think we are living the American dream when in fact our financial life is a living nightmare.



If you really want to make a lot of headway with your finances and want to become the next millionaire, you should stop caring about what people think of you and start thinking about what your wallet and your bank account has to say. Are your finances already in the red? Is the electric company threatening to cut off your electricity? If the answer to both questions (and similar ones) are in the affirmative and you still think that you will die if you can’t have the new designer bag that just came out, then your way of thinking needs a major overhaul.



But as we all know, it’s extremely challenging to battle this desire that has been ingrained in our system for so long. After all, we all love our things and whether we admit it or not, we attach our self-worth to them. Thus, it’s understandable that we meet a lot of resistance from ourselves when we try to solve this problem. But winning is possible. Here are some steps to help you change your mindset:



First, you have to really want to change. The first step towards believing that you can become financially stable is to believe that you really want to be. This might seem quite easy at first but in reality, it takes a lot of introspection. If you look deep into your finances and are content with the way you manage your finances now then you won’t be convinced that you need to change. If, however, you see a pauper years from now when you retire and seriously want to avert that, you need to plant the seeds of change now.



Second, you have to stand up to peer pressure. This might seem very high school-ish, but we succumb to pressure from friends, family, and society when we try to live up to their expectations. We are living the way big clothing companies want us to live every time we feel we are left out if we don’t buy their latest creations. We are bowing down to peer pressure every time we feel we ought to bail out a younger (or older) sibling from debt because our family thinks we are well-off even if we are drowning in debt ourselves. You have to learn to say no—and say it even to those you love—if you are serious about straightening out your finances.



Finally, you have to let go of that most important thing you have but cannot afford. If you are up to your neck in financial troubles and the only way out is to sell the business you have worked so hard to put up then you have to do it. The same goes for that car you hold dear, the house, or that rare art collection. Whatever it is, you have to let it go. Only when you have done so will you start the road towards financial freedom.



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22

Dec

2013

Dispelling your Ignorance about Money

Financial Ignorance is not Bliss



One of the reasons why so many people end up being incompetent about money is the fact that they are ignorant about it. No, this is not meant to be insulting but is a statement of fact. Although the word “ignorant” is usually taken as a derogatory term to mean someone who is uneducated, it also describes someone who lacks knowledge of the fundamentals of a given field. In this case, financial ignorance refers to anyone who does not possess the know-how of such basic concepts as budgeting and handling money.



Take note, just because you are financially ignorant does not mean that you are dumb in everything else. You only do not know how to make wise financial decisions. Being financially ignorant does not mean that you are not good in your work as a professional athlete, cook, or actor. Seriously, how many times have we heard of stars in their own field—basketball players, for example, who can shoot and dunk while seemingly able to defy gravity—who have gone broke and filed for bankruptcy? The names of individuals who have excelled in their lines of work but have failed miserably as far as money goes are long and unless we are all educated about money matters, this list will continue to grow longer.



If financial ignorance does not affect our work, then why do we make such a big deal about it? Unfortunately, this kind of ignorance— when not reversed— can have serious repercussions in other areas of your life. Unwise decisions about money, unpaid debts, and the threat of foreclosures and bankruptcies can spiral into broken relationships and despair that can ruin lives. When you are burdened with debt, you tend to become less effective at work which can lead your employer to fire you. And that adds to your already mounting problems.



If you want to prevent this from happening, you need to stop being financially ignorant and need to start being financially wise. If you are already experiencing all these because of your ignorance, don’t despair. There is still time to change even if the road is going to be more challenging.



The problem with our society and our educational system today is that we are not taught about such subjects as how to handle money in high school or even earlier. Most of our parents who were also struggling with the burden of debt and the challenges of budgeting did not know how to make us, their kids, financially savvy. In essence, we were left to our own devices as far as money is concerned and as a result, we derive our knowledge of it through mainstream media and television.



Since plastic money is glorified in all advertisements, we think that it’s normal to own a lot of credit cards and worse, max them out. We think it’s all right to keep on changing their cars every three to five years and perpetually paying for a brand new vehicle month after month. Most of the modeling that we got were wrong, leaving us bereft of financial knowledge that are now the cause of all our troubles.



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Wed

18

Dec

2013

Understanding Student Loans

rough these tax-advantaged accounts.

 

Second, look for scholarship opportunities. Most, if not all, institutions of higher learning have merit-based and need based scholarships for students. You will have to comply with all the requirements and impress the committee with your qualifications. But if you do get awarded scholarships, it’s virtually a free pass to college. Some even give a modest monthly stipend in addition to the tuition, board and lodging, and books so it’s a way to have extra money, too. The catch is, there are conditions that have to be maintained for the scholarship to be awarded so you have to meet these. Otherwise, your scholarship could get revoked.

 

Third, find work. You will have a lot of free time when you’re in college and you can make these productive by getting a job. Work will not only help you make ends meet, it also enhances your resume that will make you more valuable to your employers. As much as possible, try to find a part-time job that is related in some way to your course so your work experience will give you an edge over other applicants vying for the same position when you’re job hunting after college.

 

Before you Apply for a Student Loan

 

If the above-mentioned ways to fund for college are not available or just not enough, student loans are available. However, make sure that you know the answers to these questions before you accomplish that application form:

 

  • What kind of student loan are you getting? In the world of credit, there are many different kinds. The same holds true for student loans. You have Stafford, Perkins, PLUS—what have you. It’s important that you get to know the features of each one so you can choose the one that’s best for your needs and circumstances. Researching on these is easier now with the Internet and it should be the first step towards getting a loan. If you know what kind of loan to apply for, it’s also easier to apply.

 

  • How much do you need and can pay for based on your probably earning potential? See to it that you only borrow what you need and can actually afford to pay for based on your projected earnings when you start working. When we say projected earnings, we’re talking about how much your expected salary is in your first job, provided that you work in the profession you studied for. There are some majors that don’t pay as much and there are others that allow you to earn handsomely. So let’s say the entry-level salary in your field is $40,000 determine how much you can afford to pay for your student loan given your other obligations (e.g. credit card bills, food, utilities, etc.).

 

  • What are the terms for your loan? Be sure to ask how much you will be paying for a particular loan, what the interest rate is, and how long the term is. Remember, a student loan is debt and debt can make you lose opportunities for saving and investing. The lesson? Strive to pay off your loan as early as possible.

 

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18

Dec

2013

Managing your Student Loans

Managing your student loan starts the moment you apply for it. Aside from doing all the research on the types of loans available, the law also requires you to attend an entrance and exit counseling before and after you get your loan. You should pay attention to what your responsibilities and rights are regarding the money you borrowed and the terms of payment. You can contact your loan servicer any time as well if you have clarifications or questions about your loan terms.

 

If you are still pursuing graduate studies or are serving the military, you can also defer loan payments. Do keep in touch with your loan servicer so you can arrange payment when you’re done with school or are already out of duty. What if you become unemployed or got sick and cannot work? You can arrange to defer payment, too, under these circumstances. What’s important is that you talk to your loan provider right away if you find yourself in these situations.

But what if you are working but are not earning enough to sufficiently pay your student loan burden? Certain programs, like the “pay as you earn” plan allows you to pay only 10 percent your discretionary income based on how much you earn and your family size. If your repayment plan is “income based” meanwhile, your payment is 15 percent of your discretionary income. The “income contingent” repayment scheme is based on 20 percent of your discretionary income and is best suited for those with very low incomes. In this arrangement, any balance that remains unpaid after the loan term is forgiven.

 

Your loan may also be forgiven if you work in certain public service fields. Policemen and other law enforcers, teachers, doctors, nurses, healthcare personnel, and government employees can apply for the Public Service Loan Forgiveness Program or the Teacher Loan Forgiveness Program. In a nutshell, your balance is forgiven after you have made 120 payments on your loan. So make sure to check this out if you are working in education, public health, emergency management, the military, or the government.

 

You can also opt to extend your loan to take advantage of the lower monthly payments. So if your loan is scheduled to be fully paid in 10 years, you can change the payment schedule to 20 or 25 years so that you are not burdened with higher monthly dues. However, always remember that the longer you keep a loan, the more you will pay in interest. Most of the time, the interest paid on the student loan debt is even higher than the principal!

 

Don’t forget to deduct federal loan interest payments from your taxable income. Just make sure that you follow the IRS rules for doing so. Also, don’t forget that there are no penalties for paying your student loans early. Unlike home mortgages, prepayment penalties do not apply to student loans.

 

Student loans can help you get your college degree which will put you on track towards a higher paying job in the future. However, it can immediately turn into a burden if you don’t manage it wisely and pay it off on time. Don’t make the mistake of letting your student loan haunt you until you retire. Learn all you can about it, repay it as soon as possible, and don’t forget to talk with your loan provider right away as soon as you realize that you are going to have a hard time making the monthly payments. The sooner you talk to your provider, the earlier a solution can be found.

 

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Wed

18

Dec

2013

The Lowdown on Credit Cards

Credit cards are seen as wallet staples these days. It’s hard to find someone who does not own at least one card. But we also know that plastic money has its own pitfalls. As we have stated in the first part of this report, debt is not a tool. It can do more harm than good, and can be disastrous if you let it go out of hand.

 

That being said, most of us need credit cards in today’s economy. So in addition to preventing your balance from accumulating by not paying your dues on time, a crucial step that all potential card owners need to take is to try to get the right card for you. When we say “right card” we’re talking about the plastic that reduces your costs.

 

To do that, you need to examine your spending habits. If you are the type who sees to it that all debts are paid on time, the annual percentage rate would be the least of your considerations. After all, you won’t carry a balance anyway. What you are after would be a card that is willing to waive the annual fee and has lengthy grace periods. A “rewards card” will also allow you to reap the benefits of your prompt payments. This can be in the form of frequent flyer miles or other freebies.

 

However, if you are the type who would prefer the minimum payments—not really a good idea, though—then the interest rate matters big time. The lower it is the better. For those who have the tendency to go on a shopping spree when they have plastic in their hands, a secured card is better. With this card, the deposit you put in serves as your credit limit. So if you only have $500 there, then that’s all you have to spend. You also need to pay it off like a regular credit card and interest accrues if you don’t. This is also the recommended card for those who are trying to rebuild their credit.

 

Don’t fall for every credit card offers that come your way. At the most, you should only have two cards with you. The others only serve to tempt you to buy things which in reality you cannot really afford.

 

Habits to Nurture to Get Low Interest Rate Credit Cards

 

When looking for credit cards that charge low interest rates, you want to make sure that you nurture certain habits. Before, it used to be so easy for banks to offer low rate plastic in a highly-competitive market. But the bankruptcy filings which have increased over the years have also made them cautious and picky with those they give these cards to. So if you want to get the low rate cards, be sure to:

 

1. Show a history of punctual payment. Usually, they look at your bill paying habits in the last three to five years. If you have ever been late for one or two months (or more) in your bills, you’re lowering your chances of getting a lower interest rate.

 

2. Be employed for at least a year with your current employer. Aside from job stability, banks also want to see that you’ve been living in the same house for the same span of time (or longer) as well.

 

3. Show that you are not heavily in debt. They will look at your usage ratio or the ratio of your outstanding debt to your credit limits. The higher it is, the more difficult it will be to qualify.

 

Instead of you having to put the merchants on your account and arranging for the deductions, you can instead have the merchant automatically deduct their charges direct from your account on a certain date each month. For example, you can arrange with your cellphone company to directly deduct your bill from your checking account each month and they will do that for you. Just make sure that you are dealing with a reputable merchant. You should also still do the necessary checks that the merchant has only deducted the exact amount from your account. Reports of some merchants directly levying additional charges have made a lot of individuals wary of this mode of payment.

 

  • Trusted Envelope System

 

If you would rather pay for things in cash, then the time-trusted envelope system works best. Put all the expenses and amounts in appropriately-labeled envelopes. When the “dinners out” envelope starts getting low, you know it’s time to do more home-cooking.

 

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Wed

18

Dec

2013

Ways to Win Over Debt

Debt is not a tool, despite what you have been told to believe. If you’re reading this, you’re probably under a ton of consumer debt and want to get out. And it’s only right that you should. The more you are in debt, the more opportunities you lose to invest your money and save for the rainy days. It is not unusual to hear of seniors still paying off their student loans. So beware of that $4,000 credit card debt you have from your college years—that can easily balloon into a huge and debilitating financial obligation if you don’t pay it off fast!

 

Debt should not be given the same care as plants, watering it each day until it grows and blossoms. If you only pay the minimums month after month, it will grow and grow as the years pass by. However, unlike a flower that goes into full bloom when taken care of, debt will only balloon into a monster that will destroy your life. Instead, you should look at debt as a weed that sucks the lifeblood of your plants and hack at it until even the roots are uprooted. Don’t be content to pay the minimums. Rather, treat it like a plague and finish paying all your obligations until you have nothing left. Then and only then can you put your money to better use.

 

Debt does not give you freedom. In fact, it can imprison you unless you have a very healthy view of it. No, it cannot imprison you literally since we do not have debtor’s prisons here in the United States. However, it can limit your freedoms in a lot of ways. For starters, your financial history is recorded in what you probably know of as your credit report. Your creditors report your transactions to the three credit bureaus—Equifax, Experian, and TransUnion—and form the basis of your credit score.

 

If you have a bad credit history (and consequently a low credit history) marred by late payments, bankruptcies, and foreclosures, the detrimental effects can spillover to other parts of your life. You could lose your chance of getting a job, won’t be able to get competitive interest rates for loans or won’t even be approved for them, and probably won’t even be able to rent a house. Your credit report is already used as a basis to determine just how financially responsible of a person you are and if it shows otherwise, that can reflect on the rest of your character too. Unfair that maybe, that’s how things work nowadays. So unless you can responsibly manage debt, it’s better to steer clear of it.

 

But I Already Have Debt!

 

Unfortunately, majority of Americans are already swimming in debt and for those who are already drowning in it, the lessons above are learned a little too late. But even if you are already in debt, it is still possible to manage it so that it doesn’t push you further into the abyss. To help you do that, here are some guidelines:

 

1. Pay off your high-interest debt instead of putting your money in savings or investing at a lower interest.

Savings is good. However, if you have a credit card loan that earns a high rate of annual interest, you would be better off paying the debt first with your savings money. Here’s the deal: If your credit card debt earns 15 percent interest annually and your savings only gives you a 5 percent return each year, it is logically more practical to pay the debt than stick with meager returns on your savings. You’re essentially losing money if you continue to hold on to your savings instead of using your money to pay off your high-interest debt.

 

2. Refinance to a lower interest rate.

If you have a credit card debt that charges you 15 percent interest rate annually and you can qualify for a low or zero-interest credit card that allows you to transfer your remaining balance to it, then it is wiser to do so. Before you make the transfer, however, be sure to read the fine print as there are bound to be conditions that go with the transfers. For example, the low interest rate is only good for a certain number of months and will revert back to the prevailing interest rates once the time has passed. There are also some cards that strictly specify that the low rates only apply to the balance transferred. When you use the card for new purchases, they are also charged the prevailing market rates.

 

3. Pay promptly.

This is one of the proven ways to build a great credit history. Punctual payments will not only make you avoid additional charges and higher interest, it will also free your mind from the constant worry of not being able to pay your obligations. Now, even if you already have a marred credit history which can’t be undone, it is still possible to rebuild. And the best way to do that is to start making on-time payments. Now if you’re planning to apply for a mortgage sometime in the future, your prompt payments now can mean a huge difference in the interest that you will be given. The more punctual you are, the better your score is going to be, the more competitive the interest rate you will get for your mortgage.

 

4. Negotiate for a lower rate.

You don’t have to contend with a very high interest rate if you can get a lower rate. To be able to get what you want, you’re going to have to ask. Don’t be afraid to pick up the phone and call someone from the bank or the credit card company who has the power to lower your rates or even just eliminate the additional charges from a past due account. Be sure to get the name of the person you talked to and if your request is granted, make it a point to follow up your request with a letter that encapsulates the conversation and what was agreed upon. This way, you have a paper trail to support your claim. If the first person you talk to cannot or will not agree to your proposal just keep on looking for someone higher up in the chain who will finally be willing to help you out.

 

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Fri

06

Dec

2013

Of Family, Friends, Social Contacts and Your Finances

The family is considered the social unit of society. Most people were born in one and the formation of one’s behavior, values, and character happen within its confines. This is why the habits practiced and preached by the heads of the family are carried by the younger ones and in turn are taught to the next generation.



Our ideas and beliefs about money are first formed by what we see and hear from our parents. If you had been constantly given what you asked for—be it a toy, a piece of clothing, or a new gadget—then the way you view money will be different from one who grew up in an environment where a thing can only be earned if one works hard for it. Parents are instrumental in shaping the money habits of their children and it is crucial that the young be taught and shown such concepts as savings and investments as early as possible.



Next to our family are our friends. Some of our closest are as valuable as our families. We know this from our experiences with those special people we have shared strong and unbreakable bonds with from elementary, high school, or even college. Friendships that stand the test of time are those that we cherish the most. Friends who have shared the milestones we have in life—birthdays, graduations, weddings, births, even deaths—they are the ones that we can count on when times get rough.



When we talk of friendships, we don’t normally equate them with making money. However there is a very little known fact that all financially successful people share: They maintained solid friendships and had a strong network of social contacts. The saying “let me know who your friends are and I will tell you who you are” holds true when it comes to success both in life and in finances. The analogy might not be so obvious at first but when you get to dig deeper into the relationship of people and finances, you will realize just how important they are in your quest for financial stability.



In addition to your family and friends, you also get to interact with the people you work with. The relationships you hold with your bosses and colleagues will also determine just how far you will go in your career and in your financial life. Having mentors or sponsors will certainly help you go up the leadership ladder which will increase not only your earning capacity but your prestige as well.



The professional contacts you make outside your place of work will also have an effect on your career growth. These include the networks you form in person as well as those you make online through social media platforms. The wider your social networks are the more connections you have. The question now is: How do your family, friends, colleagues, and other contacts help improve your finances? That is what we will discuss in the sections that follow.



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Fri

06

Dec

2013

How Friends and Colleagues Impact your Finances

We’ve already touched a bit on how family impacts your finances in the first couple of paragraphs of this report. But the lessons we were taught at home are not necessarily carved in stone. Even if your parents were not exactly the best examples when it came to spending and saving, you can still change your views and practices about money. As you grow older and (hopefully) wiser, you’ll be able to experience the lessons in life that will lead you towards wiser and more practical decisions about your finances.



By the way, if you’re a parent, you know the importance of giving your children a firm foundation about money. Teaching them the basics of saving, investing, and budgeting early on in life will serve them well as they grow older. More than these, instilling in children the role that money should play in their life is essential if you want them to grow up with a healthy view of it.



Your Friends



So what about your friends and other contacts? In what ways do they impact your finances? Before we go ahead and count the ways, let’s first make one thing clear: You don’t make friends for the purpose of improving your finances. You make friends for the sake of making friends and the more of them you have, the richer and more varied your experiences become. And since you naturally levitate towards those who you feel an affinity with, you’ll be able to find like-minded people who share your passion for success, wealth, and financial stability.



If you’re on the road towards financial freedom, having friends who totally support your cause can give you that much-needed emotional boost when the going gets rough. However, be warned that money can also cause friendships to go sour. Borrowing money and not paying it back—even from your best friend—can strain relationships. So if you intend to borrow be sure to pay it back.



Your Colleagues and other Contacts



Your success at work depends partly on how you develop relationships with your boss and coworkers. A harmonious workplace is vital for productivity so if you want to be able to work without having to worry about what people will say about you then you should make it a point to maintain good relations with everyone. Help those in need when you can and if you have an issue with a fellow worker, try to settle it with him or her privately at first. Don’t engage in backstabbing or gossip as this almost always backfires. If you’re up for promotion and you’re in competition with someone who is equally qualified, your boss will most likely take into consideration your rapport with other members of the team. The more positive feedback others will give about you, the higher your chances of getting promoted—and increasing your earning capacity as well.



You probably already know that your boss is the one person in the office that you want to be on good terms with. While the norm for most of the rank-and-file is to please their bosses by doing anything and everything that is asked of them, a much better solution is to prove your worth in your line of work. Showcasing your professionalism (arriving on time, submitting reports, etc.) and expertise will get you in your superior’s good graces better than volunteering to get his laundry.



The art of negotiation is also something that you need to practice with your boss if you want to ask for a higher paycheck. Be polite but firm in your request. Be sure to do your research beforehand so that you are ready to answer any questions he or she may have about it.

The contacts you are able to forge online as well from the circles or associations you are members of are valuable as you expand your network. How can they impact your finances? First of all, it’s a given that your career path isn’t always linear. You experience bumps along the road—you could get laid off, for example, and need to look for a new job. You might also want to resign because of one reason or another and want to work for a different company. You might want to start a business on the side.



Whatever your reason is, the network of contacts you have made can direct you to leads that will give you a fresh start. They can point you to individuals they know in other companies who might be interested in hiring your services, for example. They might provide you with eye-opening ideas that will enhance the business project you have in mind. They might even hire you as a consultant. Certainly, the possibilities for collaboration and cooperation are there when you have created a network of contacts.



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Fri

06

Dec

2013

Practical Ways to Care for your Things and Save Money

Now that you know the rationale behind caring for your things, let’s look at some practical ways by which you can do so. In the following sections we will give some tips on you can take care of your house, car, computers, clothes, and appliances as these are the ones that you are going to use most often which are not only expensive to buy but also repair or replace in case they get damaged.



Caring for your Home



The various areas in your home have their own specialized cleaning requirements so we will just touch on the general ways by which you can care for your home so that you don’t have to spend so much for a major repair.



1. Thoroughly clean your home regularly. Cleaning is not only good for your home and gives you the chance to exercise, it’s also the best way for you to inspect if there are chipped tiles or other broken parts in your home. When you discover these minor issues early on and do something about them right away, you spend less and prevent it from getting worse.



2. Your fireplace chimney must be inspected and cleaned at least once a year. It’s best to leave the job to a professional so it’s given a thorough cleaning and you don’t have to injure yourself.



3. Clean gutters regularly. If you can’t do it yourself, let a pro do it for you.



4. Inspect windows and doors and see if their caulking and weather stripping needs to be replaced. Doing this at least once a year does not only keep your house warm, it also prevents your energy bills from rising.



5. Check your toilet tank for leaks. Having it repaired right away or changing the flapper yourself if the toilet is leaking from the tank to the bowl will save you money on your utility bill as well as prevent water damage to your floor and the possible replacement of your toilet itself. You can perform a simple test for a leak by adding some red coloring inside the toilet tank. Let it stand for one hour. If the water remains red then you don’t have a problem. But if it has turned pale to a pink shade then you have a leak.



Caring for your Car



1. Avoid driving too fast or accelerating suddenly. This will put wear and tear in your car parts and make it more susceptible to repairs. In the first few minutes of driving, take care to accelerate slowly. This will prevent too much wear in the engine.



2. Change the engine oil frequently. Your car manufacturer will specify when you need to do so. Follow it to optimize your car’s performance and prevent breakdowns. Make sure that you also know when to change the other automotive fluids of your vehicle so that its internal parts are kept in mint condition, helping you avoid costly repairs.



3. Take care of your tires. Maintain proper inflation as under-inflation can cause your tires to be worn faster while over inflation can be costly in terms of gasoline consumption. Rotate your tires and check for uneven wear and tread regularly. This will ensure that you get the most life out of your tires.



4. Have your car washed regularly. Dust, grime, and debris that accumulate can lead to the formation of rust and ultimately, corrosion. Make sure to set a regular schedule for a thorough washing at all times of the year—especially during winter.



5.Find a mechanic you can trust and take your car for scheduled maintenance checkups. These will reveal potential problems in your car and have them repaired before they get worse.



Caring for your Computer



A computer is considered a necessity these days. Whether you have a laptop or desktop computer, the following tips will help ensure optimum performance.



1. Always have a good anti virus protection installed in your computer. Having one protects your computer from harmful files and downloads and from malicious sites online that you might accidentally visit.



2. Avoid bringing or leaving beverages and sweets near your computer.  Spills can easily damage the internal parts of your system which can potentially ruin files and even its internal components, necessitating costly repair and costly replacement.



3. Use your laptop in a well-ventilated area. See to it that you don’t cover the fans so that extreme heat does not fry the motherboard.



4. Invest in a good and sturdy laptop bag so that your computer is protected from accidental bumps and bruises.



5. When you are going to be leaving your computer for more than a couple of hours, turn it off. The electricity you use when you start up your computer is still considerably less than if you let it run continuously doing nothing.



Caring for your Clothes



1. Follow washing instructions on the clothes. If it says “hand wash only” then don’t put it together with the others in the washing machine together with the others that can be machine-washed.



2. Be careful when removing stains on colored clothing using bleach. Be sure to use a product that does not remove the color of your clothes together with the stain.



3. Store your clothes carefully so that you won’t have to replace them next season. Wash them very well and let them dry thoroughly. If you place them in an airtight container you won’t need to put mothballs. Otherwise, you can position the mothballs in the upper portion of your closet to give the best protection for your clothes since the repelling odor travels downward.



4. For newly-bought clothes with buttons, prevent removal of the buttons by sealing the threads in the middle with a little dab of nail polish. For those with zippers, occasionally wax the zipper teeth with a candle to keep it functioning well.



5. Avoid crumpling your clothes in a ball and throwing them on the floor or when you are done wearing them. Instead, fold those that need to be washed and put them in the hamper. For clothes that you will wear again, be sure to put them on a hanger. When you take care of the fabric, your clothes will not be stained and will obviously last longer.



Caring for Appliances



1. Always clean kitchen appliances after using. Residue and dirt left on blenders, food processors, and others will hamper their efficiency and decrease their lifespan.



2. As much as possible, don’t power larger appliances like washing machines and refrigerators with extension cords. If this cannot be avoided, be sure that the extension is the right one for it. For electrical appliances, ensuring that the power source is stable is the best way to keep it working efficiently for a long time.



3. Run your dishwasher on a full load. This will enable you to save money on energy and water bills and let your appliance last.



4. Defrost your freezer when the frost becomes ¼ inch thick. Thick frost hampers the efficiency of your appliance, decreases its lifespan, and increases your electric bill.



5. Always read the instruction manual thoroughly on any new appliance you have. By doing so, you can install it correctly and troubleshoot minor problems. If something is wrong and you can’t find the solution in the manual, be sure to take it to the service center. New items are still covered by warranty so it’s best that you don’t tinker with it so that you don’t void the warranty.



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Fri

06

Dec

2013

The Financial Benefits of Taking Care of your Things

Why you Need to Take Care of your Stuff



There’s one thing that becomes very clear as you grow older: You pay for all your stuff. The clothes and shoes you wear, the computer and mobile phone you use, that car you drive—you usually don’t get these for free unless you have very rich and generous parents. You pay to be able to have a roof over your head, the latest appliances, and all other modern-day conveniences. If you make an inventory of all the things you own and list down how much you have actually paid for all of them, you’ll be shocked at how much money you’ve put down for all your material possessions.



Basically, the point that we’re driving here is that you pay for all your stuff. And since you pay good money for them, it is up to you to keep them in the best condition possible. Why would you want to do that? Because doing so saves you thousands of dollars in the long run. If you take care of all your stuff, you don’t have to buy a new one every now and then or pay to have it constantly repaired. And if you don’t have to fork out money for repair or replacement then you can put your dollars to better use. For instance, you can use your cash to augment your savings or add it to your investments.



Taking care of your things enables you to save time as well. If your car breaks down because you forgot to change the oil regularly then you will have to spend valuable time taking it to the repair shop. If you were on your way to work when your engine conked out that would mean a day or half a day of absence and consequently lessened productivity—and getting the ire of your boss. The same time is lost when your computer crashes or if your home needs a major repair. And because time is money, you can’t afford to lose a precious minute.



Let’s get one thing clear: Taking care of things you bought so that they last is not materialism. It’s the exact opposite, in fact. When you keep your stuff in optimum condition, you don’t have to keep on buying new things every time because you have one that works just fine.



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Mon

02

Dec

2013

Tips for Setting your Goals

Now that you know what your personal net worth is, you can now set your goals. Here are some tips to help you set personal financial goals that are SMART—Specific, Measurable, Attainable, Relevant, and Timely.



Make your goals personal. Remember that you are in-charge of your life. You steer your own ship. The same is true when you set financial goals. They should be your goals. In the same manner that you chose a medical course because you wanted to be a doctor even if your parents wanted you to become a lawyer like them, you should treat your financial goals this way.

Ask yourself some vital questions: Am I willing to let go of some conveniences now so I can retire early? Do I want to travel around the world as soon as I’m out of the workforce? Do I want to move to a mansion with a wide lawn in an affluent neighborhood before I turn fifty? By asking yourself the hard-hitting questions, you will be in a better position to set goals that you can call your own.



Commit it on paper. It is said that what goes through the hand goes to the head—and to the heart. Don’t just think about your goals. Write them down. Again, whether you use a pen and paper or type away in your keyboard doesn’t matter. What’s important is that you get them in writing. When you put something down on paper, it becomes more concrete, more real. As a result, you bind yourself to it.



Make your goals descriptive. If you have a hand at drawing, you can even draw them. For example, if you want to have your own house by the time you’re forty, write: “I want to live in a Mediterranean style home in a tree-lined street in Olmos Park, Texas by the time I’m forty.” When you are able to imagine yourself in this situation, you are more likely to realize it.



Specify short-term goals and long-term goals. There are things that you want to achieve in a year’s time or less and there are those that you want to get in a longer time period. For example, saving to buy a brand new laptop can be considered a short-term goal but saving for your daughter’s college tuition is a long-term one. When you are specific about the time-frame of your goals, you have a way of evaluating if you have achieved them.



Evaluate your goals regularly. Why should you review your progress? Because evaluating if you have achieved your goals is one way of keeping yourself committed to your other goals. If you find yourself successful in the short-term ones, you have the impetus to make sure that you get to your long-term objectives. For instance, if one of your goals is to eliminate all your credit card debt in six months and you are able to do it then there is no reason why you can’t start your own small business or save up for the rainy days.



If you fail, try and try again. There will be times when you won’t be able to honor your goals. Don’t let one failure—or two or three or even more—stop you. Understand why you failed, get up, and pick yourself up from where you have left off. When it comes to your financial success, remember that it is always possible to start over even if you have failed countless times. Just make sure that you learn a valuable lesson each time so that you won’t repeat it and can finally work towards becoming financially successful.



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Mon

02

Dec

2013

Starting with Your Net Worth Statement

Before you can start mapping out your goals, you should know where you stand. This way, you know how to get to where you’re going. When you’re preparing to travel, your starting point is your home. To get to your dream vacation spot, you know that you need to ride a taxi to get to the airport and from there, you will be flown to your point of destination. Upon landing in the airport, you will also need to decide how you will get to your hotel before you can finally enjoy your vacation.



When it comes to your personal finances, your net worth is your starting point. In simplest terms, your net worth statement is a list of your assets minus your liabilities. Your assets are the things you own that have value while your liabilities are your debts. When you subtract your liabilities from your assets, you get your personal worth. You can come up with a positive value or a negative one. It doesn’t matter. For now, what’s important is that you know where you stand.



How do you come up with your net worth statement? It’s a simple process, really, although it can be a bit tedious. You can use the old paper and pencil or your computer for this. You simply need to create two tables—one for your assets and the other for liabilities.



For the assets section, list down everything you own that has value. List them down even if you are still paying for them. If you are still paying mortgage for your house or your car, these are still considered assets. Put the current market value that they have today. The same goes for stocks, bonds, and other investments you may have. You can check how much your investments are worth at present by going back to the net worth statements that your brokerage firm has given you.



As far as insurance policies go, they can be included in your list of assets if they have cash value should you cash it today. Those that don’t accumulate cash value are not considered assets. Of course, savings and money market accounts, cash you have in your safe, furniture, paintings, appliances and gadgets, among others are also assets.



You should also include as assets money that you expect to collect. If you own a rental property, for example, and expect a monthly rent and/or have a small business which gives you modest profit, include these in your list.



Everyone has liabilities. Even the world’s richest have them. Credit card debts are just a start. Include your mortgage, car loans, child support, and alimony. Student loans are also considered liabilities. And don’t forget the tax man. Taxes that you pay on your real estate properties as well as your quarterly tax obligations are considered liabilities. And that $100 you owe to your best friend? Yes, include that, too.



Once you have all your assets and liabilities listed, total each of them and as we have mentioned earlier subtract the liabilities from your assets. The figure you get is your net worth. If it is positive, well and good. That means that you can focus on increasing it. If it is negative, don’t lose hope. Now you know that you need to work towards paying off your debt and/or increasing your income before you can start building your wealth.



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Mon

02

Dec

2013

Mapping Out Your Financial Success

The Need to Set Goals



Any company has a mission-vision statement. It sets the goals so that everyone working there will know the direction they are taking. Even if the nitty-gritty details on how to get there are taken care of in meetings and/or voluminous documents, the mission-vision statement serves as the roadmap to get there.



You also need goals when you’re mapping out your financial success. Without a clear goal, you’ll realize that it’s impossible to move forward. Without an objective, you won’t be able to achieve the financial security you have always longed for. Goal-setting is an integral part of financial freedom. When you know where you are going, you do your best to do what you need to do to get there. No matter how challenging that road is, you already have a beacon of light guiding you to success.



Think about going on a vacation to an island you haven’t been to before. You saw the beautiful pictures and that’s why you were tempted to book a week there. What do you need aside from money and your best swimwear? A map, of course. Without it, you won’t be able to navigate your way around the place. You’d be at the mercy of people who might genuinely help you or take advantage of your ignorance and overcharge you by taking you from the airport to your hotel. With a map and some knowledge of the area gleaned from reading a respectable guidebook, it is possible to get there yourself without paying too much.



The same is true for money management. When you are able to outline your goals, you know where you’re headed. You know that you can build a healthy nest egg for yourself and secure your future if you work at following your goals. And for you to do that, you need a plan.



Having a plan gives you focus. This is one of the most crucial things when it comes to goal-setting. Once you have outlined your goals, you need a plan to help you get there. Plans can be as simple as putting 10 percent of your salary in a savings account each payday or it can be as complicated as paying your debts, allocating some of your money in savings accounts, investing others, and getting a second or even third job to help you accomplish it. It really depends on your personal circumstances.



When it comes to goal-setting and planning your personal finances, it’s never too early or too late to start. But the earlier you begin with it, the better. For example, if you start saving and investing when you’re in your twenties or thirties, the power of compound interest will work wonders with your money and you will be amazed at how much it has grown compared to how much it would grow if you begin a decade later. When it comes to saving and investing, time can be your greatest friend, especially if you start early.



However, even if you have only realized the importance of saving when you’re in your fifties, keep in mind that it is never too late to start. You may not save as much as the one who started earlier but you will still have something set aside.



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Mon

02

Dec

2013

Top 10 Tips for Personal Finance Success

Many Americans live from paycheck to paycheck. Consumerism has become a way of life for many of us. And even as we find stress-relief in shopping and accumulating the latest gadgets, we are also discovering that when the time comes for us to settle those credit card bills, we get more stressed than ever. Things go from bad to worse when this way of spending isn’t curbed and we are forced to file for bankruptcy the way many Americans do year after year.



A lot of people think that living within one’s means, saving, and investing are difficult, if not downright impossible, to do. One reason why this perception is prevalent is that these concepts are not taught in schools. Research has revealed that those who graduated from high school are not equipped to manage their own finances. This cannot be blamed on the educational system alone, however, as parents should also train their children how to properly handle their money. Unfortunately, even they are grasping at straws when it comes to proper money management. How can they be expected to teach children the principles when they don’t have basic knowledge themselves?



Surprisingly, the rules of successful personal finance are quite simple. What they do require are discipline and the willingness on your end to follow them. That is where it becomes challenging. But it is perfectly doable.



Here are the top 10 tips for personal finance success:



1.       Learn all you can about managing your money. Personal finance is a whole course in itself. This is why so many books have been written about it and there are professionals who are called financial advisors or financial experts. It’s not as simple as putting coins in a piggybank. If you really want to succeed in spending your money right, saving it for the rainy days, and investing to secure your retirement, you should begin by educating yourself.



However, you should use only reputable sources to guide you. Don’t put too much credence on self-proclaimed gurus or in websites that exist only to sell you something. Read the basics and build on your knowledge by application of the principles.



2.       Follow a budget. Call it a resource allocation plan, a personal expense plan, or a financial plan. Whatever name you have for it, make sure that you create a budget that reflects your personal situation and stick to it. By having a budget, you are able to chart the course for your spending. You see where the holes are and are able to plug the leak, so to speak, early.

Because you categorize where you spend your funds in your budget, you can account for where your money goes. You are also able to allocate for savings and retirement accounts. When you don’t have a budget, you usually end up with just spending everything on unnecessary purchases.



3.       Make saving a habit. Many of us don’t save because we think that savings have to be big and substantial. Instead of focusing on the amount, it is much more effective to just concentrate on the act of saving first. Save little amounts and once you have already made it into a habit, it will be much easier (addictive, even) to save larger amounts without feeling deprived.



Experts say that 10 to 20 percent of your income should go into savings. When you have standby money, you are better equipped to deal with any adverse changes in fortune—such as if you lose your job or someone in the family becomes very sick. If 10 percent seems too big an amount for you, start by saving 3 percent. What’s important is that you make saving every payday habitual.



4.       Use cash for all purchases. Our dependence on plastic money makes credit easily accessible. The problem is that swiping our cards is too easy and makes following a budget even more difficult. If you confine yourself to cash-only purchases, especially for basic needs like groceries, you will be able to literally live within your means. Once you notice the dollars and coins dwindling in your wallet, you know that you should stop spending and stretch what is left until payday comes along.



Of course, you should already have allocated your money for savings and investments as soon as your paycheck arrived. What is in your wallet is what you have for the day-to-day expenses. So if you have no extra cash left to for that brand new treadmill with all the bells and whistles, be content with your old one that serves the same purpose until you can save enough to buy a new one.



5.       Don’t say no to the opportunity to make money. We’re talking about legal and ethical opportunities, such as the chance to start your own business, invest in the stock market, or lower your debt. The earlier you start saving, the more your money will grow and the better off you will be. When you miss these times, you’re depriving yourself of a financially secure future.

Also, instead of just passively waiting for the opportunities to come to you, create them. Be on the lookout for ways to cut costs, save, or even earn more. Whether this is in the form of kicking a financially-draining and health-endangering habit like smoking or getting a second job in the weekends, make sure that you take advantage of it fully.



6.       Automate your savings. Have it deducted automatically from your paycheck and put in a bank account specifically for that purpose. This way, you will be planning your monthly budget based on what’s left. Best of all, you remove the temptation of spending it, which is what always happens even when you include it as part of your budget.



Funds allocated for your retirement like your 401k and your IRA can also be arranged this way. So even if your paycheck seems quite a bit smaller, you’re actually getting richer. The added benefit is that you only have to allocate what’s left to utilities and day-to-day needs like groceries and gas.



7.       Opt for quality over price. Most of the time, we choose price over quality when we shop for things. But there is usually a reason why one brand sells the same item more expensively than the others. Usually, that main difference lies in the workmanship and quality—it’s designed to be more efficient and/or it can last for years. Even if you may save some money for the short-term when you buy cheap stuff, it will only be draining a hole in your pocket for the long-term because of the repairs or the need to buy another one.



However, don’t immediately assume that something that is highly-expensive is always the best buy. Read the label so you get a better idea of the brand. Try to get to know a particular brand by soliciting the opinion of those who have used it before. This is easier now with the various forums in the Internet. Get customer reviews before you buy.



8.       Don’t get into too much debt. Debt is not necessarily a bad thing. It is how you get major purchases like a house or a car. Too much debt, however, is ruinous. When you start charging groceries to your credit card, when you are getting constantly delayed on your payments, when you can’t fall asleep at night thinking about the bills you have to pay, then you have too much debt. Don’t let the problem overwhelm you. It won’t go away no matter how many sleepless nights you have. Be proactive and start thinking of ways to get yourself out of the bind.

Solving a debt problem is not easy but it can be done. You just need a very strong resolve to start the ball rolling. If the problem is not that bad, you can start disciplining yourself by creating a budget. If you’re really in over your head with debt, there are other avenues like going into a debt counseling program or negotiating with your creditors yourself. You can consider filing for bankruptcy as a last resort.



9.       Always have medical insurance for yourself and your family. One of the reasons why people go into debt and eventually file for bankruptcy is because of medical and health issues that they have to pay everything for. With medical insurance, you are assured that a majority of all your medical expenses will be paid for by the insurance company. Even if you have to pay some of it, that portion is manageable or can at least be covered by your savings. If you don’t have medical insurance, however, you will lose not only your savings but get in debt as well.



10.   You can build a healthy nest egg for yourself. The secret to amassing a lot of wealth and securing your retirement is sound financial planning and discipline. You don’t have to have a millionaire father or invent social media to be very rich before you turn forty. By educating yourself about personal finance, knowing where to place your money, and saving and investing, you should have a secure retirement and pass on something to your children at the same time.



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Mon

25

Nov

2013

8 Ways to Live Below Your Means

Yes, it’s challenging to live below your means but if you resolve to actually do so, it is possible. Here are some practical ways to get you started:



1. Don’t buy something if you cannot afford it.If you want to purchase something, look at the price tag. If you don’t have that amount to spare after all your necessary expenses have been deducted, don’t charge it to credit. You will still have to pay for it later on. Also, don’t dip money from your emergency savings fund just to be able to get it. Keep your emergency savings for real emergencies.



2. Eat and relax at home. Try tallying how much you spend for restaurant meals in a month and you’ll be shocked at the money you are throwing away. Do the same for those little knick-knacks and whatnots you buy every time you go to the mall. If you stay and cook your meals at home and watch videos or play board games together, you won’t have to spend for gas to go to the mall or buy food or other unnecessary things you see there on impulse.

Try to do this for at least a couple of weeks and then a month and you’ll realize that staying at home will help you live below your means without sacrificing the quality of your leisure time. In fact, it can even make your family closer.



3. Follow a budget.Without a spending plan, it’s going to be very difficult to live below your means because you won’t know where your dollar goes. With a budget, you allocate money where they are needed and ensure that you don’t go overboard spending in one category. Always make room for savings in your budget and automate payments if you can. This ensures that you are able to pay all your bills on time.



4. Keep yourself healthy.The healthier you are, the less you will have to spend for medical expenses like doctor’s visits and prescription medication. Sure, you have your insurance to take care of all these but you will still have to shell out for copays and drugs that are not covered in your plan. So follow an exercise regimen each day, eat right, and avoid vices that will jeopardize your health. You’ll find that living below your means is easier if you don’t have to spend so much for medical expenses.



5. Don’t buy on impulse. If you see something that you want, get out of that area and wander somewhere else. Chances are, you’ll forget that thing in an hour or less. If the thought of buying it still lingers, go home and evaluate if you truly need it. If you don’t, then don’t waste money on it.



6. Brand name products are usually more expensive.You can find better deals on non-branded items that are just as durable and/or fashionable. Knowing where to shop and what items to substitute for branded stuff enables you to save more.



7. Focus on your finances, not on the Joneses. You know where your finances stand. Constantly comparing yourself with the Joneses is not going to grow your bank account or increase the value of your investments. In fact, it’s going to do just the opposite. So set your mind to live below your means and forget everyone else.



8. Be a wise buyer. If you want to get more for your bucks, you have to know how to buy and where to buy. Use coupons to lower the cost of your grocery bills. Buy second hand items if you don’t really need it brand new. Buy in bulk the things that you are going to be using every day.



Yes, it’s challenging to live below your means. But the rewards are certainly worth it: A decent and comfortable life now and financial security for the future. Aren’t these worth all the sacrifice?



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Mon

25

Nov

2013

The Challenge of Living Below your Means

It’s not easy to live below your means. In a world fraught with consumerism and keeping appearances, you are bound to encounter internal and external challenges that will test your resolve. If you are not determined enough, it’s easy to go back to your old ways and be indebted forever or worse, spiral down towards bankruptcy. So before we discuss the ways in which you can live below your means, let’s first discuss the challenges that you will encounter if you intend to do so.



The lure of instant gratification will be hard to resist.We’re used to wanting new things now, now, now. An upgraded version of your phone or tablet just came out, you need to have it. There’s a more powerful laptop out that you just need to buy. Your friend just bought a gorgeous designer bag that’s simply to die for—you must have it. With your credit card on hand, it’s easy to march to the store and purchase these things with just one swipe. The reality is that if you keep on buying and buying, the charges will just keep on accumulating. Sure, you feel very elated the moment you bring your new acquisition home but it will just become one of your things afterwards.



You’ll still want what the Joneses have.If you’ve been keeping up appearances for your neighbors, it’s going to be a challenge to not do a kitchen renovation when the contractors are busy over at the Joneses modernizing their cooking space. It will be extremely difficult not to sell your relatively-new car so you can afford the downpayment on the manufacturer’s newest model when that same sleek vehicle is already parked in their garage. It’s human nature to want what others have. But you also have to remember that self-restraint is also a natural tendency of human nature—and something that you need to utilize fully when you’re trying to live below your means.



Family, friends, and colleagues will think that you are nuts. Loved ones who see how fashionable and trendy you’ve been before with your constantly new acquisitions will think that something has gone terribly wrong with your thought process when you start living below your means. If you’ve been generous with your money before, they might wonder why you’re getting a bit stingy now. Eating lunch you’ve brought from home instead of accompanying them to the usual hangout for lunch break might seem odd to your coworkers. The only thing that you need to remember when they ask if you need to go to a shrink is this: You know your finances better than they do.



You feel the need to reward yourself often.There’s nothing wrong with rewarding yourself once in a while for a job well done or conquering a seemingly impossible situation. However, this becomes wasteful if you reward yourself for every little obstacle conquered that the reward itself gets to become an ordinary part of your routine. For example, you buy yourself a new pair of designer shoes each time the paycheck comes or go out to eat three times a week at the fanciest restaurant in town. Not only do these put a dent on your budget, they also lose their special significance because they are normal and expected.



Your income increases.You might think that it’s actually easier to save if you get a raise or get a second job. Unfortunately, research shows that your spending is actually proportional to your earnings. If you’re not careful, you could still end up spending most if not all of your money. If you choose to live below your means, you can do so whether you get a raise or not.



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Mon

25

Nov

2013

Managing Childrearing Expenses

Having kids is no joke, as the preceding paragraphs show. Then, of course, having children also gives a certain degree of fulfillment and inspiration to parents that money just cannot buy. These do not mean, though, that couples should have or not have children on a whim. The financial and emotional investments of having kids are huge and the stakes are high if you want to raise them to grow up as responsible adults.



If you do decide to have kids or already have them, it’s important to learn how to manage the expenses that come along with them. There are ways to save on childcare that will not deprive your little angels of the necessary comforts of life. Here are some ideas:



1. Breastfeeding is best for baby—and the budget. There are various scientific studies that support the health benefits that mother’s milk gives to baby (e.g. boosts immunity, prevents diseases, and provides complete nutrition for the first six months). It also bonds the baby and the mother emotionally. But as far as the budget is concerned, breastmilk is the ultimate in zero costs. The mother naturally produces it after birth and there is no need to buy it, unlike formulas. There is also less need to buy bottles and sterilizers—unless you need to store your excess milk—further lessening expenses.



2. Try finding second-hand baby furniture from friends and relatives to save on costs. Perhaps they may even give it to your little one for free or for a very cheap price. There are also good deals on these items that you can find on eBay. Just make sure that you give it a very thorough cleaning before you use them.



3. If you have more than one child, you can let them share rooms and toys. This fosters sibling bonding while teaching them the valuable lesson of sharing.



4. Buy in bulk. As your family grows, it is cheaper to buy groceries and staple things that you need at home in larger quantities. This allows you to enjoy discounts. Using coupons will also help you save on grocery expenses. Cooking at home, minimizing restaurant dinners, and brown-bagging lunches are also other ways to save on food costs.



5. If possible, put your children in one daycare center or school to save on transportation expenses and tuition. Schools usually offer sibling discounts if you enroll your kids with them.



6. Start saving for college. There are tax-advantaged accounts like Coverdell Savings that allow you to start putting money away for your child’s college costs.



7. Have a budget and stick to it. If you have not made and followed a budget before, now would be the best time to start doing so. As the kids grow, you are going to incur expenses left and right. Without a budget, it’s going to be more difficult for you to pinpoint exactly where your money went.



8. Save before having a child. Children’s expenses start even before your child is born. There are prenatal and labor expenses, for starters. You will find yourself in a much stable financial footing if you pay for all your childcare-related expenses for your child’s first year at least in cash. This way, you don’t have to charge a lot to plastic and risk having too much debt.



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Mon

25

Nov

2013

How Much Does It Take to Raise a Child?

Babies are adorable. Yes, they can be quite a handful when they become toddlers and even more so when they become teenagers. But their purity and innocence never fails to delight our jaded souls. And this is why many couples still want to have kids. But these little souls cost money, too. It might be a bit cold and cynical to look at these children like this but the reality of the situation is that for parents to be able to raise them healthy and well, money is necessary.



The United States Department of Agriculture in its 2011 Expenditures on Children by Families has revealed that in a two-child, husband-wife household with before-tax income of less than $59,410 the cost of raising a child can range anywhere from $8,760 to $9,970 depending on the age of the child. For those with incomes between $59,410 to $102,870 the number is considerably higher. It can cost $12,290 to $14,320 annually to raise a kid. Meanwhile, those households that earn more than $102,870 before tax, the yearly cost of raising a child can range anywhere from $20,420 to $24,510. Depending on the income bracket you belong, you will have to shell out anywhere from $150,000 to more than $400,000 to raise your kids until 17 years old. After that, college expenses are going to be an entirely different cost as well.



If you are staring in disbelief at these figures, perhaps a more detailed look at the different spending categories will make it easier to see just how expensive it can be to become a parent.



1. Housing. From mortgage or rent payments to utility bills to repair and maintenance expenses to furnishings, you need to provide a decent shelter for your child that can also protect him or her from the elements and other dangers. Yes, you may think that you still pay these expenses even if you don’t have children but when they do arrive, the cost increases. For instance, you’ll want to move in to a bigger place which is going to be more expensive to maintain. You will need to buy additional furniture, like a crib, a stroller, and other necessary stuff.



2. Food.Families can save a handful in the first few years if the mother breastfeeds but as the child grows older, grocery expenses will definitely increase as well. Eating out or ordering food to be delivered can also increase as parents naturally love to treat their children to special family dinners out and/if mom and dad gets so busy at work that it’s virtually impossible to cook at home.



3. Healthcare.This one is going to be a major expense if you have kids. If your employer-sponsored healthcare insurance plan covers your family then you will have alleviated the costs somewhat but you will have to factor in those medical and dental expenses that you will have to pay out-of-pocket. Prescription drugs, medical supplies, and other possible medical needs of your children that are not covered by insurance are also going to increase your expenses.



4. Childcare and Education. If both you and your spouse work, you are going to have to factor in the cost of baby sitters and day care. Costs can vary depending on where you live. As the child grows, you also need to spend for elementary and high school tuition fees and school supplies.



5. Clothing. Diapers are just the start. Shirts, pants, dresses, coats, and shoes that will have to be augmented as the children grow and the seasons change are also real expenses that parents have to be ready for. Though minimal, related expenses like repair and dry cleaning will also have to be paid for.



6. Transportation. Car payments and expenses for maintenance and repair will have to be factored in here. When you have children, you’ll realize that you will have to be making more trips—and thus spend more for gas—to the school, to camp, to their doctor’s appointments.



7. Miscellaneous.Items that do not fit in any of the above categories such as those for their personal care and entertainment are classified here. These include storybooks, toys, gadgets, clips, hairbrushes, computers, and others.



According to the USDA 2011 report on Expenditures on Children by Families, housing comprises the biggest expenditure of a child from birth to 17 years old. This is followed by childcare and education, food, transportation, healthcare, and clothing. The USDA also found that childrearing expenses were highest in the urban areas in the Northeast, West, and Midwest.



The urban South and rural areas had exhibited the lowest childrearing expenses.

In case you’re new to parenting, it’s also important to understand that childcare costs are directly proportional to age.  You can expect your expenses to go up as your child grows older. They consume more food, they are going to want new stuff, and their school needs are going to increase as they go up the educational ladder.



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Mon

18

Nov

2013

Investment Returns

We all invest money hoping to make a profit. But before you are able to calculate how much you have gained, you need to understand what a total investment return is. (By the way, it is possible to also lose on your investment).



To determine what your total return is, you need to figure out how much money you had originally placed in the investment and figure in the interest, dividends, and other components into the equation. When you invest in stocks or bonds, you will want to determine how much your stock has appreciated or depreciated since the first time you bought it. To do this, subtract the value of your original investment from the current value of the stock and divide the answer by the value of the original investment. The answer will be expressed in percentage. So if you invested $20,000 a couple of years ago and the value of your investment is now $21,000, the appreciation is 5 percent.



Calculating how much your stock has appreciated also means including the dividends that the company has paid out to you when it turned a profit. So to calculate your total return with dividends included, you just have to follow the above-mentioned formula but add the dividends before dividing the total figure by the original investment. Let’s say that the company paid out $200 in dividends to all stockholders, your equation is going to be: ($21,000-$20,000) + $200/$20,000 = 0.06. Your total return is then 6 percent.



Take note, however, that this is not going to be your entire return. You still have taxes to think about. Depending on what your tax bracket is, you can expect the Federal and state governments to have a portion of it. This is why you should consider the tax implications of your investments as well.



How do the different types of investment vehicles measure up against the risk you’re taking when you invest in them? Generally, the lower the risk, the lower the returns. The riskier the investments, the higher the returns are going to be.



Investments that have very low risk and correspondingly very low potential returns include savings accounts, checking accounts, certificates of deposit and money market deposit accounts. Next in the risk ladder are fixed annuities, government agency securities, high quality short- and intermediate-term municipal and corporate bonds and bond funds, money market mutual funds, treasury bills and notes, certain U.S. savings bonds, and variable annuities invested in high-quality bond sub-accounts. The investment returns are also low, although these generate a higher return than those classified as very low risk investments.



Investments that hold a moderate amount of risk and potential returns include convertible bonds, high-yield (junk) bond funds, large-cap stocks and funds, S&P 500 & Wilshire 5000 stock index funds, and variable annuities invested in large-cap stock sub-accounts. The highest returns can be expected from the most volatile types of investment vehicles. These include aggressive growth funds; emerging markets mutual funds; foreign company stocks, global, international, sector, and precious metal mutual funds; penny stocks; small cap stocks and funds; and variable annuities invested in aggressive growth sub-accounts.



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Mon

18

Nov

2013

Of Investment Risks and Returns

Understanding Risks



There is no such thing as risk-free living. Everything you do involves some degree of risk. There’s a chance that you might slip in the bathroom floor when you take a shower or you might get into a car crash on the way to the office. You could get food poisoning from buying a hotdog from your favorite hotdog stand or get hit by lightning in the open field. All these are risks that come with daily living.



However, this does not mean that you should just hide in your room and not move for fear that these things can happen to you. Such an attitude would defeat the purpose of living. And while we can never completely take out risks from our lives, there are ways to minimize our exposure to them. You can install handrails in the bathroom or non-slip mats, for example. By wearing seatbelts or not driving when you have just indulged, you become aware of the movement of other cars on the road and can react accordingly.



The same holds true with investments. It always involves taking risks. If you shy away from stocks or other volatile investments and stick with traditional savings accounts, you might end up with very minimal returns that won’t be enough to fund your existing lifestyle when you retire. Also, if you stay on the perceived side of safe investments, you risk having inflation and taxes devalue your investment.



To further understand what risks are, here are the various kinds of risks that you will be facing when you invest:



Market Value Risk. This happens when the market plunges such as when socio-political events threaten investors and they pull out their investments or when a new investment craze comes in and everyone seems to be heading in that direction, ignoring the companies that had been performing quite decently. What you must understand as an investor is that the market has its ups and downs which can happen in a very short span of time. In 2000 to 2002 stocks dropped to 39 percent; in 2007 to 2009, it fell 55 percent. But the worst fall happened from 1929 to 1932 when the stock market fell 89 percent.



However, it would be erroneous to think that you should shy away from stocks. If there is anything that the market has proven all these years, it’s the fact that it will always rebound. Furthermore, the concept of market value risk makes diversifying your investments very important. You should not put all your eggs in one basket, so to speak. By buying shares of stocks in companies that are performing well in different economic conditions you reduce the risk of losing all your investments when the market underperforms.



Individual Investment Risk. Your profile as an investor is also another type of risk. If you are still young and are still starting to accumulate assets as you work your first job then you can generally invest in more volatile kinds of investment vehicles like stocks. In case they don’t do well, you still have a lot of time to recoup your investments. It would not be wise to put most of your money in riskier investment vehicles if you are already nearing retirement. In case the company stock loses value, you’d be hard-pressed to recover.



The level of knowledge you have regarding your investments can itself be considered a risk. If you don’t study the stocks that you are going to purchase beforehand, you are likely going to end up losing a lot of money. While no one can accurately predict what will happen in the future, being an informed investor reduces the risk that you will invest in the wrong stocks.



Inflation Risk. Inflation refers to the sustained increase in the price of goods and services. When there is inflation, the purchasing power of the dollar is lessened. When there is inflation, the value of your investments also depreciates. When you put your money only in investments that are perceived to be safe such as savings accounts, there is a very big chance that the rate of inflation can take over the value of your investments. By investing in stocks, you generally protect yourself against inflation since companies can adjust their prices to coincide with the rate of inflation. This explains why even retirees are advised to put some of their investments in stocks.



Career Risk. Where you choose to work and the direction you are taking with your career can affect the investments you take. If you decide to break away from the security of formal employment so you can start your own business that can be a risky venture on your part. This risk, however, can be managed if you do the necessary studies about your business first and having back up funds in place while you’re still making it grow before plunging in right away.



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18

Nov

2013

Ownership Investments

Ownership investments are the types of investments where you own an asset or a company (or a piece of it) which can generate earnings. In this category belong stocks, real estate, and running your own business.



Stocks are shares of ownership in a company. Also called equities, these enable you to share in the profits of the company. When the company performs well, other investors will want to buy shares. This demand will increase the share price and give you profits if you decide to sell your shares. On the other end of the spectrum, if the company suffers losses, the value of your stock also goes down. If you decide to sell your stocks for fear that the stock price will plummet further, you end up losing money. Take note, however, that your “losses” do not become actual losses unless you realize those by selling your stock at a losing price. The stock market has its ups and downs and many investors have found that by riding out the rough periods, stocks that once performed poorly eventually rebound.



Real estate is also another kind of ownership investment. These are the other houses, lots, apartments, or other dwellings you acquire to rent or resell. Generally, your primary residence also appreciates in value over time but since this is fulfilling your basic need for shelter, it would not be a good idea to count it as an investment. Besides, the 2008 housing crisis showcased how a mortgage meltdown could devalue your home.



Running your own business is the third type of ownership investment. When you invest money and time in making your business grow, you are going to reap the benefits and rewards when it starts giving you profits. Your business can be a product or service that people want or need. Bill Gates and the late Steve Jobs gave the world products that made lives more convenient and in the process, amassing wealth for themselves.



Ownership investments are the most profitable kinds of investments but they are also the most risky. You stand to earn a lot when times are good but you also risk losing a lot if the business or company goes under.



Lending Investments

Lending investments are those where you act as the lender. That is, you lend your money in exchange for interest which will be paid to you sometime in the future. Your regular savings account, certificates of deposit, and bonds are considered lending investments.



When you put money in a bank, you’re essentially lending your money to them so that they can use it—to give loans to individuals and businesses, for example. In return, they will be paying you interest. Although the risk factor is very low, the problem with putting your money in the bank is that the interest rate is negligible. Most of the time, what the bank will pay you in interest will just get overtaken by inflation and taxes. So even if you have faithfully saved your money in the bank for a year, the interest won’t be enough for you to realize your dreams of wealth and a comfortable retirement.



Bonds refer to certificates of deposit, treasury bills, corporate junk bonds, and the like. They are called fixed-income securities because when you purchase a bond, you are lending your money to the government or private company issuing it. In return, you are given interest when the bond expires. Federal government-issued bonds are the safest since they are guaranteed by the Federal government. Although safe, the returns are not as high. Junk bonds from companies give higher returns but they are relatively riskier. If the firm folds, you end up not getting paid. Another downside of bonds is that if the company you bought the bond from earns huge profits, you won’t share in it. You will only be paid the value of your bond plus the interest agreed upon when you purchased it.



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18

Nov

2013

An Introduction to Investment

Our social and educational systems have trained us to think that if we want money, we have to earn it. This means making the nine-to-five grind and waiting for payday so that you get rewarded for all your hard work. This way of earning money, however, means that you know how much you’re getting each month. If you want to earn more, you work overtime and/or find a part-time job. However, there are only 24 hours in a day and you can’t spend all those hours working. Besides, even if you actually amassed a lot of wealth working your butt off, it would not be fun not having the time to use all that money now, wouldn’t it? Clearly, there has to be a better way.



That better way is called investing. If you want to make more money without working more hours, you will need to invest. Investing is committing capital to something so that it will earn more money. We don’t have to explain why you want more money, right? Aside from allowing you to enjoy the conveniences of having money now, you will need it to fund that life-saving operation, send your children to college, and more importantly, secure your retirement. Investing is an essential component of sound retirement planning since the days of working in the same job, receiving lifetime pensions, and looking only to ten years of retirement are fast disappearing.



When you invest, you let your money work for you so that you don’t have to work longer hours yourself. By educating yourself on what investments are and what types of investment vehicles are available, you can take things easy and still rest in the knowledge that your money is growing.



A very important concept that you need to understand as far as investing is concerned is that of compounding. Compound interest is the process of getting earnings from previous earnings. To fully experience the power of compound interest, you will need to reinvest your earnings and give it time to grow. Any earnings made on the principal is not withdrawn but added to the principal amount so that it can earn more. Interest can be compounded weekly, monthly, or yearly.

Here’s an example: Let’s say you invested $10,000 in an account that will earn 5 percent interest in a year. If that interest is compounded monthly and you don’t touch it for five years, you would have close to $13,000 by the fifth year. And all that without working all the extra hours!



The concept of compound interest makes investing very tempting, indeed. But before you can actually dip your hands into investing and reap the benefits offered by compound interest, you need to educate yourself about the different ways by which you can invest your money. Of course, you might want to hire a money manager down the line but this does not mean that you should not learn about investing yourself. When you know what you are getting into, you are more likely to have control over your money and your investments.

Investing always involves risk. The risk can be high or low but it is there. Unless you are willing to take some risk, you cannot invest.



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Fri

08

Nov

2013

The Elements of a Grant Application Submission

One of the important things that you should keep in mind in your quest to get funding is that the various grant sources require that you follow certain formats when submitting your grant application to them. How much information to provide and when to provide them really depends on the requirements of the grant maker. The best way to find out what these are is to study the website of your prospective funding source. They will usually outline their requirements and application format there. If you can’t find that information in their website, give them a call or email them so you can get it.

 

If you’re trying to get funding from Uncle Sam, there are common elements in the application package that they require applicants to submit. Of course, each agency has different requirements so you should be careful to tailor-fit your application accordingly. These common elements include a cover letter, certification forms, assurances forms, and budget narratives. You will also be required to attach certain documents such as the resumes of the people in your organization, among others.

 

As far as private sector funding sources are concerned, they usually require an initial letter of inquiry before considering your proposal. A letter of inquiry is just a short letter where you basically ask the potential grantor if they would be interested to fund your project. Many organizations require only this for the initial contact since they are usually inundated with unsolicited proposals that take a lot of their time to review.

 

Only after they have responded to your inquiry will the organization then require you to submit a cover letter together with the grant application form. Many private funders use the Common Grant Application form developed by the National Network of Grantmakers. Like federal agencies, they will also require mandatory attachments.

 

When submitting your grant application package to a prospective funder, be sure to review the criteria first. Be sure to write and format your request so that it complies with the guidelines set forth by the grant maker. Follow the format to the letter, including pagination, the order of information, and the documents that you need to attach. For federal grants, applications will be evaluated based on a point system where the maximum score is 100 points. By following the criteria carefully, you increase your chances of being awarded the grant.

 

For private organizations, be sure to ask first if they use the Common Grant Application form or have another format. They also have their own evaluation criteria and you increase your chances of getting the award if you customize your application to their requirements.

 

Many organizations have now also harnessed the power of the Internet to streamline the grant application process. Many of them now require applicants to fill out their applications online. Called e-grants, the format is basically similar to traditional paper applications but the difference is that you have to put the information in their online form, always keeping a close watch on the limitations on the number of words, the boxes that need to be checked, and the other technical requirements.

 

Before you submit your final request, be sure to proofread it for errors and ensure that you have all the documents required in the package.

 

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08

Nov

2013

Types of Grants

There are different types of grants that fit the project you are interested in seeking funding for. Knowing what these types are will help you apply for the one where you’ll have better chances of getting the award. Here are the most common types of grants:

 

  • Annual Campaigns. These are grants that give support for an organization’s operating expenses, expansion, and improvement. For budget line-items like salaries, benefits, equipment, and other expenses that support operations, a grant for general/operating expenses may also be applied for.

  • Building/Renovation Funds. If you need funds to build a new office or facility or seek to renovate an existing one, these are the types of grants to apply for. However, there are only a limited number of these types of grants awarded. A similar type of grant which gives not only money for construction and buildings but for equipment and endowments is the capital support fund.

  • Challenge Monies. These are grants which are given by some organizations only after you have secured other funding sources (except government grants). A similar type of grant is that of matching funds where the award is only given when you are able to match it with your own funds or in-kind contributions.

  • Conference/Seminar Grants. These are grants that pay for all the expenses (speakers, travel expenses, meals, etc.) associated with planning, joining, or hosting a conference or seminar.

  • Endowments. These are grants given to a nonprofit organization which aims to develop and sustain its long-term viability. An endowment fund gives permanent investment income to the organization so it can continue to finance its operations.

  • Fellowships. These are awarded to support the study and research of graduate and postgraduate students in the fields that they want to pursue. Students awarded portable fellowships can study at an institution of their choice while institutional fellowships are given by a university or institution of higher learning for the grantee to study there.

  • Research. These are grants that are given to institutions that employ grantees. The aim is usually to further medical and educational research.

  • Scholarship Funds. Awarded to students at the undergraduate or graduate levels to fund their studies. Scholarship usually pays for tuition, miscellaneous, and other related expenses like books and living expenses.

  • Seed Money. These are grants that get programs started. The organization still has to find other sources of funding to enable the program to expand. Pilot programs can apply for program development grants to develop new programs and grow their organization.

  • Technical/Consulting Assistance. These are grants given to organizations to enable them to hire a firm or an individual who can give them technical assistance to improve their program.

 

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08

Nov

2013

Parts of a Grant Application

Writing a grant application is not the same as writing any other essay. It needs to follow a specific order depending on how the grant maker wants to have your proposal structured. Each of the agencies under the 26 federal grant-making agencies, for example, has their own set of guidelines when they release their Notices of Funding Availability or Request for Applications for cooperative agreement applicants.

 

The same thing goes for grant applicants seeking for funding from foundations and private entities. The proposal must be written in the form required by the grant-giving body. As the grant applicant, you must ensure that all the parts are answered completely and thoroughly to increase your chances of getting awarded.

 

Generally, these are the parts of a grant application for federal and private sector applications. As stated earlier, you might encounter differences depending on who is giving the grant but these are the most common parts:

 

  • Executive Summary. Also called an abstract, this encapsulates the reason why you’re asking for a grant, the goals that you intend to accomplish, and how the grant money is going to be spent.

  • Purpose of the Grant. This is usually composed of various parts. Here, you will have the statement of needs or a description of the problems that you aim to address; a description of the goals of the project; and a timetable for implementation. This also includes the program design or methodology which outlines how the project is going to be carried out and the description of the personnel and other staff who will perform the day-to-day tasks required in the project.

  • Evaluation Plan. This part outlines the plans by which the success (or failure) of the project is going to be evaluated or measured.

  • Organization Information. This includes a brief history of the organization asking for the grant; a short statement of the mission and goals; and a description of the current programs and accomplishments to give the grantors an idea of its capabilities.

  • Sustainability Statement. Basically, this section details how you intend to sustain or continue with the operations of the program after the grant period (provided that you were awarded the grant) ends.

  • Budget. In this part, you give an itemized budget where the funding will go. This usually includes such items as the salary of personnel, rent, equipment and supplies, maintenance, marketing, and other costs. Some organizations will ask you to justify your budget on a separate sheet.

 

We have mentioned above that anyone can apply for a grant. Actually, a grant applicant can apply in behalf of a nonprofit organization; an independent school district; institutions of higher education; a for profit business or for profit organizations; and an international nongovernmental organization or NGO. Other eligible applicants include state, county, or city governments; Native American tribal governments; and individuals, although there are only a few of these grants.

 

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08

Nov

2013

The Basics of Grant Writing

There is “free money” out there. You’ve probably heard of these pitches at one point in your life and in all likelihood, you never believed it. But if you have a project that you are passionate about, are willing to take the time to find this “free money,” and learn the ins-and-outs of grant writing, then the funds you need might just be within reach. [By the way, “free money” is placed in quotation marks because it’s not really free. If approved, the money will have to be used as outlined in the award or else you might be asked to return the entire grant, including the amounts you’ve already spent.

 

You—or anyone for that matter— can write a request for a grant. For as long as you know how to use a computer and can organize your thoughts then writing such a request is within your reach. But whether you will be awarded the grant is another matter altogether. Not everyone who asks for a grant gets it. And most of the time, the reason stems from the grant-seeker’s lack of understanding about the grant-writing process.

 

This report will guide you to the basics of grant writing. We will start by defining the terms, understanding the various parts of a grant application, and the various types of grants that can be given to those seeking funding.

 

Definition of Terms

 

Understanding the language used in grant writing is the first step towards being able to request for one. Here are the most common terms used and their definitions:

 

Grant. Agrant is a monetary award that is given by the grant makers or grantors to a recipient or grantee. A grant is not a loan because it does not have to be paid back. If the federal government or its agencies participate in the implementation of the activities together with the grantee, the award is called a cooperative agreement. Without government participation, the funding is simply called a grant.

 

Grantor. Also called grant maker or funder, a grantor can be a government agency at the federal, state, or local levels; foundations; companies; and philanthropists. Although grant money does not have to be repaid, grantors may have stipulations on how the award is going to be used. Most of the time, government grantors require grantees to meet a lot of conditions while private sector funders (e.g. foundations) don’t have as many stipulations in their awards.

 

Grantee. The recipient of the grant. You become only a grantee upon receiving the award. When you’re still applying and waiting for this result, you are called a grant applicant.

 

Grant Application. This is the grant applicant’s proposal or funding request to a grant maker stating what you intend to do should you receive the award. This is where your grant writing skills and knowledge come into play.

 

Grant Monitoring. This refers to the ongoing assessment of the activities and programs for which the grant was given. Depending on the requirements of the grantor, this can be something as simple as an annual written report or a more rigorous monthly accounting.

 

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Mon

04

Nov

2013

Debunking Fallacies about Debt

Americans believe that debt is normal. We can’t imagine life without our credit cards; go through college without student loans; or get a home without mortgage. Credit and debt have become so intertwined into our lives that we consider it as normal. And like anything else in this world, anyone who does not follow the norm is considered different and treated like an outcast.

 

This is pretty much how our society treats individuals who believe that debt is bad, that it is something that we can do without, and that we are better off if we wipe our debt slate clean as soon as we possibly can. Those who are for the elimination of their debts are treated as pariahs when in fact it’s the only way towards financial independence. What makes this pill very hard for so many to swallow are the fallacies that have been fed us since day one. Identifying these fallacies about debt is the first step towards gaining a real understanding of the real face of debt.

 

In the following sections, we will debunk the various fallacies about debt that our society has long believed to be true.

 

Fallacy 1: Debt is needed to create wealth.

Truth: Debt is risky and cannot make you rich.

 

For far too long, we have been led to believe that you need to go into debt in order to create wealth, that you need to loan large amounts of money in order to start a business, and that using credit available at our disposal for as long as we pay it back is good. Debt is supposed to be a tool that, when used wisely, will help you reach your dreams. If you are studying business or accounting in the university, your professors pretty much say the same thing. Financial self-help books written by supposed experts in the field also echo the same fallacy over and over again.

 

Unfortunately, this is not quite right. The truth of the matter is that debt is quite risky and any leverage that you’re supposed to get from it is counterbalanced by this risk. If you apply this to the real world scenario of starting a business, you will immediately know the truth. Let’s say you borrow capital to start your own entrepreneurial venture because your feasibility studies show that your business would click. Unfortunately, when you had finally set up shop and actually started the day-to-day operations, you find out to your dismay that you were just breaking even on some days and losing on most. Not only are you not making a profit, you also have to take care of the payments of your outstanding loan.

 

Contrast that if you were to start your own business from your own savings. If worse comes to worst, you might lose everything but in the event that you do, you don’t have to worry about paying anyone and getting sued if you don’t. You have only lost your own money and can just “charge it to experience.”

 

Fallacy 2: Loaning money to friends and relatives is an act of kindness.

Truth: Loaning money to people you love destroys relationships.

 

First, let’s get one thing straight: Loaning your best friend or your child money is different from giving them money. When you grant them a loan, you expect payment and they look at you as a lender and put you on the same level as that of a bank or any other financial institution they hold loan accounts with. It doesn’t matter if you, out of the kindness of your heart, granted your loved one an interest-free loan or charged very minimal interest. The loan itself changes the nature of your relationship. And this change becomes more evident if your loved one becomes unable to pay the loan.

 

The most common reaction would be avoidance. They would go to a self-imposed exile out of shame and guilt for not paying you back. There goes your relationship—and all because you thought that granting a loan is an act of kindness.

 

If you want to help out a loved one, do not grant them a loan. Give you have something to give and expect nothing in return.

 

Fallacy 3: Cosigning a loved one’s loan is another act of kindness.

Truth: Cosigning a loved one’s loan will almost always mean that you will have to repay it.

 

We all want to help a relative or a friend in need. But if your sister wants you to cosign a loan she has a hard time applying for, ask yourself why she needs a cosigner. As you may already know, one of the main reasons why lenders ask someone to co-sign a loan is because the borrower has had a history of non-payments. Whether it is just a habit of paying the bills late or something as serious as filing a bankruptcy, an individual’s credit history has already been marred in some way and the bank wants to make sure that someone will pay this person’s debt in case the borrower is unable to.

 

While it is not good to judge anyone—after all, so many people have rebounded and paid off their debts even when someone cosigned for them—it is perfectly reasonable to assume that there is a good chance that you will end up paying your sister’s loan if she defaults. This can only lead to resentment on your part and again, guilt and shame on the part of your sister—a perfect recipe for broken relationships.

 

Talk with your loved one and if you can help by giving money then do so. But it’s a bad idea to cosign.

 

Fallacy 4: Payday loans and other forms of cash loans help those with insufficient income.

Truth: These are examples of predatory lending that do not give any benefits.

 

If you live from paycheck-to-paycheck and still fall short of cash a week before payday, it is tempting to resort to payday loans. After all, if you just need $300, these types of lenders will give that to you right away for only a small service charge, of say, $30 for example. Then you pay it when your paycheck arrives. However, when you look at the math, you’ll realize that you’re actually paying sky-high interest rate when computed on an annual basis. Compared to the standard APR of credit cards which is pegged at 12 percent, payday loan interest can go anywhere from 400 to 5,000 percent in a year.

 

But what is worse for most payday loan customers is that resorting to this does not help change their mindset about saving and spending. They believe that since it is there, they don’t have to worry about not making they check last until the next payday. Borrowing also becomes highly addictive for some. They borrow from many different payday loan lenders even for non-essential needs and find out that they are in hot water when they cannot anymore repay these. You do not win with payday loans.

 

Fallacy 5: It’s perfectly okay to buy your home furnishings and appliances under a financing plan.

Truth: The only way to buy these items is to pay for them in cash.

 

Many furniture and electronics stores offer financing plans for customers who want to buy a new dining set or a brand new flat screen television but don’t have the money for it yet. Many are easily lured by promos which tout “good as cash” deals if you pay for it in three months or less.

The problem with these offers is that they often come with many hidden charges and conditions. Unless you read the fine print of the contract before you sign, you will most likely be shocked when payment time comes that you are paying more than what the salesperson said you would pay for.

 

The only way to buy chairs, beds, gadgets, and other similar items is to save for them, ask for a discount, and pay in cold hard cash.

 

Fallacy 6: Getting a car loan is very acceptable and is a part of life.

Truth: Constantly paying for a car is a waste of money.

 

We know that cars are a necessity these days. But you have a choice as to the kind of car you will get. You also have a choice as to how often you need to buy a car. Unfortunately, many Americans think that their car needs to be changed every three to five years so that no sooner had they finished paying off their previous car, they’re off shopping around for a new one. This behavior seems to be regarded as “normal” since everyone is doing it. Everyone except those who can actually afford to.

 

Millionaires and billionaires know that being a slave to car payments is a big waste of wealth. The money you use to pay for the car can be put to your own savings or even invested in the stock market to give you returns in the long-term. Take care of the car that you have already paid in full for and it will still reliably take you anywhere you want to go minus all the payments.

 

Even if you are offered a zero percent interest on a new car, you’re still throwing away a precious amount of money especially if your old car is still in top condition. Remember that once you drive away with that new car, it immediately starts to depreciate. You’ll never be able to recoup what you paid for it because in the span of five years, you will only be able to sell that car for so much less than what it originally cost you to pay for it.

 

Instead of getting a new car, investing the monthly payments supposedly intended for that new car is a far better idea. Doing so will bring you closer to your goal of creating wealth and not burden you further with debt that will only bring you to financial ruin. Later on, when you’ve already secured your finances and have money to splurge then you can gift yourself with that set of wheels that you have always wanted—paid for in cash, of course.

 

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Mon

04

Nov

2013

Getting out of Denial

The major obstacle that people have when it comes to money issues is that they don’t believe that they have a problem. Denial is the most common reaction of many people when confronted with their relationship with money. It’s easy to say that you’re doing fine when in fact you’re already on the verge of a financial meltdown. Thus, you need to know if you’re in denial so you can snap out of it and tackle your problems head on. So, how can you tell if you’re in denial? Here are some signs:

 

You know you’re in denial if:

 

  • You believe that you’re doing all right even if you know that your credit card debts are mounting and you have nothing saved up for yourself or for the kids.

  • You can still pay the monthly minimums on your credit card debts but are racking up 20 percent or more in interest in the process.

  • You find yourself applying for new lines of credit because you have maxed out the credit limit on your existing cards.

  • You charge even your groceries to plastic because you have no cash left before payday comes.

  • You have nothing in your savings account to cover for sudden expenses like the repair of a leaking roof or your broken car.

  • You have no savings for living expenses in case you lose your main source of income or your combined income as a couple get drastically reduced.

  • You have a hard time keeping up with your bills.

  • You constantly fight with your spouse about money matters. Even initially innocent chats about the prices of goods and services turn into one big row about money.

  • You are a regular payday loan customer.

  • You constantly worry at your lack of financial stability.

 

If you are in this boat, now is the time to really take a long hard look at yourself in the mirror and ask: Do I really want to live like this? For sure, you don’t. No one does. If you love your family, if you love your kids, and if you love yourself, you want to stop being in denial and start straightening your relationship with money.

 

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04

Nov

2013

Pain is a Natural Part of the Process

Once you acknowledge that you have a problem and are determined to do something about it, you have to realize that no change is possible without some degree of pain. Depending on how problematic your financial situation is, you have to expect that there will be some “conveniences” and “comforts” that you are used to that you are going to have to learn to live without.

 

The process is not going to be pleasant. But these sacrifices are minor compared to what you stand to gain when you accomplish your goals. You have to remember that you are where you are right now because you chose to be. No one told you to splurge and spend (although you could argue that advertisements lured you to swipe and swipe—but that card won’t jump out of your wallet if you did not intentionally take it). No one told you to give your kids everything they asked for even if you know that you could not afford it.

 

As a couple, both of you decided to buy a house that you know is well beyond your means. You bought your luxury vehicles because they look cool even if you are already having a hard time keeping up with your mortgage payments. You throw lavish parties every weekend and invite family and friends over—which isn’t bad in itself—but you charge everything and worry about the payments when billing time comes.

 

The will to change your spending habits and start having a healthy relationship with money is just a start. It is the doing that will really test your mettle. Righting previous financial wrongs can take many years and for the first few months in your endeavor, you are going to be in for some rough patches.

You can liken it to the withdrawal symptoms experienced by those who are trying to wean themselves from alcohol or recreational drugs. They have been far too dependent on these for too long that when they begin the road towards rehabilitation, they experience depression, anxiety, and craving. But with time and appropriate guidance, therapy (if needed), and support, the symptoms will gradually disappear.

 

If you have been too dependent on credit for too long and want to change, you can expect to feel these withdrawal symptoms. There will be times when you will be depressed at the fact that you are not eating restaurant meals as often as you used to or at the fact that you have to say “No” to your kids when they ask to be bought a new gadget. There will be moments when you will be anxious at the fact that you have left yourself without any credit card “escape routes” to use in case you decide that you have an “emergency.” You will crave for the things that you did before and it will take a lot of effort to say no to yourself.

 

Don’t expect a lot of your friends or even your family to understand. Jokes will be made at your expense and you have to be ready for that. Yes, it will hurt and because it came from a loved one, the pain will even be worse.

 

But as time goes by and you continue to stick to your plan and your budget, you will find that allocating your resources right where they belong becomes easier. Those withdrawal symptoms gradually disappear and as you find your debts decreasing and your savings increasing, you will be encouraged to continue with more zeal and fervor than ever before. As you embrace your newfound knowledge and wealth, all those jokes made at you will slide off as harmless. You can even have a good laugh at it.

 

Yes, the path to financial freedom is not easy. There will be desperate times. But for as long as you (and your spouse) know where you’re going and you know that you’re getting there one small step at a time, you will realize that you’re on the road towards reaching your goals sooner than you had initially cared to imagine.

 

Remember, there is no easy way. Motivational speakers can only go so much. They can only fire you up to start. But if you don’t take action, that initial fire will easily die down. The nitty-gritty, the hard work, the self-control—all these will have to come from you. Don’t wait you’ve had a nasty wakeup call to start rehabilitating your finances. Start your financial makeover today.

 

If you’ve already had your wakeup call then don’t wait to sink deeper into debt. Starting from here might be more challenging but it can be done. Don’t dwell on the pain that the process will bring. Rather, look beyond it and see that when you have your financial house in order, only a bright future awaits.

 

Check outwww.adamscapgroup.com for more Information onHow to Manage Your Debt.

 

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Mon

04

Nov

2013

Challenging yourself to do a Total Money Makeover

Your Finances: An Honest Look

 

If you find yourself constantly worried and stressed out about money, you’re not alone. The scenarios include living from paycheck-to-paycheck; having mounting credit card debt; and no savings for emergencies. Worries like how to pay the monthly bills; how to send the kids to college; and whether you can afford to even retire are ever-present whenever you make your monthly budget which is a seeming exercise in futility in itself.

 

Money issues are the top reasons why you and your spouse fight. And most of the time, you end blaming yourself or each other. It’s not a very empowering place to be in. It erodes your self-esteem and makes you question your capability of providing for your family. Most of the time, you will feel that you are not in control of your life.

 

The enjoyment you once derived from your work— assuming that you actually enjoy what you’re doing—is slowly eroding as you grapple with debt and the harsh reality of not having enough from your paycheck each month. It’s not a fun place to be in. You feel like you’re constantly walking on a tightrope. A major illness of any member of the family or getting that dreaded pink slip and you know there’s nowhere else to go but down.

 

Thankfully, you don’t have to live like this for the rest of your life. There is a way out. You can achieve financial freedom if you desire it. But you have to work hard at it. It is going to take sacrifice on your end. It will require a lot of belt-tightening and doing away with all the supposed “pleasures” that you enjoy today but pay dearly for in debt. You may even find yourself ridiculed by friends and family members who will question if you’ve already lost your sanity. The payoff, however, is certainly going to be worth it.

 

But first, you have to admit that you have a problem.

 

Check outwww.adamscapgroup.com for more Information onMoney Management Tips.

 

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Fri

25

Oct

2013

Sticking to Some Basic Financial Rules

There are some basic financial rules that you should follow if you want to regain solid financial footing. At first, these may seem very difficult but once you are able to prioritize your expenses and your future goals, you will find the discipline to follow these rules to the letter.

First, see to it that your debt payments make no more than 20 percent of your take home pay. Debt here includes your credit card, car, and other personal loans. It does not cover mortgage or rent—they will be tackled later. Thus, if your monthly take home pay is $3000, you should be paying no more than $600 per month for all the types of debts mentioned.
Note, however, that calculating your debt on a monthly basis can hide a huge amount of debt because you can just pay the minimums and still your monthly payments can be way less than 20 percent. So to make sure that you get a good grasp of how bad in debt you really are, get the total unpaid balance of all your consumer debts. If this is more than 20 percent of your take home pay for one year, then you are drowning in debt. Let’s say your annual take home is $35,000 and you have a $15,000 credit card debt. Since 20 percent of $35,000 is only $7,000, you are in too deep with your financial obligations and you have to do something about it fast.

The second rule is to spend no more than 30 percent of your monthly take home pay for rent or monthly mortgage. We hear of too many Americans being “house poor”—that is, they get a house which is way too expensive for them. So if bring in $3000 a month after taxes, you should pay no more than $900 a month for your roof over your head.
Finally, make it a point to save at least 10 percent of your earnings every month. This is the absolute minimum that you should try to stash away for the rainy days. So that you don’t get tempted to spend this, automatically have this amount transferred to your savings account from your paycheck. Of course, the more you can save, the better it will be for you.

Ways to Track your Money

If you have been less than judicious with how you spent your money, you might have experienced wondering just where exactly your cash went. In worst case scenarios, shock probably overtook you when you realized that the money you had earmarked for the electric bill has already been partly spent or has gone completely “missing” from your wallet. The prospect of having your electricity cut off is scary and actually spending unwanted candlelit dinners is not at all fun or romantic.

Thankfully, it’s easier to keep track of where our money goes these days. Technology has certainly evolved to a point that it has made it more convenient for us to ensure that our dollar goes where we want it to go.

 

 

 

 

 

 

Online Bill Pay
In this method, you simply add merchants that you want to pay to your bank account. This is usually available in most banks that give clients the ability to conduct online transactions. Write how much you have to pay to the merchant and the date when you want to pay them. You can choose to schedule the payments once a month or at recurring dates each month. If you choose the latter, do make sure that your account has money by that time. Your online statement will reflect the payment.

Online bill payments ensure that you don’t forget your monthly obligations since it is automatically deducted from your account as soon as you schedule it. This is especially important for ongoing monthly bills like your utilities and rent.

Merchant Automatically Deducts
Instead of you having to put the merchants on your account and arranging for the deductions, you can instead have the merchant automatically deduct their charges direct from your account on a certain date each month. For example, you can arrange with your cellphone company to directly deduct your bill from your checking account each month and they will do that for you. Just make sure that you are dealing with a reputable merchant. You should also still do the necessary checks that the merchant has only deducted the exact amount from your account. Reports of some merchants directly levying additional charges have made a lot of individuals wary of this mode of payment.

Trusted Envelope System
If you would rather pay for things in cash, then the time-trusted envelope system works best. Put all the expenses and amounts in appropriately-labeled envelopes. When the “dinners out” envelope starts getting low, you know it’s time to do more home-cooking.

Check out www.adamscapgroup.com for more Information on Guide to Investments.

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Fri

25

Oct

2013

Your Finances: The Reality Check (Part 2)

Tracing your Spending

 

In Part I of this report, we covered your financial goals and set the amount you need to save to be able to accomplish them within a certain time period. We also covered how you can trace where your money went. Knowing exactly where you are spending every dollar by writing down all your purchases is vital to getting an honest reality check of your finances. By doing this for at least a month—you can do it for two months to get a more comprehensive picture—you will be able to figure out just how much money you are spending for the unnecessary things. Once you know this, it is easier to determine the areas where you need to trim down on your expenses or cut them off entirely so you can put more money towards your priorities.

 

Once you have the figures for your expenses for one month, it’s time for you to organize your expenditures. There are many financial worksheets online that you can fill out. You may also use your own. Basically, a worksheet is composed of two areas: Your income and outflows. The income, obviously, refers to the money you make each month like your salary and bonuses and money earned from second or third jobs you may be holding. This part also includes any interest earned on savings accounts, alimony (if you are receiving any), and scholarships (if you are a recipient). Make sure that you record your gross income or the money you make before tax.

 

The outflow portion represents your expenses each month. Include in this portion your taxes, mortgage or rent amount, retirement contributions, food and groceries, utilities (gas, electricity and water), communications (landline, mobile phone, and Internet), clothing, laundry, eating out, nightlife, gasoline and car repair/maintenance, fare for public transportation, insurances (health, life, long-term care, homeowners, disability, and auto insurance), debts (student loans, car loan, and personal loan), childcare, tuition and other school expenses, copays and deductibles, home maintenance/repairs, subscriptions (cable, gyms, newspaper/magazine, etc.), hobbies, pets/pet care expenses, vacations, and hobbies. Be as specific as much as possible. If there are other expenses that don’t fit in with the other categories, put them under miscellaneous.

 

For expenses which don’t really happen each month, like car repairs, get previous receipts and try to come up with a monthly average. Use your ATMs, credit card bills, and other receipts for other stuff so you can get an idea as to how much you need to allocate to these expenses per month.

 

The next step is where you’ll find out if you’ve been overspending or not. From your total income, subtract the total outflow or expenses. You are clearly spending more than you should if you arrive at a negative number. Now that you know this, what can you do about it?

Perhaps the category for eating out and nightlife is glaring at you accusingly. If you constantly have your lunches out, perhaps you can save more if you brown bag them.

 

Instead of going out with friends on weekends, perhaps you can scale back and just have these dates once or twice a month. Are you really using your gym membership to the fullest? If not, you can just exercise at home. What about your other subscriptions? If you barely use them, unsubscribe. How much money do you spend (cash or charged to your credit card) for shopping for items that you barely even remember afterwards? Are you constantly updated on the latest fashion trends? Well, you don’t really need to be for as long as you have the so-called staples in your wardrobe like the little black dress, black pants, jeans, jacket, and white shirt. You don’t also have to shop for designer shoes and clothing all the time. There are good finds in department stores for as long as you don’t care about labels.

 

Once you have already determined where you can cut back, go back to your worksheet and redo it, this time putting in the new figures of the areas where you intend to scale back. Then subtract the total expenses again from your total income again. By this time, you should already have a positive figure. You can now see the money you have to save for your financial goals. Depending on how much you can put into your savings, you will have to do some adjustments, either in the amount of the goals you want to attain or the number of years you want to accomplish them.

 

Check out www.adamscapgroup.com for more Information onTips for Credit Repair.

 

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Fri

25

Oct

2013

Your Finances: The Reality Check (Part 1)

One of the most important things you can do now so you can find yourself in solid financial footing in the future is to start figuring out your financial goals. Money and budget issues are often very difficult to tackle because there seems to always be less than enough. Most of the time, there are more days than money left which add to the feeling of helplessness as far as our budgets are concerned.

 

Here are some common financial goals and how to go about putting a figure on them:

 

Purchasing a home.

Most, if not all, Americans yearn to live in a home of their own. Not only is it a good investment, it also allows you to do what you want with it without having to ask permission from your landlord. Try to do some research on what the median price of a home is nowadays. Let’s say you plan to get a $200,000 home. To be able to get that, you need to have 10 percent to 20 percent saved for the downpayment plus anywhere from 1 percent to 5 percent for the closing costs. So the lowest that you need to save for a $200,000 home, is $22,000 and the highest is $50,000. Of course, the more you save, the better it is going to be as you’ll end up paying less on the monthly amortization.

 

Another smart way of going about a home acquisition is to really strive to pay for it in cold hard cash while living in the cheapest but decent home you can find for the meantime. Yes, this is possible but it is going to take a lot of discipline and effort on your part. Of course, you will have to be patient as accumulating this kind of money is going to take a few years.

 

Buying a new car.

Everyone dreams of getting their own car. And this is another acquisition that is going to cost you money. If you want to get a brand new set of wheels, you also need to save anywhere from 10 percent to 20 percent for the downpayment. That means if the car costs $30,000, you have to save anywhere from $3,000 to $6,000 to be able to drive it home. But it would even be smarter if you pay for your vehicle in cash as it depreciates in value the moment you drive it out of the dealership.

 

Saving for emergencies.

You know just how unstable the world has become these days. One day you have a job and the next you are given the pink slip because the company needs to downsize to survive. You need to guard yourself against these and other emergencies which will potentially drain your resources and cause you to go in debt. Experts recommend having financial emergency savings of anywhere from three to six months of your living expenses so that you will still remain afloat when something bad rocks your world.

 

To arrive at this computation, you need to sit down and figure out your budget so that you know how much you need to set aside for your living expenses (this amount is lower than your monthly income). The more unstable your jobs is or if you are the sole breadwinner in the family or have a sickness that could put you out of commission anytime, the more months you should put into your emergency fund. But if you are in government service for many years now and have no intentions of quitting or have established yourself well in a relatively stable company then a minimum of three month’s emergency savings is enough.

 

Erasing your debts.

Debt is a burden that many people now wish they never got into. From student loans to credit card debt to personal loans, your financial obligations can weigh you down and prevent you from making the most productive use of your money. Instead of using it to prepare for your retirement or save for your kids’ college education, you lose the opportunity because you have to keep paying your debts each month.

 

So calculate how much you owe right now and make a determined effort to pay back every cent. There are two ways to pay your debts. The most common method suggested by financial experts is to tackle the high-interest debts first. The rationale behind this is that you avoid accumulating interest and prevent your debt from getting larger. The other one is called the debt snowball, popularized by Dave Ramsey in the Total Money Makeover. He advocates paying the smallest debts first so that you get the feeling of winning small victories and are thus motivated to keep on paying your obligations. Choose the method that you are most comfortable with and will most likely stick with until you are able to erase your debts completely.

 

Of course, you may have other goals, too, like funding for retirement or saving for your children’s college expenses. Be sure to put a price tag on these so you know how much you are going to be putting away each month to achieve them.

 

Check out www.adamscapgroup.com for more Information on Retirement Planning.



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Fri

25

Oct

2013

8 Ways to Getting on Solid Financial Footing: The Cheat Sheet

This report gives you a quick lowdown on how to get on solid financial footing. It’s a cheat sheet so that means that we won’t be doing a detailed itemization of each step. Rather, this part is for those who are in a hurry and just want basic information on what to do now. Getting an idea on how to manage your finances way will get you started towards a much better future and a comfortable retirement. These 8 ways are not necessarily written in any order of importance so you can choose where to begin depending on what your situation calls for and what your priorities are.

 

If you’re ready, here’s the quick rundown on how you can get into solid financial footing fast:

 

1. Get health insurance.

One of the things that put people in financial ruin is illness. If you’re unprepared, one serious and debilitating disease can get you up to your neck in debt and yes, even bankrupt you and your family’s coffers. You want to protect yourself against this possibility by getting health insurance coverage. Those working with employers who offer healthcare insurance are fortunate as any contributions you make are bound to be less costly than if you were to buy coverage on your own.

 

Now if you are one of those who have to get health insurance yourself, be sure to compare plans first. Inquire about the illnesses that are covered and if you are limited in seeing doctors or specialists that are members of the plan. Do they charge extra if you go to a non-plan doctor? How much are the deductibles and copayments? If you are still on the hunt for a job, perhaps you can get temporary insurance that will shield you for a few months from very expensive medical issues. If you’re young, perhaps you can still be covered by mom and dad’s coverage so check this option out as well. Going without health insurance is a sure way to invite bankruptcy and financial ruin in so no matter how limited a coverage you can afford, make it a point to take care of healthcare insurance first.

 

2. Take care of your debts.

Who doesn’t have debt? It seems that this is a common thread that runs among majority of American families and is one of the reasons why it’s very difficult for many to manage their monies. Well, if you are not yet in debt, don’t go into it. But if you already have financial obligations to take care of, start freeing yourself from them right away. Begin by paying off those high-interest loans. If you have other debts, ask for a time extension or maybe even lowering your interest rate. Some debtors may not be as kind but some will give you consideration so it never hurts to ask.

Now you may be tempted to invest your money or put it in a savings account. But if you are still burdened with high-interest rate debts, you stand to “earn” much more if you paid off your 18 percent interest credit card loan first than put your money in an investment that pays only 5 percent interest.

 

3. Save for retirement.

Retirement may seem so far off into the future when you’re young and healthy but the best time to prepare for it is now. Most employers offer a 401k plan to their employees which give a matching contribution to what the latter puts in. So if your employer matches your contribution 100 percent then every dollar you put will also mean receiving another dollar for your retirement fund. That’s free lunch money that comes at no extra effort from you except, perhaps, to see to it that you have that extra money to contribute. There are also tax benefits for putting money into a retirement fund. One is that it grows tax-free—that is, you only get taxed when you withdraw that money later on. You can also borrow from your 401k although it is best at all not to so that your money grows undisturbed.

 

If you are self-employed or working for a company that does not offer a retirement plan, you can still prepare for retirement by opening an individual retirement account or IRA. There are maximum contributions to an IRA adjusted each year by the Internal Revenue Service. For 2013, it’s $5,500 ($6,500 for those aged 50 or older). Try to give the maximum contributions as much as possible.

 

4. Save money for emergencies.

You must make it a point to save three to six months of living expenses in case life catches you unawares and throws you those unexpected blows, like the loss of a job or the death of a spouse. If you want to be “forced” to save money, you can have a certain amount of your paycheck each month sent automatically to your savings account. This way, you don’t have to worry about spending it. You may also opt to put your savings in a money market fund which offers higher interest rates than traditional bank accounts. The more unstable your job is, the more you should beef up your savings. If you’re the only breadwinner in the family, you should also strive for a fatter emergency fund.

 

5. Invest in stocks, bonds, and mutual funds.

With your savings account firmly in place for emergencies, you can choose to be savvy by building your wealth portfolio. Investing in stocks, bonds, and mutual funds has always been the traditional way of building your nest egg and growing your wealth. These three investment vehicles are considered risky (well, all investment is) but the riskiest of all are stocks. However, it is also the one that gives the fastest growth over the long-term so it would be unwise to avoid it because you are afraid of losing money.

 

To diversify your portfolio and balance the volatility of stocks, you can invest in bonds. Here, the government or company borrows your money in exchange for interest and the promise of paying it at a certain time in the future. The safest bonds are those guaranteed by the federal government as it is highly unlikely that the government will go out of business. However, bonds issued by companies may also be safe provided that you check out the ratings from independent companies which give you an idea of the stability of the bond issuer.

 

Mutual funds are the best way to invest if you only have limited funds and cannot possibly put on a diversified investment mix by buying individual stocks and bonds. In mutual funds, your money together with thousands of other investors are gathered and the mutual fund manager invests it in a variety of stocks, bonds, and money market accounts. For only a fraction of what you would spend for individual stocks and bonds, you get a diversified portfolio in a mutual fund. Moreover, you also enjoy the benefit of having a professional manager who has years of training manage your portfolio. Do look for no-load mutual funds so that you can maximize the return of your investments.

 

6. Improve your credit score.

Your credit score is based on your credit report, which details whether you are a good debtor or not. Your credit history matters a lot because it affects almost all aspects of your life. Of course, an unblemished history of on-time payments and good credit will give you a good score and enable you to take advantage of competitive interest rates when acquiring any type of loan. On the other hand, a marred credit history and low credit score will be detrimental, not only in your chances of getting approved for a loan. It will also lessen your chances of getting a job or renting an apartment.

 

You are entitled to a free copy of your credit report once a year at www.annualcreditreport.com. You may also contact any of the three credit bureaus—Experian, Equifax, and TransUnion—to get a copy of your credit report. Review your credit report carefully and see if there are any errors on it. If you spot anything that is erroneous, be sure to communicate with the credit bureau right away so it can be corrected.

 

7. Get your own crib.

We’re talking about buying your own home, if you don’t have one already. Getting your own crib is a good investment because real estate values always go up, no matter how unpromising the housing sector has been in the past years. It’s a good idea to pay up for your home in cash but since this is not really very possible for a lot of people, strive to save more for the downpayment. Commercial mortgage lenders require at least 10 percent for the downpayment but if you can give more then you are much better off financially because that would mean lower monthly payments. As much as possible, avoid adjusted rate mortgages and balloon mortgages.

 

8. Figure out ways to legally lower the taxes you pay.

We need to pay our taxes to keep the government working. But if you’re not smart about handling it, you can end up paying more than you should. Find out ways that you can legally lower the taxes you pay to Uncle Sam. Putting money in retirement accounts and in college savings funds yield tax advantages so be sure to acquaint yourself with them. Some expenses are tax-deductible too, so learn what these are. The website of the Internal Revenue Service gives the most comprehensive source of information. You can also ask a financial adviser on ways to lower your income tax.

 

Check outwww.adamscapgroup.com for more Information on How to Get the Best on Mortgage Deals.

 

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Tue

22

Oct

2013

The Cost of Divorce

Marriage does indeed offer a host of pleasantly surprising monetary benefits. While these might be good reasons to really work on your marriage, divorce is even costlier and should give you both more incentives to avoid it as much as possible. If money issues are disintegrating your union, you should try to really work things out because divorce is certainly going to make your finances take a turn for the worse. How come?

 

Divorce results in exorbitant legal fees.When you and your spouse decide that it’s time to call it quits, you should be ready to pay each of your attorneys to handle the legal proceedings. Even if you both decide not to contest the divorce, you can still expect to shell out $1,500 in legal fees. On the average, contested divorce can cost $15,000 and more complex divorces can cost anywhere from $50,000 to $100,000 according to estimates. If your relationship is beyond repair that you are only talking with your ex-spouse through your attorneys, the cost can go up significantly. Even if you do decide not to hire an attorney to keep costs low, you still have to spend money to end the relationship legally.

 

Divorce can result to higher taxes.When a couple decides to split and they have investments in a joint account, they usually end up liquidating and splitting the assets. This might seem like a good idea at this point, especially since one or both would need the funds to start over, but the capital gains tax bill later on can hit you in the face. It becomes worse if the funds were taken from a traditional IRA and both are below 59 ½ years old. The 10 percent penalty for early withdrawals also increases the burden you have to pay to the IRS.

 

Divorce means you have to maintain two households.We have mentioned how you can save on certain expenses when you live together. When you head for Splitsville, you both have to find separate houses and pay your bills and expenses on your own. If you have already bought a house or other properties during your marriage, the property laws in your state will determine how these will be divided. The challenge lies in the fact that your income will still be the same but you will be paying all your bills yourself compared to when two incomes were sharing the expenses.

 

Divorce means dealing with alimony and child support obligations.If one party—usually the disadvantaged spouse— requests for alimony and the judge grants it, this will mean more expenses on that spouse. If there are children, child support will have to be added to that list of ever-expanding financial obligations as well. Now let’s say that you do decide to marry again after the divorce: You will not only have to continue giving your former spouse alimony and child support, you also have to work to provide for your current family.

 

Divorce can lead to poverty. This is one of the lesser-known facts about divorce: That dissolution of the marriage can be detrimental to one or both spouses in the long-term. Studies show that the poverty rate of children living in married couple homes is about 8 percent while those in single-parent households have a poverty rate of 35 percent. When a divorced parent is unable to provide for the needs of his or her children and the spouse becomes remiss in his or her child support obligations, the financial impact on the child can be very devastating.

 

 

Check out www.adamscapgroup.com for more Information onPersonal Finance and Budgeting.

 

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Tue

22

Oct

2013

The Financial Benefits of Staying Married

Many individuals avoid discussing marriage and money in the same breath but in reality, the discussion— or lack thereof—of finances is one of the primary reasons why couples decide to call it quits. What a lot of individuals who tie the knot often do not understand until too late in the marriage is the fact that it is often money matters that lead to a lot of arguments. When not handled properly or left unresolved, financial issues often lead to divorce.

 

Yes, we do not go into marriage thinking that it will end in the big D word. We all want it to last forever. But we also have to face the reality that the specter of divorce looms in many unions. The best thing to do would be to learn from those who have gone before and try not to go that same path if it can be helped. For many marriages, the breakdown is often precipitated by a lack of communication about money and debt. If you are open with each other about things like the family budget, savings, debts, and the little luxuries that you want to buy for yourself, you set the stage for an honest relationship.

 

Aside from love, marriage offers a host of financial benefits that make a great incentive for couples to stay together through thick and thin. So before we discuss how divorce impacts your finances in more detail, let’s examine the financial advantages that come with tying the knot. These make a practical case for staying together and working through the rough spots that inevitably come with it.

 

Better financial stability.The most obvious benefit that comes with marriage is that there are already two of you working instead of one. Your earning power is increased. Even if one of you decides to stay home when the kids come later on, the other is still available to earn for the family and you get to save on major expenses like childcare. Moreover, having a partner to work for the family means that you still have a little leeway in case you suffer a daunting setback, like getting fired from your job.

 

When you treat two incomes as one, you have the leeway to allocate funds for certain financial goals that you both share. You have money to save for that house downpayment, that vacation, or your future plan to go back to college or pursue graduate studies.

 

The opportunity to combine—and lessen— expenses.When you are married, you naturally share one roof, the same cable, phone, and Internet subscriptions, and utility bills. Food expenses may likely be the same as you will still most probably be eating the same when you were still living separately. But for the other expenses mentioned, there is that opportunity to lessen your expenses. This will mean savings for you—money which you could invest or put in a nest egg for your retirement.

 

Better loan offers.When there are two incomes, lenders are more likely to grant favorable loan offers because you are naturally in a better position to pay off your debts than if there was only one breadwinner applying for a loan. If your spouse has a stellar credit score and yours is just so-so, you could both benefit by getting more competitive interest rates.

 

On the not-so-bright-side of things, your credit rating could get affected if spouse has a very bad credit history and low credit score. This is why you should always ask to see each other’s credit records before you tie the knot and have candid discussions about these issues so that you are both not caught off guard when applying for loans as a married couple.

 

Savings on car insurance. If you and your spouse are responsible drivers, you get to save on car insurance. Inform your insurance agent that you are getting hitched and you will benefit from lower rates. Moreover, you can consolidate policies and even insure your car and your home with the same insurance company to get discounts.

 

A word of caution, however: If your spouse is an irresponsible driver, you could end up with higher premiums if you put him or her on your policy. Be sure to read the terms and conditions carefully and weigh the pros and cons together if consolidating policies is going to result in savings or if you’re better off keeping separate insurances.

 

Access to your spouse’s employer-sponsored health plans.Employers often give generous benefit plans to their employees. Most plans include coverage to spouses and kids as well. Marriage is one of the events that will allow you to gain access to your spouse’s health plans. This is considered a major financial plus to those who are currently purchasing their own health insurance policy which can really be expensive. If you are also covered by a health plan from your own employer, you should decide if it is more financially-beneficial for you to be covered under your spouse’s employer-sponsored plan or to keep your own.

 

 

Check out www.adamscapgroup.com for more Information onHow to Manage Your Debt.

 

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Tue

22

Oct

2013

Money Questions to Ask Before Tying the Knot

1.   Do you have any savings?

So this might sound like you’re only after his or her money but if you haven’t encountered financial bumps on the road yet, you’re likely to do so when you’re already sharing your life together. One of you might get fired or need a medical operation. You both might want to have kids one day or your car needs a major repair. Whether the incident is major or minor, you are most likely going to need money to get you through it. Without some savings, it’s all too easy to get into debt and strain your relationship because of it. If you find that your would-be spouse is not a saver, you could suggest a plan for you both to open a joint savings account that you can each contribute to every month.

 

2.   Do you have any debt?

It’s time to own up on any financial obligations you may have to your future spouse. Whether you’re late on your credit card bills, have any personal loans, or other debt that you have, you should come clean. Remember that once you are married, you are also going to be sharing your financial life together as well. If you are the one with the debt, you owe it up to your beloved to be honest about the information and the things you are doing to rectify it. In case you are the one with the clean credit slate and your partner is having problems, discuss how he or she intends to pay off the debt and how you can help. By being open about these things, you avoid having to fight about debt—a potential relationship-breaker.

 

3.      How many credit cards do you have and how are they used?

While you’re talking about debt, ask your partner how many credit cards he or she has and if these have ever been maxed out. You may also like to inquire whether he or she uses these cards for everyday expenses. At the most, financial experts recommend having no more than two credit cards as having more could make you more prone to debt, especially if you carry all of them with you and are an impulse-buyer. Talk this over with your spouse so that you can come together to an amicable arrangement that will strengthen, not weaken, your financial foundation.

 

4.     What’s your credit score?

At this point, you should show each other copies of your credit reports and credit scores. These things matter because if you intend to get a house together or a new family car when you do get married, your spouse’s credit rating is going to matter. Your husband’s or wife’s low credit score could negatively impact your ability to get a competitive interest rate on your loans, for one. If your would-be spouse really has a major credit problem, you might consider postponing the marriage until after he or she has gone to counseling or has sorted his or her financial issues out. This does not mean that you are valuing money over love—you still offer your support while he or she is mending his or her finances—but you are merely setting a stronger foundation for your married life so you won’t be facing a lot of arguments and a potential divorce later on in the marriage.

 

5.       What assets do you bring to the marriage?

You are going to be living together so you should know what the other is bringing to the union. Decide on the things you want to share together and the ones you want to keep for yourself or to the people that you want to support even before you have met your future spouse. You can always go into more detailed estate planning later on but for now, it is better for each one to know what you bring to the relationship.

 

6.        What is your salary?

This is the starting point for your financial planning as a couple. When you know each other’s salaries, you are able to start putting together your budget and allocate funds for the projects you intend to undertake as a couple. Being transparent about how much you both earn is integral not only to your budget but to the trust you give each other.

 

7.       How do we handle our finances?

Since you are going to be living in the same household, you should decide early on how to merge your finances. There are basically three ways to do so: 1) Separate; 2) Joint; 3) Mixed. When you choose to keep things separate, you’re basically keeping your salaries and all the expenses you share together are going to be divided in half. You pay your own debts and keep your own savings.

 

When you join your finances, you merge everything. You have a joint account where you direct both your salaries and get your expenses from there. You also open a joint savings account where you put money to each payday. One spouse’s debt is also the debt of the other spouse. In an ideal arrangement, you inform each other each time you want to take money from the account to spend for your wants not included in the budget.

 

In a mixed arrangement, you have a joint checking account for the expenses that you will share together, such as food, mortgage/rent, and utilities. However, you also keep a portion of your salary so you can spend it freely as you wish. Debts that you incur for yourself are also paid out of your own money and not from your joint account.

 

You will know which arrangement works best for you if you are open and candid with each other. By deciding early on how to handle your finances, you avoid confusion and frustration when you are already married.

 

 

 

Check out www.adamscapgroup.com for more Information on Ways to Get Out of Debt.

 

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Tue

22

Oct

2013

Marriage and Your Financial Compatibility

The excitement and anxiety that comes with getting married often clouds rational thinking and sound judgment. While many think that tying the knot is simply a romantic undertaking, those who have been there know that it’s as much financial as it is quixotic. In fact, money plays a vital role both before and after the wedding and even more so during your marriage that it’s important to marry the person who you are financially compatible with.

 

Unfortunately, finding the one who is financially fit for you is often quite difficult. Most of the time, we go out of our way to please the person we love by putting our best foot forward—and this means spending a ton of money on gifts and surprises. Some people don’t care if they are on the verge of maxing out their credit cards for as long as they are able to see the happiness mirrored on their loved one’s faces.

 

However, this is not the best way to get to know each other on a more intimate level, especially where money matters are concerned. It is often the opposite. By spending more than what you can afford, or even by not calling your boyfriend’s or girlfriend’s attention to the fact that the extravagant displays and expensive presents are making you feel uncomfortable because it shows how conflicting your views are about money, you are both setting the stage for false assumptions and financial disagreements. Money problems are one of the issues that couples often fight about which lead to divorce that it’s vital early on in the relationship to find out if you and your would-be spouse are the right financial fit.

 

Before we dig deeper into this issue, let’s first get certain things clear. First of all, even if you know that you are going to be marrying a millionaire, you still should be on the same wavelength when it comes to handling money. Second, even if you know that your partner is a whiz at all the budgeting and financial planning, you should still work as a team. He or she may be the one managing the money but you should have your say on how or where the funds go.

 

So how do you figure out if you hold the same views about money or if you still need to work things out? Here are some very crucial questions to ask before you both tie the knot. Now remember, if you are the one opening up this conversation with your partner, there’s a chance that he or she might take it the wrong way. These kinds of topics require the utmost tact on your part. You might need to preamble it by explaining how important financial compatibility is to the new life that you are going to share as a married couple. But you must make it clear that these need to be answered so you have a starting point on how you want your finances handled.

 

Check outwww.adamscapgroup.com for more Information onMoney Management Tips.

 

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Thu

27

Jun

2013

Credit Card Savings

Having a credit card is very convenient since carrying a lot of cash becomes unnecessary and you might even have a hard time leaving your credit card at home. But with its advantages comes also its disadvantages. Since you can always buy things without carrying cash around, you are always tempted to buy something that you come across. If you have excellent control on your finances then good for you. If you have a hard time managing your credit card, then these pointers can help you.

 

Get organized

 

First thing's first, obtain your credit card records to have a better idea of your spendings. Be sure to double check the records for errors and ensure its accuracy. A good example would be to find out if you have outstanding debts that should not be there as well as the accuracy of the listing of your former and present address.

 

Evaluate your credit card

 

Go over your recent credit card records and look at the interest rates. Some credit card companies have promos wherein they offer lower interest rates for a period of time and this promo may already be over yet you have no idea and are already paying at a higher interest rate. Also take note of the membership fee which they charge annually since some have very high membership fees. Consider cancelling this if you are not using it frequently.  

 

Pay on time

 

It is important to pay your bills on time since it can have a negative effect on your credit record or rating. You will also be able to avoid getting charged because of not paying on time. Try asking the credit card company to remove the overdue charge if you have forgotten to pay it on time for the first time.

 

Manage your debts

 

If you see that you have more debt than what is comfortable, think ahead and plan out how you will repay it or at least reduce your debt. Devise a way to pay more than what is required of you so that you will have a reduced payment schedule. Prioritize the card that has the highest interest rate. Do not bring your credit card always when you go around since temptations abound.

 

Don't bite more than you can chew

 

As the saying 'don't bite more than you can chew" goes, do not spend more than you can afford. True, a beautiful gold bracelet may be enjoyable to wear but its price tag may mean paying a lot for the next months. If you are bent to save money when using your credit card, unnecessary items like jewelry and the like should be at the bottom of your considerations.


For more on personal finance, visitwww.ezmortgagesolutions.net.


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Thu

27

Jun

2013

High-low Numbers: Tips On Saving Money On Clothes

Are you craving for the newest designer clothes, a pretty tank top, and that pretty dress? All this fashion comes at a price — you choose.

 

Buying clothes these days is always a choice between the designer-made outfit or those cheap but quality items that you could pull together and express your personality in many different ways.

 

Most experts contend that clothes can definitely make or break a person. They say that your personality is usually reflected on how you dress up. But it does not necessarily mean that good fashion would absolutely mean expensive clothes.

 

Hence, you can still make a remarkable fashion statement without having to spend hundreds or even thousands of dollars just for your clothes.

 

Here is a list of some money-saving tips when buying clothes that would turn other people's heads to you but would not definitely break your wallet.

 

1. Do the math

 

Choosing fashionable clothes can be really tricky, not unless you know how to do the math! So before you buy three sets of clothes that would cost you hundreds of dollars, try to go for the budget-friendly dozen of items that you can even match alternatively.

 

The number of expensive items that your money can buy is definitely doubled or even tripled when you buy cheaper ones but can still make a good fashion statement.

 

2. Know what you want

 

Saving money is definitely based on knowing what you want whenever you spend your money on something. If you know what you want, this means that you have researched the item, have compared them with the other items, you will be able to come up with the lowest price of the product.

 

3. Drive your way to a 'thrift store"

 

Usually, these 'thrift stores" are non-profit organizations. This means that they are usually operating for charity. They give their proceeds to some charitable institutions.

 

Hence, the prices of the clothes being sold in the thrift store are absolutely cheaper than the ones being sold in the department store. So that would mean many savings for you.

 

Best of all, you do not only get to save more money, you get to do some charity work as well.

 

The bottom line here is that when shopping for clothes, do not shop for the brand name, shop for the quality.

 

Nowadays, you just have to be practical. Better spend your money on more important things than those designer clothes.


More onpersonal finance can be found atwww.ezmortgagecalculator.org.


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Sun

23

Jun

2013

Extra Money For Your Extra Time

Earning extra money for your future, that is definitely not a bad thing!

 

However, is it an easy thing? One definitely wants that for a stronger foundations for the future, but how can you manage?

 

Saving Money

 

One of the better ways to have a more secured future is to have more than enough money in your bank account, to be more liquid.

 

Time is Gold

 

Sometime in a day, you may find yourself with nothing to do. You can either take this time to rest, to sleep, to read a book or any of your favorite pastimes. Basically anything will do just to keep you sane and as long you do not have to spend too much money.

 

However, instead of looking for activities that will not be too costly to maintain, it is better to pursue things that can even help you earn money. If you have enough free time, consider taking a part-time job. More than saving money, you can even expect more dough into your savings!

 

Why Should I Get a Part-time Job?


  • It can be a source for your extra money for your savings.

  • You make good use of your free time. For a student, the experience can teach a lot about life and the real world.

  • You can meet interesting people.

  • There is the possibility of discovering new skills or passions.

  • Getting a good part-time job can actually be a start to a more serious endeavor.

 

Getting a Part-time Job

 

It will be relatively easy to get a part-time job. You can look up the posters or newspapers. Inquire in different establishments for openings in part-time positions. Ask friends who may recommend you. You can even provide services of your own skills like tutorial, writing or painting.

 

The job may require from you a few hours of your week. It can be something you do in the afternoons, during the weekends, or during school breaks.

 

You may feel challenged by exploring this new possibility in your life. You will have to balance your part-time job with what you regularly do. Simply manage your work and time properly. Save time too. Do minor tasks when traveling or waiting. Give no room for distraction, procrastination or cramming.

 

As long as you keep track of your extra earnings and savings, in the long run, your part-time job will definitely help do wonders to your plans in the future.


Check outwww.adamscapgroup.com for more Information on money management.


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Sun

23

Jun

2013

Guidelines in Applying for a Personal Loan

People have various reasons for applying for a personal loan. Some are in need of emergency cash for paying their utilities or medical bills. Some need it for their education needs. In general, however, the fact that this loan is very easy and quick to acquire is what makes it very attractive to borrowers.

 

Lenders can provide you the funds within a short period of time, so then you no longer have to wait too long for the cash that you desperately need.


Where Can You Find Loan Lenders?


Loan lenders are not very hard to find, especially with the advent of the internet. A quick search on the internet can yield literally hundreds of results for loan lenders. This allows you to choose the lender who can provide you the money that you need. But as in any type of services, you have to make sure that you are dealing with a legitimate personal loan lender and with someone who can offer you the most profitable deal. Comparing various lenders in terms of interest rates and monthly payments can certainly lead you to the right lending company. Also, review the lender’s website and check if there are doubtful policies in their company. Their website should also look professional and must have great content as this can tell you whether or not they’re legitimate.


When you apply for aquick personal loan, you would only need a few minutes. First, choose the best lender available by following the tips outlined above.

 

After choosing the lender, look for the application section in their website. It is important to fill out all the fields in the application form. You will be asked some vital information such as your name, current address, and date of birth, social security number, and monthly wage. Answer each question as accurately and honestly as possible.


What Are Your Chances of Personal Loan Approval?


As in most loans, borrowers fear that their loan application will not be approved. Some people even worry about their bad credit score, which could spell trouble for most loan applications. But with personal loans, this is not really an issue. As long as you have provided the right information, your application will most likely be approved. In fact, the percentage of those who apply for personal loans that get approved is much higher than those who don’t get  approved. Usually, it only takes a few minutes before you can receive the notification that your application has been approved. Once approved, expect to receive the money that you need within a very short time. The next business day, expect the funds to be transferred directly into your bank account by the lenders and you’ll have access to your much needed cash in no time. or the cash that you desperately need.


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Fri

14

Jun

2013

How Credit Card Forgiveness Affects your Taxes

Credit Card Forgiveness and the 1099-C


You breathe a sigh of relief. You have just successfully negotiated a debt settlement agreement with one of your creditors. They agreed to receive $10,000 for the $25,000 credit card debt you originally owed to them and consider it as full payment of your account. But before you open that bottle of champagne, there is something you need to know: The taxman will be coming with a 1099-C. In plain and simple language, the debt which you have been forgiven is considered taxable income.


The Internal Revenue Service (IRS) states that cancellation of debt is taxable as ordinary income. This is provided for under Section 61 (a)(12) of the Internal Revenue Code which states that “income from discharge of indebtedness” is considered gross income and is thus taxable. This happens when a creditor cancels at least $600 of the debt you owe them without receiving anything in return. So in our example above, the $15,000 which was forgiven will have to be reported in the 1099-C, also known as the Cancellation of Debt form.


Cancelled debts owed to a financial institution, the Federal government, a credit union, a military department, the U.S. Postal Service, or any organization having a significant trade or business of lending money need to be reported in the 1099-C. Aside from credit card debt, a COD can also arise when you foreclose your personal residence or cancel an automobile loan.


How can the IRS trace a COD? Lenders report it to them. Now don’t take this personally. It is common practice for creditors to report uncollectible debts, charge-offs, and debts settled for less than the full payment to reduce their tax liabilities. The income that they have declared lost, however, has serious ramifications for the taxpayer as it could mean a sizable tax bill when mid-April comes around.


Not all consumers are apprised of the 1099-C. In fact, many of them simply ignore or trash these notices since these are usually sent by creditors or debt collection agencies to the debtors. They believe that these COD forms are not anymore necessary inasmuch as they have already settled their accounts with these lenders and have the papers to prove it. Because they don’t file it together with their federal income tax returns, they risk not only penalties and fines but audits from the Internal Revenue Service.


Accuracy is one of the things that consumers should be vigilant about when it comes to filling out their 1099-C. You may have agreed to settle your debt for $10,000 but the lender reflected a settlement amount of $15,000 in the COD form. In all likelihood, they factored in all the costs involved in getting the debt lowered. You should contact the lender first if there is a discrepancy in what is reflected in the 1099 and the amount of debt settlement that you agreed with the lender. You can dispute the fair market value written on the form provided that you have information from reliable sources to support your claim. Otherwise, the IRS will take what is given by the form to be correct. A forgiven amount that is higher than what was agreed upon during the debt settlement might result in you having to pay more taxes than you should.


 

Find more articles on debt management by visiting this site: www.consolidatedebtguide.org.


 

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Fri

14

Jun

2013

Consolidation Or Multiple Accounts

When working with those planning financial retirements one question keeps coming up. Should I consolidate all my accounts or keep them separate? Chances are that you have several different types of retirement accounts from different companies you've worked for along the way. This is not necessarily a bad thing but can be frustrating to try and keep track of.


Combining these funds can be a rather tricky endeavor as many of them are designed to only mate with like accounts. For this reason most 401 (k) plans can only be combined with another 401 (k) the same holds true for many other common retirement accounts including a 403 (b). The one type of account that can accept them all and consolidate them together is a rollover IRA.

Having only one account can simply so many aspects of your retirement that most people wonder why on earth they didn't do this from the very beginning. There are many more benefits than mere ease that goes along with consolidating your accounts and eliminating those extraneous accounts. One of which is the fees that are often charged simply for having the account. These fees can add up over the course of several different accounts and consolidating them into one lone account will eliminate the fees of all the others.


One misconception that people have when it comes to rolling over their accounts is that they will lose their investment options. This is especially a misconception when it comes to a 401 (k) program as if you own a particular investment while it is a 401(k) you will still own the same investment when its within your IRA account.


In other words a rollover IRA account offers the ultimate flexibility when it comes to your financial retirement needs. You can consolidate all your accounts into one, have all the information in one location and still enjoy the freedom that all the different accounts allowed you to experience in your investing. Diversity is a key ingredient when it comes to successful financial investing procedures.


If you are looking for the best when it comes to financial freedom for your retirement investments you should take the first available opportunity to consolidate your investments into a rollover IRA. Of course you should discuss this with your financial advisor first in order to see if there is a better situation for your unique and personal needs however in many cases the convenience factor of this process is far too tempting to overlook unless there is a very big and specific reason for doing so.


In other words consolidation by and large is very much the way to go when it comes to your retirement funds. You do not however want to sacrifice the diversity of your plan in the process. You should keep your actual investments as diverse as possible in order to insure a well-balanced portfolio that is designed to maximize your profit potential while minimizing your risks.


The decision of whether or not to consolidate your many retirement accounts is as personal as your decision to wear brightly colored socks and ties. There is no absolute right or wrong answer and it quite literally comes down to a matter of preference. If you thrive in chaos then by all means keep five or six accounts going at any given time. If you need neat lines and nice rows that balance out in a glance then consolidation might be the very best thing you can do for your retirement fund.

 

For more on personal finance, visit www.ezmortgagesolutions.net.

 

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Sun

09

Jun

2013

Gas Saving Tips

The price of gasoline is on the rise. This is truly a great concern if you are following a tight budget. So how can you save some money on gas? Read these tips.


The carpool system


This is a great idea for employees and students alike. Since all of you will have the same destination, there is no need to bring extra vehicles if you can all fit in one car or van. If you are with your co-workers, it is a good idea to bring your cars alternately or on rotation. If you have children that you bring to school or social events, exchange driving responsibilities with your friends.


Commute to work


You can always take the public transportation system when going to the office. This is also a good way to relax since you are not driving. You can even take a short nap while on your way.

Look at the prices of different gas stations


Take time to drive around and check the pump prices of the gas stations near your neighborhood. Keep in mind that a few cents difference can add up to a lot if you continually have your car re-filled in the same gas station all the time.


Shed some sweat


A good way to save money on gas and keep yourself healthy at the same time is by walking or riding a bike to your destination. It saves time since you do not have to look for parking and also makes you healthier from the exercise. Utilizing these alternatives will also keep you from getting stuck in traffic which will surely waste a lot of your time and gas.  


Keep your car in very good condition


It is necessary to keep your car's engine in good running condition so that it will not consume a lot of fuel. When driving around on errands, plan out your route before you even get out of the house. This will minimize your trips going back and forth. If is also ideal to use the aircon as minimal as possible since it drastically increases the car's fuel consumption.


Check your car's tire pressure


Keep it a habit to check your car's tires so each one has the right amount of pressure. Having unequal pressure can greatly affect the car's fuel economy. It is also advised for you to refrain from accelerating too fast since this means burning a lot more fuel.

These are some of the things that you can do to save on gas. Gasoline is not a renewable resource, therefore using it wisely is very important to conserve this valuable commodity.


More on personal finance can be found at www.ezmortgagecalculator.org.


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Sun

09

Jun

2013

Cutting Your Kids' Schooling Costs

Whenever the school season is just around the corner, there's only one thing that parents are thinking about - the impending costs. Education is a primary right and a pertinent need of every child but it can become very costly. Availing of scholarships and education grants for your children is the best way to get them through schooling. But of course, only a small percentage of children can be given these privileges.


There are simple and effective measures that parents can employ in cutting the costs of their children's schooling, especially during the back-to-school season. Most often, these measures are often taken for granted, but don't miss out!


Organize and Save


Keep an inventory of your children's school supplies and keep it organized. If you are not organized, you will be spending more money on replenishing your supplies. Small things like pencils and crayons may not cost too much, but if you replenish your supplies unnecessarily, you are losing valuable money.

You should also try involving the kids when making the inventory. This will give them a sense of ownership for their things and would know where to take and put their things.


Tax Holidays


Tax holidays are often offered by many states during the back-to-school season.  Price ceilings will be put on different school gears. You might want to do a little research and ask about the schedule and the details of the tax holidays in your area.


Bulk Buying


It's a basic economic principle - 'the more you buy, the more you save". Well, this is applicable if you are buying a specific item which you will really need in the near future. In buying pencils, for example, you might want to buy a box rather than buying one for each of your kids. Face it, you will be needing to replenish these after some time, so might as well avail of the lower price by buying in bulk.


Transportation


You might want to consider buying your child a bicycle for him to bring to school. This, of course, is not always feasible. Finding a cheap and safe way to bring your children to school daily is an important thing. Car pools and school transportation services are options that you can look at.


Snacks


Whenever you have the time and energy to prepare food for your children, do so. You will not only be saving on the pocket money that you will give to them but you are also secured that your children are eating healthy and safe meals.


Getting your children through school is a hard task and a costly one. Saving money through practical and simple means can assist you in this endeavor. The benefits will eventually add up to bring a brighter future to your children.


Check out www.adamscapgroup.com for more Information on personal finance.


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Tue

04

Jun

2013

Smart Secrets to Budgeting

There's nothing more we want than to be able to efficiently manage our money. After all, the money that we want to manage is money that is oftentimes, hard earned. This is where a budget comes in. A budget executed properly, should help you see where your money is going, get more utility out of every buck, and help you save some extra for future use.

 

The first smart secret to a budget is to set a goal. What do you want to achieve? Do you want to correctly appropriate your income into bills payments? Do you want to put an amount aside for a big purchase or a huge investment? By having a goal, you will be able to shape your budget to best serve your interests.

 

Secondly, you would want to take note of where your money usually goes. This includes bills, major but regular purchases (like grocery costs, healthcare costs, and the like), and everyday miscellaneous purchases. It is only when you list down where you know your money usually goes will you be able to identify which expenses you can do without. Once you've identified these regular expenditures, take into consideration what you can cut back on. How much do you spend on your daily caffeine fix in the morning? How much do you spend on newspaper deliveries to your front door? The measly $2 or $5 of these small purchases cumulatively translates to more than $3600 a year! Instead of buying your expensive latte or reading the newspaper on print, put aside the amount you would usually pay for these small routine purchases in a small container. You will be surprised at how much you"re saving out of your older budget.

 

Being indebted is a vicious cycle on its own. You’re talking about continuous payments, not to mention huge interest rates. The best way to deal with this is to pay the minimum on all of your debts in order to avoid paying extraneous late fees. Whatever cash excesses you may have, you can opt to add on to the payments you make in your biggest debt. This way, you are concentrated on getting the biggest debts first that cost you the greatest interest rates. Doing this progressively, you’ll be amazed at how much you’ll get off your huge debts.

 

The last and most important step is to jot down the amount you earn the sum you spend. You can make use of computer cash management programs, or make database sheets of your own. Make a system that works for you and will help you keep track of your monthly budgeting progress.

 

Check out www.adamscapgroup.com for more Information on personal finance and budgeting .

 

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Tue

04

Jun

2013

What Are Your Alternatives to Bankruptcy?

We’ve already mentioned that bankruptcy should be undertaken only as a last resort, when all other ways to settle your debts have failed. Consider these alternatives:

 

Make a budget. If you are used to spending away your money each payday on whatever catches your fancy, it’s time to stop that now. List down all your sources of income in one column, your fixed expenses (food, shelter, education, car payments, and the like) in another, and your other expenses (leisure, vacation, and the like) in another. Write even the most insignificant purchases as these have the tendency to add up. When you do, you will be able to spot where you are spending needlessly. With a budget, you are in a better position to manage your funds.

 

Call your creditors. Most creditors are amenable to restructuring your loans with them if you show the initiative to contact them about your delinquent accounts. Explain why you are having difficulties but that you can afford to pay a certain amount per month to settle your debts until such time that your finances get better. Make sure that you do this before your debt becomes 120 days delinquent, though, as your account will most likely be turned over to a debt collector. Dealing with collection agencies is much more complicated.

 

Settle your debts. Contact your creditors and offer to settle your debts. Do debt settlement on your own and don’t rely on debt negotiation companies to do this for you. Many have successfully negotiated their debts for as low as 20 to 30 cents on the dollar and have written books about it. Learn from them. 

 

Sell some stuff. If buying designer clothes, bags, and shoes got you in this mess and you have a closet full of stuff you don’t anymore use, have a garage sale. Turn any asset you have into cash which will help pay off some of your debts. Look around for stuff in the house you can sell on eBay. Not only will selling things you don’t anymore need generate money to get you through this financially troubling time, you will also realize how owning fewer things gives you more freedom physically, emotionally, and spiritually.

 

Be frugal. Living below ones means is a trait of many self-made millionaires. You may be far from that road now but spending less than what you make each month will give you extra funds that can go towards debt payments. Besides, it’s also good practice to always have something extra left. Even when you don’t have any more debts to pay and have already cultivated that habit of being frugal, the excess amount left can be used for savings or investments.

 

Consolidate all your debts. If you can take out a home equity loan and pay off all your credit card and other unsecured debts using the proceeds you can get from it, you will only concentrate on paying off one loan. However, this would mean that you are turning your unsecured loans into a secured one with your house on the line. If you fail to pay, foreclosure is possible. Talk with a lawyer or a financial adviser before consolidating your debts.

 

Go for credit counseling. If you simply want advice on how to manage your finances, a credit counselor can help. Some will even help negotiate your debts for you. However, it’s best to do the negotiations on your own with the lessons you have learned from your counseling sessions.

 

As you can see, there are many alternatives. Exhaust all these strategies first before ultimately filing for bankruptcy. 

 

Find more articles on debt management  by just clicking on this link: http://consolidatedebtguide.org/

 

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Mon

27

May

2013

Sample Letter to Your Creditors for Debt Settlement

One of the most important rules to follow when it comes to debt settlement is to always communicate with the original creditor or debt collector through letters. It should be sent through registered mail with return receipt requested so that you have a paper trail of your transactions. If you are not sure how to go about writing a debt settlement letter, here are some samples to help you get started. Remember that you have to craft the letter to fit your unique situation so don’t just copy and paste. Make sure that you review it before sending so your letter becomes more effective.  

 

Part I of this report gives sample letters you can write to your original creditors. These include an unsolicited settlement offer, a letter countering a creditor’s offer, a letter of acceptance to a verbal offer, and a debt settlement agreement. Don’t forget to send your letters via registered mail with return receipt requested.

 

Settlement Offer Letter

 

Date

 

Your Name

Your Address (Street Number, Street Name)

City, State, and Zip Code

Your Phone number

 

(Name of Creditor)

(Creditor Office Street Number and Address)

(City, State, and Zip Code)

 

RE:  Account #_________________

 

Dear Sir/Madam (if you know the name of the person in charge, the better),

 

I have been unable to make payments on my account with your company which shows an outstanding balance of $___________ because of financial hardships that I am experiencing. (You can give a short explanation of what has caused the hardship but be professional in your explanation.)  

 

I feel that I have a moral obligation to pay this debt but do not have enough money to pay it fully. However, I would like to offer a settlement amount of $ __________ which will consider this debt paid in full.

 

I sincerely hope that you will be able to accept this offer inasmuch as it is all I can afford. Should you accept this settlement offer, please send me a letter stating that you also agree to these terms: 

 

  1. That you are accepting my one-time lump sum payment of $____________ as full payment of the outstanding balance of $____________ which I owe to your company and that no future litigation related to this account number will be filed against me;

 

When I receive your letter agreeing to this settlement, I will immediately send you the agreed amount so I can get this burden behind me (you can also ask them to sign a debt settlement agreement that you have already prepared and send you a copy). I appreciate your consideration of my offer. Thank you very much for your time.

 

Sincerely yours,

 

 

Signature over Printed Name

 

 

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Mon

27

May

2013

What You Need To Know Before You Enroll Into a Debt Management Plan

Don't drown in your debts, manage them instead! Rather than paying off many separate bills each month, you can use debt strategies to combine your monthly payments into one easy-to-manage bill per month. Debt consolidation gives you the power to get out of debt with the help of a certified debt consolidation agency. In order to properly manage your debt and help you to get rid o your debt in timely basics, a debt consolidation always goes with a debt management plan.


Your debt counselor from debt consolidation agency will normally ask you to enroll into one of their debt management plan. If you decide to enroll in a Debt Management Plan, do your homework before signing anything. Here are some guidelines for your reference before you put your signature on to the debt management contract.


1.Check with the Better Business Bureau


You should short listed a few debt management plans offer by different debt consolidation companies; then, check these company's rating and their past performance records from Better Business Bureau (www bbb.org). Eliminate from those companies that have an "unsatisfactory" rating at BBB.org. Serious and unresolved complaints will be noted, and you can learn what other names the company operates under so you can look them up as well. Understand how they resolve complaints and whether they will pay your creditors on time.

 

2.Understand the Fees


Debt consolidation is not free. Fees may include account set up fee and monthly processing fee. Ask for all the fees involved, including the potential hidden fees before you decide to enroll to the proposed debt management plan. Avoid services that need up front fee; the rule of thumb, If you're paying more than £50 a month, you're paying too much.


3.Choose a Debt Consolidation Company that Can Handle All Your Accounts


Before you sign a contract, let the debt consolidation company know all your accounts to be consolidated and ask to confirm that they can work with all your creditors and consolidation all your accounts, not just a few.


4.Be Wary of Company That Enroll You in 30 Minutes of Less


A counselor should spend time with you to understand your current financial situation and will make sure that the proposed debt management plan best fit you. In general rule, if a counselor enrolls you into their debt management plan without understanding your real debt problem, they won't work for your interests in the future either. Be wary of these companies that just want you to become their customer and don't care about your real financial issues.


In Summary


Debt consolidation with a good debt management plan will is able to help you to resolve your debt issues. While there are many reputable debt consolidation companies around in the market that really provide a good service to help their customers in resolving their debt issues, many are around just to earn profit and ignoring your debt problem. If you decide to enroll in a Debt Management Plan, do your homework before signing anything.

 

For more on debt management Plan, visit http://www.ezmortgagesolutions.net/


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Tue

21

May

2013

Debt Management | Reasons not to File Bankruptcy

Although bankruptcy does give you the chance to start anew financially, there are still a lot of reasons why you should not. The most important ones are outlined below:

 

1.       Bankruptcy leaves a negative mark on your credit report. You might be able to discharge all your unsecured debts under Chapter 7 but you will have to live with this derogatory listing in your credit report for the next ten years (a Chapter 13 will stay for only seven years). It can lower your credit score and impact your chances of obtaining a mortgage, car loans, and other types of loans. This single act alone brands you as financially irresponsible and a high credit risk. This is not permanent, however. With sound financial management, your credit score will improve in time. But if there are things you can do to avoid going this route you should take it before considering a bankruptcy filing.

 

2.       It is not suited for everybody. Just because you are hearing calls from debt collectors left and right does not mean that you should immediately file. Generally, if you still have income and have less than $5,000 in unsecured debt, bankruptcy may not be a wise decision. However, those with debts less than this amount but want to save their house from foreclosure or a vehicle from repossession will consider bankruptcy a very viable alternative. Each case varies so you will have to take a long hard look at your finances to determine if it is right for you.

 

3.       It requires full disclosure of all your income, assets, and debts. If you are not comfortable with this idea, it might be better to consider other options, especially if you have some properties that you want to protect from your creditors.

 

4.       Your filing becomes part of the public record. Anyone who wants to obtain information about you and your bankruptcy filing can do so. Even prospective employers or business clients will know about it if they do a background check on you. These can negatively impact your personal and financial future.

 

5.       You have exhausted the only legal means of protection from financial disaster in the coming years. Generally, you cannot file again in the next six years. Even if you do your best to avert another debt crisis after your bankruptcy petition, you’ll never know if you will be involved in situations where you will be required to pay a huge sum in damages. Where will you turn to then?

 

6.       Your bankruptcy filing could affect other people. In a Chapter 7, co-signers in some of the loans you took out will still be liable for your debt even if you are already legally free from it. Unless you want to destroy relationships you have built over the years and contribute to their own difficulties, you should think your decision through many times over.

 

7.       Bankruptcy is a personal loss. Yes, you might lose all your debts when you get them discharged but it will be a loss to you. It’s an admission that you were remiss in managing your personal life and your finances. If you still have the chance to pay off your creditors without resorting to bankruptcy, you should take it. It will mean keeping your dignity and self-respect intact.

 

Find more articles on debt management  by just clicking on this link: http://consolidatedebtguide.org/

 

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Tue

21

May

2013

Consider Your Financial Retirement Options

When it comes to planning your retirement you will find that there are many options available to the savvy investor. The problem isn't necessarily in investment opportunities but the knowledge that is needed in order to turn those opportunities into wild successes. For this reason alone, I recommend that your first stop along the path to financial retirement investment be at the door of a competent financial planner.

 

Most of are more than willing to go to the experts for advice when problems arise and yet for some reason have major problems seeking the services of those who are trained to assist us in our financial planning endeavors. You should consider your options carefully and decide what is in your best interest. The best way to do this is with the information that a good financial planner can provide and by listening to his or her guidance.

 

One thing you will probably be told is the importance of diversity in your investment portfolio. We all have been told many times never to put all of our eggs in one basket and the same holds true when it comes to investing your retirement. All investments are a gamble; some carry more risks than others. You must keep in mind that every penny you invest is subject to loss however and make your investment decisions by how much of a risk the particular investment presents and how much you are willing to lose if the investment doesn't pan out.

 

 

Perhaps the most common investment choice for retirement funds is mutual funds. These offer the ability to invest long-term with lower risk than many other investment options you will come across. These funds present a higher risk than other investments but are a good moderate risk investment for those who have little knowledge of how the market actually works. There is a fund manager that is in charge of making the actual investment decision for the collective pool of the fund and his or her job to decide where to put the money for which they have been entrusted. This leaves the critical decisions out of your hands and off your mind.

 

If mutual funds seem boring to you, there are other higher risk investment opportunities in the form of stocks. I seriously recommend studying the market carefully and completely before making the leap into stock trading but this can be quite the short-term quick profit rush that you are looking for if you are willing to risk your retirement investment for the sake of increasing your net worth. If you do choose to invest in the stock market please take the time to learn the proper procedures, the risks, and the process before diving in.

 

If you have a financial planner (and you definitely should) then he or she may prove to be an exceptional resource when it comes to the practice of 'playing' the stock market.

 

Securities are a very complicated process that many of us would feel better never needing to understand. If you need a little more adrenaline pumping, heart clutching moments when it comes to you financial retirement and are willing to risk the need to work for the rest of your life in the process you may find that this is just the boost for you. Be sure however, not to rest all of your hopes and dreams for retirement on the allure of securities trading as this is a very high risk field for those who do know what they are doing. For those who have little experience it can prove to be a financially fatal flaw.

 

Learning the ins and outs of the investment process in addition to the options that are available to you through the course of your own financial retirement planning is like going to war with the proper weapons and armor rather than a slingshot and a rock. The problem is that while there are some financial Goliath's out there that are simply waiting to be tamed, most investment strategies present their own unique needs that should be understood and monitored.

 

More on personal finance  can be found at www.ezmortgagecalculator.org.

 

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Mon

13

May

2013

Why Borrowers are Patronizing Payday Loans

Lending is one of the businesses that prosper today since it involves money. The fact that different financial institutions earn big from the interest rates imposed to the borrowers make online payday lenders grow their business even more. And now that shopping can be done not only in the supermarket but also through the internet, fast cash becomes more of a want than a need.

With this mentality that we have, no wonder that the majority are stressed emotionally and financially owing to the mounting charges and interests that they have to pay when using their credit cards for online shopping.


Once an employee is left with no other recourse in meeting their financial needs, they would come to online payday lenders for help. Payday loans offer employees a source of fast cash but usually with a high interest rate that could range between 38%-1000% annually. But despite this high rate of interest charges, payday craze remains to be high among employees.


Why Quick Payday Loan Has Become a Craze?


It is a human nature of wanting everything to happen in an instant. That is what we have instant noodles, instant canned goods and of course instant cash when we need it in the form of a payday loan. This loan system involves the quick processing of a loan application that is usually granted within a day or less. To be able to avail of this, the main requirement in the borrower is merely an employment. The moment you need a money, online payday lenders are generous to grant you a loan with very few requirements in exchange for a high interest rate that goes with your loaned amount.


Payday loan has become a craze for many mainly because of its enticing feature of being able to get hold of quick cash when you need money. Notwithstanding the high interest rate, the fact that your loan application is approved so quickly is more enticing and it overcomes the risks of paying a higher interest rate that could even be bigger than the principal loaned amount in some cases.


Understanding the Payday Loan Craze


In an attempt to understand about the payday craze the psychological point of view about the payday loan craze is considered. Online payday lenders offer people the opportunity to provide an instant gratification in wanting or needing fast cash. The unconscious side of the brain has the id that seeks instant gratification with the impulses of desiring instant pleasure. It is this impulse that perhaps caused people to patronize payday loans as it can provide them an instant satisfaction of obtaining quick cash to meet their financial needs.


Online Counseling Agency As a Tool in Saying No To Your Instinct


Saying no to your instinct can be hard sometimes, but with the help of support system such as online counseling agency which is usually non- profitable group, you can still develop a habit of delaying your instinctive gratification, especially when it comes to availing quick cash. They will provide you with educational materials that would help you develop an effective budgeting plan. Aside from these educational materials, they also conduct seminars that tackle about proper management of monetary fund and how to spend it wisely.


If you need quick online cash advance, visit

www.cashadvanceloanstoday.org

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