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Archive for November, 2011

Bankruptcy, what do you really know?

Written by admin on Nov 30th, 2011 | Filed under: debt relief

A looming bankruptcy could be your worst nightmare. After all the planning and hard work, you have to face the fact that your business might not make it financially.

Your current accounts may be in arrears and your overdraft maxed out. You foresee that you might end up losing everything you have worked for. But all is not bad news. It is not the end of the world as everything is not what it seems.

You may be anxious that everybody will know that you have filed for bankruptcy. This is not true. There are so many people like you. You and your case will not be noticed by everyone.

What will affect you adversely is the fact that your self-confidence will be seriously compromised. It might take years before your self-esteem is what it has been before.

People believe that all their debts will be cleared away. There is, however, debt that will not be cleared. You will still be held responsible for child support, alimony and student loans.

Many people believe that they will never get credit again. It is not all that bad. You will be able to apply for loans, but at a higher rate than before. If you want to go and buy that car, it might be possible, but you will pay the price. You can even still apply for basic current accounts at several banks.

You are not to lose everything that you have ever worked for. As a matter of fact, many people keep most of what they had. You will still have your house and car and most of your current accounts, for instance. The laws differ from state to state but you will not walk out naked.

The general consensus is that the process of filing for bankruptcy is a difficult one. You can do it on your own if you wish to do so, although the assistance of an attorney will be a great help.

Once you have been declared bankrupt, you are not obligated to repay anyone even if you feel you would want to. This would be your conscience talking and not the law.

Don’t think that your credit rating will resurrect when all the debts have been discharged. Bankruptcy is the one thing you do not want to interrupt your credit score as it can stay with you for the next ten years.

If you think that you don’t have to repay back taxes anymore, think again. Unless it is tax bankruptcy, taxes will have to be paid. Most of the debt will be cleared, but some of your current accounts will remain your responsibility.

Some people plan to max out credit cards and believe that if they file for bankruptcy they will never pay for what they bought – just until the next judge cottons onto you and declares it fraud. Then you really have a problem.

If you believe that you can file for bankruptcy only once, rather stick to that notion, because even though you can file for bankruptcy again you will do your credit rating a lot of irreparable harm.

Make sure that you really have to file for bankruptcy. If you have exhausted all the possible avenues, then go ahead and do it.

Bankruptcy is not only for those who cannot make a business work. Other situations also force people to go bankrupt, such as when they get divorced or lose a job. They cannot keep up the payments and problems ensue.

Bankruptcy is not what anyone wants. It just so happens, that is the only option we have to stay alive and fight another day.


How To Prioritize Your Money Needs

Written by Toi Williams on Nov 30th, 2011 | Filed under: mindset

Most of us can’t tackle all of our spending and saving needs at once.  We’re taught to maximize our retirement savings, create an emergency fund, pay off debts, and buy the right insurance while paying our bills, raising our kids, and trying to have a little bit of fun for ourselves.  Here’s what you need to know now to properly prioritize your spending and manage your money.

Pay Your Bills

If you can get a handle on your basic living expenses, your ability to manage all your other financial priorities will be greatly enhanced.  Try to limit your necessary expenses, which includes shelter, utilities, transportation, food, insurance, child care, and minimum loan payments, to less than 50% of your after-tax income.  If your necessary expenses are higher than this, you may want to consider trimming your costs by trimming your food bills, lowering your home’s thermostat, finding a cheaper place to live, or getting rid of an expensive car.

Create An Emergency Fund

Having an emergency fund allows you to pay for minor emergencies without adding to your credit card debt.  Set up automatic transfers from your checking account into a savings account and deposit any tax refunds or other windfall payments into the savings account until you have saved at least three months worth of expenses.  There’s a large psychological advantage to having an emergency fund as people that have them are much less worried that a small financial emergency would cause a financial hardship.

Pay Off Credit Card Debt

Credit card debt is one of the most dangerous types of debt because lenders can change rates and terms at any time, the interest rate is usually in the double digits, and high credit limits encourage you to rack up more debt than you can comfortably repay.  To eliminate this debt, target the debt with the highest interest rate first, paying as much as possible while paying the minimums on any other debts you may have.  Another method would be to tackle your smallest debt first to give yourself the psychological boost of completely paying off a credit card bill.


How Do I Make A Budget?

Written by Toi Williams on Nov 29th, 2011 | Filed under: Uncategorized

It is very important to make a budget so that you can take control of your finances and begin to plan financially for the future.  It is impossible to know how much you are spending unless you keep track of your finances and create a budget to make sure that you don’t spend more than you can afford.  Here are some simple tips for creating a budget that is simple to follow.

Start by listing all of your expenses and the amount that you spend on each expense each month.  The list should include necessary expenses that must be paid monthly and discretionary expenses that are more of a choice than an obligation.  This will give you a good picture of your spending habits, showing you where your money goes each month.

After you have made a list of all of your expenses, look for areas where you can trim your costs.  For example, if you have the deluxe cable package but are rarely ever home to watch television, you may want to consider downgrading to a basic cable package that costs less or getting rid of the cable package altogether and watching movies or online content for entertainment.  Most people can find multiple areas where costs can be reduced once they can see where their money is going.

Once you have decided on what expenses are necessary and which ones can be eliminated, it is time to create a spending plan.  The spending plan must be detailed to ensure that all of your bases are covered when it comes to spending.  List each of the expenses that are important to you and the amount that you should be spending in each category each month.  Be sure to include savings in your savings plan of at least 10% of your income to make sure that you have enough saved to take care of an emergency situation without having to use credit.

The list that you have just created should be your spending plan for your budget.  It may need to be tweaked a little bit in the first few months of using the budgeting plan as you find that your estimates of how much you spend are wrong or when forgotten expenses arise.  Outside of these small tweaks to the spending amounts or addition of new spending categories, you should try to stick to this budgeting plan as closely as possible.

Although it may be hard in the beginning, as you continue to follow the budget that you have created, you will find that it will become easier and easier to stick to the plan.  Diverting the recommended amount to savings will help your savings account grow quickly and ensure that you have money available for emergency expenses.  Creating a budget and sticking to it is a great way to monitor your spending and secure your financial future.


Cut Your Grocery Costs With These Tips

Written by Toi Williams on Nov 29th, 2011 | Filed under: saving

Household grocery expenses are typically a family’s second largest monthly expense after housing expenses.  The cost of food products and personal care items continues to increase year after year, taking more and more out of a family’s household budget.  There are a number of methods you can use to cut your grocery costs by a significant amount and using these tips can save you hundreds of dollars over the course of the year.

One of the simplest ways to reduce your grocery costs is to limit the amount of money that you are spending at the grocery store.  Decide on a budgeted amount to be spent before leaving for the store and stick to this amount once you are in the store.  While shopping, keep track of the amount the items in your cart cost with a piece of paper or a calculator.  Once your spending limit has been reached, it is time to head towards the checkout or remove items from your cart to create spending room for items that you need more.

Making a list before you go to the store will also help you keep your spending on groceries in check.  Grocery stores use advertising signs and displays to entice shoppers into buying additional items from the store so that the stores profits will increase.  Many of the subliminal buying cues employed by grocery stores can be resisted simply by making a list of the items that you actually need and sticking to this list while you are in the store.

Choosing the cheapest brand of the item that you need or buying brands that you have a coupon for can reduce your grocery costs by 30% or more.  In many grocery stores, the cheapest brand of an item available may change from month to month as different brands are put on sale.  Some people choose to try different brands when they are on sale while some others choose to stock up on the brand that they like the most when its cost is the lowest.  For most products, the taste difference between the brands will not be very dramatic and may taste very similar.


Debt Elimination In Several Simple Steps

Written by Toi Williams on Nov 28th, 2011 | Filed under: debt relief

Eliminating debt is a noble goal and is one that will benefit you greatly in the future.  The hardest part of eliminating your debt is sticking to the plan that you create and limiting your spending for long enough to pay off your debts.  Here are some simple steps that can help you stay on track and eliminate your debt in a reasonable amount of time.

Acknowledge The Problem

The first step in getting out of debt is convincing yourself that you have a debt problem.  The problem must be seen as urgent for you to maintain your focus and have the willpower to eliminate your debt completely.  Face the problem head on and make a plan for eliminating your debt as quickly as possible.

Stop Borrowing

You will never be able to eliminate your debt if you keep adding to it.  Put the credit cards away and make it your goal to live completely on what you bring home in your paycheck.  This will mean that you will not be able to buy everything you want as easily as before, but keep in mind that every dollar not spent is a dollar that can be put towards paying down your debt.

Reduce Expenses

To have more money to put towards paying down your debt, actively look for ways to reduce your expenses.  Lower your energy costs by adjusting the temperature and limiting your use of electricity.  Save money by taking your lunch to work instead of buying food at fast food restaurants.  There are hundreds of ways to reduce your everyday expenses and each dollar saved will go a long way when used to repay debt.

Increase Your Income

If you are deeply in debt, you may want to consider ways of increasing your income to be able to pay off your debts quicker.  There are many different ways to earn additional money outside of a traditional employment positions and the one that you choose should reflect an interest or a hobby you have to make it more enjoyable.  Some people find that using their spare time to earn additional money to put towards their debts helps them pay off their debts much faster than they would have been able to accomplish through spending cuts alone.


Need To Make Some Extra Money?

Written by Toi Williams on Nov 28th, 2011 | Filed under: mindset

Let’s face it; almost everyone could use some extra money these days.  Luckily, there are literally thousands of ways to make extra money in your spare time.  Finding the best way to make extra money will depend on a number of different factors, including your interests, your schedule, and the amount of time that you will have available to dedicate to making money.  Here are some of the most common methods used to earn additional money during your spare time.

Capitalize On Your Talents

If you have a talent, put it to work for you earning you money.  People that know how to play the guitar can earn a substantial amount of cash playing gigs or teaching others how to pay.  People that are good at creating craft products may find a market for the things that they make in their neighborhood.  There are many different ways that a talent can be used to make money, so be creative and explore all of your options.

Find A Part Time Job Online

Many online companies are looking for people that can perform specific tasks for the company over the internet for a nominal fee.  There are some companies that need people to write product descriptions for their products, other companies that need someone to proofread their documents, and a multitude of others that would rather pay someone as a contractor than hire someone with the company to do the job.  You can choose the projects you accept and the number of hours you are willing to work to ensure that the part time job will not interfere with your primary employment.

Become A Tutor

If you are strong in a particular subject or enjoy teaching children, you may want to consider earning some extra money as a tutor.  Nearly every neighborhood has a group of children that needs help grasping specific concepts and parents willing to pay by the hour for you to help their children learn the things they are having difficulty with.  Be aware that you may need to prove your proficiency in the subject that you choose to be a tutor for and that parents may withdraw their children from tutoring at any time depending on their situation and their perception of whether you are tutoring the children properly.


Keeping The Costs Down On A Checking Account

Written by Toi Williams on Nov 22nd, 2011 | Filed under: saving

Due to the changes being implemented across the board to banking institutions around the nation, many large banks are trying to come up with new ways to replace the revenue lost to the new rules.  Many of these banks are raising existing fees and adding new fees to checking accounts to recoup these lost profits.  There are several methods that can be used to keep the costs down on your checking account and using these methods can save you hundreds of dollars on bank fees each year.

Get Your Account Fees Waived

Many banks charge account fees or servicing fees for their checking accounts that are typically charged to the account monthly with the amount immediately deducted from the balance of the checking account.  To avoid these fees, you must meet certain conditions that are determined by the bank, such as having a balance above the minimum amount at all times, using online banking, or having payments direct deposited to the account.  Before opening a checking account, be sure that you can perform the actions to get your fees waived so that you can pay less or nothing at all for your checking account.

Avoid ATM Fees

Most banks penalize you for using another company’s ATM and in many cases, you must pay a fee to both your bank and the bank that owns the ATM.  These fees vary from company to company, so the fee that you are charged each time you use an out of network ATM can change with each occurrence.  To avoid these fees, open your account with a company that has ATMs conveniently located near your home or workplace or with a bank that allows you to use other bank’s ATMs for free.

Avoid Overdrafts

Causing an overdraft on your checking account can cause a cascade of expensive fees that quickly drain the money from your account.  The first fee will be an overdraft fee that can be as much as $35 for every transaction that results in a negative balance for the account.  If the negative balance is not repaid quickly, many banks also charge a negative balance fee of between $5 and $10 per day.  It is important to avoid causing overdrafts in your checking account at all costs, so check the balance of your account when it is getting low to ensure you are not spending more than your account contains.


Controlling Home Loan Costs Can Save You Thousands

Written by Toi Williams on Nov 22nd, 2011 | Filed under: loans

Home loans are very expensive and in most cases, is the most expensive loan that a person will obtain in their lifetime.  Most people would like to pay only what they absolutely have to for their home loan, and not a penny more, so that they can use the money saved for other expenses.  There are several different ways to control some of the costs of a home loan and taking these steps can save you thousands of dollars over the life of the loan.

Don’t Be Afraid To Negotiate

Many people do not know that they can negotiate the rates, closing costs, and other terms of their home loan before closing and save themselves thousands of dollars on the cost of the loan.  It is important to get all of the cost information available before beginning the negotiation process so that you are armed with the correct information before you begin to speak.  The quote that you receive from the lender is not the same quote that is offered to everyone so negotiating to get the best deal available may convince the lender to give you a better price on the loan.

Stick To Fixed Rate Loans

Adjustable rate home loans may seem like an attractive option because the initial monthly cost may be lower, but these loans have a tendency to reset to a higher rate which can throw off your budget and cause a financial hardship that could last for years.  A fixed rate loan gives you the stability of knowing that your payments will not change during the life of the loan and allows you to budget effectively for the expense of paying off the loan in the time period chosen.  Shop around for fixed rate loans from different lenders and compare the quotes to see which lenders are offering the best deals on these loans.

Less Documentation Means Higher Costs

During the recent real estate boom, many lenders required little or no documentation of income or assets before they approved an application for a home loan.  With the implosion of the housing market, the documentation rules have become more stringent at many lenders, but there are still some that require little proof that you will be able to repay the loan that they are extending to you.  Be aware that most loans that require little documentation are charging higher interest rates and loan fees than what is available from lenders that require the documentation of income or assets before approving the loan application.


Types of Loans

Written by admin on Nov 21st, 2011 | Filed under: debt relief

Anyone looking for a loan needs to understand the types of loans available. Understanding the options makes it easier to find something that suits personal needs. Numerous loans are available to match common needs consumers might have.

Mortgage Loans:

A home loan is one of the most common types available for many borrowers. Banks offer loans to those who are looking for a home based on credit score, the amount of money made each year and current debts like credit cards consumers have. Based on the amount banks determine a customer might afford, the maximum amount is provided. Mortgages are typically long term loans of around 25 years that spread the payments over the time period to make buying a house affordable.

Personal Loans:

Personal loans are the type designed for any type of personal need. Lenders provide funds to meet any need, even if borrowers are uncomfortable giving the details of the needs. The loan is often a higher interest than other types of loans, but it also does not have a specific purpose. Repayment times will vary between loans.

Holiday Loans:

Going on holiday during vacation time from work is a common way to relax and enjoy the time off. Unfortunately, it might also require a little more funding than consumers have available at the time. A holiday loan is designed to help pay for that getaway. Borrowers can set the repayment terms, so it is possible to draw out the payments or pay it off quickly as determined by personal financial ability or preferences.

Car Loans:

Buying a vehicle often requires taking out a loan, even if the car is used. Depending on the price of the vehicle, the loan might be a large or small amount. In many cases, the loan is a medium length of around five years.

Bridging Loans:

A bridging loan is designed for those who are in the middle of selling a property. It is money to get buy until the sale goes through and is usually a short term loan. Borrowers generally pay back the loan as soon as the sale is completed and the proceeds from the sale are in hand.

Loans are widely variable based on personal needs. Banks and lenders work around the needs of customers to come up with different types of loans designed for those specific necessities or wants. Borrowers can find something to suit their wants and needs with a little searching.


Common Money Mistakes And How To Avoid Them

Written by Toi Williams on Nov 13th, 2011 | Filed under: mindset

There are many common mistakes that people make when managing their money and nearly everyone is affected by one or more of these mistakes on a regular basis.  It is important to keep these mistakes to a minimum if you are interested in building wealth and securing your financial future.  Here are some of the most common mistakes that people make with their money and the best ways to avoid them.

Buying Impulse Items On Credit

If you use your credit card to make an impulse purchase and do not pay off the balance of that credit card before the grace period is up, you will be paying interest on that purchase for months, or possibly years, after the purchase has been made.  Spending your hard-earned money on items that you do not need is bad enough, but paying hundreds of dollars in interest for the purchase over time is much worse.  It is important to only charge the amount that you can afford to pay off each month to limit interest charges and to limit purchases to the items that you truly need.

Taking On Too Much Debt

Taking on too much debt can quickly land you in financial trouble.  Every year, millions of individuals find themselves struggling to pay their expenses, their loans, and their credit card bills because they have taken on too much debt.  The warning signs that you may have taken on too much debt are deliberately paying bills late, borrowing money to pay existing loans, and putting off medical appointments and other necessary expenses because you are short of money.  If any of these warning signs are present, you need to make paying down your debt as quickly as possible a priority so that you can get out of debt safely with your credit score intact.

Paying Your Bills Late

Paying your bills late can cause your creditors to report the late payments to the credit reporting bureaus for inclusion on your credit report, which will decrease your credit score.  Your credit score can affect many different areas of your life, including whether you are approved for a home loan or an apartment, whether you qualify for a particular employment position, the interest rate you are charged for loans, and the amount that you pay for insurance.  It is important to keep your credit record as clear of negative information as possible and the best way to do this is to pay all of your bills on time.