Posts tagged: debts

Finances: Avoid Sorrow And Plan For Tomorrow

money planningFinances are a tough thing to manage. Even if you’re earning a high-figure salary, poor money-management can lead to a very sparse bank account. It’s not so much about the level of your income but what you do with that income. Even on a minimum wage salary, you can make those earnings go a very long way if you screw on your financial head and start to spend or save your money in sensible ways. It’s all about taking a look at all the necessary costs you face in life and then making smart decisions as to what you do with the rest of your money.

Of course, whilst you might be sailing on by smoothly at the moment, you have to think about the future. Earning a lot of money and spending it all is fine today because you’ll get another paycheck in a week. However, you need to start planning ahead for the day on which you retire because very few people want to work for the entirety of their lives. We’ll get onto that in more detail later, as we will with all the other points touched upon briefly in this introduction. If you want to avoid sorrow and start to plan for tomorrow then these sound nuggets of financial wisdom should help you on your way.

Organize your finances.

First of all, you need to get your house in order. “That’s why I clicked on this article,” you say. Fair enough. If you need a little guidance then you should start by making a budget for the month; you can do one weekly but planning for the month is always a nice place to start ( bills such as rent are often faced on a month-by-month basis). Write down how much you earn in a month. If you’re self-employed then write down an average and alter the budget on a monthly basis depending on whether your situation changes. Either way, you’ll end up returning to your budget frequently to make changes when things change in your life; whether you change energy providers, move house, reduce your petrol costs, and so on.

The most important thing is that you estimate how much your necessities cost; rent, food, utilities, everything else we’ve mentioned and anything else you can think of. Once you’ve added up the sum of these things, you’ll know how much money you have to set aside for necessities and how much disposable income you have left over. Don’t exceed this figure and you’ll never end up in debt. It’s that simple. Just don’t spend beyond your means. Cut down on expenses by using less energy around the house or cycling to work instead of wasting money on petrol.

Avoid debt.

Of course, continuing from the point above, if you’ve overspent in the past and had to borrow money to make ends meet then you should dedicate all available earnings to debt repayments; it’s important to pay off your debts in life as soon as possible in order to improve your credit score. Even if you don’t overspend, we all have to borrow money at some point (perhaps it’ll be for a car or a house). The point is that you shouldn’t borrow money to fund bad habits such as poor money-management, excessive shopping, or gambling. Track your expenditures so that you live within your means and your bank account will grow each month, even if only marginally. In terms of the future, you’ll thank yourself tomorrow for doing more to manage your money today. We’ll get onto smart ways to use your “excess income” throughout this article.

Think about your retirement.

It’s so important to plan ahead for your retirement. If you ended up on this article then this was probably already on your mind. You might be worried that you’re not earning enough from your job to provide for you and your family once you stop working. Perhaps your pension plan isn’t looking very good. It’s good to think about these things today because there’s always time to improve your situation before you retire. You might want to look into power of attorney solicitors who can act on your behalf if you’re thinking about a future in which you might not have the mental or physical capacity to manage your personal, business, or financial affairs.

Your retired years shouldn’t be filled with doom and gloom by any means but it’s smart to start thinking about tomorrow. You can make rational decisions regarding your finances today but you have to think about your later years. Will your family be well looked after? Do you want to authorize those close to you to make decisions for you if you no longer can for yourself? Sort out these things today and you won’t have to spend your retirement worrying about money or other things when you should be relaxing and enjoying life.

Get an advisor or an accountant.

Of course, you could go one step further than the suggestion in the point above. Even if you’re nowhere near retirement age yet, why wait until you’re older to start getting good financial advice? As explained throughout this article, you need to start taking action today to protect your finances for tomorrow, so it makes sense to get somebody to start helping you today as well. A financial advisor could help you out if you’re struggling to get your head around proper financial management, even with the advice given so far in this article.

It’s all very well to understand the concept of managing your money but life can get hectic and overwhelming very quickly. An advisor could take a load off your shoulders by teaching you how to better look after your money (and an accountant could help you file tax returns if you need other forms of financial aid). Better yet, there’s great return on your investment here; pay an advisor to help you and they’ll show you smart ways to invest your savings to make more money. Remember, this is in their interests because they’re getting paid to help you; they want you to do well financially. You’ll end up more than making back the money you’ve spent.

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The Golden Rules of Taking Out a Loan

loan timeIf the world was perfect for everyone, no one would ever need to borrow any money. Unfortunately, things just don’t work like that yet – and as long as we have a banking system, it’s unlikely to change. The reality is that we have to borrow money to lead the lives we want. However, there are limits, and many people are guilty of stepping over the mark.

The truth is there are good debts and bad debts, as you probably already know. And even if you are in good enough shape to take out the former, after a few missed payments or a challenging life event, it can quickly turn into the latter.

When it comes to personal loans, the temptation is strong enough to turn heads of even people with the strongest financial constitutions. Advertising is everywhere, and almost all speak to your aspirations and the life you could have – if only you would borrow a few thousand dollars or more.

To make sure you don’t fall into a trap, there are a few things you need to consider when taking out a loan. These golden rules should be set in stone, as when you step outside of them, it’s often the first step down a slippery slope to unaffordable, bad debts. Let’s take a look at everything you need to know.

Always shop around

It doesn’t matter whether you are borrowing money to buy a car, a home, or just pay for something quickly with cash loans, always shop around and look for the best deal possible. You should compare percentage rates for interest, but also check the length of the loan. Sometimes, cheaper interest rates over a longer time period will result in a higher overall cost.

Always check your credit score.

Another thing to consider before applying for a loan is your credit rating. When you make an application and get turned down, your credit score takes a hit. Not only that, however, but when you are attracted by a fantastic looking deal that you see in an advertisement, you have to remember that these deals are only offered to consumers with the best credit scores. If your rating is anything less than perfect, you won’t be offered it, and instead, have to put up with a much more expensive deal than you applied for in the first place. A lot of people fall for this, so ensure your credit rating is up to scratch before you apply.

Always read the small print.

The terms and conditions on loans are notoriously detailed, and the vast majority of borrowers never pay them a blind bit of notice. It’s no surprise – who has time to read the reams of paper that often come with your application form? However, you should make time. Banks and lenders of all varieties depend on your ignorance and lack of time, and will often include some pretty dire conditions that you need to meet to qualify for any of the supposed advantages. Another thing to watch out for is early repayment charges – you should always include them in the overall cost of the loan when you do your initial sums. Ideally, all loans would be free to pay off whenever you want, but the reality is somewhat different.

Consider insurance

Loan insurance gets a bad rep, because of a lot of malpractice in the past. However, it’s a valuable protection if you can find the right deal. For a few dollars a month you can protect yourself in the event you suffer an injury at work or get ill and can’t earn any money to pay the loan back. Again, shop around – there are varying rates from all kinds of lenders and insurance companies, and you will often find it is more expensive to buy insurance from the company offering the loan.

Compare with a credit card.

Another major misconception is that personal loans always have better deals than credit cards. To be fair, this used to be the case, back in the day when credit cards were only for the very wealthy, but times have changed. When you consider the long 0% deals you get on credit cards – some of which go for around 18 months at the moment – they often compare very favorably to a personal loan at, say, 6%. And if you can pay off the card before those 18 months are complete, it won’t actually cost you a penny.

Pro tip: borrow more money

As a rule, you should never borrow more than you can pay back. However, when you consider that banks and lenders will offer lower interest rates for higher loans, wouldn’t it make sense to get the better deal? In short, of course, it would, but you have to have a lot of self-discipline. You could borrow a larger amount of money, only spend what you need, and then pay it back over time using a combination of your personal repayments and the surplus. Over the course of a 4-5 year loan, this could actually save you a four-figure sum, so it’s well worth investigating – if you have the discipline, of course.

Be careful with secured loans.

Secured loans will always give you a fantastic sounding deal. But there is a reason – it’s because you have capital at stake. When a loan is secured against your possessions, lenders tend to sleep easily, content in the knowledge that if you fail to pay, they get your house, car, or treasured objects. Yes, the deals can be tempting. But unless you are 100% sure that you will be able to pay them back. Unsecured loans may attract higher interest charges, but ultimately if you have a problem paying them, there is little a lender can actually do.

Always stake the shortest path.

Finally, whenever you take out a loan, the cheapest option will always be to pay it back as quick as possible. It’s down to your personal circumstances, of course, but if your idea of the perfect loan is that it ends up costing you less, it’s the only way to go.

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There’s a Difference Between Good and Bad Debt

money debtsMost people contribute the word debt to something negative. If you’re in debt, it’s usually because you’re bad at managing your money and you’ve somehow ended up in the negative. You probably had to resort to loans to pay for something important, and that set you on a slippery slope that has plunged you into debt.

At least, that’s the stigma against people who take out loans and say they’re in debt.

Fortunately, it’s not as bleak as it sounds. There is such a thing as good debt despite what many people say. Before you start borrowing money, it’s a good idea to understand the concepts of good and bad debt because it could change your entire opinion on loans. In fact, you could go as far to say that being in debt is actually a positive thing if used correctly. But before you go apply for a personal loan and get yourself in trouble for misunderstanding this idea, here is some advice.

What is Good Debt?

Good debts can be characterised by good and productive uses of the money. For instance, if your car breaks down and you need to fix it so you can ferry your kids to school, then it can be considered a long-term investment for your future. Another example is taking out a loan in order to start a business. These are positive uses for your money because they serve as investments, which is the general idea that your borrowing should follow.

Thanks to sources like cashloans.co, it’s possible to look up all the different types of loans you can take out so you can fit the interest rates and terms to your needs. As long as you’re able to pay it back in a reasonable amount of time (or even make earlier repayments) there’s almost no reason not to take out a loan as long as it’s put towards something useful that can help you. Other good examples of good debt are student loans, mortgages and paying for child services.

What is Bad Debt?

Bad debt covers anything that is used to pay for your personal enjoyment and luxury. A week-long holiday to China paid with a personal loan? Bad debt. Purchasing a luxury new television that you didn’t really need? Yet another example of bad debt. Borrowing money to pay back other loans? That’s probably the worst thing you could do.

Bad debt is characterised by bad decisions. If you struggle to pay all of your bills at the end of the month, then you might be living a lifestyle that you really can’t afford. Perhaps you’re subscribed to too many entertainment services or maybe you eat out far too much. Good financial management will eliminate all sources of bad debt, but you need to be self-aware that you’re overspending.

If you’re still unsure if your reasons for getting a loan is good or bad, then this article from nasdaq.com has a couple of examples that you could follow. In short, make sure you take out a loan for a good reason, not a personal one for your own enjoyment.

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The Best Financial Advice For College Students

money for studentsDespite all their partying and endless nights of fun, college kids actually have it rough – financially speaking, anyway. It’s a tough period as students have a lot to pay for, and not a lot of money to pay for these things.

As such, if you’re a student, here’s some of the best financial advice you’ll ever read:

Make As Much Money As You Can

The grind never stops – or at least it shouldn’t stop – during your college years. Any opportunity you have to make money, take it! You will need money now more than any other time in your life. If you’re earning while in college, you can start paying off some of your student loan debt while you study. This lowers your interest rates and means you have less to pay when you graduate. It’s also mentioned on businessinsider.com that the earlier you start to pay, the faster you can pay your debt off. Plus, it’s always handy to have some disposable income for college essentials.

Find a part-time job in the town near where you’re attending college, or look for jobs around campus. Some final year students will often pay other students to take part in research projects or to be test subjects for them. The way I see it, this is basically free money for a student, so you should do it!

Raise Your Credit Score

College is usually a good indicator that life is getting serious and it’s time to do some adult stuff. One of those things is raising your credit score. Do this during college, and you can leave with a very good score that opens your world to many possibilities.

You can raise your score in various ways, but there are two main ways a college student can do this. The first is to use a credit card responsibly to build up your creditworthiness. It’s mentioned on studentcredit.cards that some companies offer credit cards with low-interest rates specially for students. The second thing you can do is avoid going into your overdraft and taking ages to get out of it. This doesn’t make you seem very creditworthy, and your score won’t grow.

Learn How To Budget

I’m going to go out on a limb here and guess that most people haven’t budgeted before they go to college. You don’t really have any need to before then, your parents tend to take care of everything. Now, you’re on your own, and you have expenses to pay, and you want a social life too.

So, you have to learn to budget your money. Do the math, work out how much you have, how much you need to spend, and how much you’ve got left over. The money you need to spend is essential payments you know you have to make, such as your tuition fees and accommodation costs. What you have left over will be split up into food money, toiletry money, and so on. Stick to your budget, and you will make it through college without much financial trouble.

Don’t become one of the many college students that manage their money badly. Work on improving your financial life while you study, as well as setting yourself up for a less stressful financial life after college.

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Your Flexible Friend? Four Things That You Should Know Before Getting a Credit Card

before getting a credit cardIf you’re thinking about getting your first ever credit card, then it may just seem like another way of spending money and making purchases. But in reality, and something that is often forgotten about, it can be much, much more. If you use a credit card wisely, it can help to give your credit score a boost. If you weren’t aware of that, though, then it could damage your credit score without you even realizing it. Experian.com explains that a credit score can be an influence when it comes to things like mortgages, loans, and even a new cell phone contract, you want to make sure that your score is a positive one.

So, what are the other things you should know before getting yourself a credit card? Here are some things to be thinking about or finding out the answer to before you commit to a credit card.

You Should Know What a Credit Card Is

It might silly, but you’d be surprised at just how many people think that a credit card is like a debit card. In the ways you physically use it, they are basically the same. But in terms of money, they couldn’t be more different. A credit card is like a small loan essentially, that you have been approved for. But you have to pay it off each month. Otherwise, it costs you more than it would have been if you’d used your debit card.

You Should Know Why You Want a Credit Card

If you’re looking to get a credit card, simply because you find yourself in your overdraft each month, then that is not the wisest of reasons to get one. If you’re looking to get it to help build a credit score and to practice discipline with money, then that will stand you in much greater stead.

You Should Know How To Budget

Again, in order to make your credit card work for you, then it is a good idea that you know how to budget. A credit card can be helpful when you don’t have money right now, but you have some coming in. You need to know your finances well, as well as being able to budget, to really make your card work for you. If not, it can spiral out of control, and the next thing you know, you could be looking at a site like consolidate.loan in order to help you to consolidate your credit card debt. So budget, know your finances and pay off your card as soon as you have the money to do so.

You Should Know About Interest Rates

If you are getting a credit card, then you need to know all about interest rates. What interest rate does the card you have, or are looking at, have? If you don’t pay off your card in full each month, then what will it mean for your finances? How much will it end up costing? A credit card only works for you, if you don’t have to pay any interest.

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