Archive for October, 2016

How to Protect Yourself From Get Rich Quick Schemes

by admin .

How do you differentiate between a legitimate money making idea and a “get rich scheme”? There are indicators that you can use to help you do some homework. You will need to be a detective on this one as there are no short cuts.

Helpful Methods of Investigation
There are four ways I have found of differentiating sales rhetoric from the real deal. The first way is to thoroughly research details of the offer for consistency. The second method is through examining the psychology of how an idea is pitched to you. The third way involves tried and true “laws of finance” that rarely get broken and if the sales pitch breaks one of these laws, it is a sign that you are likely being reamed. The last method is using your instinct or gut feel. If the sales pitch is well put together but something smells wrong, it is likely a signal to get out while you can. The first three methods may allow you to confirm what the rotten smell is, but sometimes you need to say no on faith before finding this out. A powerful check and balance is to use all of the methods together.

Imperfect Methods of Investigation
There are also three methods that I found may not work unless the scheme is old, brazen or preying specifically on the ignorant. One of these methods is checking if people are licensed. A license is merely access to a market or product, it does not mean that integrity is guaranteed. Even if ethics is emphasized to get the license, it is very difficult to enforce. There is a minimum level of compliance that is ensured with a license, but it is not full protection. A secondary method is checking reviews or associations like those for accountants, lawyers and the like. These groups serve a purpose, but they may be skewed or late in finding out if misleading activity is going on. There are instances when people have been disbarred from an association which is a red flag, but this only happens after a lengthy investigation and conviction. In the meantime, criminal activity may continue. A third way that may not work is measuring the scheme by its popularity. Whistle blowers are not popular and neither is the truth. People who question things are usually insulted, persecuted and ridiculed because they are rocking the boat. There are legitimate things that are bought by most people, but the same holds true for scams. If you need examples in the financial world of popular scams, there are plenty: Bre-X, Worldcom, Enron, Bernie Madoff and the sub-prime mortgage debacle to name a few. If you trust other people who are buying a product, it may tilt the odds in your favour, but trust and ethics are huge indicators which you must be sure of before you get involved in financial schemes. It is a good idea to read or watch movies produced on the above scams to learn how popularity can obscure the truth. Note that all of these fiascos were done by insiders who are licensed and members of their associations in good standing until the scams were revealed.

Research details for consistency
Admittedly, most people do not know how to do this, otherwise they would be able to handle finances themselves and not listen to get rich quick ideas. There are exceptions to this rule for people who don’t have time, don’t want to piece components together or want to buy the dream of not working hard, allowing money to manage itself or somehow finding a silver bullet for their financial needs.

Collect the Facts
When you are given a sales pitch, write down the key references, numbers, statistics or concepts that they are selling you. Double check them at home versus third party sources for those same details. If you notice that numbers are not matching, find out why. Many schemes manipulate numbers to market an idea. Contrary to what people think, numbers can lie depending on how they are presented. This can be done by changing relevant time periods, how numbers are calculated, or which numbers are presented (averages, totals, sums, percentages, etc.) Marketers tend to use averages that are well known, but they may not apply to you! There are also a number of conditions that could change the numbers, the famous “it depends” idea. Know which assumptions are being used and whether you can understand how they got their numbers. If you are not given time to check anything, this is a red flag. You will likely have to do this checking at home without the pressure of the sales pitch looming over you.

Legitimizing Their Idea
Schemers want to make themselves legitimate by quoting successful investors. Do the research on whether these successful investors actually would by this product. In a lot of cases, these quotations are taken out of context, and the conditions and what-if scenarios the successful investor was talking about are not revealed. Remember that you cannot do what a billionaire can do. You don’t have the connections or clout to obtain first hand knowledge of an idea. This concept makes a big difference and should not be ignored. You will likely not get the same deals and returns as this investor for this reason.

Follow the Money
Beware of ideas where you are using “other people’s money” There is a cost to doing this. Borrowing money comes with interest and must be paid back relatively quickly to be profitable. If the investment you are putting money into does not work, you will have to return the borrowed money or take a loss and pay money you do not have back to someone. If it is a multi level marketing idea and you are getting referrals, your reputation is at stake. Should the scheme implode, you will be blamed. You would have to follow the money to see if the whole cycle of money flow actually is profitable.

Scam artists tend to utilize investment ideas that are “hot” or popular because they have good track records. Most successful investors actually buy when nobody wants a given investment because it is cheap or has issues. Warren Buffett is a known contrarian as an example. If what they are proposing is hot like flipping real estate, day trading, options on technology companies, small mining shares in Indonesia, leveraged US home purchasing etc., you need to find out the details to see what is really going on. None of these fads lasted forever, although people made a lot of money over a certain period of time.

Psychology of the Sales Pitch
You need to ask questions and uncover inconsistencies in what is being told to you. Most of these schemes have some truth and legitimacy to them, but they start preying on people’s emotions and extrapolating the truth to distort what you are really getting into. “You don’t need to know how it works” is a common mantra but if you want to protect yourself, you have to know how it works!

Feelings of Lack
The hallmark of a good sales pitch is making you feel ugly, stupid, lazy or defective in some way. This lack of something is communicated repeatedly so these negative emotions dominate your ability to reason. This effect is accomplished by repeating these same negative ideas over and over again until you are essentially “brainwashed”.

Many schemes prey on people who are “hungry”, “desperate”, “ignorant” and who want quick answers. They do not want you to research and find out technical details. The devil is in the details and the truth can be exposed by finding issues in the details.

Common Complaints
They tend to manipulate common complaints people have such as: “Banks are evil. I hate paying taxes. I am poor. The government is bad, I work hard and all for nothing”, as well as how easy life can be: “You can make all kinds of money without work, risk or worry and you don’t need to know anything and it will happen quickly and easily.” These manipulations are designed to feed on the lack mentality to make you feel like a failure and open your mind to this new idea that is being pitched to you. Another point to keep in mind is that you may hate bank fees or paying taxes, but after the sales pitch is done, you may still be paying taxes and bank fees. You will just feel like it doesn’t matter because you have bought this idea and these truths are not in your mind any more. Researching the details will uncover some of the inconsistencies and allow you to see through using these common gripes to manipulate you.

Truth Mixed With Lies
Every good lie is a truth that has been twisted in some way. Because part of the truth is there, you assume that the rest of it is true. The idea may start out with facts, and then somewhere along the way, you will get diverted into a scam. An example of this is that “this account is tax free” but it depends on many conditions that they do not tell you. There is such a thing as a tax free account, but you need these 3 conditions and it only happens in this situation. If you are going into a deal blind, you may be stuck with issues you did not plan on getting into. The research exposes these half truths but unless you see through the scam, they will not be evident right away.

No Time to Think
Good marketers do not give you time to think. They want you to commit quickly before you can do your homework and verify what they are saying. Take the time that you need, sales people like to close deals right away because the longer it takes, the less likely you would fall for a scam. Salespeople also keep talking a lot because quiet allows people to take information in and the mind works on processing it. This may lead to questioning the idea so this has to be silenced quickly to keep the scam going. If the presenter wants you to agree to an idea without necessarily giving you time to dispute it or process it, this is another form of coercion. Good marketers will measure the mood of the crowd and if they see skepticism, they will continue feeding this negativity until they see the buy in from people. Pay attention to who is around you and see what you can pick up in terms of emotions.

The gist of sensible ideas should be explained in 5 minutes or less. If the presenter is droning on about how wonderful this thing is, how successful you will be etc. they are using propaganda to brainwash you into agreement so that you forget to use your discernment. Another thing that will happen is that they will keep repeating nebulous ideas over and over again that charge up your emotions but do not really have any substance in terms of solutions. If you are felling emotional, it is harder to use reason. This is exactly what marketers want, emotional decisions. Feel with your gut, but let reason have its say as well.

Ask why you have never heard of this before? They may tell you something like “it is secret”, or “people are stupid” or whatever. There is some truth that most people do not take risks, but ask them why. Once more, the details will reveal why nobody has heard of it. It may not be true, or is it a known scam.

Many schemes will hide behind complexity and minimize risks to make it seem like things will never be lost. The excuses given when you ask how it works may sound like “it is too complicated”, “you don’t need to know” or they try to blow you away with jargon and technical terms to intimidate you and make you feel dumb so you do not ask questions any more. You must understand what you are buying otherwise you are open to manipulation. If it is not being explained, this is another red flag.

The “Laws” of Finance
There are some basic rules of finance that you must remember. If one of these laws is broken, make sure you understand what the reasons are.

1. Buy what you understand. The first rule to remember is “buy what you understand”. If you are introduced to something and you are not familiar with what it is, seek to find out.

2. There is risk or loss possible in every investment or venture, knowing what it is can give you a better handle on whether the deal is worthwhile or not. The trick is to be comfortable with the risks and tilt the odds in your favour. Telling people that you can’t lose money is misleading. Yes, you can put money into a bank account and it is relatively safe, but this is not something that scam artists tend to sell you.

3. Taxes are a given. There are ways of minimizing, deferring and reducing taxes, but if you hear a claim that this investment is tax free for life, start asking questions. Even complicated vehicles like trust accounts or offshore accounts have their risks and should not be ignored. Tax codes are always changing. Today’s scam could be tomorrow’s audit complete with tax penalties if the rules change and you are not aware. You are liable for any changes in your tax situation, not your accountant or the scam artist. Even if the idea is tax free, ask about costs and method of implementation. These costs may be more than the taxes saved, effectively wasting your time and getting you into unnecessary complexity.

4. There is no free lunch. You may pay later of through different means, but there is always a cost. Knowing what it is upfront is a good idea.

5. Timing is important. Whatever the scheme is, pay attention to the time at which it is being presented to you and when the evidence was gathered. If this idea is really worth it, you will be able to test it over a long time period and see how it fares in different markets. If the scheme does not make sense over different periods of time, you will understand the weaknesses better.

6. Nothing lasts forever, you can buy and hold but eventually even this strategy may not work in a huge market disruption.

7. Making money takes time and patience. People who build empires need to do it over time and they typically fail numerous times before making money. It is not easy or fast. Read books by successful entrepreneurs, traders, business moguls and even CEOs to get an idea what they had to do to make real money.

8. Follow the Money, keep track of how it flows. It is borrowed? Is it savings from somewhere else? Is it selling people stuff? Is it based on referrals? Whatever it is, know how the money flows and what impacts it. This is one of the ways to find scams. Ask yourself if you would be successful as a salesperson, landlord, day trader or whatever. If you are skilled at doing these things, you can likely sell anything, trade anything, or refer people for anything, maybe there is a better way to use your skills.

9. Finance is essentially a zero sum game. There are winners and there are losers. Growth and wealth will appreciate slowly over time and there are new inventions that will create wealth, but these take time and patience and are not “get rich quick” in nature. If you are winning, ask who the losers are. If it is not obvious, it is likely your customers and maybe you when the scheme implodes.

When Something Smells Wrong
Pay attention to your instinct. If it smells bad but you are not sure why, do not ignore this! You may find out over time but your instinct may save you from a lot of wasted time and effort. Note that your gut is the small voice of instinct that comes quietly and speaks softly to you. It is not the siren call of greed, anger, resentment or other negative emotions that propaganda may make you feel during presentations. Your gut works best when it is quiet and your mind is grounded and calm. It is hard to get proper messages in a crowded sales presentation or noisy fast paced environment. Time to think or feel in this case is the enemy of the scam artist. You will have to create your own time and space to see what you really feel. Sleeping on a decision is also helpful because it forces this quiet time and allows things to enter your mind which would not happen in the spur of the moment.

Using all of the methods as well as any ideas that you have will help you to steer clear of a lot of heartache and keep your hard earned money. There is a difference between being a risk taker and entrepreneur and being taken. The more you learn the difference between these two positions, the more successful you will be.

Wealth Creation – Providing Your Basic Knowledge and Details

by admin .

Exactly what conducts being actually wealthy mean to you? Certain individuals would like to presume that being wealthy is the option of having the ability to take your dream getaway at a moment’s notification or the assurance that if anything undesirable does happen to you, your family may nonetheless have a roof over their heads and money in the bank.

Every single of us may possess various analyses of being rich and what is needed for wealth building but all of us often agree on the same thing and that is being definitely wealthy indicates having excess money, and lots of extra money that is not planned for some other specific use.

This brings us to the highest significant inquiry, exactly how is wealth creation done? Is really it remotely possible to become wealthy by working for another person or do you actually need to start out your own company and sustain all the risks that come with it?

Truth be told, it is about producing smart money alternatives, unimportant of what job you have. To get a closer look at your chances of getting rich, carry out an easy analysis on your income generators. What are the aspects in your life that can and are making you cash? Even though you are working for someone else, is your income able to cover all your required expenses and supply you with savings?

It had only become more successful if you have the capacity to recognize the strong suits of your budgets and how you are able to make the weak points of your financing even more powerful.

Take into consideration the probabilities of producing extra income through other income generators such as home rental, a second job , online business services or even catering services. Checking out all the possible income generators you have around you and discovering ways to guarantee that they are being really made complete use of is a very big step towards being successful.

As soon as you have developed your revenue generators, look at ways to successfully manage your costs in relation to these income generators. Does your earnings generator sustain any cost to you, be it regular monthly or an one time fee? In case you have acquired your necessary overheads for your income generator, you must recognize the approximate time preferred for the costs to get recovered. Knowing your spending details will be able to give you a clearer timespan for your approaching wealth creation.

Outside your income generators, make it a point to list out your costs so you will know the amount of you are spending on items that you prefer and items that you want. Much like getting a healthy budget, being rich also revolves around being smart about what to strike off your expense list.

The next tip that is essential in building your own wealth is the capacity to preserve your financial investments and eventually enhance these financial investments at an appropriate and beneficial time and cost to you. Investments are never risk totally free. But the method to being successful is in understanding which investments are capable to pose less risk or even if they possess a possibility of complete failure, what are the steps that will be needed to recover your losses.

You would need to look at investments that can supply you with maximum returns on money spent, even though it takes longer than others, this is normally much less unsafe than financial investments that include fast returns. The faster the returns normally mean the higher the risk for that distinct investment and greater threats of course decrease your possibilities.

Building advancement is typically one of the much less risky types of investment but often demands maintenance costs and a much longer period before you have the ability to make money from your investment and adding this to your balance. Boosting your investments must be done when your finances are able to cope with additional risks and not just because you have located an investment that you like.

Many individuals would like to inform you that being wealthy is all about difficult tricks and requires you to spend a bunch of money well before you have the capacity to see some gains and this may hold true in some small aspects, the actual facts about wealth creation include earning money, making the ideal choices when devoting money, increasing your investments and handling your threats.

Financial Tips For Newly Weds

by admin .

For a young couple, preparing for your wedding can be financially strenuous and life after the wedding day if not properly planned can be a dangerous. More so if the couple are not from financial buoyant families.

Have a budget, do not borrow to buy liabilities

Now that the party and celebrations of your wedding are over, it is time for reality of life after the wedding day to begin.

Here are a few tips to help you start off on a good footing:

1) Pay Off Debts: Sometimes it is possible that you have outstanding bills to settle with some vendors who offered services at your wedding. Make it your priority to pay off any outstanding debts. It is not a wise thing to start a family in debt. Off setting your debts helps you start off your new family on a clean financial slate.

2) Furnishing Your House: If you have not already furnished your house, it is wiser to start with the essentials (cooking gas, refrigerator, TV and sofa). If you earn a regular monthly income, you can approach vendors of these items for an installment payment agreement to purchase some of these items. Most stores will agree to this because they want patronage.

3) Have A Budget: You must form the habit of having a monthly family budget to cater for your monthly needs. Include your rent in your monthly budget. Do not wait until your yearly rent is due before saving towards it. This will put under undue financial pressure. Also include in your budget a percentage for charity (no matter how small). When you give to those in need, nature has a way of reciprocating when you are in need.

4) Have A Savings Culture: If you have not already imbibed a savings culture, now is the time to do so. As a couple, save towards major long term projects like purchasing a plot of land to build your own house. When you build your first house, build to accommodate tenants too so you can earn rental income which you can use for other investments like buying and developing another property.

5) Do Not Borrow To Buy Liabilities: If you have to borrow, then borrow only when you have to buy an asset that will further generate income. Do not borrow to buy a car, phone or clothes. Those are not assets. While a car is good for convenience in mobility and every family deserves to have one, it still requires maintenance and maintenance will cost money.

6) Be True To Yourself: It may sound old school but these days a lot of young people are living a lie. As a couple, you must understand that nobody really cares about how you lead your life. So do not go about trying to win the people’s approval. Stay focused on building a good family and stay true to yourself.

7) Have A Positive Outlook: Research has shown that those who keep a positive outlook in life are more likely to succeed. Always keep a positive outlook no matter the challenge you come across. challenges will make you stronger and wiser if you face the storm with optimism.

How Each Generation Makes Its Own Set Of Financial Mistakes

by admin .

As a financial planner, licensed real estate salesperson, business/ organization analyst, event planner, and financial, organizational, and personal consultant, specializing in planning, budgetary, marketing/ sales, and financial matters/ areas, it is not surprising that many of my informal conversations, end up, being about some financial topic. Last weekend, we had a nice dinner with friends, and the woman (who is a well respected, apparently successful professional) off handedly stated, she was a terrible business person. This surprised me, because she is knowledgeable, extremely intelligent, well known, has a large practice, etc. However, in retrospect, it should not have, because most people make a variety of financial/ money mistakes/ errors, and while, for some, it only slightly harms them, for others, might be somewhat devastating. Every generation seems to make its own set of financial mistakes.

1. 20’s – Playing it too safe
This is the decade when most people should be taking their biggest risks, because they generally have fewer responsibilities, have more time to reap the rewards/ benefits, and should be seeking growth in terms of their portfolio. However, the vast majority of these individuals, either don’t consider investments, at all, or behave fearfully, by remaining in the very limited comfort zone, of merely putting their money in the bank. Especially in these times, when interest rates are so low, this type of behavior does not even keep up with behavior, and they lose valuable years, when they could be creating the foundation for a solid financial portfolio.

2. 30’s – Comparing themselves to their parents, etc
Times have changed, and it is far more challenging today, to reach a comfortable standard of living, than it might have been, for some, in the past. It is a far more complicated economic world, with many more options, as well as far more challenges/ obstacles. This group will not reach their desired goals by trying to mirror the past, but rather by disciplining themselves, to create, develop, and implement a formal investment plan.

3. 40’s – Unprepared
We’ve all heard the expression, Not ready for prime time, yet that is exactly what many in this group are! They are simply not prepared for the decade when many witness their largest expenses, such as housing and children related costs. The past decades should have been used to create educational accounts, so the whopping costs associated with education, were less overwhelming! Many purchase their first home, or upgrade (move up) during this time of their lives. However, while one might qualify for the mortgage, that is only part of the expense of home ownership, including maintenance, taxes, repairs, renovations, etc. At the same time, one must continue planning for his retirement years, because it takes a sizeable nest egg, to retire comfortably.

4. 50’s – Panic and catching up
Magically, most people begin to realize during this period, they had not done as good a job, as they might have hoped to do, when they were younger. Many begin to panic, wondering how they will ever have enough to retire on. Others begin to address the accumulation of debt they may have acquired, because it may have been easy and convenient, in the past. Rather than panic, the best approach is to develop the discipline, and make it a priority, to use a systematic savings/ investment plan, of some sort. This means taking advantage of dollar cost averaging, where one invests the same amount on the same date, every month, regardless of market conditions. For most people, selecting 3 or 4 quality mutual funds, with different objectives (growth, balanced fund/ asset management, blue chip, etc), is the best course of action.

5. 60’s and above – Refusal to evolve
While many believe 60 is today’s 50, most people still aim to retire somewhere between 65 and 70. Some have great pensions from work, but many do not! Some have disciplined themselves to consistently contribute to IRA’s, 401 (K)’s, and other retirement savings vehicles, and are in better shape. Some have used a trusted adviser or advisers, for years, but have not planned for that individual’s changing life plans. Parents must begin the conversation, at least when they are in their fifties, if possible, so a responsible child, is knowledgeable, trustworthy, and ready to help them, if they cannot do so themselves. Formalize this process, by discussing with an Estate Attorney, etc, how best to both protect assets, while still maintaining a comfortable retirement lifestyle.

This article only touches the surface, in terms of helping yourself financially, by planning better, and doing what’s necessary, when it will do the most good. Don’t get worried or depressed if you haven’t done some of these things so far, but, rather, get started today!

I Hate Annuities – I Love Annuities

by admin .

The financial world has seen an explosion in the annuity marketplace over the last 15 years. With the Baby Boomers coming into retirement at the rate of 10,000 per day the insurance companies have not missed the opportunity to design, market, and sell record amounts of annuities ( both in contracts sold and premium dollars paid ) during this timeframe.

The proposals that are coming out of Washington to enhance the scrutiny of the sales of annuities have been grabbing the attention of not only the financial and political media, but also the general media. The concerns stem from the sales of annuities to those that do not fully understand all the contract language, especially the terms related to lengthy and stiff penalties if a contract owner changes their mind and wants out.

Truth is that even for a 25 year veteran of the financial services industry the annuity model of today is very difficult to understand. The complexities of how interest is calculated makes even the most seasoned veteran pause. Therefore the chance that an average consumer ( even one with superior intelligence ) will understand all the nuances of the contract is slim. At the beginning of my career ( in the late 1980’s ) an annuity application was 2-3 pages. Today they are 30-50 pages!!

When you shift through all of the rhetoric surrounding the annuity designs of today ( they still offer what no other investment can ) the peace of mind that a guaranteed lifetime income stream can offer. The term annuity comes from Latin which meaning “per annum”. The first annuities were issued to Roman soldiers as a way to compensate them for their service to Rome. That is why no matter what the press or competitors say about annuities ( “I Love Annuities” ) as long as the purchaser understands that they are getting something very special in the security of the income payment but they are also paying a price for that security, proving the old adage that “there is no such thing as a free lunch”.

The challenge for the consumer is the only way to “beat the insurance company” and “get into their pockets” is to live a long time, well past your life expectancy. A typical annuity will take the balance in your annuity policy, factor in your life expectancy (or the life expectancy of two people in the case of a joint life annuity), and offer you a payment that you cannot outlive. Let’s look at that a little deeper.

Take for example a couple that are both 73 years of age. Let’s assume that they give $150,000 of premium to an insurance company in exchange for a monthly income check that will last as long as they do. That monthly check will equate to about $850. If you assume that the insurance company will earn 3% on the funds that it holds on your behalf, it will take just over 19 years for that pot of money to deplete to zero. One of them will need to last until 92 years of age before the insurance company is “really on the hook”. If they both die prior to that, the insurance company wins. On the other hand if one of them lives to Age 100, this annuity might have been a wise buy. This is why “I Hate Annuities”.

In the Safe Money investing world there are a host of options that can create safe, sustainable, monthly income without the need to give up control and access to the principal. This takes some discipline and prudence on the part of the investor ( not to spend foolishly ) this is what the allure is all about in the annuity world, it’s like “buy an annuity and we will protect you from yourself”. This definitely appeals to some consumers, especially those that are not savers and have some issues surrounding their spending habits.

In conclusion the decision of whether to purchase an annuity or not rests more on the habits and the longevity of the purchaser. There is no such thing as a perfect investment, one needs to give to get. In the equity markets you need to give the safety of your principal to get the opportunity for nice returns. With annuities one needs to give up some control and flexibility in order to get the security of principal and the potential to receive a “check” for the rest of one’s life.

How To Manage Your Financial Problems After Buying A New Home

by admin .

Changing your living status can drastically change your lifestyle and your financial problems. But you don’t worry, because you will get the solution if you are cautious about how you spend your money.

If you are young and buying your first home, it can be a critical time in your life. Nonetheless, it’s also extremely exciting to imagine that you are setting off to own your property interestingly. This is really the American Dream at work! Chances are, your mortgage payment will be more expensive than whatever rent you were paying before you were a homeowner. You might be stressed over how to budget after you close on the house, yet you will catch on speedier than you might suspect. If you couldn’t manage the cost of the house, the bank wouldn’t have given you the loan, so motivate prepared to crunch some numbers and appreciate the first year living in your new abode.

Pay Attention to Your Lending Officer
Prior to your loan is even endorsed, you’re lending officer should sit down with you at the bank and give you a snappy once-over of the numbers. If they don’t, you should ask them to do as such, or discover a lending officer that will, it’s absolutely OK to shop around for lenders, especially in this economy. When you meet with your lending officer, don’t be reluctant to ask questions and/or take notes. When you lock to your interest rate, they will let you know precisely what your mortgage payment will be, and if you choose to keep your taxes and homeowner’s insurance in escrow, they will calculate that in, as well. Pay attention to that month to month number, and use that to set your new budget.

Set a New Budget
Ideally, if you’ve purchased a house, you have officially set some sort of budget for your living expenses pre-homeownership. If you have, it should be generally easy to set a new budget that accounts for your increased living expenses. Just module the number from the bank for your regularly scheduled payments and make adjustments as necessary. You will need to remove some things, that is almost inevitable. In any case, ensure it is something you can live with.

Communicate with Your Partner or Roommate
If you are buying this house with your spouse or partner, or if you are having someone move in and pay rent, make sure to communicate expectations and concerns transparently. This can represent the deciding moment a partnership when it comes time to pay all that money at closing. When you figure out what everybody owes, ensure you tell everybody upfront. If you are having a renter live with you, it’s not a bad idea to draw up a lease arrangement and have a lawyer look at it. That can save you a great deal of inconvenience down the road.

Learn to Cook
Cooking your own foods can be significantly inexpensive than eating out each night. When you cook, you often have lots of leftovers which you can eat the following night or for lunch the following day. It would be such a shame to waste your new, awesome kitchen in your new house, so if you don’t definitely know how to cook some simple meals, now is a great time to learn how.

The Habits You Need to Become a Highly Effective Credit Card User

by admin .

Amongst the different banking cards, credit cards have proven to be the most favorable option. However, when it comes to using a credit card, there is a huge financial responsibility you will need to take on. For one, you need to keep track of your expenditures. At the same time, you also need to consider the repayment dues and the interest rate. Additionally, if you make a late payment, there is a high chance it can affect your CIBIL score. The only way to ensure that the credit card will benefit you in the long run is to ensure that you develop an effective habit when it comes to using this card.

Make timely repayments
As a part of the credit card usage, you will need to repay back the borrowed funds over time. This is an important habit you will need to inculcate at the time you get your credit card. This repayment process reflects on your CIBIL score. Even a single delayed repayment will lower your credit score. Individuals with a perfect CIBIL score do not miss a single payment on all the credit lines they opt for. This is the same step you will need to take. In order to make this process convenient for you, ensure that you automate your payments so that you avoid any scope of delaying or missing a single payment. Ensure that the account connected to your credit card payment is well furnished for this purpose.

Maintain a minimum outstanding balance on your credit card
There will come a time where you will have an outstanding amount on your credit cards. This can occur if you recklessly use your card or impulsive purchases. Alternatively, emergency financial requirements such as a medical emergency may require you to use the card to make a large purchase. While you may not be able to completely clear the outstanding balance in a single go, you can ensure that there is minimum outstanding balance on your card. A large debt on your card will invariably affect your credit score. However, by reducing the size of the debt, you can prevent it from lowering your score drastically. To avoid any unnecessary expenditures in the future, you must never spend anything on your card which you cannot afford to repay in full at the end of each billing cycle.

Use your credit card only when necessary
In order to keep above the competition, plenty of banks and financial institutions will offer your good deals and discounts on their card, if you only you use them. However, this benifite, should only be used when absolutely necessary, even though it is easily or readily available. Excessive use of this available credit will unbalance your credit score in a blink of an eye. To avoid any possibility of hampering your score, you must only use your credit cards if there is a requirement for it.

Pros and Cons of an Electronic Payment System

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During this highly technological age, cash is trying hard to compete with electronic money, since nowadays a lot of people choose to use their virtual wallets. Here, you will read about the pros and cons of using an electronic payment system.

It is plain to see that electronic payment systems have more advantages than traditional banking services. Let’s see:

– Saves on time
Money transfer from one virtual account to another may only take a few minutes, whereas a wire or postal transfer may take a number of days. Besides, you have to spend some time to go to the bank or post office and wait in line.

– Controls expenses
Even if a person is willing to control his disbursements, it can take a lot of patience to jot down all the expenses, and this takes up a huge part of the total amount. On the other hand, the virtual account comprises the history of all the transactions, including the store name and amount spent. Best of all, you can check it whenever and wherever you like. In this case, an electronic payment system works to your advantage.

– Reduced loss and theft risks
You will not make the mistake of losing or leaving your virtual wallet behind, and it can never be taken by robbers.

– User friendly
All services aim to reach out to a greater number of audiences and so, their interface should be easy for users to understand. Moreover, users can always ask help from the support team since they work 24/7. You can receive an answer by means of the forums as well.

– Convenient to use
As long as you have access to the Internet, you can carry out transfers anytime, anywhere.

After discussing the advantages that come with using an electronic payment system, it is essential to talk about its disadvantages as well:

– Restrictions
In every payment system, there is a limit with regard to the number of transactions you can do per day and the maximum amount you can withdraw.

– Risk of Getting Hacked
Risks can be reduced when you follow the security regulations. This is comparable to the risk of being robbed. The situation can get worse when the processing company’s system breaks down, since this may lead to the leaking of confidential information on the online cards, as well as its owners. Though some electronic payment systems do not launch plastic cards, they can however be involved in Identity theft scandals.

– The problem of money transfer from one payment system to another
Most of the time, electronic payment systems do not cooperate with one another. If that is the case, you can use e-currency exchange services. However, it can consume a lot of time when you do not have a service you can trust for this purpose.

– Lack of Anonymity
Since the database of the payment system stores all your transactions ( like the name of recipient, amount and time ) the intelligence agency can access all your information. Decide on whether that is good or bad.

– The Need for Internet Access
When you have no Internet connection, you cannot transact on your online account.

Know How To Overcome Financial Problems

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“Money is the secret to all the keys”, says a popular quote. It won’t be exaggeration if said that a sound financial status is the key to a happy life. It is a known fact that a sound financial status can handle majority of the so called life problems. Though many say that money cannot get you happiness, the fact remains that money can get the various happiness contributors. In addition, in the current scenario various health experts say that one of the major contributors to health and mental problems is financial problems. Financial problems are one problem that seems to be affecting all earning capacities for the following reasons:

Mismanagement of savings and bad investment planning

Imbalance in the earnings and expenditure.

The ratio of increase in salary is not matching with the ratio of increase in the spending style, resulting to deficit.

Despite the fact that these are the major reasons for financial problems, human tendency is to put the blame of the financial crisis on external factors like lack in salary hike, sudden expenditure etc. However, this imbalance in financial status can lead to various financial problems like:

Loss of self confidence: As you lack financial strength, you stop taking risk and start doubting your skills and confidence. You tend to behave safe that acts as a barrier to success.

Insecurity: As you have less money to spend, you start thinking that your friends consider you as a failure and therefore, wish to stay aloof.

Dissatisfaction: Lack of money makes you kill your desires and wishes leading to a sense of dejection and dissatisfaction.

Thus, with the above pointers, it is clear that financial problems need to be addressed effectively. So, here are some tips to know how to overcome financial problems:

Think from the long term perspective: There is a new tendency of people neglecting the long term perspective in life. Therefore, people seem to save less and despite a hike in salary believe in spending. Therefore, looking at the financial planning from the long term perspective is important.

Keep a tap on your expenses: These days the criterion for buying has shifted from necessity to social buying. This shift has resulted to a trend of unexpected expenses resulting to imbalance in finances. Therefore, ensure that what you buy is useful and necessary for you.

Salaries will not change overnight but if you plan them properly you can definitely ensure that you have sound financial status. Therefore, have a monthly budget with some flexibility to accommodate sudden expenses. Try to stick to the budget.

However, for all those who make a financial plan and stick to it, lead a happy and stable life. However, there are cases of people who have failed to handle their finances and have fallen prey to depression resulting to continuous failures in life. For all those people, in addition to attaining financial status, gaining self confidence too becomes important. In such scenario opting for an external help for this dual improvement is suggested.

How to Become Independently Wealthy

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how to become independent wealthyBeing independently wealthy roughly indicates that you are financially  self sufficient and not dependent on anyone. This certainly is an enviable position to be in. This article will shell out some tips on how to become independently wealthy.

Getting Wealthy in a Nutshell

– Increase earnings
– Curtail expenses
– Reduce/Avoid debts

Who wouldn’t like a leisurely life, without the 9 to 5 grind, free of meeting the deadline or completing targets. You would probably find a majority of people desiring it and even succeeding at it to some extent. Yet, you would find a minority who simply have to grind it out just to make ends meet and safeguard their future. If you find yourself in a similar situation, wouldn’t it be preferable to have some cash stashed away for difficult times so that you can be financially independent?

And before your crafty mind starts thinking of how much money is needed to be independently wealthy, let me tell you, there isn’t a fixed number or amount. Financial independence is something that is achieved step by step, not all at once. While there are suggestions that financial independence and being independently wealthy are different, the underlying fact is that both goals target financial security. The paragraphs below will give you some ideas about this concept.

Steps to Become Independently Wealthy

1. Save, Save, and Save

– Regarded as the oldest rule in the book, this step is the first to become financially stable.
– Save a part of your income/salary (a substantial part), in fact, do not consider it be your income/salary at all, do not touch that money.
– Apart from spending for mandatory household necessities, try to avoid buying something luxurious, something you can do without. Before you purchase anything, weigh the necessity of that object/good at that point of time.
– Again, this depends on the kind of lifestyle you lead, which in turn depends on your family, their monetary requirements, etc.
– For example, if you live alone and have no family obligations (at that point of time), then you can save rather easily. But, if you have extra bills to pay, many mouths to feed, and other expenses to meet (a sick family member, college fees, etc.), then your saving strategies should be carefully thought out.
– Let’s say, you are married and have a kid. Your total expenditure per month would include household expenses, your kid’s education, taxes, insurance, an outing once in a while, etc. If your spouse also earns, the combined income/salary would help save quite a bit, if not, you have to plan your expenses such that you save a significant amount.
– Ideally, it would be better to start saving as early as possible so that you are in a better prepared financially to tackle any unforeseen expenses that may arise in future.
– That said, do not stop enjoying life. Save enough, spend wise.

2. Investments

– Irrespective of whatever you do to earn a living, investing wisely is the magic key to a golden future.
– The money you save should not lie idle, remember, no money is good money if it does not fetch an interest. Therefore, read and research on whatever investing strategies there are.
– Another point, always understand the concepts of inflation before investing. If an item is worth USD 100 today, its cost may probably double or triple in a decade.
– Certificates of deposit (CD) are a great way to save a large amount of money, since you are offered a higher interest rate than that of a regular checking account.
– There are many types of CDs, and you need to choose one that you feel is safe for you.
– Again, CDs have their own disadvantages, like higher penalties and lesser risk.
– Stocks and shares are a great investment option, but DO NOT invest in them unless you know how the share market works.
– Investing in stocks can be tricky, and you need to have sufficient experience and capital under your belt. Consider this investment option later in your life, when you can afford to take a higher risk.
– There are different saving accounts, mutual funds, equities, annuities, bonds, insurance policies, and other investment options that can fetch you a decent return after a sufficient period.
– You have to consider a number of factors, like recession, market position, interest rate, etc., while investing in any scheme.
– Another important step is to have a tentative plan in place, as to how much money you intend to have as a safety deposit, depending on your lifestyle, inflation, and other factors. Accordingly, choose a proper investment strategy.

3. Real Estate

– Investing in real estate is a risky, yet assured way of earning money.
– A piece of advice before proceeding though, always, I mean, always research the market well before investing in this field.
– The property business changes according to the prevalent economic situation.
– However, if the market is favorable, remember that a piece of land is one of those assets that never depreciates in value with the passage of time. Ask any wealthy individual, and he will attest that a property worth, say USD 100,000 today, will be much more in just a few years time.
– This is true with every kind of property apartments, villas, farms, etc. Unless, of course, the land has some issues, like it is in a marshy area or flood prone area.
– Beg or borrow, do anything, but buy that piece of real estate without delay.
– You can work out a plan with the bank or any other financial institution to pay off the loan in periodic installments.
– With time, the value of that land is bound to increase, and one day, you will be in a position to lease it out for a substantial amount, or even  better, sell it for a much higher price than the original, and reinvest the lump sum.
– Even while you are paying the EMI, you are still the legal owner of the property, which means that you can lease it out the moment you gain possession.
– If you have invested in an apartment, and you already have a place to live in, get the house registered and look out for tenants.
– This will give you a regular extra income every month, help pay your home loan, and leave you with alternative investment strategies.
– Remember though, that real estate investment is not a piece of cake, be very careful with the legalities, conduct a thorough investigation and then proceed. This holds true for the tenants too, look for a decent family to rent out, instead of leasing it out to someone who may have a police  record or a dubious past.

4. A Safety Net

– Always, I mean always, try to create a second source of income. Whether you are an entrepreneur or a food runner or a corporate junkie, have a passive source from where you can generate money.
– The other source may or may not generate much income, but it still is income. It will help you tide over difficult times.
– You could be an independent freelancer, blogger, illustrator, etc., anything that allows you contribute some time from your regular routine.
– Apart from keeping your home fire burning, this will give you the financial strength and the encouragement you need.
– Because you have two sources of income, your boredom will vanish, as you will look forward to working on something else for a change,  something you enjoy doing.

5. Entrepreneurship

– Starting your own business can be another source of income, but here, you have quite a bit at stake.
– To begin with, a business venture requires a worthwhile idea or market, besides running a business/venture/enterprise successfully is a totally different ball game.
– Depending on the type of business, you will need sufficient initial equity. Moreover, you need contacts.
– If you think you can do this, start small, and without initial expectations.
– Begin by planning what you plan to do. That is to say, whether you want to start your own catering business or a chocolate/cake making business, even scrap dealing, etc.
– Accordingly, begin by advertising your business/service to friends and family and on social networking sites. Supply product samples and record feedback.
– You must know to manage your time extremely well, since you have to contribute a lot of time initially until the venture is stable enough.
– Any business venture always runs the risk of failure and closure, therefore, do not place all your bets on the same.
– Once you have established a loyal clientele and steady stream of customers, you can think of ways to improve your business, as well as learn to wrap up things quicker than before.

To conclude, understand that there are many methods to become rich, but saving more and spending less is one sure and probably the best way to become independently wealthy. Yet, as mentioned before, do not scrimp so much so that your life becomes dull. In the process of making your future colorful, do not make your present colorless. Learn to balance. All the best!

Disclaimer: The results obtained by following the suggestions provided in this article may vary according to person and circumstances.