Category Archives: Finance

Control Your Bad Money Habits

This article contains some things you must consider if you want to be able to change your bad money habits.

  • Make a Decision

Changing your bad money habits would require you to first make a critical decision in your life whether you want to change your bad money habits or not. You cannot change your bad money habits without first resolving to do so. Taking charge and controlling your finances will afford you the power to reshape your life positively. Making the resolve in your heart to change your bad money habits is the first step, but it does not end there. What is more important is your decision to stay committed and determined every single day.

  • Managing your Money

You do not have to start living below your means before you can start taking charge of your financial situations. You do not have to start giving up your daily cup of coffee before you can assume control over your finances. All that is required from you is the ability to master the art of self-control and postpone pleasure and focus on the more important things. You must understand the art of getting into good debts, rather than bad debts; and know how to take advantage of them.

  • Managing your Debt

The real culprit in your financial struggle is not debt. There is the good debt, and then there is the bad debt. Good debt is the debt you incur in investing in assets, which in turn makes you some more money. Bad debt, on the other hand, takes money away from you. You spend bad debt on pleasurable things such as cars, and clothes; which do not necessarily make you more money in return. You must understand the difference between good debt and bad debt.

  • Pay yourself

The idea behind this is, whatever money you receive from all your sources of income such as salary, gift, or tax refund; you must remove 30% for yourself. Whatever is left, share it between your savings account and your investment account.

Money Saving Tips

Here are some money-saving tips that could save you from any future calamity involving money:

1. Open a Dedicated Savings Account

Like any first step towards the path of making some savings, opening your own for savings-only account is a must. Unlike your primary banking account which you use to deposit and withdraw money from, this dedicated savings account is strictly for money depositions only. For optimum benefits regarding interest rate, look for a bank which offers “higher-than-inflation” growth rate, which is something you might have to personally ask, if not endorsed to you.

2. Cut Out Unwanted Expenses

Be it a monthly service subscription you no longer see as beneficial to you or a habit that just drains your money, many are guilty about spending on something on a monthly basis that they can really live without. Part of keeping yourself free from unwanted expenses is by knowing which expenses are worth keeping from which are not and do the necessary steps in trimming those that are from the latter.

3. Be Systematic

If you are still unused to the idea of making a saving out of your every income, chance is good that your first few attempts at stashing some money on the side may be inconsistent and irregular at least. But if you are serious in saving some money for future considerations, sometimes sticking to a tried-and-tested formula may be a good start at disciplining yourself about money. One such popular formula that is becoming a clich√© among money-conscious individuals is the “80-20” rule which suggests saving 20% of your every income, regardless how small, while freely spending on the 80%.

4. Learn How to Invest

Let your money work for you. Don’t go into get-rich-quick investment scam and promised very high ROI. It’s possible to get high return in Forex trading and stock trading but there’s no guarantee that you will continuously gain due to up and down of the market. There’s always a risk in every investment. Read books, attend seminars and courses about investing. Try to learn short term and long term investment, high yield investment, stocks, mutual fund, UITF. Know the difference between Investing and Trading. Investing is long-term, you will buy, hold and sell after several years. Trading is short-term, which means if I buy today then sell after few days, weeks, months. In Forex trading, other traders buy and sell within seconds, minutes and hours.

5. Earn Some Money on the Side

With so many channels you can tap-online, mobile devices, or in real-life scenario-making money has been made easier so long as you have access to these means. When you are having trouble making ends meet so as to give way for savings, sometimes generating multiple income streams may be the better option just to save.

Car Leasing

Leasing a car is not a simple case of paying a fee and doing as you please while the leasing operator foots the bill. Generally there are usually stipulations in the contract that going over an agreed mileage will lead to additional costs, or that maintenance costs beyond the general wear and tear of a car will not be paid for by the car leasing operator. This isn’t as bad as it sounds, details like that are agreed upon before starting the contract. If you were to buy the car up front, you would have a harder time selling a car that has a huge mileage on the clock for as much as without. The same goes for paying repair costs that are down to carelessness. Leasing is no different in this respect, taking care of the car you are leasing means it will cost you less money overall.

The loss in value of a car over a period of time is much more important when looking at a 2-3 year time period, typically this value is worked out as; roughly 25% of the cars value is lost in the first year, 13% for the second, 7% in the third, it follows this pattern of half the previous years depreciation. So while over a longer period of time leasing a car may not work out to be cheaper due to the much lower depreciation, leasing a car is usually done over a 2-3 year period. Selling a new car this regularly would lead to huge amounts of money being lost with the higher depreciation, but with leasing a car the depreciation is what you pay for, rather than the cost of the car.

It is in the best interest of the car leasing operator to keep the value of the car as high as possible for the duration of the lease. This is because at the end of the leasing period the car is returned to them, after all it is still their property. Because of this most car leasing operators will offer free maintenance for the car, plus the new car warranty that will likely cover the new car you are leasing. This can potentially save a large amount of money compared to buying a car outright and being responsible for its maintenance, or possibly not being covered by a new car warranty.

In a lot of cases it is true that buying the car outright, over a longer period of time, would have cost the same amount or less than leasing. However this means that to buy the car you need to be able to either have a pile of cash sitting around waiting to be spent, or be willing to stay with the same model car for a much longer period of time than if you were leasing. If you wanted to replace your car every 2-3 years with a new model, leasing a car is undoubtedly a cheaper option.

Equipment Financing

t’s hard to believe, but 2014 is drawing to a close in a hurry, which means it’s time for many businesses to perform a review of their finances for the year and make a last-minute push for any big organizational goals they have. If you have been considering getting some new equipment for your company, beginning the financing process in these last couple months of the year could be beneficial for you. One such benefit comes through the Section 179 depreciation deduction. This deduction enables taxpayers to deduct certain types of property as expenses rather than forcing the taxpayer to deal with the cost of depreciation.

There are some limits to this deduction. Any deductions filed under Section 179 must be property that is tangible and depreciable, acquired for use “in the active conduct” of business. Common examples include real estate property, vehicles and business equipment, such as computers or medical equipment and technology. There is also a dollar limitation to the amount that you can claim under Section 179. The maximum one-time deduction you can take in a year is $500,000. By taking advantage of Section 179 benefits within the next couple months, you’ll be able to get the equipment you still need for your business before the end of the year and benefit from the tax deductions when you file your taxes in early 2015.

Depending on your financing plan, you may also have the option to defer payments until a later time. This means that within the last couple months of this year, you could get the equipment you need now and not worry about making payments until the New Year starts. For this reason, many companies find it extremely beneficial to get the equipment they need at the end of the year, allowing them to go fresh into the new year with the equipment they need to achieve their company goals.

Reasons To Lease Equipment

1. Pay As You Use

Leasing highlights the utility value of the equipment. In other words, leasing provides the opportunity to pay for equipment as it is generating revenue for the company. No different than paying employees bi-weekly or monthly as opposed to pre-paying them for the next 2 or 3 years of work. Both are assets of the company, and it makes no sense to pre-pay for either.

2. Payments Are Fixed

In most cases, lease payments are fixed for the duration of the term. This has a major advantage over conventional bank loans or purchases from a credit where the interest rate are commonly based on a floating rate. Knowing in advance what the payments will be, facilitates ease of budgeting and reduces interest rate risk.

3. Longer Terms / Lower Payments

Many banking institutions will limit the term of a loan to 12or 24 months, at which time the rate and terms of the loan are re-negotiated. Based on the useful life of the equipment being leased, it is not uncommon the see fixed lease terms as long as 48 or 60 months. This in effect lowers the monthly payment at a fixed rate.

4. Obsolescence Protection

In this era of major technological advances, certain types of equipment purchased today, can be obsolete within one or two years. Most leases offer a provision to economically upgrade equipment within the last year of the lease contract thus giving the company a built in obsolescence protection. In addition, although the leasing company holds title to the equipment, the will generally allow the vendor to provide a trade in on the existing equipment.

5. No Down Payment

Conventional banking institutions will generally require a down payment of 10%-25% in order to undertake financing on most equipment. In a lease transaction, the entire amount is financed with only the first or first and last payment being required at the time of lease inception. In some cases where the financial strength of the company is not sufficient to support the amount being leased, a small down payment may be required.

6. 100% Financing

Traditional financing methods will frequently not allow soft costs such as installation, freight, maintenance, and software to be included in the loan. These must be paid directly out of working capital. A lease, on the other hand, will allow soft costs to be included, thus conserving working capital and allowing for a single monthly payment for the entire acquisition.

7. Fast And Easy

Depending on the dollar amount of the acquisition, a traditional loan may take many days and require approvals from higher levels within the financial institution. This can mean delays in getting the order placed for the much needed equipment. The credit process for a lease acquisition is generally much faster and can be as quickly as a few hours up to a couple of days. Again depending on the size of the acquisition.

8. Conservation of Working Capital

In a recent industry survey, the number one reason for leasing equipment was conversation of working capital. By using lease financing, working capital is freed up to be used in the day to day operation of the business for things such as purchasing inventory, advertising, trade shows, and hiring employees. Essentially, leasing allows a company to reduce the amount invested in a depreciating asset, and use the money where it will generate a higher return.

Steps To Follow When Leasing A Fleet

If you have business needs, you can buy a fleet of vehicles. Based on the number of cars you need, you can also lease a fleet. If you have no idea how to go about leasing a fleet, you can follow the easy steps that we have described below.

  • Head to the website of the manufacturer

First of all, you should go to the website of the manufacturer to check out different types of cars and their prices. Based on your needs, you can go for cars that are fuel-efficient or luxurious. In order to get a pretty good idea of what you should go for, you can build the vehicles in a virtual environment. This way you can get a better idea of the prices and the features of the vehicles. By comparing various models, you can get the right one.

  • Contact the manufacturer

You should get in touch with the manufacturer in order to know more about the fleet leasing. The manufacturer may refer you to a local dealer. However, what you need to do is ask him important questions in order to prepare yourself to meet the dealer. Once you have asked the important questions, you should contact the dealer for an appointment. Next, you should meet the sales or fleet manager.

  • Talk about your term options

When meeting the sales manager, you should talk about your term and mileage options. Make sure the mileage options will satisfy your business needs since most fleet leases are subject to high penalty fees. You should look around if the dealer doesn’t satisfy your lease needs.

  • Talk about discount

Before talking about discount, you should let the manager know the number of vehicles you need. Based on this, the dealer may give you a handsome discount. Aside from this, you should talk about vehicle options and get the estimated cost to ensure that the cost will not be a burden on your budget.

  • Fill in the credit application

Before you place the order, make sure you fill in the credit application for approval. In the forum, you will have to write your business name, income details, tax identification number and the Society Security number. Moreover, your dealer may ask for the copies of your driver’s license and business license.

  • Shipping options

Once you have placed your order, you should talk about the shipping options. Your next step should be to get a timeframe for the delivery of the order and plan accordingly. You will get the vehicle identification numbers from the dealer.

Credit Cards and Bankruptcy

The inevitable trap of credit cards and the preying by banks on their victims may lead many to bankruptcy. There is no easy way out of financial situations when income simply does not match expenditure. We all want the latest and best things on the market and many acquire them through loans on those pieces of plastic. The facts are, however, that the interest charged may mean that repaying such loans quickly puts it out of reach of meeting it. Banks are not so honourable that they will surrender their biggest money earners, namely the credit cards. The ones who use them are ‘cash cows’ supplying their lenders with huge incomes and vast annual profits. It’s like gambling when one puts money in and gets little back in return.

In times past I too was hooked on credit and then some valuable lessons came to hand. The goods I was buying during sales, and so forth, were costing twice as much as they would if the same items were bought for cash. Not only that but much of the stuff filling my cupboards was unnecessary and likely would never be used. Banks and sales go together. One often sees stores offering extra discounts for using a Visa card. It does not take a genius to know how much the business receives back for this slight-of-hand deal. Nor does one need a calculator to check on where the institutions are making most of their money.

At the moment in Australia interest loans on property have never been lower. One can get a mortgage for something like 1.5 percent or even less. That is because the banks know that people will be forced to sell that property at a great loss if they go bankrupt through using their credit cards. With that in mind the offer of extended credit is given to the mortgagee.

There is a move afoot here to force banks to disclose the source of their income while the Opposition wants a Royal Commission into banking practices. With the focus on the ongoing links between credit cards and bankruptcy prominent in the media it is long overdue. The best way to avoid the trap is to tear up the cards and have nothing to do with them. Bargains are only such when there is a genuine saving to be had from the purchase. If money is correctly managed then buying things for cash will quickly become a priority.

Trade Finance

Without trade finance, there wouldn’t be Indian spices, clothes, or jewelry in the United States. Or Apple’s iPhones in China, much less any other international product at any respectable distance from its origin. In fact, according to Investopedia, the World Trade Organization (WTO) estimates that international world trade has expanded 80%-90% thanks to trade finance. For this to continue, companies need to include trade finance in their business development strategies.

Market penetration and market development are key parts of a business development strategy. Market development involves selling more of your service or product to repeat customers. While market penetration is about expanding your product or service to other cities and provinces, it can involve inland trade finance. As you may have to renegotiate local and provincial trade deals. For instance, let’s say you sell jewelry. A business from a neighboring city may purchase your jewelry and sell it to its customers. You have a long history with this client. And know that your product is selling quickly in your customers’ shop. In which case, you could propose selling the client more jewelry for a bulk price. After negotiating, the client agrees. However, despite the long, positive history you’ve had with the client, the client may not feel comfortable paying you before you export the jewelry. This is where a trade financier or banking institution comes in, providing a letter of credit promising that you will export the jewelry upon payment.

With repeat customers, you’re doubling the number of products the repeat client is importing. And, with new clients, your new product or service will expand your client base. It’s important that you first create new products for your repeat customers before jumping to new customers, as it involves more risk. Again, trade finance can help cultivate more trust during this period of growth. Since trade financiers or banking institutions can create letters of credit, laying out the terms the importer and exporters must follow.

Structured Trade Finance

Structured trade finance (STF), a type of debt finance, is used as an alternative to conventional lending. This form of finance is utilized regularly in developing countries, as well as, in relation to cross border transactions. The objective is to encourage trade by making use of non-standard security. STF is generally used in high-value transactions in bilateral trading relationships. As a more complicated type of finance, STF is commonly related to commodity trading. Within the commodity sector, STF products are most prevalent. It is used by producers, processors, traders, as well as, end-users. These financial arrangements are tailored by banking organizations to meet the precise needs of the clients. STF products are primarily working capital financing, warehouse financing and pre-export financing. There are also some institutions that extend reserve-based lending, as well as, finance the conversion of raw materials into products, along with other customized finance products. In order to promote trading activities, STF products are extended across the supply chain.

STF structures are sponsored by limited recourse trade finance lines. The structure aims at offering better security mechanism and to act as an enhancement on the position of the borrower when viewed in isolation. Trade credit insurance, bank assurances, letters of credit, factoring and forfeiting are some of the STF products that have been positively affected by the latest technological advancements. These products have changed due the recent developments. The massive progress in communication and information domains have also helped the banking institutions to track the physical risks and events in the supply chain between the exporter and the importer. Structured trade finance products are used so that the risks related to trading in specific country and different jurisdictions can be mitigated. Any transaction together with STF products help to add resilience to the trade and the same cannot be said when looking at financing the individual elements of a trade. Moreover, it allows for lengthening the payment time, strategizing procurement, diversifying funding and enhancing the ability for clients to boost the facility sizes.

What makes STF extremely attractive is that the borrower’s strength in the transaction is not scrutinized as closely as compared to a vanilla loan. Here, the focus is more on the structure and the underlying cash flows. Another reason for STF’s popularity is that the transactions are not reflected in the balance sheet of a company and the presence of this financing option has helped several importers to maintain flexible credit terms with exporters. In recent years, structured trade finance products coupled with the recent advances in technology are considered as the fundamental reasons for the increasing volumes of international trade.

Credit Union

If you are currently banking with one of the “big banks” and are not happy with their services there are numerous reasons to consider banking with a credit union. If you’re not quite convinced they can be the right path for your finances, here’s a breakdown of the benefits of banking with a credit union.

  • Personalized Customer service

Because credit unions are banks for the people by the people and have smaller memberships than the typical larger institutions, you are able to get customized personal service. It’s much more of an intimate relationship than you would have at a traditional bank. The credit union employees actually know you and are invested in your success as a member. That’s because their focus is on making every consumer interaction a personal one, void of lines, long phone waits, and canned responses.

  • Accessibility

Since they serve their local communities, most of the time branches are not available outside of their service area. To make up for that they sometimes reimburse members for ATM fees or offer a shared ATM network if members have to go out of network to have access to their money.

  • Structure

Credit unions are owned and operated by their members. The minute you make your first deposit, you will have voting rights.

  • Lower Account Fees

They also have fewer fees across the board because they have lower overhead costs. Because they are typically smaller operations than big banks they can pass their overhead savings on to their members. According to Bankrate.com more than 75% of credit unions offer free checking, compared to 40% of banks. And many don’t stop there. They even pay members rewards in the form of high interest or dividends, cash back, and other perks, like ATM fee refunds.

Monthly maintenance fees are lower and members don’t have to keep as high a balance in the accounts to escape these fees.

  • Serving the Underserved

Credit Unions serve those that are usually locked out of the traditional banking system. This covers the large number of immigrants in communities that would otherwise not have access to necessary financial services.

  • Supporting the local community

The money that is deposited in your local credit union supports its members and the local community. They channel funds back into the local economy in the form of loans in support of small business, home purchase and loans that help members accomplish their financial goals.

  • Interest Rates

They offer higher-yield savings and checking account rates. Good luck finding an interest-yielding bank account at a megabank. They yield next to nothing for their account holders.

  • No scams

Employees aren’t pressured to meet unreasonable sales goals. So rest easy, no one is going to open a secret account behind your back.

  • Federally Insured

Your money is no more safe at a big bank than it is at a local credit union. Just like the FDIC at a traditional bank, deposits up to $250,000 at a credit union are insured by NCUA – a federally backed agency.

  • First-name basis

They take time to know their members. You’ll be a name, not just an account number.

  • Technologically Advanced

Credit Union’s have come a long way from their once obsolete style of banking. Today, the technology used at a credit union is just as advanced as a megabank. They have online banking options that feature mobile check deposit, smart chip cards, mobile apps, online bill pay, e-statements and more.