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Building a Firm Financial Foundation

May 30th, 2017 Posted in financial education, learning about money, Money Tips
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Effectively administering your personal finances encompasses broad responsibilities, ranging from everyday budgeting to long-range concerns, such as retirement planning and preparing for a child’s higher education expenses.  For the best results finding security and stability, individual money managers start with solid footing, building upon each favorable financial outcome.  Without a consistent base, on the other hand, individual finances are vulnerable to damage and distress.

Building firm financial foundation - sound money image

Building a sturdy financial base begins early in life, as young adults transition from dependency, carving-out their own financial territories.  And the process continues for a lifetime, calling on effective money managers to remain proactive shaping positive financial outcomes.  Consider the following concerns, at the heart of your financial stability:

Use Strong Credit References to Support Your Financial Health

From your first financial interactions, your behavior handling money lays the groundwork for credit references, which follow you for a lifetime.  By setting-off on the right foot, you not only establish short-term credit references, but early success also puts building blocks in place on which to raise a strong financial structure.

Although it is a representation of your actual credit behavior, your credit score ultimately takes on a life of its own.  Beginning with your first credit card, car note, or revolving store account, credit reporting agencies monitor your behavior making good on debts and managing money matters.  Successful financial outcomes boost your score, while inconsistencies reduce your strength of credit.  Each circumstance is judged according to its particulars, so it is hard to generalize about the impact of credit mistakes.  Suffice to say, however, it doesn’t take many missteps to undermine your credit strength, resulting in an uphill battle correcting deficiencies.  In addition to responsible use of credit opportunities, adopt these strategies to maintain credit integrity:

  • Always pay on time
  • Utilize various forms of credit
  • Close unused accounts
  • Check your credit score annually

Select the Right Financing for the Job

Various types of financing serve non-commercial borrowers, helping people fund everything from routine daily purchases to major, big-ticket buys.  Matching the correct loan or revolving account to your funding need can save money on the cost of purchases and reinforce your financial foundation.  Using equity financing to carry-off home improvements, for example, is a sensible approach to renovation.  While relying on a high-interest credit card to pay for residential upgrades may not be prudent.

Fortunately it is easier than ever to evaluate lender rates and terms, using online resources to compare and contrast borrowing alternatives.  Your credit history, income and employment status are important considerations when vetting financing alternatives, leading you to the most cost-effective solution for each funding need.

Build a Strong Financial IQ

When it comes to money matters, knowledge is empowering – in more ways than one.  Not only does financial understanding give you peace of mind, ensuring you are making the right moves, but a well-rounded financial IQ can also have a direct impact on your bottom line.  Building and reinforcing financial savvy protects your monetary interests and  whether or not you are mathematically inclined, general accounting principles are important tools for making the most of your financial resources.  Understanding how to balance your budget, for instance, is essential for long-term financial success, resulting in a sustainable flow of cash through your home.  And knowledge of fundamentals such as depreciation, dollar-cost averaging, and APR weigh heavily on your ability to effectively manage money.  For the most consistent financial outcomes possible, use your commitment to financial understanding to make informed decisions, without leaving money on the table.

Your financial security relies on a sturdy base and ongoing discipline managing money matters.  From a high credit score to a strong financial IQ, it is up to you to use all the tools at your disposal, building and preserving a solid financial foundation.

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Important Steps In Getting Your Loan Approved

May 19th, 2017 Posted in learning about money, Money Tips
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Getting approved for a loan certainly isn’t the easiest process in the world. With Brexit pushing the future of the nation’s economy into uncertainty, lenders are less strict than they were during the recession of the noughties, but more strict than they have been in the past. Bottom line: it’s still very important to present a great package if you want your loan to be approved. Here are some important steps to getting your loan approved…

Review your Personal Preferences

Important Steps In Getting Your Loan Approved - Car keys image

From Pexels

Before you head straight to your bank and start asking questions, spend some time researching the market, and seeing what your alternatives are. This is an essential step to ensuring you can get your hands on some of the best offers on the market. This means thinking about the type of loan you’re looking for, the terms that you can reasonably afford, and how you’re going to pay off the loan in the shortest period of time possible. When you’re looking for a specific type of loan, such as a personal loan, auto loan, or a mortgage, scouring the market and avoiding impulsively jumping at any of the offers that arrive in your email inbox, is absolutely essential to coming out on top.

Know your Limits

Important Steps In Getting Your Loan Approved - calculator image

From Wikimedia

When you’re pursuing a loan, it’s important to be aware of your current credit score and your history. All good lenders will tell you the bracket of credit scores required for approval for a certain loan. You can prepare in advance by requesting a copy of your credit and history a few weeks prior to your actual application. Start reviewing your history for accuracy, and make sure you have enough time for correcting any kind of errors in your history. These days, lenders put a lot of emphasis on how you’ve used credit in the past. If there are any mistakes left in your report, you may wind up with a much lower score, which can obviously hurt your chances of being approved. Always consider your personal finances when you’re planning to pursue a loan, and target deals based on your limits, and realistic ability to make repayments which you can comfortably afford.

Manage your Expectations

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From Pexels

We’ve said it once and we’ll say it again: rushing through the process of applying for a loan is never a good idea. Loan officers have very strict protocol to follow when they’re approving loans and getting the money to applicants. Through the entire process, you should be discussing the sequence of your events so that you’ll know what to expect moving forward. While some loans can be pre-approved right out of the gate, you may not know all the specifics until a number of weeks have passed. Ask the experts when it comes to following up. Your overarching goal should be securing a loan that you definitely have the means to repay. Getting turned down for loans can be frustrating, but it’s important to understand your situation thoroughly and manage your expectations, and not to ruin your credit by applying for loan after loan.

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The Wrong Fairy Tales: Ignore These Mortgage Myths!

April 10th, 2017 Posted in learning about money, Property Investment
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The Wrong Fairy Tales: Ignore These Mortgage Myths! - mortgage sign image

Flickr

Very few people are able to buy a house outright. Some people will try to make the argument that this is a problem unique to our financially-troubled times, but the truth is that we’ve rarely not lived in “financially-troubled” times where a lot of people were able to buy homes without assistance from some institution.

Banks and other lenders have been pulling the financial strings of the vast majority of homeownership for a long time, and it will probably continue to be that way for a long time yet. The fact is that, unless you’re pretty darn wealthy, you’re going to need financial assistance to get a home. Heck, even the wealthy need the assistance at times, when you consider modern house prices.

Getting a mortgage is, in all likelihood, how you’re going to get your own home. So it’s important that you’re not falling for any myths about mortgages! Here are some of the most common.

A pre-approved loan is a sure thing

Yes, you should definitely get a mortgage pre-approved before you start shopping for property. But this doesn’t mean that a pre-approved mortgage is the same thing as a mortgage! However, once you’ve made an offer on the place, the lender is going to double-check everything. After all, things may have changed between that pre-approval and the final approval. Remember that prefix: pre-approval. It’s not total approval just yet!

The Wrong Fairy Tales: Ignore These Mortgage Myths! - lender image

Flickr

A high income is all that matters

Let’s say you’ve got one person earning $100,000 a year and another that earns $50,000 a year. The first one is going to get the best mortgage rate, right? Well, not necessarily. There are a lot of factors to consider. Ms $100,000 may also be paying about $60,000 in debt every year, whereas Ms $50,000 is only paying maybe $3000 in debt. The latter has a healthier cash flow, so has the upper hand! Another thing to consider is the type of work you do. Ms $50,000 may be a scientist with a steady career ladder ahead. Ms $100,000 may be a self-employed freelancer who could potentially earn much less in the following year!

Your credit needs to be spotless

It’s true that a good credit score is highly desirable if you want a mortgage. But you’re not expected to have a perfect score. But if you have a middling score – and many people do! – then it’s not exactly a deal breaker. In general, a few blemishes won’t hurt you overall as long as you have a steady income and pay your bills.

The Wrong Fairy Tales: Ignore These Mortgage Myths! - credit score image

Image Credit Flickr and Cafe Credit

You need to have 20% saved for a down payment

20% is the amount that always gets thrown around when it comes to saving up money for a down payment on a home. And, yes, that is the best minimum to have if you want the best mortgage rates. But it’s not necessary – after all, that 20% is usually quite a lot of money. There are a lot of good institutions who will give you a mortgage with a down payment of about 5%, for example. Don’t assume you’re doomed if you haven’t saved that magical amount of 20% just yet!

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Strategies For Tackling Debt – Which Is Best?

March 14th, 2017 Posted in learning about money, Money Tips
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Strategies For Tackling Debt - debt burden image

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As any financial expert or debt advisor will tell you, the way to approach tackling your financial woes is to take a systematic approach. However, there are a few different strategies you can employ on your quest to become debt free. Some will work well for you; others may not. But how can you tell which is best for you and your finances?

Today, we’re going to go through a broad range of debt-tackling strategies and explain everything you need to know. Let’s take a closer look at some of your options, and – we hope – point you in the right direction for the strategy best for your situation.

Debt Consolidation

Most debt experts will advise you that you should never consolidate your debts – or, at the very least, be incredibly careful about doing so. However, there are some benefits in going down this route as long as you do your research and choose the right path. For example, interest-free balance transfers can switch your debts so that you don’t pay any interest at all for a set period, meaning all the repayments go towards paying the debt off. However, given that you need a good credit score to enjoy interest-free balance transfers, it’s not always an option. In this case, you might try to look for bad credit loans and consolidate that way. Bear in mind that these can be expensive, so it’s important to work out whether consolidation is worth your while. It might be the case that tackling your debts individually is a more cost-efficient tactic. If you decide that this route is better, the following strategies might help.

The Avalanche

The avalanche method is where you pay off your debts one at a time, focusing on the debt with the highest interest – or highest balance – first. Once you have paid off your highest interest debt, you move onto the next highest, and so on. Using this method is thought to be useful as your higher interest debts will, ultimately, cost you more. However, if the debt is large, it can take a significant amount of time to pay it off, and it requires you to put a lot of money towards it if you want to see quick results.

The Snowball

The debt snowball method focuses on your smallest debts first. The idea here is to get rid of your debts in a systematic way, eliminating them one by one and feeling like you are making progress. Now, let’s take a look at some of the snowball and avalanche methods in more detail.

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APR Method

This method involves working out which creditor is charging you the highest annual percentage rate. You continue paying your minimum repayment to all other creditors, and put any spare money into the highest interest charger. Once you have cleared the first debt, you move onto the next – not forgetting to include your minimum repayment. As you pay off each debt, you can take the minimum payments from your old debts and add them to the next biggest debts, ‘snowballing’ your repayment amounts as you go along. By the time you start paying off your largest debts, you should have a significant sum of money set aside, and it should – in theory – take less time to clear.

Highest Balance Method

You can also consider the highest balance method to repay your debts. This strategy can work if you have a couple of big debts that seem impossible to erase. However, if you put every spare cent you have into tackling your most significant debt, it won’t take long to start seeing your results. Let’s say you have $5,000 on a credit card. If you could, for example, pay $200 a month, in a year’s time you will have whittled this down to $2,800, assuming you have managed to freeze all other interest charges. It’s a dramatic impact that has reduced your debt with that creditor by almost half.

Quick Win

When you keep getting bill after bill in the mail, debts can actually start impacting your life and wellbeing. And it’s always difficult to know where to start. There is a solution, however – go down the quick win route. Using this strategy puts your focus on eliminating your easiest debts first – the ones with the lowest number of repayments left. If there are two debts with similar end dates, tackle the one with the higher monthly payment. While this strategy might cost you more in the long-term than, say, the APR method, it will still give you a sense of momentum. And, most importantly, reduce the number of debts you have far quicker than the other strategies.

Low Balance

Similar to the quick win strategy, the small balance method involves tackling easy debts first – the ones with the least amount of money outstanding. Removing these irritating small debts gives you a sense of momentum, and you can then collate all the minimum repayment monies and use them to tackle the bigger problem areas. If you are struggling to pay off your debts, it’s a strategy worth considering as research shows it is often the most successful.

The family loan

Finally, consider borrowing money from a family member or trusted friend. There are a few reasons why this can work for both parties. First of all, let’s take a look at this strategy from your family member’s point of view. If your mom or dad has, say, money in a standard savings account, the chances are that they aren’t earning lots of interest on it. So, you could offer them a better deal over a set period of time, while still enjoying a lower interest rate than you are currently paying your creditors. This strategy is like a super-charged consolidation plan, as everyone on your side of the fence wins – and you get to pay off your creditors in one hit. It’s always worth doing this as the sooner you can repay your problem debts, the sooner you can start rebuilding your credit score and reducing the impact on your lifestyle and borrowing power.

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Golden Rules Of Repairing A Poor Credit Score

February 17th, 2017 Posted in Money Tips
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repairing a poor credit score - calculator image

Via – pixabay

A bad credit score can have a terrible impact on your overall finances – and your lifestyle. But it’s  important to understand it is not the end of the world. With the right mindset and prudent financial planning, it is possible to repair your score and start getting your household’s money and borrowing ability back into shape. Let’s take a closer look at some of the golden rules of repairing bad credit.

Understand the importance of a good credit rating

The first golden rule is to know what you are dealing with. Good credit scores make your life easier, cheaper, and more manageable – it’s that simple. A poor credit score, however, can have a significant impact on your life. Your borrowing options will be limited. You might open yourself up to the harsh realities of bankruptcy. And you might find that you can’t get a job, rent a property, or even get a contract for a cell phone. It’s that serious – and it should spur you on to make amends.

Check your rating

The next golden rule is to understand your current credit position. You’ll need to check with the major credit reference bureaus such as Experian, Equifax, and the TransUnion. Once you sign up, you should be able to see a breakdown of all your borrowing history, as well as records of your bank accounts and any court judgements you might have against your name. At this point, it’s important to look for any records that you are not responsible for. Sadly, fraud and mistakes are all too common, and it’s not a rare occurrence for credit records to be incorrect.

Tackle your debts

The next step is to highlight all the debts that are causing you problems. Contact them and set up reasonable repayment schedules that you can afford, making sure that you have money left over for general household spending.

Start improving your credit rating

Now you are in a position where you can start repairing your score. And the way to do this is to prove that you are a responsible borrower. Unfortunately, many of the credit avenues you had before maybe closed off to you now, so working out how to get a loan with bad credit will usually result in applying to particular services and lenders. But the point is, as soon as you start paying back your debts promptly, your score will improve, bit by bit. Just borrow and spend small, affordable amounts and keep clearing your balances for a minimum of six months.

Don’t fall off the wagon again

Finally, once you have done all the hard work to repair your credit rating, don’t ruin things by making the same mistakes as before. See this as an opportunity to change the way you deal with your finances, and you should – with a little bit of luck and a lot of dedication – never find yourself in a similar position again. Keep checking your rating, and always update your current budget to ensure you are on the right track.

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