Finance On Wheels

Americans to survive the current financial turmoil

So, how are we as Americans to survive the current financial turmoil and come out of the other side better off? Here are some positive steps I would recommend:

Reduce outgoings and debt load

Make a budget and stick to it. First list all your income. Then list all your essential expenditure. Remove all expenditure that does not directly support living. Food, housing costs, home to work transport, and essential supplies (personal hygiene, cleaning supplies, etc) are what I would term essentials. All other expenses: cable TV, personal cell phones, eating out etc are non-essentials.
Use the increased difference between income and expenditure to pay off debts; auto loans, student loans, home improvement loans, mortgage etc. The more debt you can pay down, the more money you can have to build an emergency fund and for long term investments.

Increase income

If possible, find ways to improve your income. At work or in your business, always deliver more than you are asked to do. Those who do this will be the last to be laid off or dismissed. Find ways to help the company make more sales. Even in this depressed economy, there are lots of opportunities.

Maintain your Investments

Don’t panic. Selling off your investments in a down trending market may not be best policy. You should be investing for the long term and holding on to your stocks and mutual funds. Those using dollar cost averaging stand to make great gains when the market recovers. Just stay the course. Any investments you have in cash would be good to leave alone, unless you have great concern with the liquidity of the holder of the funds. Bear in mind that conventional banks are the least affected by the current crisis as they are the most regulated.

Doing the above, especially reducing you debt load, will go a long way towards insulating you from further turmoil in the financial sector. It will also put you in a far better position to take advantage of the improved financial landscape when the crisis finally ends.

Author
Malcolm

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Importance of good credit

Extensive usage of plastic money has given rise to innumerable credit card defaulters. The number of credit card defaulters has increased over the years and to keep pace with the number of defaulting consumers, several credit repair agencies have struck root.

There are two main factors which have contributed to the rise in the number of delinquent accounts. They are easy accessibility to debt and the high interest rates charged by the creditors. The high rate of interest however, does not prevent consumers from availing debts.

If you have delayed in making payments to the creditors, it shows on your credit report. However, the moment you start paying regularly, your credit score improves over time.

A bad credit indicates bad repayment habit and this does not go down very well with many people with whom you have to interact on a daily basis.

Given below are some of the instances when the importance of good credit is realized.

• Entrepreneurship

If you are planning to open a small business of your own, you need to have sufficient funds at the time of start up. If you are planning to take a loan, there may be chances of being refused one. This is true if you have not maintained a good credit in the past.

• Utility Services

In many cases your credit is required to avail utility services. Utility services may include cable, telephone, water, cell phone, electricity etc. It has been observed in several instances that to get fresh electricity connection, credit history is checked.

• Transportation

If you are planning to buy a car with the help of a loan, your creditor will check whether you have a good credit or not. This in turn will influence the creditor to decide your loan amount as well as the rate of interest.

• Shelter

Taking shelter in any area can also be impacted by a credit score. In the event, you do not have a good credit history, a mortgage lender may lend you money at a very high rate of interest or in the worst case scenario your loan application may be refused right away.

• Employment

There are many employers who conduct a credit check prior to hiring the employees. If it is found that the prospective employee has not maintained a very good credit record, he may be refused employment.

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Planning Personal Finance

Personal finance is a broad field and includes several financial options, which may be utilized for the judicious management of ones finances. There are times when a person is not able to decide, which plan would be best suited for him or investing in which program will give the maximum ROI (Return on Investment). A person can take decisions about his finances depending on the financial principles.

It is important to save ones hard earned money and failing to do so will invite a lot of tension and unpleasantness. As it is said that prevention is better than cure, planning ones finances is of utmost importance.

Some does’ and don’ts to keep in mind while planning financial finances:

The first step to plan about personal finance is to understand the financial condition in, which one is in. One may also make a list of all the debts as well as assets a person has.

Make a budget- Drawing up a budget is a very crucial step and requires a thorough inspection of where the money is actually going. Is the expense really required? Can a little less be spent on something? These are few things, which need to be thought of.

Savings is another important tool to be prepared for the rainy day. You never know when an emergency may arise. Savings can again be for a longer period or for a short term.

Debt: If a person manages his finances properly, it is seldom that he is required to borrow money. Borrowing money means you have to return it sooner or later. Keeping track of the monthly payments, managing the various debt accounts and to top it all is the credit report story. So, it is better not to borrow.

Purchasing a house: While buying a house location is vital. Again, taking a loan for buying a house should also be considered.

One should avoid investing in items, which depreciate a lot over time. Buying a car can be a good example.

Insurance is another tool for saving for the long term. As per norms, it is obligatory to insure certain types of assets.

Retirement plan: All the hue and cry about saving, ROI and planning is mainly directed towards the retirement days. In majority of the countries there are incentives offered by the Government.

After a person has kept aside enough money to spend for his needs and depending on his disposable income, he may think of investing it in different schemes and programs. However, there are always risks involved in investments.

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Credit Card Debt

Credit card or plastic money may be referred to as a financial tool, which can do away with handling cash to some extent. Credit cards give instant access to money. Just as they have a lot of advantages, they can have disadvantages too. Studies reveal that on an average about 14 credit cards are maintained by every American household. An average American family has to pay more than USD$8000 per year for credit cards.

The credit cards also attract high interest rate. If a credit card holder is unable to manage the cards carefully, it becomes more of a burden than a help. There are instances when people use several credit cards and are unable to manage the payment of all the cards properly. This leads them to debt. Under such circumstances, debt consolidation may be a good alternative. You can also manage your own debts by working out a budget and following it.

In credit card debt consolidation the outstanding balance on all the credit cards are combined into a single debt. In this case, the interest rate is also lowered. A debtor can take assistance of a debt consolidation company to become debt free. A debt consolidation loan can also bail you out of a credit card debt.

By consolidating the debts, the following benefits are enjoyed by the debtor.

• It reduces the rate of interest.
• Makes the debts more manageable
• It saves debtors from receiving calls from collection agencies.
• It helps in improving the credit score of the debtor.

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Get Out of Debt

If you are like most of the Americans, and you have huge debt. Try not to think about that how much debt you have and what its originally effecting you. If u didn’t think about it, definitely you might not sleep through the night.

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