bookmark_borderLimelight On Crediting

The concept can also be extended to the historical barter system which involved direct exchange of goods and services. In recent times of course, credit is mainly used as a financial term.

Generally, in return of the facility to repay later the borrower has to pay an additional amount in addition to the amount borrowed. This cost of credit depends on the amount of resources borrowed and the time span for which the money is borrowed. The interest is calculated according to some generalized rules.

There are many types of credit: Bank Credit. Consumer Credit. Public Credit. Investment Credit. Real Estate Credit

It is enlightening to know that personal loans, mortgages, credit cards and automobile finance are all categorized under Consumer Credit. As such, if you are intending to get a car credit to meet the bit of crunch in your pocket, you will be listed as a creditor under Consumer Credit.

Keeping pace with the ups and downs of your financial stability, it is not always possible to afford a car entirely with the money in hand. In such circumstances, additional financial assistance is required to cater to your dreams of purchasing a brand new car. If you are still pondering on where to get this assistance from, then be rest assured as there are a plethora of insurance companies that offer credit for the same.

The car insurance companies take into account several factors while judging the rates for an insurance applicant, some of which may be listed as:Present age of the person to drive. Past records of driving. Model of the car for which loan requested. Mileage of the car. Safety criterion associated with the car and so on.

However it is wise for part of the person to borrow credit to get in touch with a reputed and reliable firm to get credit at reasonable rates of interest and to avoid any discrepancies in the future.

bookmark_borderHandle Sudden Wealth

Most people who successfully build wealth do so slowly and steadily through work, investment and planning. But windfalls large enough to change one’s financial life certainly aren’t unheard of. Arguably the most common way in which people’s financial statuses suddenly change is through a large inheritance or bequest, but that is only one scenario. You may also receive a large lifetime gift from a parent or grandparent. You may win a large divorce or other legal settlement. You may be a professional athlete or entertainer signing a large contract, or an early employee of a tech startup that goes public. Occasionally, someone even wins a huge lottery jackpot.

Depending on how you come by your newfound wealth, you may or may not have expected to receive it. If your parent makes you a large lifetime gift, for instance, ideally you have discussed the transaction in advance. On the other hand, if you are a young athlete who has just been drafted by a professional team for the first time, you are unlikely to have experience handling anything like the amount of money suddenly available to you. Regardless of background, anyone who receives a large windfall is at risk for what is often called “sudden wealth syndrome:” the stress and uncertainty that accompanies moving from one lifestyle to another.

If you have never managed a large sum of money before, it is much easier than you might think to squander your newfound wealth. Before you go on a spending spree or stuff the entire amount into your mattress, it’s crucial to pause and instead prepare a comprehensive plan to handle your new financial reality. Taking a calm and measured approach can help you to avoid common pitfalls and to make the most of your resources in the long run.

Traps To Avoid

HBO’s new football comedy “Ballers” focuses on Spenser Strasmore, a former NFL player turned financial adviser, and the pro athletes he advises. While the show incorporates all the heightened drama you would expect, the struggles with financial stability it depicts are all too real. A study published in the spring of 2015 found that about one in six former NFL players end up filing for bankruptcy within a dozen years of retirement.

And it isn’t only football players who run this risk. There is a long list of lottery winners who burned through large winnings in a few years, and 70 percent of affluent families lose their wealth by the second generation, according to the Williams Group wealth consultancy. So where does all the money go?

Conspicuous consumption is the default answer, and sometimes spending unwisely is indeed the culprit. But while it is easy to judge football players who buy huge mansions and young adults with outsize tastes for designer shoes and the latest Apple gadgets, the reality is that people suddenly handling much more money than they are used to can easily fall into the trap of believing their newfound wealth will never run out, no matter what they do.

For instance, buying a house with the proceeds of a large divorce settlement may seem like a reasonable choice. However, expenses such as property taxes and upkeep, not to mention plans to remodel or expand, can quickly tie up a great deal of your resources in a way that is very hard to undo if you later realize that you don’t have enough cash to meet your day-to-day expenses or that you are not on track to meet your retirement goals. And if you buy something that will depreciate quickly, such as an expensive car or a boat, your prospects of reclaiming much of the original capital through a sale are even worse. The best way to avoid such outcomes is to make a plan before you make large purchases, not after.

Family and friends may also have a hard time understanding that your new wealth has limits. Many of those who have lost their wealth did so in whole or in part because they provided funding for risky ventures or faltering businesses. Your loved ones may also fail to understand why you cannot just pay off their debt or buy them better homes, and it can be difficult to say no to such requests from people you care about. One possible solution is to designate your financial adviser as a “gatekeeper,” so he or she can be the one who actually says no. Your adviser should also vet all business and investment proposals, even those that come from people you personally trust. This is not to say you can’t provide any support to family and friends, but such support should be part of an overall plan to make sure that it doesn’t undermine your own long-term financial well-being.

Making A Plan

So if planning is the best way to avoid the pitfalls of sudden wealth, where should you begin?

First, you should assemble a team of professionals. One of these should be a fee-based Certified Financial Planner (TM) who is transparent about his or her compensation. This helps to ensure your adviser’s interests are aligned with yours. You may also want to consider a separate accountant or tax expert and a wealth manager, depending on what services and expertise your adviser offers. An estate planning attorney will also be helpful. Researching and vetting these professionals may take some time, but it is the first step in making sure your choices are shaped by those with sufficient experience to offer you the best advice possible.

Once you are satisfied with your advisers, the next step will be to determine whether your windfall has tax implications. While an inheritance or life insurance proceeds are not typically taxable, an exercise of stock options, the sale of appreciated stock and a lottery payout are all taxable events. Your accountant will be able to tell you whether you owe taxes, and if so, how much your total tax bill will be and when it will be due. Set aside any money you will need to cover state and federal tax liabilities before you start planning how you will spend and invest the remainder.

After setting aside the portion to cover taxes, a logical next step is to consider your debt. In most situations, it will make sense to pay off any outstanding “bad” debt right away. What makes debt bad? Generally, it is when you use debt to buy something that immediately decreases in value. The most common debt of this type is credit card debt, but if you have a line of credit at a particular store or an auto loan, those are also forms of debt it typically makes sense to pay off quickly.

“Good” debt is debt that creates value. For instance, educational loans, business loans and mortgages are all forms of debt that can produce long-term wealth and may offer tax breaks in some situations. Work with your financial adviser to get a more complete picture of what repayment schedule makes the most sense for these sorts of debts. For instance, you may do better to repay your student loans more slowly while investing more for retirement; in other situations, especially if your income phases you out of tax benefits such as interest deductions, paying off loans more quickly to reduce overall interest paid may make more sense.

Once you’ve set aside funds for your tax liabilities and assessed your debt, you should work with your adviser to develop a budget. This will serve as a road map that will allow you to preserve your new wealth and ensure you don’t outlive it – or even watch it grow, if that is your ultimate objective.

Just like any budget, your new plan should start with your income, including earnings, investment income, retirement benefits or any other income source you expect over time. It should also include your living expenses. The common adage, “don’t live beyond your means,” applies here: Use your budget to make sure annual living expenses don’t exceed annual income. If they do, you will need to reduce your expenses, increase your income or both until the income exceeds the output. Otherwise, you will need to dip into savings or sell investments to cover your shortfall. In certain situations, such as in retirement, this may be necessary; in these cases, you will still want to avoid invading principal too quickly, and thus risk exhausting your wealth during your lifetime.

Your new budget will necessarily make certain assumptions about inflation and the rate of return on your investments. Of course, no one can predict these with certainty, which means your budget will need some built-in flexibility. More importantly, your budget should be flexible because that makes it more likely you will actually stick to it over time. Set a budget too rigidly, and you run the risk of abandoning it altogether. A budget you ignore is useless, no matter how well it balances on paper.

A good budget will do more than simply ensure your income exceeds your living expenses. It should also allow for any large purchases you would like to make in the near term, such as a residence, a vehicle or a vacation. By including such big-ticket items in your budget, you can evaluate the implications before you actually make the purchase. This will allow you the confidence to move forward with an understanding of any adjustments or trade-offs the purchase may require.

Your budget will also help you with your next planning step: a long-term financial strategy. First, look to the future. Everyone’s financial goals will be different, and it is important to articulate what you specifically hope to accomplish in the years ahead. Some common concerns may be funding your own retirement, paying for a child’s education or future support, starting your own business or supporting charitable causes.

With the help of your financial planner and wealth manager, you can use these goals, your existing budget, and your tolerance for risk to develop a long-term investment strategy. While everyone’s particular financial plan and time horizon will be a bit different in the particular details, a well-diversified approach focused on the long term will be the best way to secure your financial goals. Your budget will be helpful in determining your target asset allocation (the mix of stocks, bonds and other investments in your portfolio), as well as the amount of risk you are comfortable assuming in pursuit of your objectives.

For example, if your budget in retirement will require you to draw down your investment portfolio, you may need to adopt an aggressive strategy – one heavily-weighted in stocks – to meet your goals in your later years. However, if such an aggressive allocation will be too much for you to bear, you may need to adjust your goals and the amount of money you plan to withdraw from your portfolio each year to settle on an allocation with which you will be comfortable.

Finally, your estate planning professionals will help you ensure that the wealth you worked hard to preserve and grow will pass to your intended beneficiaries upon your death. At a minimum, you should update your will – or create one, if necessary – to reflect your new situation. However, depending on how your wealth came to you and your long-term plans, you may want to consider more complex planning techniques, such as creating trusts or reconfiguring insurance arrangements. Competent professionals will be able to advise you on the best ways to go about making sure your wealth is protected beyond your lifetime if this is important to you.

bookmark_borderSeperating Credit Profiles

The first thing you need to do is create a “wall” or “shield” between yourself and your business. How you simply do this is start off with an LLC or Corporation. Next get your EIN number. Talk to your local experts on what your business model will be and what type of entity will best suit your venture. Remember this can still be done if you’re operating currently as a sole proprietor. Once you establish this corporate veil you will have taken the first steps on separation.

Next it’s important for people and other business to know you exist. You need to register your business with as many free directories as possible. Some of the simple examples are: Superpages, Yahoo, Google, Bing, 411 and so on. There are lots of directories out there so if you can register your business with as many as possible. You want to make it easy for ANYONE to find you. It can take a little bit of time to get your business listed on the search engines so don’t worry it will get there.

After you’re registered with directories you know want to establish your business with the business credit bureaus. Companies like Experian Business & Dunn & Bradstreet are just 2 of the many that exist. There are also smaller reporting agencies that operate in states and regions as well. Get familiar with as many as you have time to find. Once you’re established with the business credit bureaus it’s now time to move to the credit building part.

You need to start out setting up small accounts with vendors that report. There are thousands of vendors out there that extend credit in just the company name however there a few that actually report. It’s important to know who those vendors are and to obtain credit with them. After obtaining credit you will use and pay the lines of credit you established for a few months. Once your business has done this you now develop a paydex score. Paydex scores range from 1-100 so anything scoring 80 or above lets banks and lenders know you’re a great candidate to lend to. You pay your bills and pay them on time or before they are due. Business credit scores are based only off payment history so make sure you pay your bills on time, if you don’t it can hurt you. Then start applying for small lines of credit and credit cards from 2-5 different lenders in just the company name.

bookmark_borderBenefits of A Cash Loan

Is a numerical expression based on a balanced analysis of a person’s credit record, representing the credit worthiness of the person. Lenders like banks and credit card companies evaluate the potential risk exhibited by these persons when they apply for loans by studying their credit scores. In the present context, the loan agencies are hardly concerned about the credit score of their clients.

Customers have to fulfil the following criteria

  • Be at least 18 years of age
  • Provide proof of citizenship, such as social Insurance Number
  • Have a bank account in your name
  • Provide work and home telephone numbers
  • Provide a valid email address

Benefits of Cash Loans

  • Lower rates of interest than payday loans
  • The credit score is not an issue
  • Ease of getting loans
  • Payment plan can range from 6 to 60 months
  • Borrowers are given a choice of lenders, whose credentials they can go through and choose which one suits them the most. Some of them are almost like loan search engines.
  • Ease of applying and finding a lender on the same day
  • Poor credit loans are also available (these are loans at very low interest rates for those who do not have a good credit history)

These are very useful for paying off credit card debts. Banks refuse loans on seeing the outstanding credit, and the credit card company continues charging high interest. A good way to pay it off would be with this cash loan where the rate of interest is much less than what the credit card charges, and the credit worthiness of the person is not an issue.

This is one sort of institution or agency that clearly is on the side of the borrower, and finds lenders who are willing to understand their circumstances just like they do.

bookmark_borderTypes of Credit Lenders

When you do this your personal credit isn’t even looked at nor is it used for the lending decision but this is about the only exception in the business funding space.

All other funding types including advances look at and care about your personal credit. YES, you can get approved for cash flow financing and merchant advances with bad credit but your repayment terms won’t be nearly as favorable then if you had good personal credit.

SBA loans, conventional loans, most other long term loans, and credit lines do require good personal credit for approval in most cases. Collateral and asset type based financing doesn’t care about personal credit as much. This is if financing only looks at collateral for approval, not financing where collateral is required for approval.

There is no FCRA in the business world, so lenders will never disclose to you that they pull your business credit when you apply for business financing. But they DO pull your business credit!!!

Just think, you are applying for money for your business, and your business has its own credit profile and score. So of course they will want to see how the business pays its bills on top of how you do as the owner. There is A LOT of money available for business owners, more now than there has ever been in the past. You just need to know what type of financing to go after, once you know that you can more easily find what you need.

Not having establishes business credit makes you look like a rookie, a startup, a “non-established” business. This will lead to denial so insure you have at least 5-10 reported accounts and that you are paying them as agreed.

You actually have three types of credit: Personal Credit, Business Credit and Bank Credit. All three should be good to give you the best chance of approval.

bookmark_borderFast Cash Loans

Positive Features

Fast cash loans, true to their nomenclature, are really fast to come, as these are generally approved within a couple of hours, and they never take more than 24 hours to reach you. You can find many lenders online, and that makes it easier to make a choice for the mailing of your loan application. Of course, you can access those lenders in person too, but you’ll agree that an online contact is quicker and more convenient. Depending on your monthly earnings, lenders may offer your loan varying from just $100 to $1,500.

Such loans may be unsecured or secured. As you can guess, secured loans carry lower rates of interest and other fees, compared to unsecured loans. However, processing secured loans could take a bit longer due to the collateral offered by the borrower, as the lender would surely get the worth of the collateral assessed before approving the loan.

Unsecured loans, on the other hand, are approved very fast. In their case, the credit rating of the borrower is the deciding factor for the approval of loan. That happens because the lender is taking a higher risk. Good credit rating helps, as the lender would consider you capable of paying your dues within the prescribed time.

You can get two options for paying back your fast cash loan. One options is to pay back your dues to the lender through installments, the other is to ask the lender to withdraw the payments against the loan, plus the interest, straightway from the bank with which you have an account. You will find it helpful to realize that, generally, the date for paying back the loan is purposely scheduled on the day you get your paychecks.

Negative Aspects

The most important drawback of availing fast cash loan, especially the unsecured kind, is the unusually high rate of interest charged by the lenders. Another problem is the fact that, if you are unable to payback your dues as per the agreed schedule, you are forced to pay hefty fines.

Except for the above mentioned features, there are no other drawbacks of availing fast cash loans. Yet, both these drawbacks can be taken care of toa great extent by paying back your loan in time, and offering collateral at the time of taking the loan.

bookmark_borderStop Putting Off Important Financial Decisions

It is never too late (or too early for that matter) to start addressing one’s financial issues. By recognizing the need for a sound financial plan, you will be able to stop putting off important financial decisions while meeting both your current and future financial needs in the process. For all intents and purposes, this is our some list of financial reasons people tend to put off:

  • Automating one’s finances – helps individuals get into the habit of automatically saving a small percentage of their income on a regular basis.
  • Building an emergency fund – financial advisors recommend finding a savings account that offers the highest yield and making regular contributions to it.
  • Deciding when to retire – if you haven’t reached your 40’s yet, you should start saving towards retirement now because the element of time will be your best friend.
  • Deciding where to retire – you should have a plan in place for where you want to retire, otherwise you may be forced into taking what is available.
  • Developing a debt pay-off plan and sticking to it – there are a number of ways that you can prioritize your debts and start paying them off, but no matter what type of plan you develop, you need to stick to it.
  • Having life insurance – this is another financial decision that people oftentimes procrastinate about and one that could financially cover their family members in the event of their demise.

bookmark_borderImmutable Laws of Money Control

One day, a boat filled with sailors rowed past the cliff. A sailor spotted the goat, grabbed a bow and shot at him. As the goat lay dying he gasped “I thought my enemies would come by land. I never thought to look out to the sea”

Wealth is only guaranteed when your personal money making machine is made up of effective money generation and money retention system. A defect in either of these systems makes you vulnerable to poverty and financial failure. Unfortunately most people intending to make money often concentrate all their efforts on generating money with little or no attention on controlling money. This is like trying to save the life of an automobile accident victim by doing everything to get him to the hospital without stopping blood flow from his body. The truth is: he is likely going to die faster due to loss of blood than due to the injury sustained. You will remain poor more as a result of lack of money control skills than due to lack of money generation skills. This is true for individuals as well as for organizations.

Think about it this way, every time you save $100, you are automatically $100 richer. But every time you need to make $100 you will need to spend some money in other to make it, sometimes as much as $ 80. Therefore preventing yourself from losing $100 might be equivalent to making $500 or more. The first and most important skill of enduring prosperity therefore is money retention skills.

If you ask most people if they are good at controlling money, their answers will be a resounding yes. But this approach will give the kind of result you will get if you ask children if taking ice-cream is good for their health. The best way to know if you have money control problem is to answer the five questions below as sincerely as you can with a yes or a no. No one else needs to know what your answers are, but being sincere with yourself will put you on the path of enduring prosperity.

  1. Do you regularly find yourself in short-term and long-term non-business debt? E.g. You always have to borrow money or apply for IOU before the end of the month
  2. Do you find yourself borrowing money from people who earn less income than yourself? E.g. Sub-ordinates or non-working parents
  3. Do you find yourself usually involved in regret expenses? These are expenses you incurred and wished you had delayed for more important expenses
  4. Do you find yourself usually involved in emotional purchases or expenses? Buying things or spending money not because you need to but because of what people will say
  5. Do you find yourself regularly unable to meet expected and predictable bulk expenses such as: Children school fees, Maternity bills, House rents, Major car repairs
  6. Do you find yourself regularly dreaming of jackpot or sudden financial breakthrough and therefore frequently participating in different types of lottery or lucky dips

bookmark_borderFinding Financial Advisor

The fiduciary standard legally obligates advisors to put your interest before their own. Advisors that work under a fiduciary standard must disclose any conflict of interests and share with you whether they benefit from recommending any products or other professionals. They must be transparent as to fees the advisors gets for that advice.

In contrast, the suitability standard is a standard requires advisors to suggest investment products that are appropriate for you. There is no standard to conclude that the investment will help you achieve your goals or is in your legal best interest. Also, there is no requirement to fully disclose any conflicts of interest, potentially allowing an advisor to recommend products that may provide higher commissions for themselves instead of similar products with lower fees.

There are wonderful advisors and poor advisors that work under both the fiduciary and suitability standard. We work under the fiduciary standard and highly value the trust we know it provides.

An advisor’s professional designations and experience matter. It gives you great insight as to the advisor’s knowledge and areas of expertise. There are over 100 different types of credentials and they can be very confusing. If you are looking for a financial advisor, you might be well served to at least be familiar with these three credentials that reflect a broad level of training and commitment:

CFP® – CERTIFIED FINANCIAL PLANNER ®

CFP® professionals have completed university level financial planning coursework, met experience requirements, and passed the CFP® board’s rigorous exam covering 72 topics ranging from investment and risk management to tax and retirement planning, legacy management and the integration of all these disciplines. They also commit to ongoing education and a high ethical standard. More information: http://www.cfp.net

CFA® – Chartered Financial Analyst ®

To earn the CFA credential, professionals must pass 3 rigorous exams, each of which demands a minimum of 300 hours of master’s degree level study that includes financial analysis, portfolio management and wealth management. Professionals must also accumulate at least four years of qualified investment experience and annually commit to a statement of high ethics. More information: www.cfainstitute.org

CIMA® – Certified Investment Management Analyst®

CIMAs focus on asset allocation and portfolio construction. The program of study covers 5 core topic areas and applicants must meet experience, education, examination and ethical requirements. CIMAs must also commit to ongoing professional education. More information: www.imca.org

Make sure you seek out an advisor and firm that fits your needs. If you need someone to help you with your investing, you might seek out a firm that has a range of investment solutions such as an asset management firm.

If you need help assessing your current circumstances and creating a plan for you to reach various goals in your life, you might seek a financial planner. This advisor can help you consider retirement and college needs, tax strategies, risk management and possible wealth transfers.

If you need both financial planning and investment advice, then you should seek a wealth manager. This advisor has broad expertise and takes a holistic approach to guide you through comprehensive planning and portfolio management.

Don’t be shy; ask about fees! Every professional deserves to be paid for their expertise and services. By understanding how the advisor is compensated, you can determine whether the advisor’s interests align well with yours.

Commissions only – these advisors are compensated based on the investment products you choose such as mutual funds, structured products, insurance policies or annuities they buy or sell for you.

Fee only – Independent advisors often offer fee only advising. Their fee is often stated as a percentage of the assets they manage for you so that they, too, benefit if your portfolio grows and are penalized when it declines. They may also offer fixed fees for specific services.

Fee-based – these advisors may charge a fixed fee for financial planning services they provide and collect a commission on any financial product you buy or sell. These may include mutual funds, Real Estate Investment Trusts (REITs), annuities and insurance.

bookmark_borderMistakes Most Investors Make

Improper Asset Allocation

Most investors have their assets dispersed with several advisors and several financial firms. No single advisor knows what the other is doing resulting in an uncoordinated portfolio. One advisor in firm A might be selling the very asset that an advisor in firm B is buying. Unless there is one coach reviewing the entire portfolio, then your money is not coordinated.

Your asset allocation should always reflect your current position in life, your current goals, future, feelings and family characteristics. When your hard earned money is scattered to other advisors and institutions, you alone are left to properly manage your portfolio. Many individuals are not trained to monitor this correctly and consistently. Unfortunately, the overall plan suffers.

Improper Correlation Within Investments, Managers and Funds

Without saying, each investment needs to be excellent on its own. The investment, manager, or mutual fund needs to have a strong track record (I like a ten-year record). You might be able to select quality investments. That’s not the problem. Where the breakdown occurs is knowing how these investments interrelate. This is nearly impossible to track when one advisor is doing one thing, and a different advisor is doing just the opposite.

Let’s think about a recipe analogy. You might have the best ingredients to make your favorite dish. You might even have quality chefs at your beck and call, ready to make this dish for you. If you put all of these chefs in the same kitchen, but don’t let them know what the other is doing, a culinary disaster awaits. You can see that the likelihood of your dish coming out correctly is very low, no matter how good the ingredients were. Same is true with your investment portfolio.

Failure to Monitor the Consolidated Portfolio

You know life is not static. Life is constantly changing. Whether it’s your job, children, the economy, world events, new laws, unplanned expenses (and the list goes on and on), your world constantly moves. Your entire portfolio needs to be dynamic as well. When market forces move, the properly managed portfolio needs to move with it. I am not talking about day-trading, but rebalancing when and where appropriate. Additionally, your goals, future, feelings and family characteristics are changing as well. Every day is either a day closer to your goals, or not.