5 effective ways of managing personal finances

If you are trapped in financial problems which are increasing day by day then you are not alone. According to a recent survey conducted in US. It is estimated that more than 80% of the total world’s population facing severe debt issues. The worst thing is that even developed countries are facing severe challenges along with the developing and under-developed countries.

Controlling personal finances:

This is the most common question usually asked by the person. Though the global economy is not in our control however we can have control our personal finances for ensuring a better life.

There are some easy to follow tips for managing the personal finances. However, these five are really be helpful for you in managing your finances and bear positive results.

  1. Keeping track of every single dollar you spend:

The one and the most important tip is to keep a record of every dollar that you spend on daily basis. This can be done by writing down all your transactions. You may write down manually or use a financial management software. There are various software available for this purpose. This single habit will help you find the root cause of your financial problems and enable you to solve this problem.

  1. Don’t spend more than you earn:

Majority of the people face financial instability just because their expenses exceed their monthly income. It is important to keep track of your monthly expenditures and then spend money likewise. If you are spending more than you earn then it is the right time to make a change by limiting your expenses.

  1. Adopt thinking of an investor or a businessman:

A businessman and an investor always look for a business opportunity. He finds avenues to invest his income to earn money. If you want to live a financially stable life, it is important to think and act like a businessman. It would be better off if you can invest in a stock market or go for a fixed-deposit. Investing in a real state can also yield high returns. Another way to increase your revenue is to rent out extra potion of your house or doing a part time job in evenings. There are also other ways like freelancing and online earning methods, which can help you to make some extra money. There are million ways to earn extra money.

  1. Simple lifestyle can be helpful

Sometimes we have enough income but still we face severe financial problems which are mostly created by ourselves. This is the result of discrepancy between his/her earnings and lifestyle. It is a matter of fact that mostly people just keep on following other people’s lifestyle and adopt luxury rather than living a simple life. It is advisable to live in your limitations, and live a life which is affordable.

  1. Financial Planning

Lastly, another important thing is financial planning. If you want to get rid of any tensions in your life and want to live a better life, it is important to do financial planning. Budgeting is one of the most effective methods of financial planning which can enhance your chances to secure financials for future. If you are good at managing your finance, you can do it yourself otherwise hiring a financial advisor can be a good option as well.

Also, there are some other techniques which can help you make a better financial plan:

  • Bargaining while shopping as much as possible
  • Getting insured
  • Make savings a habit in your daily routine
  • Getting rid of loans as much as possible
  • Try to fulfill your basic necessities instead of going after luxuries

Through following these rules, you can live a happy life free of debt and loan. However, initially, these habits will take time to form but once established you will be able to save money and in the best case, you will also invest your money for future benefits.

4 ways to change your mind-set about money

It is quite important to remember that if you always do what you have always done, you will always get, what you have always got. When we feel like we are stuck in a rut, when it comes to finances, we need to devise a proper strategy and changed mindset to get out of this situation. It requires a major change in the mindset to get the desired results. There are always new ways to look at things so it means that making a change in our perspective and willingness to change.

There are four ways through which we can change our mindset:

  • Relationship with money

Take time to figure out your relationship with the money matters. How do you feel when you spend some cash? Similarly your feelings when you save some cash for future use. Are there any specific moments in your life when you felt like spending money and what was the main reason behind that? Beware of the emotions that play an instrumental role in your money matters. Track these emotions and see if any patterns of your spending & savings emerge. It is quite important to figure out your spending habits and understand that where your money is going, only then you would be able to make a shift in your mindset regarding money issues.

  • Spend consciously

It is important to be aware of the fact that where your money goes. Take out time and look at your spending habit carefully. Are you consciously spending your money or is it just sliding through your fingers and you won’t able to solve it. Try to track your expenses even if you start for a week. Keep a track record of all your expenses for a week and see where the money is flowing. This will enable you to think about your spending patterns. You might get surprised to see where your money goes actually. Also, do not ever adopt a lavish lifestyle which can cause you trouble afterwards. Keep your lifestyle simple with doable goals and aims.

  • Share your plans

Whenever we talk about our plan in a public domain, there are more chances that they will actually happen. Experts say when you take out your plans from you to the outside, they are more likely to happen. Not only, it will create a support system for you but it will also increase your chances of success.  Moreover, if more people would know about your goals, you’d also be conscious to come up with what you initially planned and move forward to complete your goal with full dedication and commitment.

  • Money games

Make a game of saving money. For e.g. you should never spend a coin of $2 and always save this coin. In the end, it will help you to make savings easier and at the end of the day you will be able to save enough amount of money to enjoy vacations or buy something new. Set deadlines and make it fun. Set a goal in your mind and then try to achieve it with full rigor and commitment. Saving goals can be really fun and rewarding if you can be strong enough to follow them and have audacity to fulfill it.

These are quite useful tips when it comes to change your mindset regarding money matters. However, most of the people do not understand these simple tricks and make their live a lot tougher when it comes to financials. If they can’t keep a strong eye on these few things, they might get into the trouble of debt. Once you are trapped in debt, it is quite difficult for you to get out of it. Hence, it is important to apply a safe approach towards handling finances and get most out of every situation of life through having a firm control

An Overview of the Mortgage Process

House hunting can be an exhilarating process as you try to pick that perfect property. Applying for a mortgage isn’t nearly as much fun. Following is an overview of how the mortgage industry works.

An Overview of the Mortgage Process

You have a nice chunk of money saved away for a down payment. You have started shopping for a home or have found the perfect property. It is time to enter the world of financing, better known as getting a mortgage. Before entering the labyrinth, it might help to get an overview of how the mortgage process works.

A mortgage simply is a debt instrument that acts to secure a cash loan to you on a home. In exchange for giving you the money, the lender puts a first lien on the prospective home for loan amount. If you default, the lender can foreclose and sell the home to recover the debt amount.

In mortgage industry terms, applying for a mortgage is known as originating a loan. To originate the loan, you will first have to find a lender you are comfortable with. You may have a close relationship with a bank that will suffice. Many will find it advisable to use a mortgage broker to shop for the loan that best meets their needs. Different lenders offer different loans and terms.

As part of the origination process, you will fill out a lengthy loan application. Depending on the nature of the loan, you probably will also be required to submit documentation supporting your claims of income and so on. There are no document or partial document loan applications, but most people don’t qualify for them. Once your application is submitted, a lender inevitably will ask for more information or documentation. Depending on how the review, known as underwriting, goes, the lender may decline or accept your application. Often, the lender will add a stipulation to the loan that cover issues it is concerned about.

Once you are granted the loan, you will close on the residence you are after. Most people are then very surprised by what happens. Inevitably, your mortgage lender will sell the loan to another entity. To raise cash to issue more home loans, lenders sell their current stock of mortgages on a secondary market. Your lender may continue to handle the administration of the loan, but will often just hand the entire thing off.

Your mortgage will be terminated at some point in time. Positive reasons can be the sale of the home, refinancing or simply paying off the balance. Negative reasons can include default or bankruptcy. Regardless, the above represents the basic structure of the mortgage industry and how your loan moves through it.

Can I Pay My Mortgage With A Credit Card?

Yes you can. There are two ways to make a mortgage payment with your credit card.

The first way is to use the convenience checks that credit card companies send out every so often. These checks work like those you would write from a checking account, but they draw against your credit rather than available bank funds. You can write, sign and mail these off to mortgage companies.

The second way is to use an online billpay feature (such as the type available at MBNA). This allows you to pay a certain amount to the specified company. The amount will be drawn out of your available credit and paid to the mortgage company similar to a check.

The downside to these two methods?

You won’t receive any cashback, miles, points or other credit card rewards for these transactions; which is the main reason for paying with a credit card anyway.

So, is there a way to pay with a credit card and still get the bonuses?

Yes there is. Well, there was.

There was a time when you could purchase Charter One gift cards using your credit card. These worked just like ATM/Debit cards and could be loaded with up to $500 each.

Basically you just needed to purchase these gift cards, take them to an ATM and pay the withdrawal fee (around $3) and pocket the $497 cash, while still receiving your credit card bonuses. You could then deposit enough cash to pay your mortgage and write a check to cover the payment.

Of course, this all required a lot of planning, but being able to get cash from a credit card without paying huge cash-advance fees AND still getting your bonus rewards is a huge plus.

Naturally, this program was abused in this way, and when they realized they weren’t going to make much money from it, the program was cancelled.

But be on the lookout for another loophole like this, because they come up all the time!

Cash Grants for First Time Home Buyers

When was the last time somebody credible offered you thousands of dollars in free money? For most of us, that just doesn’t happen every day, or ever at all, for that matter.

However, if you are considering purchasing your first home, there are very credible sources that genuinely do want to give you thousands of dollars in free money.

Those sources are state and federal agencies, and the thousands of dollars of free money available comes to you in the form of a cash grant to help you buy your first home.

It is no secret that saving for a down payment and closing costs is the largest obstacle that first time home buyers must conquer. For millions of Americans, this obstacle is one that is nearly impossible to over come. After paying monthly rent, utilities, food, insurance, car payments, (as well as the high price of gasoline), clothing, phone bills, day care for the children, and many more recurring monthly bills, there is virtually no money left to set aside to save for a down payment for a future first home.

The federal as well as state governments recognize this situation and have created special programs for the very purpose of giving away money to help people in need buy their first home.

A reasonable person might assume that as soon as the money is available at the respective agencies, it is completely given away within hours, if not, days. It seems entirely logical that on the day the money becomes available hundreds and hundreds of people would line up just as fans do on the day that U2 concert tickets go on sale.

A reasonable person would be wrong.

Each year, the majority of state agencies do not completely exhaust their funding. For fiscal year 2006, only two states had requests in excess of their budget and ran out of money in their programs. For the first time home buyer, this is very good news. It means that there is currently money available to help you buy your first home.

The primary reason that the funding isn’t exhausted every year is that the programs are not widely advertised. There are 3 ways you can learn about these programs: you can buy the information, you can contact your state representative, or you can go to a website that provides all the information for free.

Whatever method you choose, you stand to gain thousands of dollars in free cash assistance towards the purchase of your first home. Choose one method and take action. Today could be one of those very rare days that a credible source offers you thousands of dollars in free cash.

Credit Factors to Consider before Using a Debt Negotiation Company?

A relatively new approach to debt resolution, debt settlement or debt negotiation is the process of negotiating with creditors to lower the amount that you owe, typically by as much as 50 to 60 percent. A settlement offer is only attractive to a creditor when a consumer is behind on their payments. The reason why this is the case is that statistically a past due debtor is far more likely to either 1) file bankruptcy; 2) never pay the creditor at all; or 3) cost so much money in any collection efforts that a settlement offer is more profitable for the creditor. The financial incentive of debt settlement is clear for the consumer: you are able to cut your balance in half and presumably eliminate interest altogether. The main downside is that since you have to be past due in order for a settlement to be reached your credit will most likely suffer.

• Debt Settlement and Consumers with Good Credit: The impact should be pretty significant, particularly in the short-term. If you have high balances, however, then even your positive credit history is being weighed down by the negative effect that the amount you owe is having on your credit. This being the case other factors that you should consider are 1) when you anticipate using your credit again and 2) what other options are available to you. If you’re retired and not planning on getting another mortgage, then debt settlement is still probably your best option. If you’re 30 years old and planning on buying a home in the next year or two, I’d probably reconsider. And by reconsider, I mean I’d reconsider debt settlement and getting a house. If you’re buried in minimum payments, then the last thing that you should be thinking about is adding on more debt. If you have no real assets (equity in your home, for example), then debt settlement may be a suitable solution because you don’t have any options at your disposal that don’t affect your credit negatively. On the other hand, if you have a lot of equity in your home, then it may be your best option to tap into it because the credit impact of debt settlement may cost you more in the long run if you try to refinance or buy another home.

• Debt Settlement and Consumers with Average Credit: As a result of debt settlement you will still take a sizable hit in the short-term, but it will be far easier for consumers with average credit to restore their score to where it was when they entered the program versus consumers with good credit. Keep in mind, if you’re the sort of consumer that has always made payments on time, but you’re still stuck with a mediocre credit score, then it’s probable that in the long-run debt settlement will help you by eliminating the debt that dragging down the amount owed component of your credit score. With some proactive rebuilding after completing your debt settlement program, you should be in a better position to obtain a loan than when you contacted your debt negotiation company.

• Debt Settlement and Consumers with Bad Credit: For those of us with bad credit (600 FICO score and below), the impact of debt settlement may still be negative in the short-term, but the credit impact will be so negligible that the savings from enrolling high interest credit cards will most likely overcome it. Moreover, if your accounts are already in collections and charged-off, then debt settlement will likely improve your credit score since you’d be paying off seriously past due accounts. If you fit in this boat, then debt settlement is an ideal fit because you save a lot of money while sacrificing much less from a credit standpoint.

Is Life After Bankruptcy That Bad?

It seems that some people do not recognize that dispite some unpleasant aftereffects, bankruptcy is truly a “fresh start.”

Instead of being satisfied with the benefits they receive some people remain unhappy.

Here is a letter I received:

“Why does it take attorney’s six or more weeks to discharge a chapter 13?

Why do apartment leasers hold a bankruptcy against you when I don’t see how you could add apartment rent onto your bankruptcy?

If life is so miserable after a bankruptcy, why are lawyers constantly telling people it’s okay to file. (They want to get paid.) “

My response:

“Six weeks for a discharge isn’t that long and may well be governed by the schedule of the bankruptcy court.

Some landlords may not want to rent to someone with bad credit. They may feel that they will have to chase the renter for their money. Dispossessions are time consuming and expensive.

In many cases the landlord will get possession of his apartment, but may never recover the unpaid rent.

While the court proceedings drag on, the landlord has lost a part of his source of income. So he haa a right to be careful.

However life is not that bad after bankruptcy. Debtors used to be sent to jail.

Not too long ago, bankruptcy would mean that the bankrupts would have to carry a stigma for life. Many committed suicide rather than face the disgrace.

Many people who went bankrupt during the Great Depression spent years paying off their discharged debts as a matter of honor.

Now nobody much cares. You will be able to get credit. Your debts have been wiped away. What more can you ask for?

You were the one who ran up the debts, whether through bad luck, bad planning or the simple inability to control your spending.

You did contract to repay the money and you didn’t.

For the most part you are now free of the pain and pressure caused by your financial problems. You will face some obstacles over the next few years, but you should have realized that before filing.

You approached a lawyer, not the other way around. I’m sure the lawyer didn’t twist your arm to force you to file. If you’ve gotten your discharge, be happy, restart your life and live with the consequences.

Things could be worse.”

In my opinion this person needs an attitude adjustment.

Debt Collection–Tips for Dealing with Old Credit Card Debt

The business of debt collection has become very lucrative and the collection of “old” debt is on the rise. It would be wise to know your rights when it comes to getting collection calls for old debt especially debt that is excess of seven years and no longer appears on your credit record.

1. Be aware of the statute of limitations in the state you live and in the state the debt was incurred if they are different. If it has expired, the collection agency will have limited legal options.

2. You may want to ignore the call. If the statute of limitations has expired they have very little recourse and you have a lot to lose by negotiating repayment. Repayment could cause it to be relisted on your credit report again.

3. Write them a letter and send it certified mail. Do not admit to the debt. Once they have received the letter the law prohibits them from contacting you again.

4. Know what your rights are. A copy of the Fair debt Collection Practices Act or a copy of “Money Troubles” by Leonard will familiarize you with what your legal right are.

5. Watch your credit report. If you see something on your credit report that is incorrect, you can dispute it with the credit bureau. If the reporting agency or creditor can not prove that the information is correct, it will be removed.

6. If the statute of limitations is still current, you may want to try to work out a settlement with the agency. Negotiate with them and see what you can get worked out.

Collections has become a very lucrative business. Knowledge is power. You will best be able to handle your debts if you know what your rights are and where you stand.

Curing Yourself from Leaky Wallet Syndrome

Financial stewardship of a business empire or $100 bill require a particular psychology if they are going to survive over time in the same hands. The lack of this same psychology is why most lottery winners cannot hold onto the giant sums of money they receive; and I call this psychological mind-set the “Leaky Wallet Syndrome”.

The difficulty with holding onto money is that it only takes a single weakness to lose it entirely. By weakness I mean that something has caught your eye that is so desirable that you will buy it spite of the fact that you cannot afford it. Whatever this purchase or payment may be, it psychologically reaches your personal threshold where having something right now is more important than having something tomorrow. There is a trigger that sets aside your normal, balanced decision-making with instant gratification. In my opinion, it is similar to dieting in that you have to eat food, but there are consequences if you continually eat even a little too much. Likewise you need to spend money, but there is a predictable consequence if you continually spend even just a little too much.

Let me list some of the common categories where people could have financial weakness: vacations, clothing, cars, shoes, personal electronics, charities, collections of any kind, books, Christmas gifts, watches, pets, jewelry, relatives, dining out, boats, hobbies and sports activities. And these are only single leaks in your wallet, if you have many of them your wallet could be in more serious trouble.

If you’ve never felt like you’ve had much “extra” money, you may not be aware of what your financial weaknesses may be. They may not show up until you receive a sudden windfall (annual bonus, tax refund, pay raise, inheritance, lottery winners), and you are not familiar with or prepared for your psychological pressure to spend money. If you want to know a few of your weaknesses, think about some of the items at the top of your list that you would buy if you had the money. How many of these items would seem like reasonable purchases to friends and family vs. how many would seem like ridiculous extravagances?

If you are still not sure if you suffer from Leaky Wallet Syndrome, your checking account may tell you: Do you have money leftover at the end of every month? Are you unable to payoff your entire credit card balance each month? Do you have any past due bills? Do you hide your checking account or avoid balancing it?

Let me give you a couple examples. An acquaintance of mine has three children, and in my view, is financially prudent in all matters except for one. And this single weakness has caused her to continually have trouble with high levels of credit card debt. She’s had this debt problem as long as I’ve known him and his only weakness is a particular self-help seminar. At least once a year, if there is room on her credit card, she attends one of these seminars and charges it all to a credit card. I don’t see her do anything with the information that she learns, and she feels it is so important, but I fear that she is sacrificing her family’s financial future.

I’d rather not see any more exposés about non-profit organizations spending their donations on supercomputers to analyze direct-mail campaigns instead of their stated cause. In another example, an acquaintance’s grandmother has a weakness for requests that she receives from left-wing political organizations. If a direct-mail piece lands in her mailbox, then they are guaranteed to receive some donation from her – no matter that she can’t afford it. And like a good poker player sensing weakness, the fund raisers now flood her mailbox with donation requests.

Leaky Wallet Syndrome doesn’t only afflict individuals. A family-friend is a business turnaround consultant for private companies. He says that the majority of the time his services are called during the third-generation from the business founder. The founder builds a successful business and the second-generation coasts on this success, and is mentored by the founder. But by the third generation, the business is supporting so many family members on the payroll that don’t contribute value and family infighting prevents any efficiency or reform, that only Herculean effort from an outsider can save the business from so many forms of overspending.

You don’t have to look far from home to find Leaky Wallet Syndrome (has anyone seen my Ferrari? I mean my Ferrari keychain with a used Honda key?), but all the leaks in your psychology need to be plugged before you can successfully move toward your financial goals. And this effort also helps prepare you for any windfalls that would quickly leak from your wallet.