Do Not Allow Lifestyle Debts To Destroy Your Future

By on April 23, 2013 in Credit Cards, Debt, Professional Posts

wipe off your debtNot all debts are the same. While some debts actually help develop your asset base and can make you wealthy over time, other debts are like a cancer, growing slowly but surely to ultimately destroy everything that you work so hard to build.

Replacing bad debt with good debt can take many years of concentrated effort. It is much easier to make correct debt decisions from the outset.

Debt habits form and early age

We learn spending and saving habits from our parents. If we have come from a family that did not believe in investment, a family that was always struggling with debt, always short on money, it makes it far more difficult for us to make wise financial decisions in our early 20s. Everyone needs to have a role model when it comes to money management.

Too many young Australians borrow to pay for holidays, jewellery, weddings and the like. We regularly witness the fallout of unwise debt decisions made in their early 20’s still haunting people in their late 30s.

Our banking system encourages people to live beyond their means. We are offered credit to enjoy things today and pay for them later. Borrowing for a wedding leaves you with a great photo album and a video, and a crippling debt problem to grapple with for years to come. Unfortunately some wedding loans have a longer life-span than do the marriages they financed.

Budget before spending

Any successful investor knows the importance of budgeting. Unless you come from a very wealthy family where access to funding is pretty much unlimited, choices need to be made and money needs to be assigned to “essentials” and the “nice-to-have”.

A budget is a financial plan of how you intend to spend the money that you earn. If you are left short after you have assigned money to your expenditure categories, you clearly need to either find ways to increase your income or reduce your expenses.

It is indeed that simple. If you would like to buy a house by the time that you are 30, a deposit will not magically appear in your account when you turn 29. If you do not put a budget together that allows for you to put some money away towards a deposit every year, it will not happen.

Budgeting helps to make sure that the money that you need to pay for rent, utilities, food and entertainment is set aside and available. Budgeting helps highlight if you are running out of money and assists one to plan for upcoming larger expenses such as a holiday or a wedding.

Effective use of credit cards

Credit cards are a great money management tool. They offer borrowers access to free money for up to 50 days. That means anything you buy on credit, will cost you no interest if you pay the card off in full every month.  Anyone who does not pay out their credit cards in full at end of the month is either living beyond their means today or did so some time in the recent past.

If you use credit cards but pay them out at the end of the month in full, then you are demonstrating that you are in control of your money.

If your credit card balance is not being paid out but is in fact increasing, then you are the kind of credit card customer that card providers love. They can count on you contributing lots of money to their bottom line.

The rules with credit cards are simple, if you can not pay it off by end of month, do not buy it!

Borrow to invest

An investment is any asset purchase that you expect to grow in value over time. Most people think of shares or real estate as an investment. However an investment can also be a piece of art or antiques.

The rule with borrowing to invest is clearly the increase in asset value plus any income that the asset is expected to generate over time should exceed the costs associated with its finance.

There is nothing wrong with investment debt. Because this is the debt that helps you grow your asset base and your wealth.

However even with investment debt one needs to be very prudent.

Borrowing with a small deposit can leave you trapped in your current mortgage, unable to refinance to a different lender for a better deal. This is the situation currently facing many Aussie homeowners who bought their homes on 5% deposit during 2008 and 2009. Most of these properties are today worth less than the mortgage debt secured against them.

Those unlucky enough to lose their job while living in a house with negative equity can quickly see their debt problems multiply. If you need to sell the house because you can no longer afford to cover your mortgage payments, there is very likely to be a significant shortfall.

We speak to people who have gone from being homeowners to having no home and being in debt to the bank to the tune of $30,000 after their property was sold. This can be a very hard debt to repay and can push families into bankruptcy.

 Debt Problems?

If you have hit hard times and are finding it difficult to keep up with debt obligations, speak to your credit providers and seek special hardship consideration to help you catch up and recover. Credit providers have a legal obligation to do what they can to assist borrowers experiencing financial hardship.

Looking for assistance from debt consolidation professionals to help you get out of a difficult situation? Please give us a call on 1300 Debt Solutions or visit our website at www.debtsolutions.com.au
photo credit: Images_of_Money via photopin cc

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How To Save Money? Get The Right Savings Habits

By on April 5, 2013 in Featured, Professional Posts, Quick Money Saving Tips

How To Save MoneyIn this short video, we highlight why some people like Melissa get ahead with their savings and investments, while others just like Geoffrey, struggle from one pay-day to the next.

Developing good savings habits with money will lead to a better budget, more savings and greater investments for your future.

This video appeared at Humble Investors and was presented by Darren Wright

The advice in this short video is simple but very effective – Enjoy
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How-To-Guide On Getting Your Assets In Order

By on March 28, 2013 in Five Ways To Invest, Professional Posts, Retirement

How To get Your Assets In OrderIt is crucial to ensure your assets are in order, at all times. One of the main reasons is to protect your money and property against the unfortunate possibility of a terminal illness, or worse – death.

There’s no way of knowing when a terminal illness may strike, so it’s worth ensuring that your assets are organised and protected at all times. I mean, why would you? You are young and healthy- getting sick is the least thing on your mind right now.

However, as with anything in life, nothing is guaranteed and you can bet your bottom dollar that something will happen when you least expect it.

So what should you do? Here, the experts at www.cheselden.co.uk have put together a helpful guide:

Get a will

The first step is to make sure that your will is up to date. Without a valid will, your estate will automatically pass to your spouse if you’re married, or to your children if you have them; or to the closed living relative. If there is no will and no-one had a legal claim to your estate, your assets will revert to the state.

Having a will means that you can specify who you would like to inherit your assets, and also allows you to divide your assets between multiple persons. This can be especially useful in avoiding Inheritance Tax, which may apply to estates with a value of greater than £325,000.

So if you don’t want your assets to automatically pass to someone, you need to get it down in writing.

Record everything you own

Your estate consists of the value of your assets, minus the cost of your debts. If you die, the beneficiaries of your will cannot receive anything until a Probate has been issued, confirming the net value of your estate.

Probate settlement can sometimes take years, especially when the deceased has failed to keep accurate records. You can help to avoid this by making sure your records are in good order right now. Make a list of everything you own, including property, savings and investments.

Make a similar list of all outstanding debts; this will give you an idea of what you might leave behind, so that your estate might be settled quickly. Gather and file all paperwork relating to these items and store them in a secure location.

Try to make it as easy as possible for someone else to get their hands on the relevant information. If it is locked by a password or key, ensure that a trustworthy loved-one has access.

After all, you wouldn’t want to pass with the knowledge that your loved-ones are going to have to fight tooth and nail for several years, simply because you failed to record your estate accurately?

Don’t forget your pension

Remember that your pension is also an asset. You can nominate a beneficiary to receive your tax-free lump sum, if it has not already been claimed.

Additionally, it is important to know how to cover your care home fees, so that your assets are protected.

The article was written by Cheselden, the UK’s leading continuing care review specialists.  They are the only company with a panel of clinical experts dedicated to continuing care claims, so if you believe that a loved-one has wrongly paid care home fees, you can claim it back- even if they are now deceased. 

image - Twobee Freedigitalphotos.net
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Why Choose Car Finance?

By on March 25, 2013 in Debt, Professional Posts, Quick Money Saving Tips

While many of us would love to be able to save up enough money to buy a car upfront, in reality, it’s not an easy thing to manage. Finding an extra few thousand dollars in your budget can be tough enough, never mind finding $20,000 to pay for a new car.

When you need a new car, you need a new car. Your old car may not wait around long enough for you to save up thousands of dollars to replace it. So, what are your other options?

Many people opt for a car loan to finance the purchase of a new car. A car loan allows you to borrow the money to purchase the car, and then pay off the purchase in installments over a certain period of time.

When you are choosing a car loan, you will need to decide how long you want the loan to last for. This will normally be determined by what you can afford to pay back each month. Loan terms range from 1-5 years, although some can last longer.

It’s worth bearing in mind that although a loan over a longer time period will mean lower monthly repayments, you really don’t want to be stuck paying off your car loan long after the car itself is dead.

In order to work out the most affordable car loan option, it can be a good idea to use a car loan calculator. A car loan calculator can allow you to compare car loans so you can work out how much each loan will cost you overall.

It can also help you to work out how much you can afford to repay each month, and how long you will need to pay off the loan.

While taking out a car loan will mean you have to pay interest, the interest you pay can be kept to a minimum. One of the main things that will affect the amount you pay in interest will be your credit score.

When you apply for a car loan, the lender will look at your credit file to evaluate how much of a risk you are. If you have bad credit or no credit, then you will be seen as a higher risk.

This is one of the main reasons to check your credit file before you apply for a loan. You can apply for a copy of your credit file online for free from a credit reporting agency such as Dun & Bradstreet or Veda Advantage. If you notice any errors on your credit file, ask to have them corrected.

When you are looking for car loans, shop around and compare the market to find the best option. Read the small print and find out what the lender charges in loan fees. Use the information from the car loan calculator to choose the best loan option for your budget.

Applying for a car loan is usually a quick process, and you can often receive a reply within minutes. Which means you could be on the road in your new car within days, not years!

This is a post from Car Loan World - Australia

photo credit: ndrwfgg via photopin cc

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Fixed Interest Vs Variable Rate For Car Loans – The Pros and Cons

By on March 15, 2013 in Professional Posts, Quick Money Saving Tips

fixed interest vs variable rate car loansThis article was proudly written by CarLoans.com.au Pty Ltd for more information or any questions feel free to contact us at our website –  CarLoans.com.au.

There are a range of factors to take into consideration when deciding on using a secured fixed rate car loan as opposed to a variable rate car loan.

The most obvious difference is whether you require locking down your interest rate for the whole term of the loan with a fixed rate. This gives you certainty of the periodic payment, which is great for assisting with your personal budget.

However, most fixed rate loans come with early termination fees if the loan were to be finalised earlier than the agreed term and this should be a consideration in regards to your decision making as to what your plans are with your loan and how early you plan to pay it out, if at all.

With a variable rate car loan, the lender has the ability to change the interest rate where it can fluctuate with the market and may move closely to what the Reserve Bank of Australia (“RBA”) is doing with the cash rate; however in recent times, lenders have also been moving their interest rates independently of the RBA’s movements.

A Variable rate car loan can make it a little harder to maintain your expenses on your personal budget as with a variable interest rate, this would also mean that your periodic payments would also fluctuate.

As the lender has the ability to change the interest rate in line with their economic costs, quite often if a variable rate car loan was terminated early, there would be very minimal or no early exit costs and this could be advantageous if the plan was to pay the loan out early.

Most car loan providers generally don’t offer a choice between variable and fixed rate and the main lenders only offer fixed interest rates on car loans, which usually makes this market more competitive which can result in cheaper interest rates that are to stay the same over the full term of the loan.

The early termination fees with most fixed rate car loans are not that large a cost, which can in many cases make it a more appealing option, but it is not always the best option and you can often find that much smaller borrows over shorter loan terms, that variable rate unsecured loans could be a cheaper option with more flexibility, although the interest rate may be higher.

It comes down to the clients overall intentions for the full term of the loan in regards to what will be the best option and due to the maze that is car loans, good professional advice is always recommended.

For more information- Visit carloans.com.au

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photo credit: Hugo90 via photopin cc

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