17 Mar
2011

Many of us want luxuries, whether it’s a nice car, a nice home, designer clothes, or other “extras.”  Many of us think that in order to have these luxuries we need to either buy them on credit or save for them. Neither solution makes a lot of sense. Using credit cards or loans to pay for luxuries means that you really can’t afford them. It also means that by the time you pay these luxuries off, you will have spent much more than they are worth in interest rates. Saving up makes more sense, but it can take many years to save up for the things you want.

A better solution is to increase how much you earn through investments, so that the money you earn can go towards luxuries. This way, you are not using your income to pay for luxuries, you don’t have to wait years or decades to enjoy what you like, and you don’t pay interest. Let’s say that you want to buy a nice car. You can start putting money aside for that purchase, but rather than putting it in a savings account, put it in dividend-paying accounts or some other investment that will earn you money. Soon, you will be making a monthly income from those investments, which can go towards luxuries while you hang onto the assets for long-term growth.

17 Mar
2011

If you are in over your head in payday loans, you may be tempted to declare bankruptcy in order to simply make the debt go away. However, before you take that big financial step, you should ask yourself a few questions:

1) Have I tried other solutions first? Bankruptcy should be a last resort solution, used when you simply have no other way to pay your debts. Even if you have multiple payday loans, there are several things you can do. You can get a second job until you pay off the debt, you can get a consolidation loan, or you can create a payment arrangement with the lender. Debt relief and debt consolidation companies can also help. Bankruptcy should be a last resort solution for when other options have failed.

2) Do I qualify for bankruptcy? Not all loans are forgiven by bankruptcy. If you owe money on taxes, student debts, and child support payments, you will still need to pay these debts. As well, if your payday loans are very recent, you may not get these debts discharged by bankruptcy. To find out whether you qualify for help through bankruptcy, you may wish to speak with a bankruptcy attorney.

3) Do I understand the consequences of bankruptcy? Bankruptcy can stay on your credit report for up to ten years, affecting your ability to get credit, loans, and even jobs or apartments. This is not a solution you want to undertake lightly.

16 Mar
2011

No one likes to be thought of as unpleasant, but sometimes playing nice is not so nice for your finances. While the stereotype of the ruthless businessman is outdated, it is true that successful business people focus on profits beyond personal likeability. If you aren’t doing the same, your earnings and savings could be suffering.

For example, let’s say that you want to earn more income and ask for a raise. Even though your work is helping the company make money, you are told that the company does not have enough money to give you a raise. You don’t want a confrontation, but if you simply slink away you could end up earning less than you should be.

The good news is that you don’t have to change your personality and become Cruella De Ville to manage your money better. However, you do need to learn more about money and you do need to start making money decisions even if it means that someone will get a little bit unhappy. If your employer is not willing to raise your salary, for example, and you are earning less than someone else in your position and with your experience, you need to find that out through research. Then, you need to bring that up with your employer and start looking for a new job that pays better if your employer still refuses to budge.

16 Mar
2011

ROI (Return on Investment) is a very popular term in business. Quite simply, it refers to what someone gets in return for their efforts or money. For example, if you hire a web site designer for your new business, you are investing money for your website. Your ROI is said to be high if the designer creates a site which brings in lots of new customers for you, ensuring that the cost of the website is covered by new business. Whenever you buy something, you should be considering ROI. Here’s how to keep your ROI high in every situation:

1) Ask yourself what your goals are. If you are buying a car for work, for example, determine what exactly you need from a car to get to work. Determine how, where, when, and how often you will use the car. You will then be better able to identify the car that meets your needs.

2) Determine whether you are buying something that is a liability. Liabilities have no ROI because they drain money from you rather than bring you value. Yet, many of us focus on buying liabilities. If you are buying something – such as a home – that is likely to drain money from you but is unlikely to make you money, you need to reconsider. Find ways to make the bargain make money for you or invest your money elsewhere.

3) Negotiate to get more. When creating a deal or investment, ask yourself how you can get more value. If you cannot lower the price, consider whether you can get something free that is of value with your investment.

16 Mar
2011

Most people love to save money, and this means that when they need professional help they often try to find the least expensive solution. The wealthy do the opposite, however, often looking to pay professionals well in order to get quality help. This same approach can work for you, too.

Let’s say that you need investment advice. You decide to go to a broker or financial advisor. Do you want to go to the cut-rate broker or the one that wealthy people use? The financial professional catering to the wealthy may charge more but he or she also has a reputation to protect, which may mean better quality service. The same may be true of health care professionals and other professionals.

Also, remember that paying less can cost you more in the long run. If you go to a professional who is less experienced and therefore charges less – a low-cost dentist, let’s say – and that person makes a mistake, you will likely then need to spend even more on another professional to fix that mistake. Experienced professionals may cost more, but most have the experience to ensure that the job gets done right the first time. Some even have guarantees to that effect.

15 Mar
2011

Many people take out payday loans because they have no savings and cannot afford to wait until their next paycheck to pay to cover important expenses. Unfortunately, if you are having trouble making it from paycheck to paycheck, it can be easy to become dependant on payday loans. This can be a big mistake, since these loans are intended for  emergency use only and carry high interest rates. If you are already in financial trouble and get in over your head in payday loans you may find most of your paycheck goes towards paying for your loans, making it hard to break even financially.

If you are already in trouble with multiple payday loans, the first step is to find ways to generate more money to pay your bills. You may need to save more money, budget carefully, or even take on a second job so that you can generate more money and stay ahead. Next, you will want to find ways to lower your interest rates and consolidate your loans if you have a few payday loans. This will help you put more money towards your principal and will ensure you spend less in interest, making it easier to repay your loan. Once you have this done, you can focus on paying off your loans as quickly as possible so that you can get out of debt.

15 Mar
2011

Most financial experts recommend “paying yourself first” but many customers are confused about exactly what this means. Paying yourself first is in fact a crucial money concept. If you master it, you can enjoy lower debts and better financial security.

At its simplest, paying yourself first means simply prioritizing your savings. Rather than paying your bills first and then trying to save some money, paying yourself first means deciding on a monthly savings amount – let’s say $200 as an example – and putting that $200 aside before paying anything else. This ensures that you set aside money in your buffer account every month. When you don’t pay yourself first, it’s very easy to tell yourself that you simply “don’t have enough” to save. However, people who decide to pay themselves first often find that they can put money aside without much trouble when they save first, and pay bills second.

If you are already living paycheck to paycheck (or relying on payday loans to see you to your next paycheck) you may need to start with small savings and you may need to work with a budget to ensure that you can set aside enough money for your savings account. You may also need to trim expenses in order to save enough to put aside.

15 Mar
2011

Yesterday, we looked at ways that financial formulas are touted by financial gurus and experts as a way to make money. Today, let’s take a look at the specific types of formulas which can make you money:

1) Savings Formulas. In these formals, you will generally set aside a specific amount of money each month to save. This money may be put into a savings account, bonds, or retirement fund, where it will grow. As long as you do not need to touch the money, this is a low-risk way to build money. You can easily automate this simplest of formulas by having your bank automatically withdraw your monthly contributions out of your accounts and place it in your savings or retirement fund.

2) Investment Formulas. In this formula, you set aside a specific amount of money so that you can invest in something – such as a business. This is usually more complex than a simple savings formula because you will need to manage your risks and investments. For example, if you decide to set up businesses and sell them, you may need to spend plenty of time establishing successful businesses.

3) Buying or Asset Formulas. This formula involves borrowing or saving money in order to buy assets – such as real estate or stocks. In general, the idea is to accumulate more of these assets with more money, thus building a portfolio. Some investors, however, change the formula by buying and selling assets – flipping real estate is an example of this.

14 Mar
2011

Financial experts and gurus sometimes talk about special or secret “systems” for making money. Usually, you need to pay quite a bit for seminars and classes that promise to unveil these “secrets” but the truth is that there are an almost infinite number of systems for making money. Mastering a few of these can make you wealthy.

A system is nothing more than a collection of actions which are used to create a result. In the case of money, these systems are usually automated so that an investor can make money around the clock. For example, someone who invests in real estate may have a system that looks like this:

1) Buy a property.
2) Rent it out.
3) Use the rent to pay off the property and save for a new property.

The investor will keep buying and renting properties to make a profit and to build a real estate empire. A more modest system may involve setting aside $500 each month to put towards the stock market. You can easily find systems in financial planning books in the library. Master a system that makes you feel comfortable and put it in place to see whether you can earn more money.

14 Mar
2011

You probably rely on your friends for many things. They may cheer you up and can help you have some fun. However, your friends can also affect your pocketbook. For example, friends who are responsible may make it easier for you to stay responsible. When friends avoid borrowing money from you, for example, it’s easier to avoid stress and it’s easier to follow the example of responsible buddies.

Friends who are good with money and interested with money can also help you learn more. If you have friends who are entrepreneurs or investors, you can learn some great tips on making your own money grow. Even if your friends are just at the same stage as you – finding ways to manage their money – talking about money and learning about it together can help guide you to better money decisions.

Friends who have good attitudes about money are also important. These friends believe that making money is possible and commendable, so they don’t put you down for trying to increase your income. This sort of support can be very important if you are trying to start a business or are trying to turn your finances around.