Good debt vs. bad debt

Good debtMost of you might be confused between the two notions of good debt and bad debt. First of all the meaning of a debt must be made clear. Debt is something that a person is bound to pay back. But there is a difference between good debt and bad debt.

Good debt is something that the person cannot afford to pay up-front but he has the money to pay it up on a scheduled date as in home equity loan or mortgage. Bad debt is something that the person cannot afford to pay as he has not saved enough money to repay the debt and hence he has to apply for a loan.

The most usual and common form of bad debt is known to be the credit card. They should be used with utmost care. The best way to prevent yourself from getting into a debt after using your credit card is to pay it off as soon as the bill arrives. This will show to the companies that you are a responsible customer. The other examples of bad debt are personal loans and cars. It is better to buy a used car and maintain it for one or two years instead of buying a new car that depreciates with time.

The best examples of good debt are business loans and mortgage. Anything that is borrowed and can be measured in monetary terms can be a good debt. The value of the car depreciates and its value is always less that what you had bought it for. Student’s loan is another example of a good debt as it helps you to attain higher education and hence have higher income in terms of job. This money can be used to pay off the loan.

Bad debt has no value or its value tends to decrease over time whereas good debt tends to increase the value over time.

Types of short term loans

short term loansThe procedure to apply for short term loans has become easy. Short term loans normally extend between 10-14 days but the money lenders may want to extend this period to some more days to get the interest. There are various types of short term loans depending on the amount of money you need and the duration of the loan. Given below are the types of short term loans:

• Payday loan- this is a type of loan where the amount of money taken on loan varies from £50 and £500. This is required to meet the temporary cash and can be repaid the next time you get paid. A payday loan is essential when there is financial emergency such as immediate work for your house like car repair and stuff. It can also be required to pay the direct debits which are outstanding for the current period.

• Bridging loan- this is a loan which is taken to meet the immediate expenses. There are times when your money may be blocked somewhere else for which you are not able to pay the current expenses. One best example to explain this loan is when you buy a commercial property and want to set up an office and you need money for renovation but you don’t have enough cash in hand because it has been used up in buying the property. The amount of money taken on loan in cases of bridging loans is higher than the amount taken in payday loans. The interest rate in bridging loans is also higher than payday loans because the lender has to lend more money in this case.
• Credit card- this is a settlement with the bank and there are no intermediaries. In this procedure a person can take a loan from the bank any time they want and after a month or so they can repay the amount.

Fixed annuity – safe or dangerous

Fixed annuityFixed annuities are particularly thought of because of their safety. You can’t really lose money due to stock market declines when you yourself are a part of it. Yet, fixed annuities are not always safe.

Even though the chances of losing money in the market do not arise in case of fixed annuities, one thing that you must keep in mind is that there are other aspects of them that may make them unsafe. The first being there is lack of liquidity. Yes there is a tax postponement component, however, you must always consider that if you need the money, you might be needed to pay certain amount/amounts of penalties to collect it. This is called surrender charges. Often these charges can turn out to be quite high on your annuities. This is what makes them riskier as far as liquidity is concerned.

The rating of the particular insurance company is also a major factor of consideration. Though it is known that ratings of companies are not at all the final word to be believed as far as safety is concerned, yet doing your research is always the best option. The safety of your annuities is directly related to the safety of the company, hence it is essential that while choosing an insurance company you do your diligence and that you do it properly.
Yet, it is not all bad. The current returns generated on fixed annuities is one of the biggest positives of entering into such an account. This leads to a consistent and sufficient income stream to compliment your other income, be it after retirement or before.

At the end of the day, entering into a fixed or a variable interest annuity should be a decision left on you for which the necessary research and preparations can be taken by only you. Your investment needs is almost a major factor on which this decision would depend.

Benefits Of Hiring A Wealth Manager

Hiring A Wealth ManagerIf it is the first time that you have earned a huge amount of cash the first it is very crucial for you to hire a wealth manager. A wealth manager not only teaches you how to keep your hard earned cash but also teaches you how to make your money grow. Here, you should not confuse a finance advisor with a wealth manager. Hiring a wealth manager is much expansive than hiring a finance advisor. You may ask then – what is the reason of choosing a wealth manager over a finance advisor? Let me help you with this.

First off, manager is a term that indicates to the person who manages everything in an organized manner. Whereas, the term advisor indicates to the person who’s task is to give you advice which you may not even follow. This is the basic difference between a wealth manager and a finance advisor. The task of a finance advisor is done at the very moment he gives you his valuable finance related advice. However, following those advices is completely up to you. On the other hand, a wealth manager sees himself whether or not you are spending your money in a right way. Moreover, he also looks into the matter of growing your money.

Besides this there are many more reasons for hiring a wealth manager. Only a wealth manager can help you to plan your future properly. It is his responsibility to secure your future and to make sure that even after your retirement you can enjoy life just like you were enjoying while working. Only a good wealth manager can tell you whether you should put your money in bank or invest it somewhere else. Simply, a wealth manager doesn’t only advices to stable your life financially but he does everything that takes to make your like stable.

Handy tips to manage credit card debts

manage credit card debtsAll leading credit card companies woo customers with promotional gimmicks and several offers that seen too-good-to-be-true in the short run. A lot of people get swayed by the lofty promises made by the credit card companies and end up having more than one credit card to their names. However, you need to understand that more often than not people with credit cards run into credit card debts and this can put a person’s financial health at risk. So, if you do have a credit card and want to use it to make purchases, you will have to make sure that you are able to handle your credit card debts efficiently. For this, expert credit card management is required.

If you have already raked up a credit card debt, then it is advised that you stop using your credit card to make further purchases immediately. However, you are advised against closing all the credit card accounts abruptly and this will affect your credit score adversely which will hamper and diminish your financial capacity. So, you need to practice self control and be determined not to use your credit card until and unless you have cleared all your existing debts. This might take some time, but you will slowly but surely do away with all the debts.

Also, to manage your credit card debt properly you must draw up a budget and make a determined effort to stick to that budget. Make a list of your debts complete with the rates of interests charged, credit limits, minimum fees, annual fees and all the other associated fees. The bills with the highest rates of interests should be given priority and you should make arrangements to pay them off as soon as you can. If possible, pay off the entire due amount at a go so that you do not incur the interest rates anymore.

Cheap auto insurance is not impossible for young drivers

Cheap auto insuranceYoung drivers often complain about increased auto insurance rates. Actually, the teen drivers are usually suspected of rash driving leading to car accidents and hence the higher rates. But there are ways how you can achieve cheap auto insurance despite being a teen driver. The article below shares the secrets of landing up with affordable car insurance rates in your college years.

No flashy cars

Young drivers are often fascinated by flashy cars to flaunt a cool style statement. But if you are looking for a cheap auto insurance pricey cool cars are a strict NO. These cars are more prone to burglary than the usual standard models and hence beget grater auto insurance rates. Thus, go for the sturdy normal cars until you rose and shine enough to afford the higher premiums.

Good academic record

Your high-school/college grades play a major role in deciding your auto insurance rate. Students with good marks usually land up with cheaper insurance premiums. Thus, maintain a commendable academic record when you are in search of inexpensive premiums.

Safety driving course

This is another significant point when you are looking for cheap auto insurance rates. Do you know that safe driving education certificate from a reputed institution can beget you around 15-20 percent discount on auto insurance rates? Actually, when you have taken up a safe driving course and have passed in flying colors, it can be expected that you will sincerely abide by the traffic regulations on road- which implies less accidents on your part & hence lesser claims.

Drive less

You must know that your car insurance rates depend largely on the miles driven annually. The bigger the miles driven higher will be insurance rates. Thus, its better that you count on public transport for your usual daily travel and use the car only for special occasions- like road trips with friends or parties.

A Guide To Student Loans

Student LoansNowadays student loans hold a very important place in the lives of the student. Higher education has become so expensive that most of the students have to get loans from the appropriate authorities. Handful students get hold of scholarships. But majority of them will dependant on student loans only. Student loans are specifically designed for students. Students can payback the loan after their particular educational course is complete and they get a good stable job. Plus the rates of interest related to the student loans are agreeable and better than the other kinds of loans.

The two main sources of student loans are: Federal government and private organizations. It is better to apply for student loans provided by your government since you will get more unique benefits. But at times federal student loans may not cover all your expenses. Therefore you can approach some reliable private organization for a student loan. Federal government will give you a loan only if you have definite proof that you are in need of a financial help. Plus your conduct and character will also be taken into account before your student loan is approved.

The rates of interest offered by the private organizations are surely higher in comparison to the rates offered by the federal government. If you get multiple student loans then it is advised by experts that you must consolidate them. Once consolidation is done you will be able to repay your loan through single monthly payments that also at lower interest rates. Whenever you are signing an official document regarding your student loan make sure that you read through the terms and conditions carefully.

Before applying for the student loans keep the necessary documents ready. Decide whether you want a federal loan or a private student loan. After the decision is made apply for the loan and wait for the good news.

How to Decrease/Negotiate Auto Loan Interest Rates as A Student

Auto Loan, loansIf you are a student and you are planning to take out a loan for your car, you need to understand the ways by which you can reduce the interest rates on the loan for the car. Auto loans are of many types and there are special student auto loans available as well. When you go out to get a student auto loan, you need to give them a complete report. If you are buying the car with your own money, then you will be given more flexibility. If you have a clean driving record and if you have as special certificate from a driving school for excellent passing marks then also you might get some benefits. You need to have a good record as mentioned earlier. If you are planning to get a second hand car then the rates are lower. If you have good grades, in some companies, that is considered as well.

Diversification of portfolio

stock portfolioIf you desire to build something then you should first have a solid foundation for it. In order to move on in life and get on better and bigger things, then you should ensure that you have made till now is sturdy completely. This same rule applies to your stock portfolio. If you want your investment plans to work effectively, then you should start on the right food. It is strongly advised to start off with a portfolio which is diversified in nature.

The first thing that you should remember while creating a portfolio is not to overextend yourself. You cannot simply purchase a bunch of stock and let them as it is in the wild. For being a good investor you need to keep a track of all your stocks and shares in the market. Having to follow ten to fifteen stocks at a time can be overwhelming. Also it is safe to start without a risk. This is the reason diversification of portfolio, to minimize risks and maximize profit in a simple way.

Filing for bankruptcy- making the tough choice

File for bankruptcy, bankruptcyThere are times in life when one has to make some tough choices. If you are having a lot of financial problems lately and you are unable to repay loans, and if every other option seems closed, then it’s probably a good time to file for bankruptcy. Over a million people file for bankruptcy every year in the United States.

Therefore, it’s not something where you are alone. Filing for bankruptcy is a good idea in such situations because it means that you can stop struggling and start afresh. You might need to go in for credit counseling before you file for bankruptcy. The next step would be to hire a lawyer. He or she can guide you in the right manner to go on about it. Therefore, whatever the situation is, if you feel that you are running the worst times in the monetary sense and your lawyer thinks that filing for bankruptcy is the best way to make this stop, then, you should go for it.

Tips on Financial Planning