Personal Finance: What People Buy On Payday

Some people think that to become wealthy, they need to live in a certain lifestyle and buy certain things that the real wealthy people have. By doing so many of them would finally end up in a financial turmoil and are far from being what they had always dreamed of: real wealthy or simply financially free.

The truth is, different people with different financial conditions buy different things on payday not because of how much money they have but because of their particular mindset that drove them to buy those things in the first place.

When the poor go shopping…

Poor people would go and buy the things we would simply call ‘little stuff’. They buy things that are inexpensive (and sometimes useless) simply because they are inexpensive.The ‘little stuff’ won’t cost them much but it won’t worth anything to them over the years — and because the money was all spent on ‘little stuff’, this will be the only thing they will have.

Some people who are even less fortunate like many in my own country, Indonesia, won’t even have ‘stuff’. When they go shopping on payday they buy food and maybe some clothes — just basic things they need to survive for one month.

The poor won’t have enough money to save, let alone invest. So what comes in on payday, goes out on ‘little stuff’ or food to survive. They simply just don’t educate themselves that their income could have been used to create more income — and this has caused a lot of financial pain. Yet, it does not need to be this way.

When the middle class go shopping…

These are successful people with well-paying jobs and great carreer. Because of this, society mistakenly considers them as ‘the rich’. The middle class would buy things that we would call ‘liabilities’. Liabilities are things that cost you money. A car would be a liability — you would spend money on gasoline, insurance and not to mention the thousands of dollars of monthly payment for the new car. A house should also be considered as a liability — although some people would call it ‘asset’, we can’t escape the fact that buying and owning a house would actually cost you — which makes this more a ‘liability’ instead of an ‘asset’. But when you buy a house and rent it out and it pays you money regularly, then the house is called an ‘asset’.

Typically, the middle class split their big fat check into two and one portion of it goes out to pay for the downpayment of a new car (or a new house) or anything that are actually ‘liabilities’. By the next month, they will have created another thousands of dollars of monthly expenses for paying the installments. After this, they would want a new Rolex watch, or another car, or a boat, or an expensive vacation.

The middle class may make big fat paychecks because of their successful carreer. But if the money that comes in are constantly spent on ‘liability’, it won’t take long until they wind up highly stressed out in a financial turmoil. In the end, the middle class find themselves enslaved by their jobs because of the liabilities. It means they have no choice than to go to work and make more money every month to be able to pay off their liabilities.

The problem with both the poor and the middle class is, generally their income is dependant on their own effort/ time. The case with the poor is, that they exchange their time with their employers money — while there is only so much you can do in 24 hours with your own effort. On the other hand, the middle class exchange their high education and expertise with someone else’s money. As soon as they stop ‘exchanging’ time and education, the money stops coming.

When the real wealthy go shopping…

Real wealthy people would go out and buy things that we would call ‘asset’. Assets are things that pay you money. The example would be investments, stocks, bonds, real estate,… Another example of asset is education. If you buy education and apply it to produce income, your education is an ‘asset’.

Real wealthy people would always put aside a certain portion of their income to buy assets like those. The wealthy simply spend their money on things that can produce more money.

If you want to become wealthy you have to find assets that would earn you income and with the income, buy more assets to earn you more income and so on. One example of affordable asset you could buy is a business. Any business that creates for you passive ongoing income is your asset.

Passive income is income that requires little work or no work at all. This type of income is the income that you earned from work you did just once.

There are numerous of passive income creation opportunities. One asset that I have found (and is affordable for me) is investing in my own small business, Success University. I find this an invaluable asset because I have free access to the most powerful success oriented personal development education, presented by over 50 of the world’s greatest minds in personal achievement. The education that I get is applied in my day job, causing me to earn even more income than before. And the business opportunity of Success Universityis just an outstanding asset that allows you to earn money even during your 14 day free trial.

This article has been written in the hopes that it will be an eye-opening piece of information on managing you personal finances better.

Young People And Personal Finance

It is very important to notice that the current generation of young people is getting more and more involved into a lot of things which were either nonexistent or possible in the past. Besides the usual late night drive-in movie or mid-afternoon soccer practice, today’s technologically savvy youths can write a letter, talk to a friend, listen to a playlist of more than a thousand songs, update a social networking personal page, and send a letter of application to a favored university, all at the same time, and all this while squeezing a stress ball with one hand. It obviously shows that for today’s youth, a whole world of opportunities lies within their reach. But with opportunity comes corresponding responsibility. And, more often than not, there is money involved. Now, more than ever, today’s generation of ecoboomers needs to know how to manage their personal finances, wisely and responsibly. That responsibility is emphasized even more for those enrolled in a university.

Take the case of an average college student. The day begins at around midnight with either a late night out together with friends with boxes of pizza with a lot of six packs, or a full blown house party with beer kegs and the works. Night wears on, and the next morning reality kicks in with a vengeance. All those wasted money on beef jerky and nacho chips, now nothing but crumbs on the filthy floor. There’s laundry to do. Papers to finish. Food that was stocked up for the week is gone from the previous night’s party. There’s a trip to the nearest store to restock. If there is a car involved, there’s gas to think about (since there are practically no convenience store within reasonable distance from a university; for stores within campus, customers pay more than usual for this extra privilege of ‘convenience’). There remains the day ahead. There’s lunch and dinner. The overdue rates at the video store. That planned movie date the succeeding night. Not to mention the real responsibilities. Payment for rent electricity, heating and water bills… not to mention tuition fees. And nothing but a limp, twisted wad of money intended to last for the rest of the week.

It is but human to succumb to the pressure of spending while there is money to spend it with. Even matured, responsible, emotionally stable adults fall for it, so why should young people be blamed for it? The real problem is the lack of education, both from adults and friends. The spending habits that start early on in life carry through to adulthood. A teenager who spends sixty dollars on a fad shirt now may spend several hundred for another later on in life. These so called little things tend to stack up and become a huge financial crisis. It is better for young people to learn how money does and does not work as soon as they gain their freedom in college, as soon as they get their student driver’s license, before they graduate from high school. The earlier, the better! Because in the real world of credit cards and mortgage payments, anyone who does not know how to stretch, squeeze, scrimp and save money for all its worth ends up in financial trouble, to say the least. And it is very disheartening to splurge all day with nothing to answer for it but candy wrappers, pizza boxes, dirty laundry and old magazines. Young people should learn more about taking care of personal finances, while they are still young and ready.

Your Personal Finance, How to Consolidate Debt

Have you ever had some one explain to you how they pay for everything on there credit cards and then pay the bill completely each month before the interest is accrued. They might even confess to doing this on several different cards to get different incentives. So many credit cards give you incentives for using them as much as possible. Who doesn’t want gift certificates to theme parks or restaurants? This is not for everyone. Most of us are just not disciplined enough to use credit cards to our advantage. Unfortunately this lesson is learned the hard way with a lot of credit card debt. Sometimes we get hit with more emergencies than we can handle so we stop paying those credit cards with the fun incentives and the ones without. This is when we really start to worry about personal finance how to consolidate debt.

Stop the Harassing Calls

If you have stopped paying your credit card bills or are over limit you will start to get phone calls from the credit card companies. It is true you do owe them money and they have every right to expect it paid back, but the calls are very distressing and can make you dread the phone ringing. So it is time to stop those calls, by getting a credit card consolidating loan.

How the Right Loan Will Help

A good credit card debt consolidating loan will improve your life by letting you pay only one bill every month and should insure that in the end you will pay less in fees and interest. Make sure that you get a loan with the best possible interest rate, which means talking to allot of credit card debt consolidators. So if you want to get your personal finances back then learn how to consolidate debt.

Achieving you Personal Finance Goals the Right Way

If you want to achieve your financial goal, don’t fall for get-rich-quick scams. Instead look at the possibilities offered by sound financial planning that can help you achieve your goal. If you deem this tedious and hard to follow, this is understandable especially if you are not taking home a fat paycheck. As they say, quitters never win; in this game plan, all you need is a steeled resolve to stick to your plans to achieve your dream of financial security.

Have Goal Will Plan

Achieving your financial goals is best started with a financial plan. Your personal finance goals should be clearly spelled out. Devising a safety net for the unpredictable future, demands you lay down all your financial cards, in the hope that someday the plan will pay dividends when you most need it.

Ask yourself what you need to have a secure future and your questions will determine the way your goals will be achieved. Achieving your goals may seem highly improbable because you fail to see the numerous possibilities and options where to put your money.

Sound financial advice can bring you nearer to your aspirations. Depending on your purpose, your financial plan will be adjusted accordingly. Whether you are simply hoping to pay your insurance faithfully to the last dollar or to see your investments working, things will depend on your determine to succeed

Plan for Financial Stability

Once the plan is finalized, it is your turn to make it work. Stay focused on the plan. Financially successful people say it is a difficult task to adhere strictly to the plan but they plodded on looking forward and the financial gains waiting for them at the end.

To stay focused towards your dream of security and gains, ask yourself the following questions:

-What do you wish to achieve?

-How much money do you need to invest?

-How long will it take to realize your financial gains?

-Can you fit in the additional drain in your budget?

With a financial planner to monitor your accomplishments, you can always be on guard to do what you are supposed to do–follow the plan to the letter to achieve your financial security and eventually reap your financial gains.

With a financial planner to monitor your accomplishments, you can always be on guard to do what you are supposed to do–follow the plan to the letter to achieve your financial security and eventually reap your financial gains.

Stay Determined

Want to do the plan without an expert’s help? Take paper and pen and list your financial goals Separate your short-term goals from long-term goals. Estimate the cost for each goal and how long do you need to achieve it–6 months? A year?

Divide the cost of the amount in weeks and that’s how much you are going to put into it weekly. Once you’ve determined your target date, settle for it and start saving. Whatever you have outlined in your personal finance plan, follow it.

Credit Crunch Still Affecting Personal Finances

The effects of the credit crunch are still having an effect on people’s personal finances and the country’s economy has not yet returned to its normal state, it has been claimed. Economist at the Centre for Economics and Business Research Charles Davies said that both consumers and businesses are being affected by the credit crunch, with growth continuing to slow.

And not only is the credit crunch biting people’s finances, continuing inflationary pressures are also having an effect, Mr Davis suggested. Indeed the British Chambers of Commerce recently reported in its Quarterly Economic Survey that there is now a serious risk of recession across the country.

“The situation has still not really completely normalised and what you have seen is the effects of it start to seep through to all different sectors of the economy. Clearly, the financial system is fundamental to the functioning of the market economy and as funds drying up have had an impact on firms, there has also been a very great impact on consumers,” said Mr Davis.

He added that this has had an ongoing effect on the housing market and that banks are still reporting weaker results than in the past few years. Indeed there is still a level of uncertainty about banks recapitalising, he added.

But people who are perhaps feeling the effects of the credit crunch may now wish to consider the benefits that a secured loan can bring to payments, as all debts can be consolidated so that monthly outgoings can be paid off in one. Such a move may prove to help minimise the effects of the credit crunch, as outgoings can be kept under control.

Mr Davis noted that the inflationary pressures on the economy are proving to be a “dual hit” on the country’s purse strings and are making things “very difficult” for people. A recent study conducted by Nationwide, in partnership with TNS, found that consumers are now less confident than they were about the overall state of the economy, borrowing and loans on the whole.

The research, published in the Nationwide Consumer Confidence Index, found that overall consumer confidence is now down 18 per cent on the level it was at last year. Spending has also fallen, to stand at 54 points in July this year, down from 65 points the same time a year before.

Indeed some 61 per cent of people do in fact believe the current economic situation is bad and some 85 per cent are of the opinion that the situation will get worse over the coming half-year. And opting to take out a loan to help cover any outgoings may be one way to cover costs such as mortgage or debt repayments.

Last month, research from mortgage advisory group mform found that people looking for new mortgage deals are now seeking out longer-term deals. Indeed the organisation found that some 11.5 per cent of people wanted to sign mortgage deals for the duration of their borrowing period and some 13.5 per cent of people wanted deals of longer than five years.

Personal Finance – Three Quick

Many Americans and people in countries where ready credit is available find themselves in greater debt then ever before and this makes you wonder whether you are working for yourself or for your creditors. This ends up being a problem of financial spending & control and if you take a short moment to reconsider your own financial health, you might be able to correct your financial situation today.

You will find that many people today are living from paycheck to paycheck and running from payday loan provider to another. This article suggests three simple & quick ways to improve your personal finances.

Firstly, you might want to draw up a Cash flow statement for yourself. This is quite simple to do actually. Just take a blank sheet of paper and draw a line in the middle and consider how much money you are earning each month and list all the sources on the left and total it up at the bottom. Next on the right column figure out how much money you are spending each month, including how much interest and debt you need to repay. Take your credit card statements out and use it to work through this section. Once you figure this out, then you will be better able to manage your own finances or at least have a better idea about your spending habits.

Secondly, budget to save before you spend. This idea is taken from many millionaires who recommend that you use auto-transfer each month a sum of your money and either save it or invest it into some thing like real estate. My personal favourite idea is to take a sum of money each month and use it to purchase my favourite Exchange Traded Fund which works like a mutual fund only that it just buys up the entire index of stocks. This way you do not need to work about over performing or underperforming the market and the management fees for these funds are really low.

Finally, now that you know how much money you have left to spend each month, budget how much you want to spend each month. As terrible as it may seem, try to pay for things with cash and with a debt card so that you are kept in touch with how much you are actually spending. Its so easy to flash a credit card and then lose sense of reality and you only get hit with it at the end of the month when the bill arrives. So try to remind yourself constantly about the need to avoid spending exuberance.

In conclusion, doing a simple cash flow statement ever so often helps to keep yourself reminded of how your spending and investing patterns are each month. Budgeting to save before you spend will ensure that you will retire quite well off and budgeting before you spend will help you figure out how you want to use your available funds each month. Remember that the more credit you use on consumer products which drop in value really fast, the most the credit card companies are going to make from you and the less you will have to spend in the longer term. Take control of your finances today and you will find your life starting to look brighter and happier.

Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

The 3 Most Popular (and Misunderstood) Terms in Personal Finance

APR, FICO, and HELOC are terms used within various areas of the personal finance arena. Each is calculated based on certain rules and regulations; and more importantly, each is important in regards to credit, loans, and interest.

APR stands for the Annual Percentage Rate. It includes the yearly cost of a loan calculated in a fee as a percentage. It will include interest and insurance in the calculation of costs. The APR is most likely to be included in mortgages, credit cards and car financing. By knowing what the APR is of a certain loan or credit card that you are about to get, you will be able to see the best loan or finance to invest in.

For credit cards, there are a couple of different types of APRs. The first is for purchases. These APRs should generally be lower than any other type of rate that you would receive. The second type of APR in credit cards is for cash advances. If you have to take a loan out of your credit card, or go over your limit, the APR will automatically increase. Balance transfers are the third type of APR that will affect your credit. By making a balance transfer from one credit card to another, your APR will also increase. There are also tiered APRs where different rates will apply to certain levels of outstanding balance that you may have on any type of credit or loan. A penalty APR may also apply. If the credit card or loan is paid late one or more times within a given amount of time, the APR will also include a penalty rate.

If you already have an APR, you can always try to get it lowered. There are several ways to do this. If you are looking at an APR for a mortgage, you can negotiate the closing costs and keep your mortgage for a longer period of time. This will automatically drop the APR to fit with the time period and annual rate which you must pay.

FICO is an acronym for Fair Isaac Credit Organization. The Fair Isaac Corporation is a company that provides several financial services of several different kinds. This includes mortgages, insurance and healthcare. One of their branches is FICO. Through this company, you can be given your credit scoring and advice on how to have good credit. If you are applying for a new loan or credit card, lenders will most often go to FICO to find the score of your credit.

There are three parts to this score, including your interest rate, your monthly payment, and a number which is your FICO score. The higher your number is, the less you will have to pay on your loans or credit cards for interest rates and monthly payments. These estimates are based on how many credit cards you have, the history of your loans and credit cards and the balance on these different types of credit cards or loans. By estimating your score, you will know how much you will have to pay in a new loan or how much will be available for a new credit card which you are applying to.

HELOC is an abbreviation for home equity line of credit. HELOC is mainly used for taking out a mortgage or a loan for your home. By using this type of credit, you will be able to have a larger amount of credit available with a lower interest rate. This type of credit line is usually based around a variable interest rate, as opposed to a fixed rate. This means that the interest rate will change according to the public margin. Because of this, it is advised that you look into the index and margin that each lender uses so that you can have the best fixed rate. There is also a cap, or fixed amount with the variable rate plan, allowing the interest rate to only go a minimum or maximum amount.

The first step into getting a home equity line of credit is to be approved for a certain amount that is given by a credit company. This is usually taken on a percentage that is appraised from the value of your home. Your ability to repay the loan will then be looked at. Things such as your income, debts and credit history are looked into to see how much you can qualify for. Once approved for a certain amount, you are then able to draw from these funds as you would a bank account. Depending on the type of credit line you have, there may be limitations on how much you can draw from at one time. If you decide to sell your home, you will most likely be required to pay back the home equity line in full.

No matter which type of credit or loan aspect you are looking into, knowing what they mean and what applies to each area will help to lower your costs.

Personal Finances – Six Steps to Take Now

You have probably read enough tips on personal finances, and maybe you are still in debt and without a plan for the future. Well, here is simple six-step plan to get you going in the right direction. Of course, like the other tips you have heard, it will only help if you actually use it.

1. Record Your Expenses

For a month or two, write down what you spend every penny on. This process may enlighten you as to where large chunks of your income goes, or show you how little things add up. You might even find that you are spending less by the end of the month, just because you are so aware of the money going out when you track it like this. After the month is over, categorize your expenses and see how much is going to various areas, like “eating out,” “renting movies,” “electric bills,” etc.

2. Find Ways To Spend Less

Using the information you have gathered in step one, start finding every way you can to cut those expenditures. This can mean giving up a few things which are less important to you than your future financial security. On the other hand , it may just mean finding better ways to do things, without sacrificing anything. Turning the heat down while at work doesn’t hurt, after all. Look for cheaper insurance, foods that cost less, better restaurants with lower prices, and on and on.

3. Apply The Money Saved To Debt

Now that you are spending less, you should have some money left over from those paychecks. Start applying it to any debts which you have. Always start with those that are at the highest interest rate, and use all “extra” money towards paying those off first. If you have done this right, you are living just as well, but spending less to live that way, and getting out of debt.

4. Find New Sources Of Income

While you are working on step three, start looking for new ways to make some extra income. This could mean an extra shift at work each week or two, or asking for a raise, or even looking for a better job. It also could mean starting a small business on the weekends. Look at the skills, connections, knowledge and things you have. Renting out an extra room in your house could provide an extra ,000 per year, for example.

5. Start Paying Cash

Everything is cheaper when you pay cash. Not only is it easier to negotiate a better price initially when paying cash, but you also don’t pay the interest charges. This means that though you may have to wait and save for some things (like the next car), you live cheaper, or get to buy even more things you want (your choice). If you do use a credit card, pay it off each month.

6. Invest Regularly For The Future

Once you are controlling those expenses, generating new income, and staying out of debt, you should have a fair amount more coming in than going out. Start investing this money for the future. If you are uncomfortable with conventional investments like mutual funds or stocks, at least find the highest-interest bank account you can, and save to start a business.

Most of these ideas are probably not new to you, but if you actually follow a simple plan like this with your person finances, you’ll almost certainly be more financially secure and more relaxed in a short time.